# EDGAR Filing Document

**Accession Number:** 0001631282
**File Stem:** 0001213900-25-109884
**Filing Date:** 2025-11
**Character Count:** 254531
**Document Hash:** fdebb7207b052ea4214a332e045a9d19
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-25-109884.hdr.sgml**: 20251113

**ACCESSION NUMBER**: 0001213900-25-109884

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 77

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251113

**DATE AS OF CHANGE**: 20251113

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** DATASEA INC.
- **CENTRAL INDEX KEY:** 0001631282
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 472019013
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38767
- **FILM NUMBER:** 251477421

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 1 XINGHUO RD, CHANGNING BLDG, STE.11D2E
- **STREET 2:** FENGTAI DISTRICT
- **CITY:** BEIJING
- **PROVINCE COUNTRY:** F4
- **BUSINESS PHONE:** (86)10-58401996

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 1 XINGHUO RD, CHANGNING BLDG, STE.11D2E
- **STREET 2:** FENGTAI DISTRICT
- **CITY:** BEIJING
- **PROVINCE COUNTRY:** F4

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ROSE ROCK INC.
- **DATE OF NAME CHANGE:** 20150121

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended <u>September 30, 2025</u>**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**Commission file number <u>001-38767</u>**

**<u>DATASEA INC.</u>**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Nevada** | **45-2019013** |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |

---

---

| | |
|:---|:---|
| **Room 302-5, Building C, Gemdale Viseen International Center, <br> No. 5 Shengfang Road, Daxing District, Beijing** | **102600** |
| (Address of principal executive offices) | (Zip Code) |

---

---

| |
|:---|
| **+86 10-56145240** |
| (Registrant's telephone number, including area code) |

---

<u> 20th Floor, Tower B, Guorui Plaza 1 Ronghua South Road, Technological Development Zone Beijing, People's Republic of China 100176</u> <br> (Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each exchange on which registered** |
| **Common Stock, $0.001 par value** | **DTSS** | **NASDAQ Capital Market** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large-accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer ☐ Accelerated filer <br> ☒ Non-accelerated filer ☒ Smaller reporting company <br> ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 13, 2025, 8,570,713 shares of common stock, $0.001par value per share, were outstanding.

**DATASEA INC.**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page No.** |
|  | [**Part I - Financial Information**](#a_001) | 1 |
| Item 1 | [Financial Statements](#a_002) | 1 |
| Item 2 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_003) | 29 |
| Item 3 | [Quantitative and Qualitative Disclosures about Market Risk](#a_004) | 60 |
| Item 4 | [Controls and Procedures](#a_005) | 60 |
|  | [**Part II - Other Information**](#a_006) | 64 |
| Item 1 | [Legal Proceedings](#a_007) | 64 |
| Item 1A | [Risk Factors](#a_008) | 64 |
| Item 2 | [Unregistered Sales of Equity Securities and Use of Proceeds](#a_009) | 64 |
| Item 3 | [Defaults Upon Senior Securities](#a_010) | 64 |
| Item 4 | [Mine Safety Disclosures](#a_011) | 64 |
| Item 5 | [Other Information](#a_012) | 64 |
| Item 6 | [Exhibits](#a_013) | 65 |

---

i

**PART I - FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS** 

**DATASEA INC.**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **SEPTEMBER 30, <br> 2025** | **JUNE 30,<br> 2025** |
|  | **(UNAUDITED)** | |
| **ASSETS** | | |
| CURRENT ASSETS |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $745264 | $620807 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 1171918 | 1374180 |
| &nbsp;&nbsp;&nbsp;Inventory, net | 200534 | 206610 |
| &nbsp;&nbsp;&nbsp;Value-added tax prepayment | 85292 | 137025 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 514879 | 583650 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 2717887 | 2922272 |
| NONCURRENT ASSETS |  |  |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 23990 | 25560 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 4613692 | 3495984 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets, net | 335791 | 292065 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noncurrent assets | 4973473 | 3813609 |
| **TOTAL ASSETS** | $7691360 | $6735881 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| CURRENT LIABILITIES |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $336292 | $420038 |
| &nbsp;&nbsp;&nbsp;Unearned revenue | 180195 | 150088 |
| &nbsp;&nbsp;&nbsp;Accrued expenses and other payables | 628729 | 547706 |
| &nbsp;&nbsp;&nbsp;Due to related parties | 97157 | 6126 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 166285 | 128525 |
| &nbsp;&nbsp;&nbsp;Bank loans payable | 2673985 | 2374767 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 4082643 | 3627250 |
| NONCURRENT LIABILITIES |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 173057 | 166436 |
| &nbsp;&nbsp;&nbsp;Bank loans payable | 422208 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noncurrent liabilities | 595265 | 166436 |
| TOTAL LIABILITIES | 4677908 | 3793686 |
| COMMITMENTS AND CONTINGENCIES |  |  |
| STOCKHOLDERS' EQUITY |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.001 par value, 25,000,000 shares authorized, 8,256,816 and 8,128,127 shares issued and outstanding as of September 30, 2025 and June 30, 2025, respectively | 8257 | 8128 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 47582488 | 47331510 |
| &nbsp;&nbsp;&nbsp;Accumulated comprehensive income | 159970 | 138586 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (44727042) | (44526016) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL COMPANY STOCKHOLDERS' EQUITY | 3023673 | 2952208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interest | (10221) | (10013) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL STOCKHOLDERS' EQUITY | 3013452 | 2942195 |
| **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | $7691360 | $6735881 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**DATASEA INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | **THREE MONTHS ENDED <br> SEPTEMBER 30,** | **THREE MONTHS ENDED <br> SEPTEMBER 30,** |
|  | **2025** | **2024** |
| Revenues | $13813551 | $21081094 |
| Cost of revenues | 12644459 | 20884113 |
| Gross profit | 1169092 | 196981 |
| Operating expenses |  |  |
| &nbsp;&nbsp;&nbsp;Selling | 393817 | 996049 |
| &nbsp;&nbsp;&nbsp;General and administrative | 550974 | 1128403 |
| &nbsp;&nbsp;&nbsp;Research and development | 512924 | 103079 |
| Total operating expenses | 1457715 | 2227531 |
| Loss from operations | (288623) | (2030550) |
| Non-operating income (expenses) |  |  |
| &nbsp;&nbsp;&nbsp;Other income, net | 87442 | 55826 |
| &nbsp;&nbsp;&nbsp;Interest income | 22 | 4055 |
| Total non-operating income, net | 87464 | 59881 |
| Loss before income tax | (201159) | (1970669) |
| Income tax | - | - |
| Loss before noncontrolling interest | (201159) | (1970669) |
| Less: loss attributable to noncontrolling interest | (133) | (8680) |
| Net loss to the Company | (201026) | (1961989) |
| Other comprehensive item |  |  |
| Foreign currency translation gain (loss) attributable to the Company | 21384 | (13154) |
| Foreign currency translation gain (loss) attributable to noncontrolling interest | (75) | 41306 |
| Comprehensive loss attributable to the Company | $(179642) | $(1975143) |
| Comprehensive income (loss) attributable to noncontrolling interest | $(208) | $32626 |
| Basic and diluted net loss per share | $(0.02) | $(0.49) |
| Weighted average shares used for computing basic and diluted loss per share \* | 8189674 | 4041052 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**DATASEA INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

**THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024**

**(UNAUDITED)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | |
|  | **Shares** | **Amount** | **Additional <br> paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated <br> other<br> comprehensive**<br>**income** | **Total<br> Company's<br> stockholders'**<br>**equity** | **Noncontrolling**<br>**interest** |
| Balance at July 1, 2025 | 8128127 | $8128 | $47331510 | $(44526016) | $138586 | $2952208 | $(10013) |
| Net loss |  | - | - | (201026) | - | (201026) | (133) |
| Shares issued for stock compensation expense | 95377 | 96 | 186054 | - | - | 186150 | - |
| Shares issued for paying officers' accrued salary and bonus | 33312 | 33 | 64924 | - | - | 64957 | - |
| Foreign currency translation gain (loss) | - | - | - | - | 21384 | 21384 | (75) |
| Balance at September 30, 2025 | 8256816 | $8257 | $47582488 | $(44727042) | $159970 | $3023673 | $(10221) |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | | |
|  | **Shares** | **Amount** | **Additional <br> paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated <br> other<br> comprehensive**<br>**income** | **Total <br> Company's<br> stockholders**'<br>**equity** | **Noncontrolling**<br>**interest** |
| Balance at July 1, 2024 | 3589620 | $3590 | $38957780 | $(39440322) | $242208 | $(236745) | $(71533) |
| Net loss |  | - | - | (1961989) | - | (1961989) | (8680) |
| Noncontrolling interest disposal at closure of the entity |  | - | - | - | - | - | 1391 |
| Issuance of common stock for equity financing | 692308 | 692 | 1958059 | - | - | 1958751 | - |
| Issuance of common stock for equity financing - related parties | 1932224 | 1932 | 3978449 | - | - | 3980381 | - |
| Shares issued for stock compensation expense | 75000 | 75 | 374925 | - | - | 375000 | - |
| Shares issued for purchase of intangible assets from the Company's major shareholders | 797850 | 798 | (798) | - | - | - | - |
| Foreign currency translation gain (loss) | - | - | - | - | (13154) | (13154) | 41306 |
| Balance at September 30, 2024 | 7087002 | $7087 | $45268415 | $(41402311) | $229054 | $4102244 | $(37516) |

---

The accompanying notes are an integral part of these consolidated financial statements.

**DATASEA INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | **THREE MONTHS ENDED <br> SEPTEMBER 30,** | **THREE MONTHS ENDED <br> SEPTEMBER 30,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Loss including noncontrolling interest | $(201159) | $(1970669) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile loss including noncontrolling interest to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Bad debt expense (reversal) | - | (7026) |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 464751 | 85635 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of fixed assets | 63 | 2815 |
| &nbsp;&nbsp;&nbsp;Operating lease expense | 39600 | 38932 |
| &nbsp;&nbsp;&nbsp;Stock compensation expense | 251107 | 375000 |
| &nbsp;&nbsp;&nbsp;Changes in assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 211824 | 701384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | 7596 | (51064) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Value-added tax prepayment | 52581 | (18760) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 72889 | (384177) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (84799) | (794504) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unearned revenue | 28888 | 1242820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other payables | 74927 | 79650 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment on operating lease liabilities | (38969) | (32691) |
| Net cash provided by (used in) operating activities | 879299 | (732655) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of property and equipment | - | (2752) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of intangible assets | (1551009) | (44768) |
| Net cash used in investing activities | (1551009) | (47520) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from (repayment to) related parties | 90683 | (426944) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from loan payables | 701339 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of loan payables | - | (40815) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net proceeds from issuance of common stock | - | 1958751 |
| Net cash provided by financing activities | 792022 | 1490992 |
| **Effect of exchange rate changes on cash** | 4145 | 45527 |
| **Net increase in cash** | 124457 | 756344 |
| **Cash, beginning of period** | 620807 | 181262 |
| **Cash, end of period** | $745264 | $937606 |
| **Supplemental disclosures of cash flow information:** |  |  |
| Cash paid for interest | $16110 | $9214 |
| Cash paid for income tax | $- | $- |
| Supplemental disclosures of non-cash financing activities: |  |  |
| Right-of-use assets obtained in exchange for operating lease liabilities | $77966 | $197347 |
| Shares issued for paying officers' accrued salary and bonus | $64957 | $- |

---

The accompanying notes are an integral part of these consolidated financial statements.

**DATASEA INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**SEPTEMBER 30, 2025 (UNAUDITED) AND JUNE 30, 2025** 

**NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS**

Datasea Inc. (the "Company," "Datasea," or "we," "us," "our") was incorporated in the State of Nevada on September 26, 2014 under the name Rose Rock Inc. and changed its name to Datasea Inc. on May 27, 2015. On May 26, 2015, the Company's founder, Xingzhong Sun, sold 6,666,667 shares of common stock, par value $0.001 per share, of the Company (the "Common Stock") to Zhixin Liu ("Ms. Liu"), an owner of Shuhai Skill (HK) as defined below. On October 27, 2016, Mr. Sun sold his remaining 1,666,667 shares of Common Stock of the Company to Ms. Liu. As a holding company with no material operations, the Company conducts a majority of its business activities through organizations established in the People's Republic of China ("PRC), primarily by variable interest entity (the "VIE"). The Company does not have any equity ownership of its VIE, instead it controls and receives economic benefits of the VIE's business operations through certain contractual arrangements.

On October 29, 2015, the Company entered into a share exchange agreement (the "Exchange Agreement") with the shareholders (the "Shareholders") of Shuhai Information Skill (HK) Limited ("Shuhai Skill (HK)"), a limited liability company ("LLC") incorporated on May 15, 2015 under the laws of the Hong Kong Special Administrative Region of the People's Republic of China (the "PRC"). Pursuant to the terms of the Exchange Agreement, the Shareholders, who own 100% of Shuhai Skill (HK), transferred all of the issued and outstanding ordinary shares of Shuhai Skill (HK) to the Company for 6,666,667 shares of Common Stock, causing Shuhai Skill (HK) and its wholly owned subsidiaries, Tianjin Information Sea Information Technology Co., Ltd. ("Tianjin Information" or "WOFE"), an LLC incorporated under the laws of the PRC, and Harbin Information Sea Information Technology Co., Ltd., an LLC incorporated under the laws of the PRC, to become wholly-owned subsidiaries of the Company; and Shuhai Information Technology Co., Ltd., also an LLC incorporated under the laws of the PRC ("Shuhai Beijing"), to become a VIE of the Company through a series of contractual agreements between Shuhai Beijing and Tianjin Information. The transaction was accounted for as a reverse merger, with Shuhai Skill (HK) and its subsidiaries being the accounting survivor. Accordingly, the historical financial statements presented are those of Shuhai Skill (HK) and its consolidated subsidiaries and VIE.

Following the Share Exchange, the Shareholders, Zhixin Liu and her father, Fu Liu, owned approximately 82% of the Company's outstanding shares of Common Stock. As of October 29, 2015, there were 18,333,333 shares of Common Stock issued and outstanding, 15,000,000 of which were beneficially owned by Zhixin Liu and Fu Liu.

After the Share Exchange, the Company, through its consolidated subsidiaries and VIE provide smart security solutions primarily to schools, tourist or scenic attractions and public communities in China.

On October 16, 2019, Shuhai Beijing incorporated a wholly owned subsidiary, Heilongjiang Xunrui Technology Co. Ltd. ("Xunrui"), which develops and markets the Company's smart security system products.

On December 3, 2019, Shuhai Beijing formed Nanjing Shuhai Equity Investment Fund Management Co. Ltd. ("Shuhai Nanjing"), a joint venture in PRC, in which Shuhai Beijing holds a 99% ownership interest with the remaining 1% held by Nanjing Fanhan Zhineng Technology Institute Co. Ltd, an unrelated party that was supported by both Nanjing Municipal Government and Beijing University of Posts and Telecommunications. Shuhai Nanjing was formed for gaining the easy access to government funding and private financing for the Company's new technology development and new project initiation.

In January 2020, the Company acquired ownership in three entities for no consideration from the Company's management, which set up such entities on the Company's behalf (described below).

On January 3, 2020, Shuhai Beijing entered into two equity transfer agreements (the "Transfer Agreements") with the President, and a Director of the Company. Pursuant to the Transfer Agreements, the Director and the President, each agreed, for no consideration, to (i) transfer his 51% and 49% respective ownership interests, in Guozhong Times (Beijing) Technology Ltd. ("Guozhong Times") to Shuhai Beijing; and (ii) transfer his 51% and 49% respective ownership interests, in Guohao Century (Beijing) Technology Ltd. ("Guohao Century") to Shuhai Beijing. Guozhong Times and Guohao Century were established to develop technology for electronic products, intelligence equipment and accessories, and provide software and information system consulting, installation and maintenance services.

On January 7, 2020, Shuhai Beijing entered into another equity transfer agreement with the President, the Director described above and an unrelated individual. Pursuant to this equity transfer agreement, the Director, the President and the unrelated individual each agreed to transfer his 51%, 16%, 33% ownership interests, in Guozhong Haoze (Beijing) Technology Ltd. ("Guozhong Haoze") to Shuhai Beijing for no consideration. Guozhong Haoze was formed to develop and market the smart security system products.

On August 17, 2020, Beijing Shuhai formed a new wholly-owned subsidiary Shuhai Jingwei to expand the security oriented systems developing, consulting and marketing business overseas.

On November 16, 2020, Guohao Century formed Hangzhou Zhangqi Business Management Limited Partnership ("Zhangqi") with ownership of 99% as an ordinary partner. In November 2023, the Company dissolved Zhangqi as a result of disposal of Zhuangxun in July 2023, Zhangqi had no operations but only serves as a holding company of Zhagnxun. In November 2023, the Company dissolved Zhangqi.

On November 19, 2020, Guohao Century formed a 51% owned subsidiary Hangzhou Shuhai Zhangxun Information Technology Co., Ltd ("Zhangxun") for research and development of 5G Multimodal communication technology. Zhangqi owns 19% of Zhangxun; accordingly, Guohao Century ultimately owns 69.81% of Zhangxun. On December 20, 2022, Guohao Century acquired a 30% ownership interests of Zhangxun from Zhengmao Zhang at the price of $0.15 (RMB 1.00). After the transaction, Guohao Century owns 81% of Zhangxun, and Zhangqi owns 19% of Zhangxun; On February 15, 2023, Guohao Century acquired a 9% ownership interests of Zhangxun from the Zhangqi at the price of $130,434 (RMB 900,000). After the transaction, Guohao Century owns 90% of Zhangxun, and Zhangqi owns 10% of Zhangxun; as a result, Guohao Century ultimately owns 99.9 % of Zhangxun. On July 20, 2023, the Company sold Zhangxun to a third party for RMB 2 ($0.28).

On February 16, 2022, Shuhai Jingwei formed Shenzhen Acoustic Effect Management Limited Partnership ("Shenzhen Acoustic MP") with 99% ownership interest, the remaining 1% ownership interest is held by a third party.

On February 16, 2022, Shuhai Jingwei formed Shuhai (Shenzhen) Acoustic Effect Technology Co., Ltd ("Shuhai Shenzhen Acoustic Effect"), a PRC company, in which Shuhai Jingwei holds 60% ownership interest, 10% ownership interest is held by Shenzhen Acoustic MP, and remaining 30% ownership interest is held by a third party. On October 18, 2022, Shuhai Jingwei acquired 30% ownership interest of Shuhai Acoustic Effect, a PRC company from the third party at the price of approximately $0.15 (RMB 1.00). After the transaction, Shuhai Jingwei owns 90% of Shuhai Shenzhen Effect, and Shenzhen Acoustic MP still owns 10% of Shuhai Shenzhen Effect; accordingly, Shuhai Jingwei ultimately owns 100% of Shuhai Acoustic Effect. The book value of 30% interest acquired from the third party was $(26,993) due to its accumulated deficit.

On March 4, 2022, Shuhai Beijing formed Beijing Yirui Business Management Development Center ("Yirui") with 99% ownership interest as an ordinary partner, the remaining 1% ownership interest is held by Zhixin Liu.

On March 4, 2022, Shuhai Beijing formed Beijing Yiying Business Management Development Center ("Yiying") with 99% ownership interest as an ordinary partner, the remaining 1% ownership interest is held by Zhixin Liu.

On July 31, 2023, Datasea established a wholly owned subsidiary Datasea Acoustic, LLC ("Datasea Acoustic") in the state of Delaware for expanding the products to the market in North America.

On October 24, 2023, Guozhong Times formed Shuhai Yiyun (Shenzhen) digital technology Co, Ltd ("Yiyun") with 66% ownership interest, the remaining 34% ownership interest is held by a third party. As of the report date, Yiyun did not have any operations.

On January 10, 2024, the Company's Board of Directors approved a reverse stock split of its authorized and issued and outstanding shares of common stock, par value $0.001 per share (the "Common Stock"), at a ratio of 1-for-15, which become legal effective on January 19, 2024. After the reverse stock split, every 15 issued and outstanding shares of the Company's Common Stock was converted automatically into one share of the Company's Common Stock without any change in the par value per share. The total number of shares of Common Stock authorized for issuance was then reduced by a corresponding proportion from 375,000,000 shares to 25,000,000 shares of Common Stock. All share amounts have been retroactively restated to reflect the reverse stock split for all periods presented.

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**GOING CONCERN**

The accompanying consolidated financial statements ("CFS") were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the three months ended September 30, 2025 and 2024, the Company had a net loss of approximately $0.20 million and $1.96 million, respectively. The Company had an accumulated deficit of approximately $44.73 million as of September 30, 2025, and cash flow from operating activities of approximately $0.88 million and $(0.73) million for the three months ended September 30, 2025 and 2024, respectively. The historical operating results including recurring losses from operations raise substantial doubt about the Company's ability to continue as a going concern.

If deemed necessary, management could seek to raise additional funds by way of admitting strategic investors, or private or public offerings, or by seeking to obtain loans from banks or others, to support the Company's research and development ("R&D"), procurement, marketing and daily operation. While management of the Company believes in the viability of its strategy to generate sufficient revenues and its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern depends upon the Company's ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations. If the Company is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay, reduce or cease its operations.

**BASIS OF PRESENTATION AND CONSOLIDATION**

The CFS were prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the SEC regarding CFS. The accompanying CFS include the financial statements of the Company and its 100% owned subsidiaries Shuhai Information Skill (HK) Limited ("Shuhai Skill (HK)"), and Tianjin Information Sea Information Technology Co., Ltd. ("Tianjin Information"), and its VIE, Shuhai Beijing, and Shuhai Beijing's 100% owned subsidiaries – Heilongjiang Xunrui Technology Co. Ltd. ("Xunrui"), Guozhong Times (Beijing) Technology Ltd. ("Guozhong Times"), Guohao Century (Beijing) Technology Ltd. ("Guohao Century"), Guozhong Haoze, and Shuhai Jingwei (Shenzhen) Information Technology Co., Ltd. ("Jingwei"), and Shuhai Beijing's 99% owned subsidiary Nanjing Shuhai Equity Investment Fund Management Co. Ltd. ("Shuhai Nanjing"). During the year ended June 30, 2022, the Company incorporated two new subsidiaries Shuhai (Shenzhen) Acoustic Effect Technology Co., Ltd ("Shuhai Acoustic") and Shenzhen Acoustic Effect Management Partnership ("Shenzhen Acoustic MP"). All significant inter-company transactions and balances were eliminated in consolidation. The chart below depicts the corporate structure of the Company as of September 30, 2025.

![](image_001.jpg)

**VARIABLE INTEREST ENTITY**

Pursuant to the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Section 810, "Consolidation" ("ASC 810"), the Company is required to include in its CFS, the financial statements of Shuhai Beijing, its VIE. ASC 810 requires a VIE to be consolidated if the Company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE's residual returns. A VIE is an entity in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards of such entity, and therefore the Company is the primary beneficiary of such entity.

Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE's economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The reporting entity's determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de - facto agents, have the unilateral ability to exercise those rights. Shuhai Beijing's actual stockholders do not hold any kick-out rights that affect the consolidation determination.

Through the VIE agreements, Tianjin Information, an indirect subsidiary of Datasea is deemed the primary beneficiary of Shuhai Beijing and its subsidiaries. Accordingly, the results of Shuhai Beijing and its subsidiaries were included in the accompanying CFS. Shuhai Beijing has no assets that are collateral for or restricted solely to settle their obligations. The creditors of Shuhai Beijing do not have recourse to the Company's general credit.

***VIE Agreements***

*Operation and Intellectual Property Service Agreement* – The Operation and Intellectual Property Service Agreement allows Tianjin Information Sea Information Technology Co., Ltd ("WFOE") to manage and operate Shuhai Beijing and collect an operating fee equal to Shuhai Beijing's pre-tax income, per month. If Shuhai Beijing suffers a loss and as a result does not have pre-tax income, such loss shall be carried forward to the following month to offset the operating fee to be paid to WFOE if there is pre-tax income of Shuhai Beijing the following month.

Furthermore, if Shuhai Beijing cannot pay off its debts, WFOE shall pay off the debt on Shuhai Beijing's behalf. If Shuhai Beijing's net assets fall lower than its registered capital balance, WFOE shall provide capital for Shuhai Beijing to make up for the deficit.

Under the terms of the Operation and Intellectual Property Service Agreement, Shuhai Beijing entrusts Tianjin Information to manage its operations, manage and control its assets and financial matters, and provide intellectual property services, purchasing management services, marketing management services and inventory management services to Shuhai Beijing. Shuhai Beijing and its stockholders shall not make any decisions nor direct the activities of Shuhai Beijing without Tianjin Information's consent.

*Stockholders' Voting Rights Entrustment Agreement* – Tianjin Information has entered into a stockholders' voting rights entrustment agreement (the "Entrustment Agreement") under which Zhixin Liu and Fu Liu (collectively the "Shuhai Beijing Stockholders") have vested their voting power in Shuhai Beijing to Tianjin Information or its designee(s). The Entrustment Agreement does not have an expiration date, but the parties can agree in writing to terminate the Entrustment Agreement. Zhixin Liu, is the Chairman of the Board, President, CEO of DataSea and Corporate Secretary, and Fu Liu, a Director of DataSea (Fu Liu is the father of Zhixin Liu).

*Equity Option Agreement* – the Shuhai Beijing Stockholders and Tianjin Information entered into an equity option agreement (the "Option Agreement"), pursuant to which the Shuhai Beijing Stockholders have granted Tianjin Information or its designee(s) the irrevocable right and option to acquire all or a portion of Shuhai Beijing Stockholders' equity interests in Shuhai Beijing for an option price of RMB0.001 for each capital contribution of RMB1.00. Pursuant to the terms of the Option Agreement, Tianjin Information and the Shuhai Beijing Stockholders have agreed to certain restrictive covenants to safeguard the rights of Tianjin Information under the Option Agreement. Tianjin Information agreed to pay RMB1.00 annually to Shuhai Beijing Stockholders to maintain the option rights. Tianjin Information may terminate the Option Agreement upon prior written notice. The Option Agreement is valid for a period of 10 years from the effective date and renewable at Tianjin Information's option.

*Equity Pledge Agreement* – Tianjin Information and the Shuhai Beijing Stockholders entered into an equity pledge agreement on October 27, 2015 (the "Equity Pledge Agreement"). The Equity Pledge Agreement serves to guarantee the performance by Shuhai Beijing of its obligations under the Operation and Intellectual Property Service Agreement and the Option Agreement. Pursuant to the Equity Pledge Agreement, Shuhai Beijing Stockholders have agreed to pledge all of their equity interests in Shuhai Beijing to Tianjin Information. Tianjin Information has the right to collect any and all dividends, bonuses and other forms of investment returns paid on the pledged equity interests during the pledge period. Pursuant to the terms of the Equity Pledge Agreement, the Shuhai Beijing Stockholders have agreed to certain restrictive covenants to safeguard the rights of Tianjin Information. Upon an event of default or certain other agreed events under the Operation and Intellectual Property Service Agreement, the Option Agreement and the Equity Pledge Agreement, Tianjin Information may exercise the right to enforce the pledge.

As of this report date, there were no dividends paid from the VIE to the U.S. parent company or the shareholders of the Company. There has been no change in facts and circumstances to consolidate the VIE.

The following financial statement amounts and balances of the VIE were included in the accompanying CFS as of September 30, 2025 and June 30, 2025, and for the three months ended September 30, 2025 and 2024, respectively.

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| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **June 30,<br> 2025** |
| Cash | $679727 | $580240 |
| Accounts receivable | 1171918 | 585085 |
| Inventory | 200687 | 206610 |
| Other current assets | 335326 | 362467 |
| Total current assets | 2387658 | 1734402 |
| Property and equipment, net | 17375 | 18640 |
| Intangible asset, net | 1921415 | 503000 |
| Right-of-use asset, net | 330909 | 284345 |
| Total non-current assets | 2269699 | 805985 |
| Total assets | $4657357 | $2540387 |
| Accounts payable | $116284 | $115772 |
| Accrued liabilities and other payables | 832814 | 804862 |
| Lease liability | 163373 | 122761 |
| Loans payable | 3096193 | 2374767 |
| Other current liabilities | 182662 | 150792 |
| Total current liabilities | 4391326 | 3568954 |
| Lease liability - noncurrent | 173057 | 166436 |
| Total non-current liabilities | 173057 | 166436 |
| Total liabilities | $4564383 | $3735390 |

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| | | |
|:---|:---|:---|
|  | **For the<br> Three Months<br> Ended<br> September 30,<br> 2025** | **For the<br> Three Months<br> Ended<br> September 30,<br> 2024** |
| Revenues | $13813551 | $21081094 |
| Gross profit | $1169177 | $238134 |
| Net loss | $413389 | $452170 |

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**USE OF ESTIMATES** 

The preparation of CFS in conformity with U.S. GAAP requires management to make 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 periods. Actual results could differ from those estimates. The significant areas requiring the use of management estimates include, but are not limited to, the estimated useful life and residual value of property, plant and equipment, provision for staff benefits, recognition and measurement of deferred income taxes and the valuation allowance for deferred tax assets. Although these estimates are based on management's knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to the CFS.

**CONTINGENCIES**

Certain conditions may exist as of the date the CFS 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's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company's CFS.

If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. As of September 30, 2025 and June 30, 2025, the Company has no such contingencies.

**CASH**

Cash includes cash on hand and demand deposits that are highly liquid in nature and have original maturities when purchased of three months or less.

**ACCOUNTS RECEIVABLE**

The Company's policy is to maintain an allowance for potential credit losses on accounts receivable. The Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit losses on financial instruments later codified as Accounting Standard codification ("ASC") 326 ("ASC 326"), on July 1, 2023. The guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses. There was no significant impact on the date of adoption of ASC 326.

Under ASC 326, accounts receivable are recorded at the invoiced amount, net of allowance for expected credit losses. The Company's primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the accounts receivable balance to the estimated net realizable value. The Company used a combination of method Aging schedule and Roll-rate method to assess the reasonability and adequacy of current allowance.

In establishing any required allowance, management considers historical losses adjusted for current market conditions, the Company's customers' financial condition, the amount of any receivables in dispute, the current receivables aging, current payment terms and expectations of forward-looking loss estimates.

All provisions for the allowance for doubtful accounts are included as a component of general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified. Subsequent recoveries of amounts previously written off are credited to earnings in the period recovered. As of September 30, 2025 and June 30, 2025, the Company had a $0 bad debt allowance for credit losses.

**INVENTORY**

Inventory is comprised principally of intelligent temperature measurement face recognition terminal and identity information recognition products, and is valued at the lower of cost or net realizable value. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances. There were $154,049 and $152,907 allowances for slow-moving and obsolete inventory (mainly for Smart-Student Identification cards) as of September 30, 2025 and June 30, 2025, respectively.

**PROPERTY AND EQUIPMENT**

Property and equipment are stated at cost, less accumulated depreciation. Major repairs and improvements that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method over estimated useful lives as follows:

Furniture and fixtures 3-5 years <br> Office equipment 3-5 years <br> Vehicles 5 years

Leasehold improvements are depreciated utilizing the straight-line method over the shorter of their estimated useful lives or remaining lease term.

**INTANGIBLE ASSETS**

Intangible assets with finite lives are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made to take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of the Company's intangible assets are subject to amortization. In accordance with the Generally Accepted Accounting Principles (ASC) 360-10-35-21 of the United States, no impairment of intangible assets has been identified as of the balance sheet date.

Intangible assets include licenses, certificates, patents and other technology and are amortized over their useful life of three years.

**FAIR VALUE ("FV") OF FINANCIAL INSTRUMENTS**

The carrying value of the Company's short-term financial instruments, such as cash, accounts receivable, prepaid expenses, accounts payable, unearned revenue, accrued expenses and other payables approximates their FV due to their short maturities. FASB ASC Topic 825, "Financial Instruments," requires disclosure of the FV of financial instruments held by the Company. The carrying amounts reported in the balance sheets for current liabilities qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and the current market rate of interest.

**FAIR VALUE MEASUREMENTS AND DISCLOSURES**

FASB ASC Topic 820, "Fair Value Measurements," defines FV, and establishes a three-level valuation hierarchy for disclosures that enhances disclosure requirements for FV measures. The three levels are defined as follows:

● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 inputs to the valuation methodology include other than those in level 1 quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

● Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement.

As of September 30, 2025 and June 30, 2025, the Company did not identify any assets or liabilities required to be presented on the balance sheet at FV on a recurring basis.

**IMPAIRMENT OF LONG-LIVED ASSETS**

In accordance with FASB ASC 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets", long-lived assets such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or other changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset.

If such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its FV. FV generally is determined using the asset's expected future undiscounted cash flows or market value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or FV less cost to sell. For the three months ended September 30, 2025 and 2024, there was no impairment loss recognized on long-lived assets.

**UNEARNED REVENUE**

The Company records payments received in advance from its customers or sales agents for the Company's products as unearned revenue, mainly consisting of deposits or prepayment for 5G products from the Company's sales agencies. These orders normally are delivered based upon contract terms and customer demand, and the Company will recognize it as revenue when the products are delivered to the end customers.

**LEASES**

The Company determines if an arrangement is a lease at inception under FASB ASC Topic 842. Right of Use Assets ("ROU") and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The ROU assets include adjustments for prepayments and accrued lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise such options.

ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.

ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of September 30, 2025 and June 30, 2025.

**REVENUE RECOGNITION**

The Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606).

The core principle underlying FASB ASC 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company's revenue streams are identified when possession of goods and services is transferred to a customer.

FASB ASC Topic 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies each performance obligation.

The Company derives its revenues from product sales, software sales, and 5G messaging service contracts with its customers, with revenues recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via product sale contracts and professional service contracts, with performance obligations identified. The transaction price, such as product selling price, and the service price to the customer with corresponding performance obligations are fixed upon acceptance of the agreement. The Company recognizes revenue when it satisfies each performance obligation, the customer receives the products and passes the inspection and when professional service is rendered to the customer, collectability of payment is probable. These revenues are recognized at a point in time after each performance obligations is satisfied. Revenue is recognized net of returns and value-added tax charged to customers

The following table shows the Company's revenue by revenue sources:

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| | | |
|:---|:---|:---|
|  | **For the Three <br> Months Ended<br> September 30,<br> 2025** | **For the Three<br> Months Ended<br> September 30,<br> 2024** |
| **5G AI Multimodal communication** | $13325311 | $21075584 |
| &nbsp;&nbsp;&nbsp;5G AI Multimodal communication | 12407655 | 21075584 |
| &nbsp;&nbsp;&nbsp;5G AI Multimodal new media marketing | 913063 | - |
| &nbsp;&nbsp;&nbsp;5G AI digital technical service | 4593 | - |
| **Acoustic Intelligence Business** | 487949 | 2464 |
| &nbsp;&nbsp;&nbsp;Ultrasonic Sound Air Disinfection Equipment | 479407 | 2464 |
| &nbsp;&nbsp;&nbsp;Upgraded Sonic Sterilization and Purification Guardian | 2486 | - |
| &nbsp;&nbsp;&nbsp;Sleep Monitor | 6056 | - |
| **Smart City business** | - | 3046 |
| &nbsp;&nbsp;&nbsp;Smart community | - | 3046 |
| **Other** | 291 | - |
| **Total revenue** | $13813551 | $21081094 |

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**SEGMENT INFORMATION**

FASB ASC Topic 280, "Segment Reporting," requires use of the "management approach" model for segment reporting. The management approach model is based on the method a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Management determined the Company's current operations constitutes a single reportable segment in accordance with ASC 280. The Company's only business and industry segment is high technology and advanced information systems ("TAIS"). TAIS includes smart city solutions that meet the security needs of residential communities, schools and commercial enterprises, and 5G messaging services including 5G SMS, 5G MMCP and 5G multi-media video messaging.

All of the Company's customers are in the PRC and all revenues for the three months ended September 30, 2025 and 2024 were generated from the PRC. All identifiable assets of the Company are located in the PRC. Accordingly, no geographical segments are presented.

**INCOME TAXES**

The Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets also include the prior years' net operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

The Company follows FASB ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

Under the provisions of FASB ASC Topic 740, when tax returns are filed, it is likely some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of income. As of September 30, 2025 and June 30, 2025, the Company had no unrecognized tax positions and no charges during the three months ended September 30, 2025 and 2024, and accordingly, the Company did not recognize any interest or penalties related to unrecognized tax benefits. The Company files a U.S. and PRC income tax return. With few exceptions, the Company's U.S. income tax returns filed for the years ending on June 30, 2018 and thereafter are subject to examination by the relevant taxing authorities; the Company uses calendar year-end for its PRC income tax return filing, PRC income tax returns filed for the years ending on December 31, 2019 and thereafter are subject to examination by the relevant taxing authorities.

**RESEARCH AND DEVELOPMENT EXPENSES**

Research and development expenses are expensed in the period when incurred. These costs primarily consist of cost of materials used, salaries paid for the Company's development department, and fees paid to third parties.

**NONCONTROLLING INTERESTS**

The Company follows FASB ASC Topic 810, "Consolidation," governing the accounting for and reporting of noncontrolling interests ("NCIs") in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI (previously referred to as minority interests) be treated as a separate component of equity, not as a liability, that increases and decreases in the parent's ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to non-controlling interests even when such allocation might result in a deficit balance.

The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a non-controlling interest's interests in the subsidiary's equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. On December 20, 2022, Guohao Century acquired a 30% ownership noncontrolling interests of Zhangxun from Zhengmao Zhang at the price of $0.15 (RMB 1.00). The Company recognized a paid in capital deficit of $982,014 from this purchase due to continued loss of Zhangxun. Subsequent to this purchase, the Company ultimately holds a 99.9% ownership of Zhangxun. On July 20, 2023, the Company sold Zhangxun to a third party for RMB 2 ($0.28).

Zhangqi was 1% owned by noncontrolling interest, in November 2023, the Company dissolved Zhangqi. As of December 31, 2023, Shuhai Nanjing was 1% owned by noncontrolling interest, Shenzhen Acoustic MP was 1% owned by noncontrolling interest, Shuhai Shenzhen Acoustic was 0.1% owned by noncontrolling interest, Guozhong Times was 0.091% owned by noncontrolling interest, and Guozhong Haoze was 0.091% owned by noncontrolling interest. During the three months ended September 30, 2025 and 2024, the Company had net loss of $133 and $8,680 attributable to the noncontrolling interest from continuing operations, respectively.

**CONCENTRATION OF CREDIT RISK** 

The Company maintains cash in accounts with state-owned banks within the PRC. Cash in state-owned banks less than RMB500,000 ($76,000) is covered by insurance. Should any institution holding the Company's cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in these bank accounts. Cash denominated in RMB with a U.S. dollar equivalent of $687,872 and $594,722 as of September 30, 2025 and June 30, 2025, respectively, was held in accounts at financial institutions located in the PRC‚ which is not freely convertible into foreign currencies.

Cash held in accounts at U.S. financial institutions is insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations up to $250,000 per depositor. As of September 30, 2025 and June 30, 2025, cash of $55,887 and $24,487 was maintained at U.S. financial institutions. Cash was maintained at financial institutions in Hong Kong, and was insured by the Hong Kong Deposit Protection Board up to a limit of HK $500,000 ($64,000). As of September 30, 2025 and June 30, 2025, the cash balance of $1,505 and $1,598 was maintained at financial institutions in Hong Kong. The Company, its subsidiaries and VIE have not experienced any losses in such accounts and do not believe the cash is exposed to any significant risk.

**FOREIGN CURRENCY TRANSLATION AND COMPREHENSIVE INCOME (LOSS)**

The accounts of the Company's Chinese entities are maintained in RMB and the accounts of the U.S. parent company are maintained in United States dollar ("USD"). The financial statements of the Chinese entities were translated into USD in accordance with FASB ASC Topic 830 "Foreign Currency Matters." All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders' equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with FASB ASC Topic 220, "Comprehensive Income." Gains and losses resulting from foreign currency transactions are reflected in the statements of operations.

The Company follows FASB ASC Topic"220-10, "Comprehensive Income (loss)." Comprehensive income (loss) comprises net income (loss) and all changes to the statements of changes in stockholders' equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders.

The exchange rates used to translate amounts in RMB to USD for the purposes of preparing the CFS were as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **September 30,** | **September 30,** | **September 30,** | **September 30,** | **June 30,** | **June 30,** |
|  | **2025** | **2025** | **2024** | **2024** | **2025** | **2025** |
| Period-end date USD: RMB exchange rate |  | 7.1050 |  | 7.0074 |  | 7.1586 |
| Average USD for the reporting period: RMB exchange rate |  | 7.1292 |  | 7.1169 |  | 7.1599 |

---

**BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (EPS)** 

Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to have been exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

**STATEMENT OF CASH FLOWS** 

In accordance with FASB ASC Topic 230, "Statement of Cash Flows," cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts shown on the statement of cash flows may not necessarily agree with changes in the corresponding asset and liability on the balance sheet.

**RECENT ACCOUNTING PRONOUNCEMENTS**

In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements — Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative." The ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The ASU was issued in response to the SEC's August 2018 final amendments in Release No. 33-10532, Disclosure Update and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated. The guidance in ASU 2023-06 is intended to align GAAP requirements with those of the SEC and to facilitate the application of GAAP for all entities. The amendments introduced by ASU 2023-06 are effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. If, by June 30, 2027, the SEC has not removed the applicable requirements from its existing regulations, the pending content of the associated amendment will be removed from the ASC and will not become effective for any entities. Early adoption is permitted. The adoption of ASU 2023-06 is not expected to have a material impact on the Company's consolidated financial statements or related disclosures.

On November 4, 2024, the FASB issued an ASU No. 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024 03") to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions (such as cost of sales; selling, general, and administrative expenses; and research and development). The amendments in the ASU require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1.Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same tabular disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date ("ASU 2025-01"). The amendments, as clarified by ASU 2025-01, are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact that ASU 2024-03 will have on its consolidated financial statements and related disclosures.

In January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in annual reporting period. The FASB's intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that the adoption of ASU 2025-01 will have on its consolidated financial statement presentation or disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's consolidated financial position, statements of comprehensive income and cash flows.

**NOTE 3 – PROPERTY AND EQUIPMENT**

Property and equipment are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **June 30,<br> 2025** |
| Furniture and fixtures | $48011 | $47655 |
| Vehicle | 493 | 489 |
| Office equipment | 234376 | 232700 |
| &nbsp;&nbsp;&nbsp;Subtotal | 282880 | 280844 |
| Less: accumulated depreciation | 258890 | 255284 |
| &nbsp;&nbsp;&nbsp;Total | $23990 | $25560 |

---

Depreciation for the three months ended September 30, 2025 and 2024 was $1,692 and $5,463, respectively.

**NOTE 4 – INTANGIBLE ASSETS**

Intangible assets are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **September 30,<br> 2024** |
| Software registration or using right | $3525973 | $1963705 |
| Patent | 3891653 | 3862786 |
| Software and technology development costs | 84921 | 84291 |
| Value-added telecommunications business license | 15634 | 15518 |
| &nbsp;&nbsp;&nbsp;Subtotal | 7518181 | 5926300 |
| Less: Accumulated amortization | 2904489 | 2430316 |
| &nbsp;&nbsp;&nbsp;Total | $4613692 | $3495984 |

---

Software registration or using right represented the purchase cost of customized software with its source code from third party software developer.

Software and technology development cost represented development costs incurred internally after the technological feasibility was established and a working model was produced and was recorded as intangible asset.

On October 14, 2024, Tianjin Information, as the purchaser, entered into a patent purchase agreement with Hangzhou Liuhuan Technology Limited Company ("Liuhuan"), as the seller, for the acquisition of an audio playback system based on voltage following. The total purchase price is RMB 14,900,000 ($2.1 million), inclusive of a 6% VAT, and will be amortized over the three years.

On October 14, 2024, Tianjin Information, as the purchaser, entered into another patent purchase agreement with Hangzhou Liuhuan Technology Limited Company ("Liuhuan"), as the seller, for the acquisition of a B-ultrasound image target detection method and B-ultrasound scanner. The total purchase price is RMB 14,300,000 ($2.0 million), inclusive of a 6% VAT, and will be amortized over the three years.

On July 1, 2025, Shuhai Information and Beijing Shuhai Culture Media Co., Ltd. entered into four Software Copyrights Transfer Agreements. According to the terms of the agreements, Beijing Shuhai Culture Media Co., Ltd. transferred ownership of four software copyrights to Shuhai Information as follows:

1) Ruan Zhu Deng Ji No. 16295142, an AI multimodal order analysis system 1.0, with a transfer price of RMB 2.9 million (approximately $0.41 million).

2) Ruan Zhu Deng Ji No.16295118, a multimodal marketing program management system 1.0, with a transfer price of RMB 3.0 million (approximately $0.42 million).

3) Ruan Zhu Deng Ji No.16295075, a service provider's marketing service system, with a transfer price of RMB 2.8 million (approximately $0.39 million).

4) Ruan Zhu Deng Ji No.16295048, a consumer comprehensive labeling system, with a transfer price of RMB 2.7 million (approximately $0.38 million).

The total purchase price is RMB 11.4 million ($1.6 million), inclusive of a 6% VAT, and will be amortized over three years.

Amortization for the three months ended September 30 30, 2025 and 2024 was $463,059 and $80,172, respectively. The amortization expense for the next five years as of September 30, 2025 will be $2,053,047, $2,075,736, $484,909, $0 and $0.

**NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepaid expenses and other current assets consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **June 30,<br> 2025** |
| Security deposit | $64579 | $57395 |
| Prepaid expenses | 415145 | 489365 |
| Other receivables – Heqin | 461614 | 458190 |
| Advance to third party individuals, no interest, payable upon demand | 32705 | 32860 |
| Others | 28486 | 29873 |
| Total | 1002529 | 1067683 |
| Less: allowance for other receivables | 487650 | 484033 |
| &nbsp;&nbsp;&nbsp;Total | $514879 | $583650 |

---

As of September 30, 2025, prepaid expenses mainly consisted of input VAT for purchasing patents of $320,241 prepaid telecommunication service fee (mainly including SMS and MMS services) of $36,384, prepaid rent and property management fees of $3,479 and other prepayments of $55,041.

As of June 30, 2025, prepaid expenses mainly consisted of input VAT for purchasing patents of $230,887, prepayment of 5G messaging service fee recharge of $9,633, prepaid professional fee of $2,225, prepayment for inventory purchase of $145,868, prepaid rent and property management fee of $5,841, prepaid promotion service fee of $58,671 and other prepayments of $36,240.

<u>Other receivables – Heqin</u>

On February 20, 2020, Guozhong Times entered an Operation Cooperation Agreement with an unrelated company, Heqin (Beijing) Technology Co, Ltd. ("Heqin"), for marketing and promoting the sale of Face Recognition Payment Processing equipment and related technical support, and other products of the Company including Epidemic Prevention and Control Systems. Heqin has a sales team which used to work with Fortune 500 companies and specializes in business marketing and sales channel establishment and expansion, especially in education industry and public area.

The cooperation term is from February 20, 2020 through March 1, 2023; however, Heqin is the exclusive distributor of the Company's face Recognition Payment Processing products for the period to July 30, 2020. During March and April 2020, Guozhong Times provided operating funds to Heqin, together with a credit line provided by Guozhong Times to Heqin from May 2020 through August 2020, for a total borrowing of RMB 10 million ($1.41 million) for Heqin's operating needs. As of March 31, 2023, Guozhong Times had an outstanding receivable of RMB 3.53 million ($513,701) from Heqin and was recorded as other receivables. The Company would not charge Heqin any interest, except for two loans of RMB 200,000 ($28,250) each, due on June 30, 2020 and August 15, 2020, respectively, for which the Company charges 15% interest if Heqin did not repay by the due date.

No profits will be allocated and distributed before full repayment of the borrowing. After Heqin pays in full the borrowing, Guozhong Times and Heqin will distribute profits of sale of Face Recognition Payment Processing equipment and related technical support at 30% and 70% of the net income, respectively. The profit allocation for the sale of other products of the Company are to be negotiated. Heqin will receive certain stock reward when it reaches the preset sales target under the performance compensation mechanism.

In November 2022, Hangzhou Yuetianyun Data Technology Company Ltd ("Yuetianyun") agreed and acknowledged a Debt Transfer Agreement, wherein Heqin transferred its debt from Yuetianyun to Guozhong Times in the amount of RMB 1,543,400 ($213,596). As of September 30, 2025 and June 30, 2025, Heqin made $56,294 (through Yuetianyun) and $55,877 repayment to the Company, and the Company made a bad debt allowance of $461,614 and $458,190 as of September 30, 2025 and June 30, 2025, respectively.

**NOTE 6 – Unearned revennue**

The balance of unearned revenue was $180,195 and $150,088 as of September 30, 2025 and June 30, 2025, respectively.

The following presents the roll-forward schedule of unearned revenue for the three months ended September 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br> September 30,** | **Three Months Ended<br> September 30,** |
|  | **2025** | **2024** |
| Balance, beginning of period | $150088 | $49239 |
| Received during the period, amount excluding VAT | 12759901 | 23586381 |
| Transferred to revenue | (12731013) | (22343561) |
| Effect of foreign currency translation | 1219 | (20258 |
| Balance, end of period | $180195 | $1312317 |

---

**NOTE 7 – ACCRUED EXPENSES AND OTHER PAYABLES**

Accrued expenses and other payables consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **June 30,<br> 2025** |
| Other payables | $114453 | $50201 |
| Due to third parties | 180 | 178 |
| Security deposit | 10696 | 10617 |
| Social security payable | 434485 | 431262 |
| Salary payable – employees | 68915 | 55448 |
| Total | $628729 | $547706 |

---

Due to third parties were the short-term advance from third party individual or companies, bear no interest and payable upon demand.

**NOTE 8 – LOANS PAYABLE**

<u>Loan from banks</u>

On December 12, 2022, Beijing Shuhai entered a loan agreement with Shenzhen Qianhai WeBank Co., Ltd for the amount of RMB 900,000 ($129,225) with a term of 24 months, the interest rate was 10.728% to be paid every 20<sup>th</sup> of each month. For the three months ended September 30, 2025 and 2024, the Company made a repayment of $nil and $36,131 to this loan. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $269 interest expense for this loan. On July 15, 2024, the loan was paid in full.

On January 13, 2023, Shenzhen Jingwei entered a loan agreement with Shenzhen Qianhai WeBank Co., Ltd for the amount of RMB 100,000 ($14,552) with a term of 24 months, the interest rate was 8.6832%. For the three months ended September 30, 2025 and 2024, the Company made a repayment of $nil and $4,684 to this loan. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $37 interest expense for this loan. On July 16, 2024, the loan was paid in full.

On April 10, 2024, Guozhong Times entered a loan agreement with Bank of Beijing for the amount of RMB 500,000 ($70,158) with a term of 12 months with a preferential annual interest rate of 3.45% to be paid every 21<sup>st</sup> of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $619 interest expense for this loan. On April 9, 2025, the loan was paid in full.

On April 23, 2024, Guozhong Times entered a loan agreement with Beijing Rural Commercial Bank Economic and Technological Development Zone Branch for the amount of RMB 550,000 ($77,173) with a term of 12 months with the annual interest rate of 4.95% to be paid every 21<sup>st</sup> of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $978 interest expense for this loan. On April 23, 2025, the loan was paid in full.

On April 25, 2024, Shuhai Beijing entered a loan agreement with Industrial Bank Co., Ltd for the amount of RMB 2,000,000 ($280,631) with a term of 12 months with a preferential annual interest rate of 3.88% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $2,786 interest expense for this loan. On April 24, 2025, the loan was paid in full.

On May 28, 2024, Guozhong Times entered a loan agreement with China Everbright Bank for the amount of RMB 1,000,000 ($140,315) with a term of 12 months with the annual interest rate of 3.4% to be paid every 21<sup>st</sup> of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $1,221 interest expense for this loan. On May 27, 2025, the loan was paid in full.

On June 20, 2024, Shuhai Beijing entered a loan agreement with Bank of China for the amount of RMB 4,000,000 ($561,262) with a term of 12 months with a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $3,034 interest expense for this loan. On June 19, 2025, the loan was paid in full.

On March 31, 2025, Shuhai Beijing entered a credit line agreement with Bank of China for the amount of RMB 6,000,000 ($835,864) with a term of 12 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $4,947 and $nil interest expense for this loan. As of September 30, 2025, $844,417 was recorded as current liabilities. Liu Fu is the guarantor of this loan agreement.

On May 20, 2025, Guozhong Times entered a credit line agreement with Beijing Bank for the amount of RMB 3,000,000 ($419,076) with a term of 12 months, the credit line has a fixed annual interest rate of 3.00% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $3,226 and $nil interest expense for this loan. As of September 30, 2025, $422,208 was recorded as current liabilities.

On May 21, 2025, Guozhong Times entered a loan agreement with Beijing Rural Commercial Bank Economic and Technological Development Zone Branch for the amount of RMB 1,000,000 ($139,692) with a term of 12 months with a fixed annual interest rate of 4.95% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $1,736 and $nil interest expense for this loan. As of September 30, 2025, $140,736 was recorded as current liabilities. Liu Zhixin is the guarantor of this loan agreement.

On June 6, 2025, Shuhai Beijing entered a credit line agreement with Bank of China for the amount of RMB 1,500,000 ($210,500) with a term of 12 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. On June 11, 2025, Shuhai Beijing entered another credit line agreement with Bank of China for the amount of RMB 2,500,000 ($350,800) with a term of 12 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $3,298 and $nil interest expense for this loan. As of September 30, 2025, $562,944 was recorded as current liabilities. Liu Fu is the guarantor of these two credit lines.

On June 6, 2025, Shuhai Beijing entered a credit line agreement with Beijing Bank for the amount of RMB 3,000,000 ($419,076) with a term of 12 months, the credit line has a fixed annual interest rate of 2.70% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $2,903 and $nil interest expense for this loan. As of September 30, 2025, $422,208 was recorded as current liabilities. Liu Fu is the guarantor of this loan agreement.

On September 23, 2025, Shuhai Beijing entered a credit line agreement with China Construction Bank for the amount of RMB 3,000,000 ($422,208) with a term of 36 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.55% to be paid every 20th of each Month. As of September 30, 2025, $422,208 was recorded as long term liabilities. Liu zhixin is the guarantor of this loan agreement.

On September 30, 2025, Guozhong Times entered a loan agreement with Bank of China for the amount of RMB 2,000,000 ($281,472) with a term of 12 months with an annual interest rate of 2.35% to be paid every 21st of the third months of each quarter. As of September 30, 2025, $281,472 was recorded as current liabilities. Liu zhixin is the guarantor of this loan agreement.

The following table summarizes the loan balance as of September 30, 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Lendor** | **Loan amount** | **Borrowing date** | **Loan term Months** | **Interest rate** | **Outstanding balance** |
| Bank of China | $844417 | 3/31/2025 | 12 | 2.30% | $844417 |
| Bank of Beijing | 422208 | 5/20/2025 | 12 | 3.00% | 422208 |
| Beijing Rural Commercial Bank Economic and Technological Development Zone Branch | 140736 | 5/21/2025 | 12 | 4.95% | 140736 |
| Bank of China | 211104 | 6/6/2025 | 12 | 2.30% | 211104 |
| Bank of Beijing | 422208 | 6/6/2025 | 12 | 2.70% | 422208 |
| Bank of China | 351840 | 6/11/2025 | 12 | 2.30% | 351840 |
| China Construction Bank | 422208 | 9/23/2025 | 36 | 2.55% | 422208 |
| Bank of China | 281472 | 9/30/2025 | 12 | 2.35% | 281472 |
| Total | $3096193 |  |  |  | $3096193 |

---

**NOTE 9 – RELATED PARTY TRANSACTIONS**

On October 1, 2020, the Company's CEO (also the president) entered into an office rental agreement with Xunrui. Pursuant to the agreement, the Company rents an office in Harbin city with a total payment of RMB 163,800 ($24,050) from October 1, 2020 through September 30, 2021. On October 1, 2021, Xunrui entered a new seven-month lease for this location with the Company's CEO for total rent of RMB 94,500 ($14,690). The lease expired on April 30, 2022. On May 1, 2022, Xunrui entered a new one-year lease agreement for this office with the Company's CEO for an annual rent of RMB 235,710 ($35,120), the Company was required to pay the rent before April 30, 2023. On May 1, 2023, Xunrui entered a new one-year lease agreement for this office location with the Company's CEO for an annual rent of RMB 282,852 ($39,144), the Company is required to pay the rent before April 30, 2024. On May 1, 2024, Xunrui entered a new one-year lease agreement for this office location with the Company's CEO for an annual rent of RMB 282,852 ($39,657), the Company is required to pay the rent before April 30, 2025. On September 10, 2024, the Company signed a rent reduction agreement with the Company's CEO, reducing the annual rent for the period from May 1, 2022, to April 30, 2025, to RMB 50,000 ($7,026), The Company is required to pay the rent before April 30, 2025. On June 24, 2025, the Company paid all the outstanding rents up to April 30, 2025 to the CEO. On May 1, 2025, Xunrui entered a new one-year lease agreement for this office location with the Company's CEO for an annual rent of RMB 50,000 ($6,983), the Company is required to pay the rent before April 30, 2026. The rental expense for this office location was $1,753 and $9,963, respectively, for the three months ended September 30, 2025 and 2024.

On July 1, 2022, the Company entered a one-year lease for two cars with the Company's CEO for each car's monthly rent of RMB 18,000 ($2,636) and RMB 20,000 ($2,876), respectively. On July 1, 2023, the Company entered a new one-year lease for two cars with the Company's CEO for each car's monthly rent of RMB 18,000 ($2,491) and RMB 20,000 ($2,768), respectively. On July 1, 2024, the Company entered a new one-year lease for two cars with the Company's CEO for each car's monthly rent of RMB 18,000 ($2,524) and RMB 20,000 ($2,804), respectively. On December 10, 2024, the Company's CEO entered into an agreement with the Company to waive the payment of rental expenses of both vehicles for the outstanding balance up to June 30, 2025. The Company recorded such waive as shareholder's capital contribution to the Company because the CEO is also the major shareholder of the Company. On July 1, 2025, the Company entered a new one-year lease of one car with the Company's CEO for monthly rent of RMB 18,000 ($2,525). The rental expense for those agreements was $7,574 and $16,018, respectively, for the three months ended September 30, 2025 and 2024.

On September 1, 2022, the Company entered a six-month lease for senior officers' dormitory in Beijing for a total rent of RMB 91,200 ($13,355), payable every three months in advance. On March 1, 2023, the Company entered a new six-month lease for a total rent of RMB 91,200 ($12,621), payable every three months in advance. On September 1, 2023, the Company entered a new one-year lease for a monthly rent of RMB 12,500 ($1,743), payable every three months in advance. On September 1, 2024, the Company entered a three-month lease for a monthly rent of RMB 12,500 ($1,756), payable in advance. The lease was not renewed at maturity. The rental expense for this lease was $5,269 for the three months ended September 30, 2024, respectively.

From July 23, 2025, to September 19, 2025, the Company entered into three loan agreements with its CEO for a total amount of RMB 930,000 ($130,885), with repayment due by December 31, 2025. During the three months ended September 30, 2025, the Company repaid $49,258 of these loans.

*<u>Due to related parties</u>*

As of September 30, 2025 and June 30, 2025, the Company had amounts due to related parties of $97,157 and $6,126, respectively. These balances primarily represent expenses paid on behalf of the Company by the Chief Executive Officer. The amounts are non-interest bearing and payable on demand.

**NOTE 10 – COMMON STOCK AND WARRANTS**

***Shares Issued for Equity Financing***

On July 2, 2024, the Company entered into a securities purchase agreement, pursuant to which the Company agreed to issue and sell to an investor in a registered direct offering 179,400 shares of the Company's common stock, at a price of $3.25 per share and pre-funded warrants to purchase up to 512,908 shares of Common Stock at a price of $3.24 per share with an exercise price of $0.01 per share (the "Pre-Funded Warrants"). The Pre-Funded Warrants are exercisable upon issuance and will remain exercisable until all the Pre-Funded Warrants are exercised in full. In connection with the Offering, on July 2, 2024, the Company entered into a placement agency agreement with EF Hutton LLC (the "Placement Agent"). Pursuant to the terms of the placement agency agreement, the Company will pay the placement agent a cash fee of 6.5% of the gross proceeds the Company receives in the offering at closing. The Company also agreed to reimburse the Placement Agent at the closing of the Offering, for expenses incurred, including disbursements of its legal counsel, in an amount not to exceed an aggregate of $75,000. The closing of the offering occurred on July 3, 2024. The Pre-Funded Warrants were exercised in full as of December 31, 2024.

On September 27, 2024, the Company entered into subscription agreements with three non-U.S. investors, including Zhixin Liu, the Company's Chairman of the Board, Chief Executive Officer, President and Secretary, and Fu Liu, a Director of the Company, pursuant to which the Company agreed to sell and the investors agreed to purchase an aggregate of 1,932,224 shares of the Company's common stock, at a purchase price of $2.06 per share, which was equal to the closing price of the Common Stock on The Nasdaq Capital Market on September 26, 2024. Pursuant to the terms of the subscription agreements, each Investor must pay the purchase price for the number of shares such Investor purchased within 15 days of the effective date. As of September 30, 2024, the Company issued all the shares to three investors, and the purchase price was received in full from each investor as of October 15, 2024, representing gross proceeds in the aggregate amount of approximately $4.0 million.

***Shares Issued for Acquiring Intangible Assets from Related Parties***

On August 9, 2024, the Company entered into an intellectual property purchase agreement with Ms. Zhixin Liu, the Company's Chairwoman and CEO, pursuant to which Ms. Zhixin Liu transferred to the Company two intangible assets (software copyrights) owned by her personally. The Compensation Committee of The Board of Directors has decided to grant Zhixin Liu 398,925 restricted shares for the purchase of this software.

On August 9, 2024, the Company entered into an intellectual property purchase agreement with Mr. Fu Liu, the Company's director of board, pursuant to which Mr. Fu Liu transferred to the Company two intangible assets (software copyrights) owned by himself. The Compensation Committee of The Board of Directors has decided to grant Fu Liu 398,925 restricted shares for the purchase of this software.

The purchase was accounted for at the historical cost of the intangible assets which was $0. Fu Liu is the father of Zhixin Liu, together, they own approximately 53.93% of the Company's common stock.

On April 1, 2025, the Company entered into an intellectual property purchase agreement with Mr. Fu Liu, the Company's director of board, pursuant to which Mr. Fu Liu transferred to the Company two intangible assets (software copyrights) owned by himself. The Compensation Committee of The Board of Directors has decided to grant Fu Liu 369,403 restricted shares for the purchase of this software.

***Shares to Independent Directors as Compensation***

During the three months ended September 30, 2025 and 2024, the Company recorded $3,900 and $4,500 stock compensation expense to independent directors through the issuance of shares of the Company's common stock at the market price of the stock issuance date, pursuant to the 2018 Equity Incentive Plan.

***Shares to Officers as Compensation***

On September 24, 2021, under the 2018 Equity Inventive plan, the Company's Board of Directors granted 1,000 shares of the Company's common stock to its CEO each month and 667 shares to one of the board members each month starting from July 1, 2021, payable quarterly with the aggregate number of shares for each quarter being issued on the first day of the next quarter at a per share price of the closing price of the day prior to the issuance. On June 12, 2024, the Board of Directors approved that starting from February 1, 2024, the Company agreed to grant 15,000 shares of the Company's common stock to its CEO each month and 10,000 shares to one of the board members each month, payable quarterly with the aggregate number of shares for each quarter being issued on the first day of the next quarter at a per share price of the closing price of the day prior to the issuance. During the three months ended September 30, 2025 and 2024, the Company recorded $146,250 and $370,500 stock compensation expense to the Company's CEO and one of the board members.

***Shares to individual Consultants***

During the three months ended September 30, 2025, the Company issued 18,367 shares of the Company's common stock to its consultant for the services they provided, the share issuance was fully vested and approved by Compensation Committee (the "Committee") of the Board of Directors under the 2018 Equity Incentive Plan. The fair value of 18,367 shares at issuance date was $36,000 and was recorded as the Company's stock compensation expense.

***Shares to Officers in Lieu of Salary Payable***

On August 18, 2025, the Board of Directors approved to issue 33,312 shares to the Company's CEO and one of the board members in lieu of payment for salary payable of $64,957.

 ****

**NOTE 11 – INCOME TAXES**

The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled. The Company's PRC subsidiaries file their income tax returns online with PRC tax authorities. The Company conducts all of its businesses through its subsidiaries and affiliated entities, principally in the PRC.

The Company's U.S. parent company is subject to U.S. income tax rate of 21% and files U.S. federal income tax return. As of September 30, 2025 and June 30, 2025, the U.S. entity had net operating loss ("NOL") carry forwards for income tax purposes of $9.54 million and $9.35 million, respectively. The NOL arising in tax years beginning after 2017 may reduce 80% of a taxpayer's taxable income, and be carried forward indefinitely. However, the Coronavirus Aid, Relief and Economic Security Act ("the CARES Act") passed in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. Management believes the realization of benefits from these losses remains uncertain due to the parent Company's limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance was provided.

The Company's offshore subsidiary, Shuhai Skill (HK), a HK holding company is subject to 16.5% corporate income tax in HK. Shuhai Beijing received a tax holiday with a 15% corporate income tax rate since it qualified as a high-tech company. Tianjin Information, Xunrui, Guozhong Times, Guozhong Haoze, Guohao Century, Jingwei, Shuhai Nanjing are subject to the regular 25% PRC income tax rate.

As of September 30, 2025 and June 30, 2025, the Company has approximately $16.58 million and $18.08 million of NOL from its HK holding company, PRC subsidiaries and VIEs that expire in calendar years 2025 through 2029. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends upon the Company's future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance as of September 30, 2025 and June 30, 2025.

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three months ended September 30 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| US federal statutory rates | (21.0)% | (21.0)% |
| Tax rate difference – current provision | (0.2)% | (2.8)% |
| Permanent difference | 22.1% | 4.0% |
| Effect of PRC tax holiday | 0.9% | (2.3)% |
| Valuation allowance | (1.8)% | 22.1% |
| Effective tax rate | -% | -% |

---

The Company's net deferred tax assets as of September 30, 2025 and June 30, 2025 is as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **June 30,<br> 2025** |
| Deferred tax asset |  |  |
| &nbsp;&nbsp;&nbsp;Net operating loss | $5341512 | $5408433 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 240883 | 236991 |
| &nbsp;&nbsp;&nbsp;Bad debt expense | 121507 | 120987 |
| &nbsp;&nbsp;&nbsp;Social security and insurance accrual | 80727 | 66298 |
| &nbsp;&nbsp;&nbsp;Inventory impairment | 38346 | 38220 |
| &nbsp;&nbsp;&nbsp;ROU, net of lease liabilities | (1434) | (941) |
| Total | 5821541 | 5869988 |
| Less: valuation allowance | (5821541) | (5869988) |
| Net deferred tax asset | $- | $- |

---

**NOTE 12 – COMMITMENTS**

**Leases**

On November 8, 2023, Shuhai Beijing entered into a new lease agreement for its office in Beijing. Pursuant to the agreement, the agreement commenced on November 8, 2023 and expired on December 7, 2024, and has a monthly rent of RMB 17,358 (or $2,425). The deposit was RMB 56,762 (or $7,929). The Company received a one-month rent abatement.

On November 8, 2023, Tianjin information entered into a lease agreement for its office in Beijing. Pursuant to the agreement, the agreement commenced on November 8, 2023 and expired on December 7, 2024, and has a monthly rent of RMB 60,195 (or $8,409). The deposit was RMB 196,838 (or $27,496). The Company received a one-month rent abatement.

In August 2020, the Company entered into a lease for an office in Shenzhen City, China for three years from August 8, 2020 through August 7, 2023, with a monthly rent of RMB 209,911 ($29,651) for the first year. The rent will increase by 3% each year starting from the second year. The lease expired at maturity without renewal.

On May 10, 2023, Guo Hao Century entered into a lease for the office in Hangzhou City, China from May 10, 2023 to May 9, 2025. The security deposit is RMB 115,311 ($7,670). The quarterly rent is as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Start Date** | **End Date** | **Rent expense** | **Rent expense** |
|  |  | **RMB** | **USD** |
| 5/10/2023 | 8/9/2023 | 43786 | $6060 |
| 8/10/2023 | 11/9/2023 | 66038 | 9139 |
| 11/10/2023 | 2/9/2024 | 66038 | 9139 |
| 2/10/2024 | 5/9/2024 | 64602 | 8940 |
| 5/10/2024 | 8/9/2024 | 66038 | 9139 |
| 8/10/2024 | 11/9/2024 | 66038 | 9139 |
| 11/10/2024 | 2/9/2025 | 66038 | 9139 |
| 2/10/2025 | 5/9/2025 | 63884 | $8841 |

---

On September 30, 2023, the lease was early terminated due to the management's decision of transferring operations in Hangzhou to Beijing headquarter office for maximizing the efficiency and cost saving.

On August 16, 2024, Shenzhen Jingwei entered into a lease agreement for its office in Shenzhen. Pursuant to the agreement, the lease commenced on August 16, 2024 with expiration on August 15, 2027, and has a monthly rent of RMB 48,238 (or $6,778). The deposit was RMB 239,068 (or $33,592). The Company received a five-month rent abatement.

On November 29, 2024, Shuhai Information entered into a lease agreement for an office in Beijing City, China from March 1, 2025 to February 29, 2028, with a monthly rent of RMB 24,965 ($3,498), payable every three months in advance. For the first three months, the Company received a rent discount and only needs to pay RMB 37,447 ($3,498) rent expense. The security deposit is RMB 161,758 ($22,503).

On December 10, 2024, the Company entered into a lease agreement for an office in Beijing City, China for 15 months from December 10, 2024 through March 10, 2026, with a monthly rent of RMB 7,000 ($981), payable every three months in advance. The security deposit is RMB 7,000 ($981).

On August 18, 2025, the Company entered into a lease agreement for an office in Shenzhen City, China for 24 months from August 18, 2025 to August 17, 2027, with a monthly rent of RMB 24,000 ($3,366), payable one day immediately preceding to the due date of each rent payment period. The security deposit is RMB 48,000 ($6,732).

The Company adopted FASB ASC Topic 842 on July 1, 2019. The components of lease costs, lease term and discount rate with respect of the Company's office lease and the senior officers' dormitory lease with an initial term of more than 12 months are as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months<br> Ended<br> September 30,<br> 2025** | **Three Months<br> Ended<br> September 30,<br> 2024** |
| Operating lease expense | $39600 | $38932 |

---

---

| | | |
|:---|:---|:---|
|  | **September 30,<br> 2025** | **June 30,<br> 2025** |
| Right-of-use assets | $335791 | $292065 |
| Lease liabilities - current | 166285 | 128525 |
| Lease liabilities - noncurrent | 173057 | 166436 |
| Weighted average remaining lease term | 2.03 years | 2.31 years |
| Weighted average discount rate | 3.60% - 3.85 | 3.60% - 6.75 |

---

The following is a schedule, by years, of maturities of the operating lease liabilities as of September 30, 2025:

---

| | |
|:---|:---|
| **12 Months Ending September 30,** | **Minimum<br> Lease<br> Payment** |
| 2026 | $176136 |
| 2027 | 161060 |
| 2028 | 15811 |
| Total undiscounted cash flows | 353007 |
| Less: imputed interest | 13665 |
| Present value of lease liabilities | $339342 |

---

**NOTE 13 – SUBSEQUENT EVENTS**

The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company had the following subsequent events that need to be disclosed.

On October 10, 2025, Shuhai Beijing entered a credit line agreement with Bank of Communications Co., Ltd. for the amount of RMB 5,000,000 ($701,340) with a term of 24 months from the first withdrawing date. The loan term for each drawdown under this contract shall not exceed 12 months, and the maturity date for the credit line shall be no later than September 30, 2027. The discretionary payment ceiling shall not exceed RMB 150,000 ($21,110).

On October 10, 2025, Shuhai Information, as the purchaser, entered into a patent purchase agreement with Tianjin Qianli Culture Media Co., Ltd, as the seller, for the acquisition of a brainwave intelligent driving system. The total purchase price is RMB 7,800,000 ($1.1 million), inclusive of a 6% VAT, and will be amortized over the three years.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

**<u>Cautionary Note Regarding Forward-Looking Statements</u>**

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue, or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as "may," "intend," "might," "will," "should," "could," "would," "expect," "believe," "anticipate," "estimate," "predict," "potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. The forward-looking statements in this report are based upon management's current expectations, which it believes are reasonable. However, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to several factors, including:

● uncertainties relating to our ability to establish and operate our business and generate revenue;

● uncertainties relating to general economic, political, and business conditions in China;

● industry trends and changes in demand for our products and service ；

● uncertainties relating to customer plans and commitments and the timing of orders received from customers;

● announcements or changes in our advertising model and related pricing policies or that of our competitors;

● unanticipated delays in the development, market acceptance, or installation of our products and services;

● changes in Chinese government regulations; and

● availability, terms and deployment of capital, relationships with third-party equipment suppliers

 ****

 ****

***Overview and Recent Developments***

Datasea Inc. ("Datasea" or the "Company", NASDAQ: DTSS) is a technology Company incorporated under the laws of the State of Nevada on September 26, 2014, with subsidiaries and operating entities located in Delaware, USA, and China. Since its incorporation in 2014, Datasea has been committed to the exploration, application, and commercialization of cutting-edge technologies. As a global high-tech Company spanning both the Chinese and U.S. markets, Datasea's business focuses on two main segments: Acoustic High-Tech and 5G+ AI Multimodal Digitalization. Through continuous R&D investment, product innovation, and industrial collaboration, the Company has gradually built a complete "technology – product – market" closed-loop system, achieving large-scale application and rapid growth in several industries. As a global high-tech Company with deep integration of acoustics and artificial intelligence as the technological foundation, Datasea advances its dual-business engines of "Acoustic High-Tech + 5G+ AI Multimodal Digitalization" to drive cross-industry applications. As one of the global proponents and industrial promoters of the "acoustic effect" concept, the Company leverages acoustic technology to establish unique technological barriers in five key fields—industrial, agricultural, healthcare, medical, and IoT—achieving full-chain value conversion from technological R&D to industry applications. In the past fiscal years, as high-margin solutions from both segments have gradually scaled, Datasea has transitioned from "scale growth" to "quality improvement," laying a solid foundation for long-term objectives and maximizing shareholder value.

**Overall Quarter Performance**

For the three months ended September 30, 2025 and September 30, 2024, the Company's gross profit was $1,169,092 and $196,981, respectively. Gross profit increased by $972,111 from the same period last year, an increase of 493.50% from the same period last year. For the three months ended September 30, 2025 and September 30, 2024, the gross profit margins were 8.46% and 0.93% respectively. The overall gross profit margin of the Company has significantly improved. This positive change is mainly attributed to the Company's proactive and successful product structure optimization strategy, which strategically increased the sales proportion of high-margin products. The core driving factors come from two innovative product lines: acoustic intelligent products and 5G-AI multi-modal technology solutions. This financial result not only proves the correctness of the Company's strategic decisions, but also clearly reflects that our product innovation has been recognized by the market, and the enterprise is steadily developing in the direction of high quality and high efficiency.

For the three months ended September 30, 2025, revenue was $13,813,551, compared with $21,081,094 in the same period last year. Revenue decreased by $7,267,543, or 34.47%. The main reason for the decline in revenue lies in the Company's proactive contraction of its low-margin 5G AI multimodal traffic business and its continuous optimization of the overall business structure, focusing on high-value-added sectors. Despite a decline in revenue, the Company's gross profit margin significantly increased from 0.93% in the same period of the previous year to 8.46%, demonstrating the effectiveness of the Company's business transformation oriented towards profit quality. Acoustic intelligent products and 5G AI multimodal digital solutions have become the main growth engines. Meanwhile, the Company has proactively reduced its standardized 5G multimodal traffic business with relatively low gross profit margins and shifted to a high value-added revenue structure characterized by technology-driven and customization, achieving a transformation from "scale growth" to "value growth".

The phased decline in revenue is an active choice made by the Company during the process of optimizing its business structure, while the significant increase in gross profit margin marks a phased achievement of the Company's shift from pursuing scale expansion to focusing on profit quality and sustainable growth. We believe this transformation can effectively lay a solid foundation for the Company's future profit growth and long-term competitiveness.

As of September 30, 2025 and June 30, 2025, the intangible assets were $4,613,692 and $3,495,984 respectively. The intangible assets increased by $1,117,708, representing a 31.97% increase compared to the beginning of the period.The increase of the proportion of intangible assets indicates that the Company is undergoing a strategic transformation towards a "light-asset, high-value" model. Through external acquisition patents related to AI multi-modal digital business, enterprises can quickly obtain mature technologies and resources, respond promptly to market changes, seize the initiative, and efficiently expand new fields, new markets or new product lines with such assets. While actively expanding external resources, the Company continues to invest in internal research and development to maintain sustained and organic innovation capabilities. These efforts provide a solid foundation for the Company's long-term and stable growth.

***Our Business Summary***

*Segment I-Acoustics high tech Segment:*

We deeply understand the market's demand for new application areas, technologies, and requirements. Therefore, through the relentless efforts of our team, we have achieved leading-edge advancements in acoustic understanding and algorithms.

**I. Overview of the Company's Acoustic high-tech Business**

As one of the global pioneers of the "acoustic effect" concept, Datasea has consistently positioned **"Acoustics + AI"** as its core technological engine. The Company is deeply engaged in the high-tech acoustic industry, continuously building a leading global technological framework in the acoustic field and driving the industry's transformation toward intelligence and digitalization.

Since achieving a major technological breakthrough in **August 2025** in **AI-enhanced acoustic coupling for neural regulation and precision medicine**, Datasea's acoustic business has officially entered an accelerated commercialization stage, forming a **multi-scenario, multi-sector business ecosystem**.

From a business layout perspective, Datasea continues to advance its strategic framework of "Acoustics + AI + Application Scenarios," focusing on five core application areas—acoustic industry, acoustic agriculture, acoustic medicine, acoustic healthcare and wellness, and acoustic IoT technologies. At the same time, the Company extends its expertise to additional sectors such as consumer electronics, providing high value-added and globally competitive acoustic products and integrated solutions that empower industries to enhance efficiency and achieve sustainable development.

At the **technical architecture level**, the Company combines fundamental acoustic theory with artificial intelligence algorithms to build a **core technological system centered on the study and application of non-audible mechanical wave effects**.This interdisciplinary field of "**Acoustics + AI**" continues to expand the boundaries of modern acoustic science. Supported by AI-driven acoustic algorithms, data modeling, and intelligent sensing technologies, Datasea efficiently transforms scientific achievements into **industrialized, commercially viable solutions**, providing systematic innovations in **health regulation, industrial precision processing, environmental protection, and smart agriculture**.

From a **market performance and development outlook** perspective, as of **September 30, 2025**, representing the **first quarter of fiscal year 2026**, the Company's acoustic business continued the strong growth momentum. Datasea remains highly confident in maintaining the growth trajectory and further improving the profitability of its acoustic segment in fiscal year 2026. The Company plans to strengthen its competitive advantages through the **scaled sales and international deployment of high-margin acoustic high-tech products and AI multimodal technology solutions**, thereby consolidating its leadership in the global market.

At the same time, Datasea places great emphasis on **industry-academia-research collaboration and industry leadership**. The Company has established in-depth cooperation with top domestic and international research institutions, including the **Institute of Acoustics, Chinese Academy of Sciences**, the **Cloud Computing and Big Data Research Institute of the China Academy of Information and Communications Technology**, the **Artificial Intelligence Research Institute of Harbin Institute of Technology**, and **Tsinghua University**.

Together, these collaborations drive ongoing innovation in acoustic technologies.

Moreover, Datasea, in collaboration with the **Ministry of Industry and Information Technology** and other authoritative institutions, jointly released **China's first White Paper on the Acoustic High-tech Industry**, which provides a comprehensive analysis of the application prospects of acoustic high-tech across various sectors. This initiative underscores the Company's leading position in both domestic and global acoustic technology fields and lays a solid foundation for advancing the **nationalization and globalization** of acoustic technology.

**II. Acoustic Technology Innovation**

As the core source of competitiveness for its acoustic business, **Datasea** continues to advance its strategic framework of **"Acoustics + AI + Application Scenarios."** Centered on key directions including ultrasound, infrasound, and Schumann resonance, the Company has built a comprehensive technological closed-loop—from fundamental acoustic theory and AI algorithms to multi-scenario applications. By deeply integrating acoustic technologies with artificial intelligence, Datasea has established a diversified technological and application system covering five major fields—**industrial, agricultural, medical, health, and IoT**—and formed a cross-industry empowerment model of **"Acoustics + AI + Vertical Scenarios."** This model is driving the transformation of acoustics from a single-discipline science into a multidimensional, scenario-driven, and industrialized ecosystem. Datasea is accelerating its evolution toward becoming a **global leader in acoustic intelligence and AI multimodal integration.**

**(i) Core Technology System Development**

Datasea has deeply integrated frontier advancements in the acoustic field, building a full-chain technological capability that spans **research and development, product transformation, and scenario application** under a dual-engine structure of **"Fundamental Acoustic Theory + AI-Driven Algorithms."**

&nbsp;&nbsp;&nbsp;&nbsp;1. **Breakthroughs in Multi-Band Acoustic Technologies: <br>** <br> The Company
continues to advance the research and industrialization of ultrasound, infrasound, and Schumann resonance technologies, unlocking the
unique application value of different frequency bands—ultrasound's cavitation, thermal, and mechanical effects; infrasound's
low-frequency penetration; and Schumann resonance's synchronization with biological rhythms—providing a robust technical
foundation for diversified application scenarios.

&nbsp;&nbsp;&nbsp;&nbsp;2. **AI-Enhanced Acoustic Integration: <br>** <br> AI-driven processing models
are embedded into the Company's acoustic technology framework to optimize the entire process from acoustic signal acquisition,

precision, efficiency, and adaptability, overcoming the traditional limitations of "fixed parameters and single-use scenarios."

&nbsp;&nbsp;&nbsp;&nbsp;3. **Scenario-Extended Acoustic Architecture: <br>** <br> Building upon its **"Acoustic Core + AI Algorithm Platform + Vertical Scenarios"** model, Datasea has established large-scale applications
and commercial ecosystems across the five major fields of medical, industrial, agricultural, health, and IoT. With a modular acoustic
core, standardized interfaces, and transferable algorithmic models, the Company enables rapid technology reuse and secondary development
across diverse scenarios. Looking ahead, this architecture is inherently scalable to additional industries and applications, continuously
expanding the boundaries and growth potential of **"Acoustics + AI."** 

**(ii) Technological Innovation and Applications Across Five Core Fields**

⮚ Acoustic Industrial Field: Empowering Intelligent Manufacturing Across the Value Chain

To address the core needs of industrial manufacturing—quality enhancement, cost reduction, and efficiency improvement—Datasea has implemented a "**Acoustics + AI + Industrial Scenario**" integration strategy. The Company embeds acoustic technology throughout the entire production lifecycle, from design and processing to inspection and maintenance, forming three core technical systems:

● **Equipment Health Management:** Utilizing sound-print recognition and AI-based diagnostic models, the system continuously collects and analyzes operating sound signals of industrial equipment, establishing a "sound data–intelligent diagnosis" platform that enables predictive maintenance and health assessment while minimizing downtime.

● **Precision Processing Enhancement:** Through ultrasonic-assisted cutting, welding, and forming, the technology significantly improves the precision and surface quality of hard-to-machine materials such as high-strength alloys and composites.

● **Nondestructive Testing and Safety Assurance:** Using ultrasonic and infrasound detection to identify internal defects in complex structural components without disassembly, the Company supports quality traceability and safety compliance under global Industry 4.0 and intelligent manufacturing standards.

These technologies are being deployed in sectors such as energy, automotive, and electronics, building a closed loop of "acoustic acquisition – AI analysis – industrial control" for intelligent manufacturing.

⮚ Acoustic Agriculture Field: Dual Engines of Green Sustainability and Efficient Production

Aligned with China's national strategies of "Green Agriculture" and "Rural Revitalization," Datasea integrates acoustic technologies across the entire agricultural value chain to create an intelligent agriculture system centered on "sound-based growth stimulation, acoustic pest control, and acoustic quality detection."

● **Sound-Wave Growth Stimulation:** Specific frequency bands are used to stimulate plant cell activity and photosynthesis, improving crop yield and quality while reducing fertilizer dependence and achieving low-carbon, sustainable farming.

● **Acoustic Pest Control:** Leveraging insects' sensitivity to specific acoustic frequencies, the Company develops purely physical, residue-free sound-based pest-repelling systems that substantially reduce pesticide usage.

● **Acoustic Quality Detection:** By analyzing sound transmission characteristics, internal density, moisture, and ripeness of crops can be evaluated for intelligent grading and pricing.

Datasea is co-establishing a *Joint Acoustic Agriculture Laboratory* with research institutions to advance standardization and large-scale deployment of acoustic farming equipment, and to integrate these technologies with agricultural IoT systems for "Smart Agriculture 4.0."

⮚ Acoustic Medical Field: Precision Neuromodulation and Non-Pharmaceutical Intervention

Datasea has established a full-cycle framework for precision intervention in neurological disorders, centered on **Low-Intensity Focused Ultrasound (tFUS)**, forming a closed loop of "detection – analysis – diagnosis – real-time intervention."

● **Precision Neuromodulation:** AI-driven algorithms dynamically adjust ultrasound parameters to achieve non-invasive modulation for neurological conditions such as Parkinson's disease, epilepsy, depression, and sleep disorders, ensuring high safety and repeatability.

● **Multi-Scenario Medical Adaptation:** The Company is developing high-end clinical intervention systems for tertiary hospitals and portable therapeutic devices for community rehabilitation centers, extending neuromodulation from clinical treatment to home-based recovery.

● **Brain-Computer Interface (BCI) Synergy:** By integrating BCI with acoustic micro-stimulation, Datasea enables real-time neural signal collection and feedback synchronization, pioneering the next frontier of "acoustic-neural + brain-machine fusion."

This technology serves as the foundation for Datasea's medical and consumer-grade product strategy in precision rehabilitation, emotional regulation, and cognitive enhancement.

⮚ Acoustic Health and Elderly-Care Field: Full-Scenario Health Protection and Management

In response to the growing global demand for health protection and wellness in the post-pandemic era, Datasea has built a comprehensive sound-based health ecosystem covering environmental sterilization, physiological regulation, cognitive enhancement, and sleep improvement.

● **Green Sterilization Technology:** Utilizing ultrasonic cavitation, the Company has developed consumable-free, chemical-free sterilization devices. Third-party laboratory testing verified a 99.83% inactivation rate of COVID-19 within nine seconds, making these products suitable for hospitals, airports, schools, homes, and senior-care facilities worldwide.

● **Sleep and Cognitive Enhancement:** By modulating brainwave rhythms through Schumann resonance frequencies, Datasea's devices help alleviate anxiety, improve sleep quality, and achieve a closed-loop process of "monitoring – intervention – optimization."

Flagship products such as the *Tianer* sterilization series and *Star Dream* sleep-aid systems have become high-margin growth drivers, and the Company is expanding their commercialization into overseas markets.

⮚ Acoustic Internet-of-Things (AIoT) Field: Intelligent Perception and Multimodal Connectivity

Through collaboration with top institutions including the **Chinese Academy of Sciences** and **Tsinghua University**, Datasea is advancing the integration of acoustics and IoT to establish a complete "acoustic sensing – data acquisition – intelligent decision-making" system:

● **Intelligent Acoustic Sensing:** High-sensitivity, low-power acoustic sensors enable real-time environmental monitoring and abnormal sound detection, supporting predictive maintenance, safety alerts, and urban noise management.

● **Multi-Scenario IoT Adaptation:** By embedding acoustic sensing and AI decision algorithms into smart-home terminals and smart-city nodes, Datasea enables functions such as voice control, environmental awareness, and public-safety alerts.

● **Global Technology Deployment:** Through its wholly owned U.S. subsidiary **Datasea Acoustics LLC**, the Company is expanding global patent coverage and commercialization, planning cooperative initiatives with international IoT and medical-device enterprises to accelerate worldwide deployment of "Acoustic IoT" solutions.

**(iii) Industrialization Support for Technological Innovation**

To ensure that technological innovation efficiently translates into commercial value, the Company has established a comprehensive **industrialization support system** for its acoustic technologies:

● **Closed-Loop R&D Mechanism:** Datasea has developed a full-cycle R&D framework encompassing *market demand research, technology development, prototype testing, product iteration, and scenario validation*, ensuring that every stage of innovation remains closely aligned with real-world market needs.

● **Third-Party Verification and Compliance System:** All acoustic technology products undergo rigorous third-party laboratory testing—such as *virus inactivation testing for disinfection devices* and *safety and performance validation for medical equipment* —and fully comply with relevant regulatory requirements to ensure lawful and reliable market entry.

● **Capacity and Quality Assurance:** The Company continues to expand its precision acoustic manufacturing capacity, enhance production automation, and strengthen quality control systems. Standardized production and process management ensure consistency and stability across products, providing strong production support for large-scale commercialization.

 **III. Acoustic Products**

Based on the combination of acoustic technology and artificial intelligence, Datasea has successfully developed a series of innovative products, including:

● **Acoustic Health Products**: Ultrasonic disinfectants, acoustic sterilizing cleaners, ultrasonic skin repair devices, widely applied in hospitals, airports, hotels, transportation, and other sectors.

● **Acoustic Health**: The "Star Dream" brand non-contact sleep aid device, utilizing low-frequency Schumann resonance and brainwave magnetic induction to improve deep sleep quality.

● **Acoustic Medicine**: AI medical robots, ultrasonic wrinkle removal devices, ultrasonic fat reduction and body shaping devices, serving the medical aesthetics industry.

**New Products in Acoustic Technology Planning**

● **Short-Term Plan**: Around environmental acoustic technology applications and cardio-brain acoustic technology applications, including ：

● **Brain Cortisol Regulation Device**: Uses sound wave technology to regulate cortisol concentration in the brain, improving mental state and learning efficiency, applicable in mental health and education fields.

● **Pet Disinfection and Deodorizing Purifier: Utilizes ultrasonic technology to eliminate pet environment odors and provide strong air disinfection, suitable for households and pet-related facilities.** 

● **Mid-Term Plan:Around environmental acoustic technology applications and cardio-brain acoustic technology applications, including:** 

● **Food and Water Cleaning and Sterilization Devices**: Combines ultrasonic cleaning and sterilization technology to provide convenient home-use products, ensuring food safety and clean drinking water.

● **Cardiovascular Health Products**: Develops acoustic technology-based health monitoring and treatment devices for cardiovascular and cerebrovascular systems, promoting innovation in the medical health sector.

● **Long-Term Plan: Precision design and manufacturing of acoustic products, including:** 

● **Acoustic Agriculture**:

○ **Ultrasonic Agricultural Product Preservation and Pest Control Devices**: Extends the shelf life of agricultural products, reduces pesticide use, and enhances agricultural production efficiency.

○ **Acoustic Plant Growth Stimulators**: Optimizes plant growth environments through sound wave technology, improving crop yield and quality.

● **Acoustic Industry**:

○ **Ultrasound-Assisted Liquid-Phase Separation Machines**: Enhances liquid separation efficiency in manufacturing, reducing energy consumption.

○ **Ultrasonic Metal 3D Printing Technology**: Drives the upgrading of the manufacturing industry, enabling high-precision and high-efficiency metal processing.

● **Acoustic Medical and Elderly Care**:

○ Develops acoustic technology-based medical devices, such as ultrasonic therapy instruments and acoustic rehabilitation equipment, serving the medical and elderly care sectors.

● **Acoustic Internet of Things (IoT) Technology**:

○ Integrates acoustic technology with IoT to develop intelligent acoustic sensors and devices, promoting the development of smart cities and smart homes.

**Recent Developments**

***During the quarter ended September 30, 2025, the Company and its subsidiaries entered into the following material agreements with its key customers:***

From May 15, 2025 to July 25, 2025, the wholly-owned subsidiary of the Company, Shenzhen Shuhai Jingwei Information Technology Co., Ltd. (hereinafter referred to as "Shuhai Jingwei"), and Yuxiang Zhiyao (Tianjin) Innovation Technology Co., Ltd. (hereinafter referred to as "Yuxiang Zhiyao") signed several agreements for the entrusted processing of the air purifier AP450A. The contract amount was RMB 4,742,900, and the contract quantity was 6,460 units. From July 1 to September 30, 2025, a total of 4,869 units of equipment were sold. Revenue from Yuxiang Zhiyao in this period reached RMB3,155,362.83 (approximately US$442,596). The signing and execution of this contract marked a strong start for the sound environment disinfection products to enter the terminal consumption market, laying a solid foundation for future business expansion and brand influence.

In September 2025, the wholly-owned subsidiary of the Company, Shuhai Jingwei and Yuxiang Zhiyao each signed a refurbishment cost agreement. The total number of refurbished units was 3,240, with an income amount of RMB 214,327.76 (approximately US$30,063).

On October 9, 2025, the wholly-owned subsidiary of the Company, Shuhai Jingwei signed a contract with Yuxiang Zhiyao for the entrusted processing of the negative ion sleep device Z5. The contract amount is RMB 1,995,000 and the contract quantity is 2,500 units.

In addition to the aforementioned sales of acoustic intelligent products, from July 1, 2025 to September 30, 2025, Shuhai Jingwei also sold 137 acoustic high-tech products to individual customers, with a total amount of RMB 115,335.59 (approximately US$13,246).

**IV. Industry Space and Position of the Acoustic Business**

Datasea is deeply rooted in the acoustic high-tech industry and continues to experience rapid growth in technological innovation, product development, and industrial applications. The Company emphasizes extensive domestic and international cooperation to promote the integration of industry, academia, and research. With a strategic focus on the acoustic intelligence sector, Datasea has established five key sub-sectors within the acoustic field—acoustic healthcare, acoustic health, acoustic industry, acoustic agriculture, and acoustic IoT—leading the industry through cutting-edge Acoustic + AI technologies and products.

Datasea holds a leading position in various acoustic technologies, such as ultrasound, infrasound, and Schumann resonance. To promote research and innovation in these areas, the Company actively collaborates with numerous renowned research institutions and universities, including the Institute of Acoustics, Chinese Academy of Sciences; the Cloud Computing and Big Data Research Institute, China Academy of Information and Communications Technology; the Internet Industry Research Institute at Tsinghua University; the Artificial Intelligence Research Institute at Harbin Institute of Technology; Beijing Union University; and the Remote Sensing Research Institute of Jilin University. Through these partnerships, we are committed to pioneering new research topics and developing innovative technological applications that drive progress within the acoustic field. To better achieve these objectives, Datasea has established joint laboratories to enhance the integration and collaboration of research resources.

Furthermore, the Company, in collaboration with the Ministry of Industry and Information Technology, the Key Laboratory for Artificial Intelligence Technology and Applications Evaluation, and the Cloud Computing and Big Data Research Institute of the China Academy of Information and Communications Technology, has jointly released China's first white paper on the acoustic high-tech industry. This white paper provides a detailed discussion on the applications of acoustic high-tech across various industries, demonstrating Datasea's proactive role in leading industry development. It highlights the Company's prominent position in the acoustic high-tech field both domestically and globally, and further reinforces the strategic importance of Datasea in driving the nationalization and globalization of acoustic technology.

Going forward, Datasea will continue to strengthen its technological and industrial influence by:

&nbsp;&nbsp;&nbsp;&nbsp;1. Leading the formulation of national and international standards for acoustic high-tech products;

&nbsp;&nbsp;&nbsp;&nbsp;2. Expanding its participation in clinical validation and regulatory frameworks for acoustic neuromodulation and healthcare devices;

&nbsp;&nbsp;&nbsp;&nbsp;3. Promoting global collaboration through its U.S. subsidiary, Datasea Acoustics LLC, to drive international patent deployment and product
commercialization.

These initiatives further solidify Datasea's position as a global leader in acoustic intelligence, contributing to both the nationalization and globalization of the acoustic high-tech industry.

**V. International Expansion of the Acoustic Business**

The international development of acoustic products is a strategic priority for Datasea. Since the establishment of its wholly owned subsidiary, Datasea Acoustics LLC, in Delaware in 2023, the Company has gradually expanded its business operations in the United States. Datasea has partnered with several well-known online e-commerce platforms and brick-and-mortar distributors in the U.S. to broaden the market for its acoustic products, including collaborations with companies such as iPower (NASDAQ: IPW) and Meglio Interiors LLC. In addition, the Company has collaborated with the century-old U.S. intellectual property firm to pursue patent applications and acquisitions, thereby building a robust international intellectual property portfolio.

To support its long-term globalization strategy, Datasea has initiated discussions with several potential strategic partners and venture funds in the United States regarding joint development and acquisition opportunities in precision healthcare and acoustic consumer electronics. These discussions are aimed at integrating R&D, production, and commercialization resources across China and the United States, enabling Datasea to accelerate the global deployment of its high-margin acoustic healthcare and wellness products.

Looking ahead, the Company plans to establish a North American Acoustic Innovation Center under Datasea Acoustics LLC, focusing on technology transfer, localized manufacturing, and clinical research collaborations with medical and academic institutions. This initiative will further enhance Datasea's international competitiveness, accelerate its path to global commercialization, and position the Company as a world-leading innovator in acoustic intelligence.

**VI. Future Outlook for the Acoustic Business**

Datasea will continue to deepen its "Acoustic + AI Precision Manufacturing" strategy, leveraging continuous technological innovation to drive global market expansion and reinforce its leadership in the high-tech acoustic sector. Entering fiscal year 2026, the Company's acoustic business has entered a new stage of industrial scaling, guided by its mission to enable intelligent, non-pharmaceutical, and sustainable health solutions through acoustic technology.

The Company's acoustic business development strategy unfolds across the following three dimensions:

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| ⮚ | **Technology R&D** |

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Datasea will focus its R&D efforts on five core areas — acoustic industry, acoustic agriculture, acoustic healthcare, acoustic wellness, and acoustic IoT technologies — to further expand the application boundaries of acoustic science. In particular, the Company will deepen research and productization in AI-enhanced ultrasound neuromodulation, brain-computer interface (BCI) interaction, and foot nerve stimulation.

Datasea plans to accelerate the construction of a "detection–analysis–diagnosis–real-time intervention" closed-loop system, integrating low-intensity focused ultrasound (tFUS) with AI algorithms to achieve intelligent control from sound signal acquisition to neural response feedback, thereby strengthening its core technological barriers in acoustic neuromodulation. Through these initiatives, Datasea aims to accelerate the global adoption and industrial upgrading of its high-tech acoustic products, driving the transformation of acoustic science into real-world health and industrial applications.

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|:---|:---|
| ⮚ | **Market Expansion** |

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Datasea will continue to integrate high-quality resources through strategic mergers, acquisitions, and joint ventures, building a complete global acoustic technology value chain. The Company will adopt a "self-deployment + acquisition integration + strategic partnership" model to establish a multi-tiered business network across North America, Europe, and Southeast Asia.

Through Datasea Acoustics LLC, the Company will establish an overseas sales and patent management center, while collaborating with local universities, research institutions, and medical groups to advance the registration and commercialization of acoustic healthcare products in international markets. These initiatives will enhance Datasea's global presence and reinforce its brand influence worldwide.

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|:---|:---|
| ⮚ | **Talent and Production Capacity** |

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Datasea is committed to cultivating an international R&D ecosystem by attracting cross-disciplinary talent in acoustics, AI, neuroscience, and material engineering. The Company will continue to expand its precision acoustic manufacturing capacity, improve its production automation and quality control systems, and establish joint research centers with global academic institutions. These initiatives will ensure strong technical and operational support for the Company's long-term global strategy.

Together, these strategic initiatives will enable Datasea to continuously strengthen its leadership in the global "Acoustic + AI" high-tech industry, accelerate the industrialization and capitalization of acoustic intelligence, and drive the Company toward a higher-quality growth cycle, creating sustained and exceptional long-term value for shareholders, partners, and users worldwide.

***Segment II-5G+ AI multimodal digital***

**Our achievements of AI Multimodal digital**

As one of China's leading service providers in the *5G+*AI multimodal digitalization sector, Datasea continues to strengthen its leadership through technological innovation, industrial application, and large-scale commercial deployment. Building upon the solid foundation established in fiscal year 2025, the Company further upgraded its AI multimodal intelligent platform in the first quarter of fiscal year 2026, integrating the latest DeepSeek 2.0 distributed training system and optimized Transformer-based multimodal architecture. These advancements enable Datasea to achieve higher data throughput, faster decision processing, and more precise multimodal interaction capabilities.

From a technical perspective, the platform has evolved into a next-generation AI-driven multimodal computing infrastructure, capable of processing massive datasets across text, voice, image, video, and sensor data in real time. The introduction of reinforcement learning algorithms and low-latency 5G edge computing nodes allows the platform to deliver AI services with millisecond-level response speed, ensuring high reliability and scalability for enterprise-level deployments.

In functionality, Datasea's platform now supports full-process intelligent automation, covering data acquisition, adaptive analysis, predictive decision-making, and feedback optimization. With continuous enhancement of its core AI models, the platform provides precise and personalized solutions for clients across multiple industries. These capabilities drive operational efficiency, optimize user engagement, and reduce business costs by up to 30%.

In terms of practical application value, Datasea's platform has demonstrated strong commercial capabilities. At present, the platform's services cover several key sectors, including new media, digital rural development, and finance. Through the deep integration of AI and big data, customer satisfaction has consistently remained above 95%, underscoring the platform's technological sophistication and commercial viability.

These advances have solidified Datasea's position as an industry benchmark for intelligent multimodal communication systems. By integrating AI generative models, multimodal semantics, and 5G connectivity, Datasea is not only redefining enterprise digital interaction but also pioneering a new paradigm of AI-powered intelligent services.

Looking ahead, the Company will continue to accelerate the commercialization of its multimodal platform, expand strategic cooperation with global technology partners, and enhance cross-border data service capabilities. Through sustained innovation and market scaling, Datasea aims to establish a world-class multimodal digital ecosystem empowering intelligent connectivity across industries worldwide.

**I. Technological Innovation of 5G+AI**

At the forefront of 5G and artificial intelligence integration, Datasea has further enhanced its distinctive technological framework, driving the next leap in multimodal digital services.

Entering fiscal 2026, the Company upgraded its core architecture with DeepSeek 2.0 distributed training and Transformer-based multimodal alignment models, significantly boosting cross-modal reasoning and generative intelligence performance.

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|:---|:---|
| ⮚ | **Core Technical Architecture:** |

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Datasea has independently developed a unified Transformer model architecture capable of processing multimodal inputs—audio, text, image, video, and sensor signals—in parallel through advanced self-attention and cross-attention mechanisms. The model achieves adaptive learning and semantic alignment across modalities, overcoming the traditional challenge of "cross-modal semantic inconsistency.

This architecture demonstrates exceptional performance in image-text correlation analysis, audio-video synchronization, and speech-to-semantic conversion, forming a strong technological foundation for Datasea's AI applications across industrial, healthcare, retail, and consumer sectors.

The Company also established a three-engine system comprising AIUC (Understanding Engine), AIGC (Generation Engine), and AGENT (Action Engine), forming a universal capability framework for multimodal intelligence. This architecture enables a full-cycle intelligent process—from data comprehension and content generation to task execution—supporting multi-language understanding, video synthesis, speech generation, and interactive AI experiences.

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|:---|:---|
| ⮚ | **Algorithm and Model Optimization:<br>** <br> By integrating DeepSeek's distributed training methods, our platform has achieved notable advancements across several critical domains: |

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● Natural Language Processing: Enables high-quality text generation and multilingual translation.

● Intelligent Programming: Supports automatic code generation, debugging, and optimization.

● Logical Reasoning: Establishes chain-of-thought output to enhance decision-making quality.

In terms of data security and compliance, Datasea employs Multi-Party Computation (MPC) and Trusted Data Space (TDS) frameworks to ensure data privacy and integrity throughout transmission, storage, and computation.

This secure architecture allows "data availability without visibility," ensuring compliant and traceable use of AI and data resources, and providing a trusted foundation for intelligent analysis and decision-making.

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|:---|:---|
| ⮚ | **Core Capabilities of the Intelligent System** |

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Datasea's 5G+AI intelligent analysis system now embodies four core capabilities:

&nbsp;&nbsp;&nbsp;&nbsp;1. **Dynamic Resource Allocation:** Automatically distributes computing resources based on real-time workload.

&nbsp;&nbsp;&nbsp;&nbsp;2. **Anomaly Detection & Proactive Alerting:** Predicts and prevents system failures through multimodal pattern recognition.

&nbsp;&nbsp;&nbsp;&nbsp;3. **Adaptive Process Optimization:** Continuously enhances workflow efficiency through AI feedback loops.

&nbsp;&nbsp;&nbsp;&nbsp;4. **Knowledge Graph Integration:** Connects disparate data sources to enable semantic decision automation.

Together, these advancements underscore Datasea's leadership in 5G+AI integrated applications. Moving forward, the Company will continue to invest in frontier research, expand industry-specific use cases, and build a globally competitive multimodal digital ecosystem empowering the next wave of intelligent transformation.

**II. 5G+AI Product and Application Scenarios**

In the era of accelerated digital transformation, the demand for **5G+AI multimodal digital applications** is experiencing rapid growth across industries. Leveraging its advanced multimodal data processing platform, **Datasea** has built an intelligent digital ecosystem that integrates text, image, voice, and video data to support enterprises and organizations in achieving intelligent upgrades, operational efficiency, and sustainable growth.

Datasea's 5G+AI multimodal solutions are divided into **two major application layers**:

&nbsp;&nbsp;&nbsp;&nbsp;(1) core customer-oriented digital solutions that directly serve
enterprise and consumer markets; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) extended industrial application scenarios that empower broader
sectors with intelligent transformation capabilities.

***Core Customer-Oriented Solutions***

Datasea's multimodal technologies are reshaping digital service models across multiple industries. By integrating visual, voice, and textual data, the Company provides high-value digital solutions in the following four key customer segments:

● **Digital Solutions for Small and Micro Enterprises: <br>** <br> Integrates membership management, intelligent marketing, and customer engagement tools to help small and micro enterprises lower digitalization barriers, improve marketing efficiency, and achieve intelligent business operations.

● **New Media Marketing Solution: <br>** <br> Combines **AIGC (AI-Generated Content)** and **AI digital human** technologies to realize automated content creation, precision distribution, and campaign performance tracking, helping brands achieve low-cost, high-conversion digital marketing and strengthen consumer engagement.

● **Digital Rural Development Solution: <br>** <br> Provides **smart agriculture management**, **rural logistics coordination**, and **remote public services** in response to China's **Rural Revitalization Policy**, promoting intelligent governance, data-driven decision-making, and sustainable agricultural development.

● **Beauty and Healthcare Digitalization Solution: <br>** <br> Offers **end-to-end digital management systems** for offline wellness and beauty stores, enabling integrated operations, intelligent customer management, and synergy with Datasea's **acoustic hardware business** for enhanced service efficiency and user experience.

***Extended Industrial Application Scenarios***

Beyond the above core markets, Datasea's 5G+AI multimodal digital technology has been widely adopted across multiple high-value industrial sectors, accelerating intelligent transformation and creating new business models:

● **Communication, Logistics, and Smart Delivery: <br>** <br> Utilizes **6G communications**, **IoT**, and **AI-based scheduling** to optimize logistics routing, enable real-time tracking, and enhance nationwide logistics efficiency.

● **Smart Healthcare: <br>** <br> Integrates multimodal data from **CT, MRI, ultrasound**, and pathology images with AI detection algorithms to support remote diagnostics, lesion identification, and personalized health management.

● **Smart Manufacturing: <br>** <br> Combines 5G connectivity with multimodal sensing and AI analytics to automate production processes, perform predictive maintenance, and ensure product quality stability.

● **Education and Training: <br>** <br> Creates immersive learning experiences by merging text, audio, and visual content. **AI digital tutors** and **virtual training environments** enhance engagement and comprehension for students and professionals.

● **Finance and Risk Management: <br>** <br> Employs multimodal data fusion and 5G real-time analytics for precise credit assessment, fraud detection, and transaction risk control, improving decision-making accuracy by over 20%.

● **Security and Smart City Management: <br>** <br> Fuses **video analytics, acoustic sensing**, and **AI forecasting models** to enable proactive risk detection and emergency response, improving urban safety and governance efficiency.

In summary, Datasea's 5G+AI multimodal technology holds broad potential across both consumer-oriented and industrial application domains. By empowering enterprises, institutions, and communities with **intelligent, data-driven digital capabilities**, Datasea is accelerating the transformation of multiple industries and solidifying its position as a leader in **AI-driven multimodal innovation**.

**III. Recent Developments in the 5G+AI Business**

***Key Customers and Agreements***

For the three months ended September 30, 2025，our revenues were $13,813,551. The Company has optimized its product structure, increased the sales of high-margin products such as acoustic intelligent products and 5G AI multimodal technology solutions, and carried out revenue optimization for the 5G AI multimodal traffic business, which had a relatively low gross profit margin during the market expansion period.

On September 12, 2025, Shuhai Beijing signed an agreement with Anhui Gukai Business Co., LTD. (hereinafter referred to as "Anhui Gukai"). Relying on its AI multi-modal technology capabilities, Shuhai Beijing will focus on the e-commerce scenario and create a full-chain module covering "product display - payment service - order service - customer relationship management".

The objective of the platform development plan is to support the customization of localized content for product display according to the target market. The payment module integrates multiple payment interfaces and synchronously optimizes the regional payment conversion rate. Customer management integrates regional user behavior data to generate precise profiles.

In addition, the AI engine can intelligently recommend the time and channel for product placement, and the data monitoring module can track the product placement effect in real time, helping the client achieve precise placement in multi-channel e-commerce marketing, reduce costs and improve conversion rates. As of September 30, 2025, revenue of RMB 2,075,471.70 (approximately US$291,121.67) was obtained from Anhui Gukai.

On September 12, 2025, Shuhai Beijing signed an agreement with Yuxiang Zhiyang (Tianjin) Innovation Technology Co., LTD. (hereinafter referred to as "Yuxiang Zhiyang"). Shuhai Beijing has its own independently developed 5K-AI multimodal new media marketing service platform, providing Yuxiang with specialized services for mature system solutions based on cutting-edge technology architectures.

The customized new media marketing service platform solution will focus on supporting the Douyin live-streaming sales and smart home appliance marketing scenarios of Yuxiang Oxygen Production, covering product promotion, user interaction, and live-streaming e-commerce conversion. It will help Yuxiang Oxygen Production build a precise marketing and brand communication system in the Douyin live-streaming sales and smart home appliance marketing scenarios. As of September 30, 2025, revenue of RMB 2,169,811.32 (approximately US$304,354.48) was obtained from Yuxiang Smart Oxygen.

On September 13, 2025, Shuhai Beijing signed an agreement with Beijing Shuhai Culture Media Co., LTD. (hereinafter referred to as "Culture Media"). Shuhai Beijing has its own independently developed 5K-AI multimodal new media marketing service platform, providing Culture Media with mature system solution specialized services based on cutting-edge technology architecture.

The new media marketing service platform helps the entire industry with marketing services. Relying on the 5G multi-modal form, the platform can form AI intelligent marketing based on the core technology of the group. With content creation and management, data monitoring and analysis, user operation and interaction as marketing themes, it can send advertisements, manage advertisements, and mark the placement areas and attributes, achieving the precise placement function of new media marketing. As of September 30, 2025, revenue from culture and media was RMB 2,264,150.94 (approximately US$317,587.28).

Datasea's 5G+AI multimodal digital platform offers comprehensive and intelligent digital solutions to a wide spectrum of industry clients, spanning from small and micro enterprises to large-scale corporations. By deeply integrating advanced AI technologies with the high-efficiency connectivity capabilities of 5G networks, Datasea not only significantly optimized clients' business processes but also continuously innovated digital service models, business models, ofering robust technological support for sustainable growth.

During the reporting period, the Company's primary revenue was derived from service fees related to its **5G+AI multimodal digital business**. From July 1 to September 30, 2025, this segment generated revenue of **USD 13.32 million**. This performance was mainly driven by the rapid expansion of China's 5G+AI multimodal digital industry, where the Company has maintained a leading position through its first-mover advantages and advanced technological capabilities. Meanwhile, the continuously expanding customer base further supported the steady growth of the business, helping the Company sustain a stable revenue scale within its core operations.

Although the Company's overall revenue experienced a temporary decline during the reporting period, the **5G+AI multimodal digital business**, as the core revenue driver, continued to demonstrate strong resilience and long-term growth potential. Its stable performance was primarily supported by two key factors:

&nbsp;&nbsp;&nbsp;&nbsp;(1) the rapid development of China's 5G+AI multimodal digital
industry, which provides broad market opportunities and favorable policy support for the Company; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) the continuous expansion of the customer base and deeper
technological penetration, which further reinforced this segment's position as a crucial pillar in the Company's overall
revenue structure.

In terms of business composition, several of the Company's technical solutions— such as 5G+ AI multi-modal services for small, medium and micro enterprises, 5G+ AI multi-modal digital rural services, and 5G +AI multi-modal new media marketing services— have achieved commercial revenue realization, generating a total of RMB 6.53 million (approximately USD0.92 million). This signifies that the Company's 5G+AI multimodal digital business has been fully implemented and entered a stage of rapid expansion. Meanwhile, these solutions are characterized by **high gross margins**, which have effectively elevated the Company's overall profitability and demonstrated continuous improvement in profit quality through technological innovation and structural optimization.

**ESG and Corporate Governance – Quarterly Update**

During this quarter, Datasea continued to advance its Environmental, Social, and Governance (ESG) framework with a stronger emphasis on corporate governance, internal control, and data transparency.

Compared with the previous quarter, this quarter's efforts focused on strengthening board oversight, enhancing supply chain compliance, and embedding measurable governance accountability into the Company's daily operations.

**Corporate Governance and Transparency Enhancement**

To further improve its governance structure and ensure transparent, compliant operations, Datasea implemented the following measures during the quarter:

● **Independent Director Expertise:** The newly appointed independent director brings extensive **internal control and risk management experience** from a leading Chinese securities firm, further enhancing the Board's oversight capability in compliance and financial governance.

● **Internal Control and Audit Strengthening:** The Company completed a **special review of its internal control over financial reporting** and launched a **quarterly compliance self-assessment** mechanism across its subsidiaries and VIE structure to ensure transparency and consistency with **SEC and Nasdaq regulatory requirements**.

● **Disclosure and Compliance Coordination:** Datasea established a **quarterly ESG and governance disclosure review mechanism**, jointly overseen by independent directors and senior management, to ensure the accuracy, completeness, and consistency of public filings and ESG data.

● **Whistleblower and Anti-Fraud Mechanism:** The Company upgraded its **internal reporting and investigation system**, adding a dedicated module to the ESG data platform that supports **anonymous reporting, case tracking, and remediation monitoring**, ensuring accountability and ethical conduct.

These initiatives have strengthened Datasea's governance framework and enhanced its transparency, providing a solid foundation for investor confidence, regulatory compliance, and long-term value creation.

**Green Operations – Enhanced Practices**

Shenzhen Jingwei (Shenzhen) Information Technology Co., Ltd.,Datasea's Shenzhen subsidiary continued upgrading its green office operations:

● Introduced a **smart waste sorting system** with a dedicated biodegradable waste channel, increasing sorting accuracy for recyclables to **91%**;

● Optimized paperless workflows, resulting in a **38% year-over-year reduction** in quarterly paper consumption—equivalent to saving approximately **120 mature trees**;

● Office energy consumption per square meter: **0.72 kWh/㎡**, a **15% decrease** year-over-year.

**Employee Development and Innovation Enablement**

The Company further improved its talent development system:

● ESG training coverage among employees rose to **85%**, a **10 percentage point increase** over the previous quarter;

● The number of adopted internal green proposals grew by **35%**.

**Building the ESG Ecosystem**

The following mechanisms were optimized this quarter:

&nbsp;&nbsp;&nbsp;&nbsp;1. **Internal ESG Action Points Program**: Over **90% employee participation**, with a cumulative total of more than **12,000 kilometers** of green commuting completed;

&nbsp;&nbsp;&nbsp;&nbsp;2. **ESG Data Transparency Platform**: Added a **supply chain carbon footprint tracking module**, enabling real-time data integration
from the majority of Tier 1 suppliers.

**Outlook**

Moving forward, Datasea will continue to evolve its ESG strategy toward a governance-centered, data-driven, and performance-based model.

The Company plans to implement supplier carbon accounting and scoring mechanisms, enhance board-level risk and compliance oversight, and link executive performance metrics with ESG objectives.

Through these actions, Datasea aims to set a new governance benchmark among Nasdaq-listed technology companies, ensuring that transparency, accountability, and sustainability remain integral to its long-term growth strategy.

**Going Concern**

The accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the three months ending September 30, 2025 and 2024, the Company had a net loss of approximately $0.20 million and $1.96 million, respectively. The Company had an accumulated deficit of approximately $44.73 million as of September 30, 2025, and cash flow from operating activities of approximately $0.88 million and $(0.73) million for the three months ended September 30, 2025 and 2024, respectively.

The historical operating results indicate the Company has recurring losses from operations which raise the question related to the Company's ability to continue as a going concern although the range of such recurring operating losses has narrowed in recent years. There can be no assurance the Company will become profitable or obtain necessary financing for its business and investments or that it will be able to continue in business and investments. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. As of September 30, 2025, the Company had cash of $745,264.

We will continue to bring in additional investors to support the Company's research and development, marketing and operations.

Use multiple marketing channels to attract customers, enhance brand awareness and increase sales. By optimizing and integrating multiple marketing channels, it can cover a wider range of target customer groups, improve efficiency and effectiveness, meet customer needs, reduce risks, achieve multi-channel comprehensive coverage, and achieve success in market competition.

Strengthen brand image building, design a unique brand identity, unify the brand image, strengthen word-of-mouth marketing, use social media and word-of-mouth network, increase the authority and visibility of the brand, and continue to follow up and maintain the brand image, improve product strength and creativity.

Maintain enterprise competitiveness and achieve sustainable development. Strengthen research and development investment and in-depth understanding of market needs, establish an innovation culture, encourage employees to propose new ideas and creativity, and create an open innovation atmosphere. Reward and recognize the innovation results to stimulate the innovation enthusiasm of employees. Strengthen cooperation and exchanges, establish cooperative relations with universities and scientific research institutions, and jointly carry out research and development projects.

Participate in industry exhibitions, seminars and other activities to exchange experience with peers and obtain the latest technology and information. Optimize product development process, adopt agile development, lean production and other methods to improve product development efficiency and quality. We will pay attention to the protection of intellectual property rights, apply for patents, trademarks and other intellectual property rights in a timely manner, and protect innovation achievements.

If deemed necessary, management could seek to raise additional funds by the way of introducing strategic investors or private or public offerings, or by obtaining loans from banks or others, to support the Company's research and development, procurement, marketing and daily operation. However, there can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. We may be required to pursue sources of additional capital through various means, including debt or equity financings.

Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in the future capital transactions may be more favorable for new investors. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. Our ability to obtain needed financing may be impaired by such factors as the capital markets and our history of losses, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.

Sustainable operation can help enterprises improve operating efficiency, enhance the competitiveness of enterprises, and enhance the market share of enterprises.

Sustainable operation can help enterprises better control risks, reduce operating costs, and ensure the safety of enterprises.

Sustainable operation can help enterprises better grasp market opportunities, grasp market trends, and achieve a win-win situation between enterprises and society.

**Significant Accounting Policies**

Please refer to our significant accounting policies in Note 2 to our consolidated financial statements included in this report.

**New Software Copyright Acquired from July 1, 2025 to September 30, 2025**

**Software Copyright Owned by Shuhai Beijing**

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| | | |
|:---|:---|:---|
| **No.** | **Certification** | **Certificate No.** |
| 1 | Multi-modal Data Intelligent Fusion Analysis System | Ruan Zhu Deng Zi<br> No.16017456 |
| 2 | Visual-linguistic joint emotion recognition system | Ruan Zhu Deng Zi <br> No. 16019239 |
| 3 | Sleep aid device user effectiveness analysis system | Ruan Zhu Deng Zi <br> No. 16017039 |
| 4 | Multi-modal Data Asset Precise Analysis System | Ruan Zhu Deng Zi<br> No.16110664 |
| 5 | Consumer Comprehensive Annotation System | Ruan Zhu Deng Zi <br> No. 16295048 |
| 6 | Service Provider Marketing Service System | Ruan Zhu Deng Zi <br> No. 16295075 |
| 7 | Multi-modal Marketing Plan Management System | Ruan Zhu Deng Zi <br> No. 16295118 |
| 8 | AI Multimodal Order Analysis System | Ruan Zhu Deng Zi <br> No. 16295142 |

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**Software Copyright owned by Xunrui Technology**

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| | | |
|:---|:---|:---|
| **No.** | **Certification** | **Certificate No.** |
| 1 | 5G-AI Multi-modal Big Health Management Platform V1.0 | Ruan Zhu Deng Zi<br> No.16289179 |
| 2 | 5G-AI Multi-modal Digital Rural Service Platform V1.0 | Ruan Zhu Deng Zi <br> No. 16289834 |
| 3 | 5G-AI Multi-modal Email Reading and Management Platform V1.0 | Ruan Zhu Deng Zi<br> No.16281116 |
| 4 | AI Intelligent Marketing Management Platform V1.0 | Ruan Zhu Deng Zi <br> No. 16278887 |
| 5 | 5G-AI SMS Delivery Platform V1.0 | Ruan Zhu Deng Zi<br> No.16289816 |

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**Patents that are currently under application from July 1, 2025 to September 30, 2025**

**Patent owned by Shuhai Beijing**

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| | | |
|:---|:---|:---|
| **No.** | **Certification** | **Request No.** |
| 1. | A brain-computer interface method and system based on real-time closed-loop vibration enhancement | ZL 2025111467773 |
| 2. | A human-computer interaction method based on multi-modal data | ZL 202510900234X |
| 3. | A signal enhancement method and system for brain-computer interface based on acoustic wave coupling | ZL 2025111905621 |

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**Results of Operations**

***Comparison of the three months ended September 30, 2025, and 2024***

The following table sets forth the results of our operations for the three months ended September 30, 2025, and 2024, respectively, indicated as a percentage of net sales. Certain columns may not add up due to rounding.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **% of<br> Revenues** | **2024** | **% of<br> Revenues** |
| Revenues | $13813551 |  | $21081094 |  |
| &nbsp;&nbsp;&nbsp;Cost of revenues | 12644459 | 91.5% | 20884113 | 99.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 1169092 | 8.5% | 196981 | 0.9% |
| &nbsp;&nbsp;&nbsp;Selling expenses | 393817 | 2.9% | 996049 | 4.7% |
| &nbsp;&nbsp;&nbsp;Research and development | 512924 | 3.7% | 103079 | 0.5% |
| &nbsp;&nbsp;&nbsp;General and administrative expenses | 550974 | 4.0% | 1128403 | 5.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 1457715 | 10.6% | 2227531 | 10.6% |
| &nbsp;&nbsp;&nbsp;Loss from operations | (288623) | (2.1)% | (2030550) | (9.6)% |
| Non-operating income, net | 87464 | 0.6% | 59881 | 0.3% |
| Loss before income taxes | (201159) | (1.5)% | (1970669) | (9.3)% |
| Income tax expense |  | -% | -% |  |
| &nbsp;&nbsp;&nbsp;Loss before noncontrolling interest | (201159) | (1.5)% | (1970669) | (9.3)% |
| Less: loss attributable to noncontrolling interest | (133) | (0.001)% | (8680) | (0.04)% |
| Net loss to the Company | (201026) | (1.5)% | (1961989) | (9.3)% |

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***Revenues***

For the three months ended September 30, 2025, revenue was $13,813,551, compared with $21,081,094 in the same period last year. Revenue decreased by $7,267,543, or 34.47%. The main reason for the decline in revenue lies in the Company's proactive contraction of its low-margin 5G AI multimodal traffic business and its continuous optimization of the overall business structure, focusing on high-value-added sectors. Despite a decline in revenue, the Company's gross profit margin significantly increased from 0.93% in the same period of the previous year to 8.46%, demonstrating the effectiveness of the Company's business transformation oriented towards profit quality.

The increase in gross profit margin is mainly attributed to multiple factors such as the optimization of product structure, the adjustment of pricing strategy and the strengthening of cost control.

Firstly, the Company has made strategic adjustments to its business structure. The data from the 2025 annual report has already shown that the proportion of high-margin products and solutions has significantly increased. Acoustic intelligent products and 5G AI multimodal digital solutions have become the main growth engines. This quarter, the sales proportion of acoustic health sleep products, air disinfection products and other series of products has increased, driving the overall gross profit margin to grow. Meanwhile, the Company has proactively reduced its standardized 5G multimodal traffic business with relatively low gross profit margins and shifted to a high value-added revenue structure characterized by technology-driven and customized features, achieving a transformation from "scale growth" to "value growth".

Secondly, in terms of pricing strategy, the Company gradually reduces promotional and discount activities oriented towards market expansion, and increases the average selling price through rational pricing. Although the order volume slightly declined in the short term, the profitability of individual items and the efficiency of cash recovery have significantly improved, thereby enhancing the overall gross profit margin.

Thirdly, the Company continuously reduces the costs of hardware manufacturing and system deployment through technological progress and supply chain optimization. The Company focuses on the direction of "high-end + lightweight", targeting high-value-added customers while also taking into account the demands of the lower-tier markets, achieving a balance between cost and performance in product design. By deepening cooperation with core suppliers, strengthening component integration and optimizing procurement strategies, the Company has significantly reduced hardware costs.

Overall, the above-mentioned structural optimization has enabled the Company to proactively reduce the scale of low-margin businesses while replacing some low-price orders with high-tech and high-margin products and services. This has led to a short-term decline in revenue, but has significantly enhanced the overall profit level. In line with the differentiated product positioning, the Company has implemented a combined pricing strategy, consolidating the achievements of gross profit margin improvement through a multi-level product structure and further optimizing the profit structure.

Overall, the temporary decline in revenue is an active choice made by the Company during the process of optimizing its business structure, while the significant increase in gross profit margin marks a phased achievement of the Company's shift from pursuing scale expansion to focusing on profit quality and sustainable growth. We believe this transformation can effectively lay a solid foundation for the Company's future profit growth and long-term competitiveness.

**Cost of Revenues**

For the three months ended September 30, 2025, we recorded a cost of revenues of $12,644,459, compared to $20,884,113 for the same period in 2024, reflecting a decrease of $8,239,654 or 39.5%. The cost of revenues for the three months ended September 30, 2025, was primarily driven by 5G AI multimodal digital platform fees and cloud platform construction costs paid to suppliers. The decrease in the cost of revenues was mainly due to the less revenue generated from the 5G AI multimodal digital segment.

For the three months ended September 30, 2025, the costs were as follows: $12.30 million for 5G AI multimodal digital, $344,354 for the acoustic intelligence business, and the cost of other was $1,289. For the three months ended September 30, 2024, the cost of 5G AI multimodal digital was $20.88 million, the cost of smart city was $1,716, and the cost of other was $409.

**Gross Profit**

Gross profit for the three months ended September 30, 2025, was $1,169,092 compared to $196,981 for the three months ended September 30, 2024, representing an increase of $972,111. This increase in gross profit was primarily driven by increased sales of high-margin products during the three months ended September 30, 2025 as a result of the Company's adjusting of its revenue focus on high margin products and services.

Gross margin was 8.5% for the three months ended September 30, 2025, compared to 0.9% for the same period in 2024. The improvement in gross margin was primarily driven by the rapid growth of high-margin customized solution projects, along with the Company's significant increase in market share. The growth in gross profit indicates that the Company has substantial development potential in its operations, including:

● **Improved Shareholder Returns:** An increase in gross profit typically leads to higher net profit, which boosts dividend distribution and stock value for shareholders. This, in turn, enhances shareholder confidence and attracts more investors.

● **Consolidation of Market Position:** A higher gross profit makes the Company more competitive, enabling it to attract more customers through price advantages, superior product quality, or service differentiation. This allows the Company to expand its market share and further strengthen its position in the market.

● **Innovation and R&D Investment:** The increase in gross profit provides the Company with more resources for innovation and R&D. This supports the development of new products, improvements to existing offerings, and the ability to adapt to changing market demands, all of which contribute to maintaining technological leadership and sustainable growth.

**Improving Business Model Integration and Market Channels:**

● **Use Multiple Marketing Channels:** By optimizing and integrating various marketing channels, the Company can reach a broader range of target customers, improve efficiency, meet customer needs, and reduce risks. This multi-channel strategy enhances the effectiveness of market coverage, positioning the Company for success in the competitive landscape.

● **Enhance Product Brand:** Strengthening brand image is key to building customer loyalty and recognition. The Company should focus on designing a unique brand identity, unifying its image, and leveraging word-of-mouth marketing through social media to increase brand visibility and authority. Continuous maintenance of the brand's image will improve product strength and creativity.

● **Improve Sales Personnel Effectiveness:** Salespeople should be focused on achieving results, ensuring that every sales activity addresses customer pain points and drives conversions. A deep understanding of customer needs allows for tailored solutions, fostering trust and recognition. Salespeople should continuously enhance their communication and negotiation skills, undergo professional development, and adapt to market changes in order to provide the best possible customer service.

● **Foster Innovative Product Development and Production:** To maintain competitiveness and achieve sustainable development, the Company should increase investment in R&D and deepen its understanding of market needs. Building a culture of innovation, encouraging employee creativity, and collaborating with universities and research institutions will drive progress.

● By focusing on these areas, the Company can strengthen its position in the market, enhance its growth potential, and continue to deliver value to shareholders and customers alike.

**Selling, General and Administrative, and Research and Development Expenses**

Selling expenses for the three months ended September 30, 2025 were $393,817, compared to $996,049 for the same period in 2024, reflecting a decrease of $602,232, or 60.5%. The decrease was mainly due to the decrease of advertising and marketing expenses by $606,071 and decreased service fee by $16,612, which was partly offset by increased payroll expense by $3,625, and increased rent expense and property management fee by $17,386.

Currently, we are focusing on expanding the Company's leading acoustics high-tech technologies and products, while continuing to develop 5G-related applications. We incurred R&D expenses of $512,924 and $103,079 during the three months ended September 30, 2025 and 2024, respectively, representing an increase of $409,845 or 397.6% as compared to the same period of 2024.

Research and development expenses for the three months ended September 30, 2025, totaled $512,924. The Company's research and development efforts have yielded several significant outcomes, including:

As one of the leading service providers in China's 5G AI multimodal digital field, Datasea has developed a range of primary products and services targeting different customer needs. These include:

● 5G AI multimodal new media marketing service platform

● 5G AI multimodal Smart Agriculture (Digital Rural) Service Platform

● 5G AI multimodal platform for small and micro-enterprise services

● 5G AI multimodal traffic top-up platform These 5G AI multimodal digital business applications are designed for various industries in China, incorporating AI-driven payment system applications, big data analytics, and predictive models.

● Datasea has completed a revolutionary upgrade of its core 5G multimodal communication business with AI processing technology. This upgrade enables the AI creation and generation of diverse forms of information, including sound, text, images, and videos. Additionally, it supports efficient transmission and AI-powered digital human marketing functions. This capability empowers numerous industries and clients by enhancing brand recognition, acquiring customers, promoting markets, and boosting revenue.

● In the field of acoustic high-tech business, Datasea is one of the pioneers in introducing the concept of "acoustic effect" globally. The Company exports cutting-edge acoustic high-tech products and solutions worldwide. Combining basic acoustic theory with artificial intelligence, Datasea applies acoustic technology and the acoustic effect technical system to collect and process acoustic data. The Company utilizes non-audible mechanical wave effects to address various challenges. With world-leading acoustic equipment and algorithm models, Datasea's acoustic technologies and products are widely used in sectors such as agriculture, industry, healthcare, and IoT technology. Notably, in the field of ultrasonic technology, the Company applies the effects of ultrasonic cavitation, thermal, and mechanical forces to meet diverse needs, including disinfection and sterilization, crop drying, safety monitoring, beauty and skincare, as well as medical health applications.

● Datasea's Acoustics and 5G intelligent products and solutions serve over 52 million businesses and households across China (with more than 99% being SMEs) by providing digital and intelligent services.

**Market Promotion Team**

The Company has collaborated with three influential Chinese market promotion enterprises, which leverage extensive market resources to recommend new clients for the Company and facilitate the signing of contracts with these new clients.

General and administration expenses decreased $577,429, or 51.2% from $1,128,403 during the three months ended September 30, 2024, to $550,974 during the three months ended September 30, 2025. The decrease was mainly due to decreased professional service fee by $462,196, decreased meal and entertainment expense by $22,630, decreased rent expense by 32,715, decreased welfare expense by $17,574, and decreased amortization expense of intangible asset by $31,075, which was partly offset by increased payroll expense by $15,062.

We are treating human capital as a key indicator to drive business growth and technical innovation, also pursuing better integrated channels with related industries.

***Non-Operating Income (Expenses), net***

Non-operating income was $87,464 for the three months ended September 30, 2025, consisting mainly of interest income of $22 and other income of $87,442. Non-operating income were $59,881 for the three months ended September 30, 2024, consisting mainly of interest income of $4,055 and other income of $55,826.

***Net Loss***

We generated net loss of $201,026 and $1,961,989 for the three months ended September 30, 2025 and 2024, respectively, a $1,760,963 or 89.8% decrease by comparing with the same period of 2024. The decrease in net loss was mainly due to increase in gross profit and decrease in operating expenses as explained above.

***Accounts receivable***

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The operating revenue of the three months ended September 30, 2025, was $13,813,551, the balance of accounts receivable was $1,171,918 at September 30, 2025. In the same period last year, the operating revenue was $21,081,094, and the accounts receivable balance was $18,445 at September 30, 2024. This quarter, the Company further segmented the market, planned eight regional headquarters, strengthened the collection control, and promoted the fund collection of contracted delivery projects, which led to the benign return of funds and had a far-reaching impact on the future.

***Liquidity and Capital Resources***

Historically, we have funded our operations primarily through the sale of our common stock and shareholder loans. To strengthen our ability to continue operating as a going concern, we are focusing on generating recurring revenues and sustainable operating cash flows.

We expect to generate revenue through expanding our current 5G AI multimodal digital business and acoustic intelligence business, along with continuous product innovation and development as well as various types of value-added services. To maintain sufficient working capital to support our operations and finance the future growth, we anticipate addressing any cash flow shortfall through financial support from our majority stockholders (who are also our board members or officers) and issuing securities public or private issuance of securities. However, such additional financial resources may not be available to us on favorable terms, or at all, if and when needed.

As of September 30, 2025, we had a working capital deficit of $1,364,756 or a current ratio of 0.67:1, and current assets in the amount of $2,717,887. As of June 30, 2025, our working capital deficit was $704,978, with a current ratio of 0.81:1, and current assets were $2,922,272.

We expect the Company to continue supporting its ongoing operations and financing through revenue growth and increased financing activities.

On October 3, 2024, Datasea entered into subscription agreements, with three non-U.S. investors, including Zhixin Liu, the Company's Chairwoman of the Board, Chief Executive Officer, President and Secretary, and Fu Liu, a Director of the Company, pursuant to which the Company sold to investors an aggregate of 1,932,224 shares (of the Company's Common Stock at the purchase price of approximately $4.0 million. The Company's used net proceeds from the sale of these shares for investments in acoustic high-tech related products design upgrade, working capital for mass production and on-line sales, acquiring intellectual property, and working capital for the promotion and sales of AI multimodal digital business products.

However, there is no assurance that the Company will be able to secure additional working capital on commercially viable terms, or at all.

The following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended September 30, 2025 and 2024, respectively.

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Net cash provided by (used in) operating activities | $879299 | $(732655) |
| Net cash used in investing activities | $(1551009) | $(47520) |
| Net cash provided by financing activities | $792022 | $1490992 |

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***Cash Flow from Operating Activities***

Net cash provided by operating activities was $879,299 during the three months ended September 30, 2025, compared to net cash used in operating activities of $732,655 during the three months ended September 30, 2024, a decrease in cash outflow of $1,611,954.

The decrease in cash outflow was mainly due to (1) decreased cash outflow on prepaid expenses and other current assets by $457,066, (2) decreased cash outflow in accounts payable by $709,705, and (3) decreased net loss by $1.76 million, which is partly offset by decreased payment received from customers for unearned by $1.21 million.

***Cash Flow from Investing Activities***

Net cash used in investing activities totaled $1.55 million for the three months ended September 30, 2025, which consisted of cash paid for acquisition of intangible assets by $1.55 million. Net cash used in investing activities totaled $47,520 for the three months ended September 30, 2024, which consisted of cash paid for the acquisition of office furniture and equipment of $2,752, and cash paid for acquisition of intangible assets by $44,768.

***Cash Flow from Financing Activities***

Net cash provided by financing activities was $792,022 during the three months ended September 30, 2025, which was from net proceeds from related parties of $90,683, and proceeds from loans of $701,339. Net cash provided by financing activities was $1,490,992 during the three months ended September 30, 2024, which was from the net proceeds from sale of our common stock through an equity financing of 1,958,751, which was partly offset by repayment of loan payables of $40,815 and repayment to related parties of $426,944.

***Loan from banks***

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On April 10, 2024, Guozhong Times entered a loan agreement with Bank of Beijing for the amount of RMB 500,000 ($70,158) with a term of 12 months with a preferential annual interest rate of 3.45% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $619 interest expense for this loan. On April 9, 2025, the loan was paid in full.

On April 23, 2024, Guozhong Times entered a loan agreement with Beijing Rural Commercial Bank Economic and Technological Development Zone Branch for the amount of RMB 550,000 ($77,173) with a term of 12 months with the annual interest rate of 4.95% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $978 interest expense for this loan. On April 23, 2025, the loan was paid in full.

On April 25, 2024, Shuhai Beijing entered a loan agreement with Industrial Bank Co., Ltd for the amount of RMB 2,000,000 ($280,631) with a term of 12 months with a preferential annual interest rate of 3.88% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $2,786 interest expense for this loan. On April 24, 2025, the loan was paid in full.

On May 28, 2024, Guozhong Times entered a loan agreement with China Everbright Bank for the amount of RMB 1,000,000 ($140,315) with a term of 12 months with the annual interest rate of 3.4% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $1,221 interest expense for this loan. On May 27, 2025, the loan was paid in full.

On June 20, 2024, Shuhai Beijing entered a loan agreement with Bank of China for the amount of RMB 4,000,000 ($561,262) with a term of 12 months with a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $nil and $3,034 interest expense for this loan. On June 19, 2025, the loan was paid in full.

On March 31, 2025, Shuhai Beijing entered a credit line agreement with Bank of China for the amount of RMB 6,000,000 ($835,864) with a term of 12 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $4,947 and $nil interest expense for this loan. As of September 30, 2025, $844,417 was recorded as current liabilities. Liu Fu is the guarantor of this loan agreement.

On May 20, 2025, Guozhong Times entered a credit line agreement with Beijing Bank for the amount of RMB 3,000,000 ($419,076) with a term of 12 months, the credit line has a fixed annual interest rate of 3.00% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $3,226 and $nil interest expense for this loan. As of September 30, 2025, $422,208 was recorded as current liabilities.

On May 21, 2025, Guozhong Times entered a loan agreement with Beijing Rural Commercial Bank Economic and Technological Development Zone Branch for the amount of RMB 1,000,000 ($139,692) with a term of 12 months with a fixed annual interest rate of 4.95% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $1,736 and $nil interest expense for this loan. As of September 30, 2025, $140,736 was recorded as current liabilities. Liu Zhixin is the guarantor of this loan agreement.

On June 6, 2025, Shuhai Beijing entered a credit line agreement with Bank of China for the amount of RMB 1,500,000 ($210,500) with a term of 12 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. On June 11, 2025, Shuhai Beijing entered another credit line agreement with Bank of China for the amount of RMB 2,500,000 ($350,800) with a term of 12 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.30% to be paid every 21st of the third months of each quarter. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $3,298 and $nil interest expense for this loan. As of September 30, 2025, $562,944 was recorded as current liabilities. Liu Fu is the guarantor of these two credit lines.

On June 6, 2025, Shuhai Beijing entered a credit line agreement with Beijing Bank for the amount of RMB 3,000,000 ($419,076) with a term of 12 months, the credit line has a fixed annual interest rate of 2.70% to be paid every 21st of each month. For the three months ended September 30, 2025 and 2024, the Company recorded and paid $2,903 and $nil interest expense for this loan. As of September 30, 2025, $422,208 was recorded as current liabilities. Liu Fu is the guarantor of this loan agreement.

On September 23, 2025, Shuhai Beijing entered a credit line agreement with China Construction Bank for the amount of RMB 3,000,000 ($422,208) with a term of 36 months from the first withdrawing date, the credit line has a preferential annual interest rate of 2.55% to be paid every 20th of each Month. As of September 30, 2025, $422,208 was recorded as long term liabilities. Liu zhixin is the guarantor of this loan agreement.

On September 30, 2025, Guozhong Times entered a loan agreement with Bank of China for the amount of RMB 2,000,000 ($281,472) with a term of 12 months with an annual interest rate of 2.35% to be paid every 21st of the third months of each quarter. As of September 30, 2025, $281,472 was recorded as current liabilities. Liu zhixin is the guarantor of this loan agreement.

 **

***Financial index analysis***

 **

For the three months ended September 30, 2025 and September 30, 2024, the Company's gross profit was $1,169,092 and $196,981, respectively. Gross profit increased by $972,111 from the same period last year, an increase of 493.50% from the same period last year, and the current period increased market share and revenue significantly, so the gross margin increased simultaneously. The increase in gross profit margin means that the Company's development and operation has great potential ability. The reasons for the increase in gross profit are analyzed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. The business structure has been optimized, and the proportion
of high-margin businesses has increased. For instance, the revenue of high-margin acoustic intelligent products has seen a significant
rise compared to the previous year. The execution of 5G AI multimodal technology solution contracts has also provided support for the
increase in gross profit margin.

&nbsp;&nbsp;&nbsp;&nbsp;2. Effective cost control leads to product differentiation.
Continuous research and development innovation can launch products with unique functions and advantages, thereby supporting higher pricing
and increasing gross profit.

&nbsp;&nbsp;&nbsp;&nbsp;3. Due to market factors, the market share of 5G AI multimodal
traffic business has expanded. The Company has gained an advantage in market competition. With an expanded market share, it will have
stronger pricing power and thereby increase gross profit.

For the three months ended September 30, 2025 and September 30, 2024, the research and development expenses were $512,924 and $103,079 respectively. The investment in research and development increased by $409,845, representing a 397.60% growth compared to the same period last year. Through increasing research and development investment, we are actively laying out new product tracks. This strategic investment reflects that the Company is accumulating strength and injecting strong momentum for future performance growth. This forward-looking layout will not only help us seize the technological high ground in emerging markets, but also build a product matrix advantage for the future. We firmly believe that the current continuous investment in innovation will surely translate into tomorrow's market leadership and sustained growth in value returns.

For the three months ended September 30, 2025 and September 30, 2024, the operating expenses were $1,457,715 and $2,227,531 respectively. The operating expenses decreased by $769,816, representing a 34.56% reduction compared to the same period last year.

Research and development investment has continued to increase, but overall operating expenses have shown a downward trend. The reduction in operating expenses reflects the overall effect of an enterprise in improving input-output efficiency and streamlining and compressing management expenses. This is not only an optimization of financial data, but also a concentrated manifestation of the enterprise's outstanding operational level, profound management ability and forward-looking strategic vision. This move will drive enterprises into a new development pattern with stronger risk resistance, higher business agility and more aggressive market competitiveness, thus laying a solid foundation for sustained growth and long-term success.

As of September 30, 2025 and June 30 2025, the Company's cash balance was $745,264 and $620,807, respectively, an increase of $124,457, or 20.04%, from the beginning of the period. The main reason is that the Company successfully obtained bank loans and an increase in gross profit during this period enhanced the visibility of the Company, enhanced the competitiveness of the Company, provided strong financial support for the Company's business expansion and projects, and used for technology research and development, market expansion, corporate brand building, etc., laying a solid foundation for the sustainable development of the Company.

The increased demand for products and services brought about by the Company's increased sales revenue and the expansion of financing channels brought about by a number of capital inflows, the Company to optimize the asset structure, enhance the corporate capital capacity and liquidity.

As of September 30, 2025 and June 30, 2025, the intangible assets were $4,613,692 and $3,495,984 respectively. The intangible assets increased by $1,117,708, representing a 31.97% increase compared to the beginning of the period .

Increasing the proportion of intangible assets indicates that the Company is undergoing a strategic transformation towards a "light-asset, high-value" model. Through external acquisition patents related to AI multi-modal digital business, enterprises can quickly obtain mature technologies and resources, respond promptly to market changes, seize the initiative, and efficiently expand new fields, new markets or new product lines with such assets. While actively laying out external resources, the Company still insists on internal research and development, maintaining a continuous and organic innovation capability, which lays a solid foundation for its long-term stable development.

As of September 30, 2025 and June 30, 2025, the outstanding bank loans were $2,673,985 and $2,374,767 respectively. The amount increased by $299,218 , representing a 12.60% increase compared to the beginning of the period. The increase in the bank's short-term loan all come from well-known Chinese banks, such as China Construction Bank and Bank of China, directly reflects the Company's excellent credit standing, healthy financial performance, and stable debt repayment capacity. This move not only enhances our financial liquidity, providing a solid guarantee for seizing market opportunities, but also indicates that the bank holds a highly optimistic attitude towards our future development prospects, heralding a more stable bank-enterprise partnership.

For the three months ended September 30, 2025 and September 30, 2024, the gross profit margins were 8.46% and 0.93% respectively. The overall gross profit margin of the Company has significantly improved. This positive change is mainly attributed to the Company's proactive and successful product structure optimization strategy, which strategically increased the sales proportion of high-margin products. The core driving factors come from two innovative product lines: acoustic intelligent products and 5G-AI multi-modal technology solutions. This financial result not only proves the correctness of the Company's strategic decisions, but also clearly reflects that our product innovation has been recognized by the market, and the enterprise is steadily developing in the direction of high quality and high efficiency.

For the three months ended September 30, 2025 and September 30, 2024, the Company's losses were $201,026 and $1,961,989 respectively. The Company's losses have significantly decreased, and its business situation has shown a stable and recovering trend. This indicates that the strategic adjustments, cost control, and business optimization measures implemented by the Company have begun to yield results, and they have started to achieve substantial revenue generation. This positive change marks that the Company's operations have gradually returned to normal, laying a solid foundation for our anticipation of future profit prospects. The Company's future development is promising.

As of September 30, 2025 and June 30, 2025, the shareholders' equity was $3,023,673 and $2,952,208 respectively, increasing by $71,465, representing a 2.42% increase compared to the beginning of the period. The increase in the total shareholder equity of the Company is a core indicator of the enhancement of the enterprise's capital strength. It not only directly boosts the intrinsic value of the enterprise but also significantly enhances its financial stability and resilience in resisting internal and external risks, laying a solid foundation for the enterprise's sustainable operation and long-term development.

***Q1 FY2026 Outlook and Strategic Priorities***

Overview

Building upon the strong growth momentum and technological breakthroughs achieved in fiscal year 2025, **Datasea Inc.** has entered fiscal year 2026 with a solid foundation and a clear focus on profitability, global expansion, and technology-driven transformation. The Company's dual business engines—**Acoustic High-Tech** and **AI Multimodal Digitalization**—continue to reinforce each other, driving cross-industry integration and sustained revenue growth.

Datasea's management expects fiscal year 2026 to mark a pivotal year characterized by accelerated commercialization of its proprietary **"Acoustics + AI + Application Scenarios"** strategy, deeper international market penetration, and optimization of its product and service portfolio to enhance overall margins and long-term competitiveness.

⮚ Strengthened R&D Investment and Technological Upgrading

Datasea will continue to expand R&D investment to advance its acoustic and AI multimodal technology platforms.

● In the **acoustic segment**, the Company will focus on deepening the industrialization of its **low-intensity focused ultrasound (tFUS)** and **AI-driven neuromodulation** technologies, expanding applications from medical intervention and health management to industrial diagnostics and precision agriculture.

● Datasea will also accelerate next-generation product development based on **multi-band acoustic systems** (ultrasound, infrasound, and Schumann resonance), aimed at forming scalable and standardized technology modules adaptable to various industries.

● In the **AI multimodal segment**, the Company plans to upgrade its distributed training architecture and Transformer-based multimodal models to enhance cross-modal data understanding, intelligent prediction, and generative capabilities. The integration of **DeepSeek 2.0** will further improve the efficiency and scalability of multimodal digital solutions.

⮚ Market Expansion and Globalization

Datasea's strategic focus for fiscal year 2026 is to **expand international commercialization while consolidating domestic market leadership**.

● In the **United States**, through its wholly owned subsidiary **Datasea Acoustics LLC**, the Company will accelerate product registration, sales channel expansion, and strategic partnerships with local distributors in healthcare, wellness, and consumer electronics. Initial sales in the U.S. market have demonstrated positive momentum, validating the global demand for Datasea's acoustic health and sterilization technologies.

● In **China**, Datasea will continue to scale its retail presence in the beauty, healthcare, and environmental protection sectors through both e-commerce and offline channels, while strengthening its B2B relationships via integrated acoustic + AI solutions.

● The Company is also preparing for entry into the **European and Asia-Pacific markets**, focusing on collaborations with IoT and smart-health technology partners to accelerate the adoption of "Acoustic + AI" applications globally.

⮚ Strategic Partnerships, M&A, and Ecosystem Expansion

Datasea plans to actively pursue **strategic partnerships and targeted M&A** to strengthen its industrial and technological ecosystem:

● The Company will seek acquisitions in **acoustics, smart sensing, and AI data processing** to enhance its global patent portfolio and technology integration capabilities.

● Through partnerships with **leading research institutions** such as the Chinese Academy of Sciences and Tsinghua University, Datasea will accelerate the transfer and commercialization of its latest research outcomes, including sound-wave coupling, acoustic BCI (brain-computer interface), and neuro-regulation technologies.

● The Company also aims to form cross-industry alliances in **smart manufacturing and digital agriculture**, enabling "Acoustics + AI" solutions to penetrate broader markets and enhance recurring revenue potential.

⮚ Product Portfolio Optimization and Profitability Enhancement

Following the strong revenue growth and margin improvement achieved in fiscal 2025, Datasea will continue to **optimize its product mix** toward high-margin and technology-driven offerings:

● The Company will prioritize acoustic health devices, medical-grade neuromodulation systems, and AI-based digital solutions as its core profit centers.

● The **business model transition** from "hardware sales" to "hardware + AI platform" integration will further improve profitability by enabling recurring service income and deeper customer engagement.

● Standardized modular product lines in sterilization, healthcare, and IoT will enhance economies of scale and accelerate global market replication.

⮚ Financial and Operational Outlook

Datasea reaffirms its strategic objective of **sustained revenue growth and profitability enhancement** in fiscal 2026.

● The Company expects continued growth from existing long-term 5G + AI digital contracts in China, alongside significant revenue contribution from the acoustic product commercialization in both domestic and international markets.

● R&D and operational investments will be disciplined and ROI-driven, balancing innovation with efficiency.

● Datasea anticipates **further gross margin improvement** in fiscal 2026 as product mix shifts toward AI-driven acoustic solutions and high-value hardware offerings.

⮚ Market Trends and Industry Outlook

Datasea believes the convergence of **acoustic intelligence and AI multimodal technologies** will continue to drive structural growth opportunities across key sectors:

&nbsp;&nbsp;&nbsp;&nbsp;1. **Healthcare and Wellness:** Rising global demand for non-invasive
 and precision health solutions positions Datasea's tFUS and AI neuromodulation systems
 for large-scale commercialization.

&nbsp;&nbsp;&nbsp;&nbsp;2. **Smart Manufacturing:** The integration of acoustics and AI will
 support predictive maintenance, fault detection, and precision processing in advanced manufacturing.

&nbsp;&nbsp;&nbsp;&nbsp;3. **Agriculture and Green Technologies:** The application of acoustic
 technologies in pest control, crop enhancement, and preservation will drive smart, sustainable
 agriculture.

&nbsp;&nbsp;&nbsp;&nbsp;4. **Consumer Health:** Personalized and home-based acoustic devices
 (sleep, air sterilization, cognitive regulation) will expand market penetration through e-commerce
 and cross-border retail.

&nbsp;&nbsp;&nbsp;&nbsp;5. **Global Integration:** As Datasea continues to expand internationally,
 it will leverage its U.S. and Chinese operational bases to form a dual-market synergy, reinforcing
 its role as a **global leader in acoustic intelligence and AI multimodal innovation**.

⮚ Corporate Compliance and Internal Control System

The Company places a strong emphasis on **corporate governance, regulatory compliance, and internal control**, continuously improving its risk management framework to ensure stable, transparent, and sustainable operations amid rapid business growth and international expansion.

● **Corporate Governance:** Datasea strictly adheres to the regulatory requirements of the **U.S. Securities and Exchange Commission (SEC)** and **Nasdaq**, maintaining a sound governance structure through its Board of Directors, Audit Committee, and Compensation Committee to enhance decision-making transparency and oversight.

● **Internal Control:** The Company continues to optimize its financial management, information disclosure, and compliance review procedures, establishing a closed-loop system of "risk identification–assessment–early warning–rectification" to ensure the authenticity, accuracy, and traceability of business operations and financial reporting.

● **Compliance and Data Security:** Datasea is strengthening its global compliance system and data governance framework in line with international standards such as the **General Data Protection Regulation (GDPR)** and U.S. data privacy laws. These measures aim to protect information security, intellectual property, and regulatory compliance, thereby providing a solid institutional foundation for sustainable global development.

**Social Responsibility and Sustainability**: Continue adhering to the principle of "innovation-driven, green development," actively promoting environmentally friendly technologies and products, and contributing to global sustainability.

**Off-Balance Sheet Arrangements**

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe that the critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

*Critical Accounting Estimates*

The preparation of the Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. These estimates and judgments include, but are not limited to, revenue recognition, sales return allowance, the allowance for bad debt, valuation allowance of deferred tax assets, income taxes, the useful lives of long-lived assets and assumptions used in assessing impairment of long-lived assets. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual amounts may differ from the estimated amounts, such differences are not likely to be material.

*Critical Accounting Policies*

Accounts Receivable, Net

On May 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Accounting Standards Codification ("ASC") 326). This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss ("CECL") methodology. CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts and generally applies to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities, and some off-balance sheet credit exposures such as unfunded commitments to extend credit. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. In addition, CECL made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not they will be required to sell.

The Company adopted ASC 326 and all related subsequent amendments thereto effective July 1, 2023, using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposures. The was no transition adjustment of the adoption of CECL.

Accounts receivable represent the amounts that the Company has an unconditional right to consideration, which are stated at the historical carrying amount net of allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including historical losses, the age of the receivable balance, the customer's historical payment patterns, its current credit-worthiness and financial condition, and current market conditions and economic trends. Accounts are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of September 30, 2025 and June 30, 2025, the Company had a $0 bad debt allowance for credit losses.

Inventories, Net

Inventory is comprised principally of intelligent temperature measurement face recognition terminal and identity information recognition products, and is valued at the lower of cost or net realizable value. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances. There were $154,049 and $152,907 allowances for slow-moving and obsolete inventory (mainly for Smart-Student Identification cards) as of September 30, 2025 and June 30, 2025, respectively.

Revenue Recognition

The Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606).

The core principle underlying FASB ASC 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. The Company's revenue streams are identified when possession of goods and services is transferred to a customer.

FASB ASC Topic 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies each performance obligation.

The Company derives its revenues from product sales, software sales, and 5G messaging service contracts with its customers, with revenues recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via product sale contracts and professional service contracts, with performance obligations identified. The transaction price, such as product selling price, and the service price to the customer with corresponding performance obligations are fixed upon acceptance of the agreement. The Company recognizes revenue when it satisfies each performance obligation, the customer receives the products and passes the inspection and when professional service is rendered to the customer, collectability of payment is probable. These revenues are recognized at a point in time after each performance obligation is satisfied. Revenue is recognized net of returns and value-added tax charged to customers.

Recently Issued Accounting Pronouncements

In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements — Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative." The ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The ASU was issued in response to the SEC's August 2018 final amendments in Release No. 33-10532, Disclosure Update and Simplification that updated and simplified disclosure requirements that the SEC believed were duplicative, overlapping, or outdated. The guidance in ASU 2023-06 is intended to align GAAP requirements with those of the SEC and to facilitate the application of GAAP for all entities. The amendments introduced by ASU 2023-06 are effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. If, by June 30, 2027, the SEC has not removed the applicable requirements from its existing regulations, the pending content of the associated amendment will be removed from the ASC and will not become effective for any entities. Early adoption is permitted. The adoption of ASU 2023-06 is not expected to have a material impact on the Company's consolidated financial statements or related disclosures.

On November 4, 2024, the FASB issued an ASU No. 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024 03") to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions (such as cost of sales; selling, general, and administrative expenses; and research and development). The amendments in the ASU require disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1.Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same tabular disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4) Disclose the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. In January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date ("ASU 2025-01"). The amendments, as clarified by ASU 2025-01, are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact that ASU 2024-03 will have on its consolidated financial statements and related disclosures.

In January 2025, the FASB issued ASU 2025-01 Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40). The FASB issued ASU 2024-03 on November 4, 2024-03 states that the amendments are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Following the issuance of ASU 2024-03, the FASB was asked to clarify the initial effective date for entities that do not have an annual reporting period that ends on December 31 (referred to as non-calendar year-end entities). Because of how the effective date guidance was written, a non-calendar year-end entity may have concluded that it would be required to initially adopt the disclosure requirements in ASU 2024-03 in an interim reporting period, rather than in annual reporting period. The FASB's intent in the basis for conclusions of ASU 2024-03 is clear that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that the adoption of ASU 2025-01 will have on its consolidated financial statement presentation or disclosures.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's consolidated financial position, statements of comprehensive income and cash flows as of September 30, 2025.

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

As a "smaller reporting company", we are not required to provide the information required by this Item.

**ITEM 4. CONTROLS AND PROCEDURES**

**Disclosure Controls and Procedures**

The management of this Company, including the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing and maintaining adequate internal controls regarding the Company's financial reporting. The management has evaluated the effectiveness of the Company's internal controls in terms of financial reporting during the reporting period. When conducting this assessment, the management used the standards stipulated in the "Internal Control - Integration Framework" issued by the Redway Commission Sponsorship Organization Committee (COSO).

Due to the deficiencies described below, the management concluded that during the reporting period from July to September 2025, the internal controls of the Company regarding financial reporting were not effective. These defects are more common in many small companies with fewer employees, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. Although an internal audit department has been established,
due to insufficient staffing, no internal audit activities have been carried out (control deficiencies).

&nbsp;&nbsp;&nbsp;&nbsp;2. Although the Company has established a relatively complete
internal control system to ensure the effective implementation of management decisions and smooth communication of information, it has
failed to track the effectiveness of control implementation in a timely manner. The testing cycle for the effectiveness of internal control
should be shortened and the testing frequency increased.

&nbsp;&nbsp;&nbsp;&nbsp;3. The Company lacks accounting personnel who have received
training in Generally Accepted Accounting Principles (GAAP) of the United States.

I. Control the environment

(1) Governance structure

The Company has established a four-level governance structure: shareholders' meeting - board of directors - independent directors - executive management. The board of directors has established an audit committee, a remuneration committee, a strategy committee and a nomination Committee. The board of directors consists of five directors, three of whom are independent directors, ensuring the independence of the board's decision-making.

(2) Organizational Structure and Responsibilities

The Company's organizational structure is set up based on business lines and functional support, clearly defining the responsibilities of the finance department, international department, risk control department, Operations Department and legal department. The risk control department takes the lead in the internal control system and risk assessment work. Each business department shall appoint an "internal control contact person" to be responsible for coordinating daily risk control matters.

(3) Internal audit

Although the Company has established an internal audit department led by the director of internal audit and a legal team, due to the rapid business expansion and challenges in personnel allocation, internal audit activities were not carried out during the reporting period.

(4) Incentive policies

The Company has established a human resources management system, covering recruitment, training, assessment and reward and punishment measures. Personnel are subject to strict management from the probation period to being converted to regular employees. After passing the comprehensive assessment, employees will be included in the regular staff team and sign the job responsibility and performance commitment letter. The human resources department conducts performance appraisals every month, and the results serve as the basis for salary distribution. According to the "Performance Appraisal Measures", employees will be rewarded or punished accordingly. For key positions (such as Chief Financial Officer, Vice president, etc.), the Company implements background checks and qualification reviews. During the reporting period, the staff turnover rate of key positions was less than 5%.

(5) Company culture

The Company adheres to the core values of "compliant operation and integrity as the foundation". The management has signed the compliance commitment letter. The internal office system has an "Internal Control Column" and regularly conducts compliance case analyses and policy interpretations. During the reporting period, in order to better implement the Company's acquisition and merger plans, the Company sorted out and studied the merger and acquisition laws and regulations of the Nasdaq market for the key management team, laying a compliance foundation for future merger and acquisition and reorganization operations.

During the Company's ten-year development, compliance and integrity have been deeply integrated into management and the daily work of all employees. As of the reporting period, the management has not committed any violations or illegal acts. The board of directors consists of five directors, three of whom are independent directors, basically meeting the requirements for independence. The Company has also formulated committee management rules and human resource management rules to clarify employment standards and reward and punishment mechanisms, and to motivate outstanding employees.

II. Risk Management

(1). International risk control

Risk control begins with identification and assessment. We assess the political, economic, legal, cultural and foreign exchange risks in international business by combining SWOT analysis and risk checklists. By collecting internal and external information, identify the sources of risks, and use quantitative and qualitative tools to assess the extent of their impact and the possibility of occurrence. This lays the foundation for formulating differentiated risk control strategies that match the global business layout, including cross-border transaction monitoring, foreign exchange risk management, international legal compliance review, and anti-money laundering mechanisms. The data-driven model has been strengthened to achieve timely identification and mitigation of risks. Phased implementation, clear responsibility division and real-time monitoring ensure effectiveness and adaptability to the constantly changing global environment.

(2). Market competition risk

The operation department of the Company submits a market research report to the management every quarter. This report covers consumer preferences, competitors' product strategies, and industry technology trends. Through the research report, the Company has gained an understanding of the development opportunities of brain-computer interfaces and related technologies. Especially the integration of 6G communication services with the Company's acoustic business.

(3). Product iteration risk

The Company has established a product life cycle management mechanism. For products with a sales decline of ≥10% for two consecutive years, the R&D, marketing and sales departments will jointly lead an iterative assessment. The iteration plan will clearly define the development cycle, budget and target market. New products must go through a three-month pilot sales period and have a customer satisfaction rate of no less than 80% before entering mass production to ensure consistency with market demand.

(4). Investment decision-making risks

Major projects (mergers and acquisitions, reorganizations, and investments) need to have feasibility studies conducted by dedicated M&A teams, finance departments, and legal departments. This includes market analysis, return on investment assessment (≥8% to proceed), risk assessment, and legal compliance review. The project can only proceed with the approval of the management.

Merger and Acquisition tracking: Monthly project progress monitoring (funds, milestones). The finance department assesses the return on investment every month. If the delay exceeds 20% or the return on investment is lower than the expected 50%, a project review will be triggered. If there is no improvement after corrective measures are taken, the project will be terminated or divested to minimize losses.

(5). Risk of staff turnover

- Core technical personnel retention: Competitive compensation and equity incentives, career development opportunities, training, and a stronger corporate culture can reduce the risk of staff turnover.

- Employee skills enhancement: Continuous training and employee handbooks ensure that skills are in line with business needs.

III. Control activities.

Control activities cover all business processes, including procurement, inventory, cash management, sales and cost control. Control measures ensure consistency among physical goods, invoices and cash flows. Authorization, verification, auditing, performance evaluation, asset security and separation of duties are carried out to ensure that management instructions are properly implemented.

&nbsp;&nbsp;&nbsp;&nbsp;(1) The Company continues to improve its internal control system,
covering aspects such as budgeting, procurement, asset management, credit control, internal auditing and cost accounting. Comprehensive
internal control policies have been established, including procurement control, inventory management and anti-fraud guidelines.

The internal control department organizes all departments to participate in the budget preparation and execution. The annual budget covers funds, assets, projects, revenues and costs, and must be strictly approved by the finance department, the Chief Executive Officer (CEO) and the Chairman of the board. A monthly rolling budget is adopted, and the financial control center analyzes the implementation results. Every quarter, after a review or audit is completed by a Certified Public Accountant (CPA) in the United States, a trial balance sheet review will be conducted.

(2). The Company provides the Audit committee with quarterly summaries of internal control and audit reports

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| | |
|:---|:---|
| (3). | The management believes that closer cooperation between internal and external legal teams can proactively reduce risks. During the reporting period, in the process of conducting external cooperation (the confidentiality agreement in the United States and Yizhimei), the management team has closely collaborated with lawyers and the internal control department to jointly discuss the methods of external cooperation and the contents of the agreements, thereby reducing the Company's operational risks. |

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IV. Monitor execution

According to COSO's "Internal Control - Integrated Framework", monitoring refers to the continuous assessment of the effectiveness of control, timely identification and correction of deficiencies, and ensuring that control measures can adapt to organizational goals and the constantly changing environment.

During the reporting period, the Company established a coordination mechanism between the internal control department and the legal department. This mechanism includes interviews with department heads, handling of identified risk areas, and ensuring the implementation of corrective measures. However, due to the limited staffing, continuous monitoring of daily operations has not been carried out, thus making it impossible to promptly identify and correct existing deficiencies.

V. Implementation of remedial measures

In the annual report, the Company has formulated the following four remedial measures for the implementation of internal control. The following is the implementation status of the remedial measures this quarter

(1). Independent internal audit: Conduct at least one independent assessment led by internal audit each year, covering high-risk areas, and track and handle previous issues.

(2). Tracking register: Maintain logs of problem records, corrective actions, responsible persons, schedules and verification results, and report to the Audit Committee on a regular basis.

During the reporting period, the Company has established a risk supervision ledger, conducting ledger statistics on the problems that emerged in supervision and operation, and recording the responsible persons, rectification measures, and tracking the subsequent results. In the future work, the Company will implement the risk ledger management system more strictly to gradually reduce the occurrence of risk events.

(3). Participation of senior management: The chairman or CEO takes the lead in establishing quarterly internal control rectification meetings to review the progress and strengthen senior supervision.

During the reporting period, the Company has held the internal risk control meeting for this quarter. All key management personnel, including the chairman and the president, have studied the regulations on information disclosure and delisting risks to better meet the compliance requirements of the Nasdaq market. In the future, the Company will continue to hold internal control meetings in a timely manner based on the occurrence of risks.

(4). Enhance internal audit capabilities: Increase the number of internal audit personnel and provide professional training (such as COSO framework, data analysis, fraud detection, etc.) to strengthen the supervisory function. The Company is actively seeking relevant matching personnel.

(5). Link to performance evaluation: Incorporate "internal control monitoring results" into the performance evaluation of departments and employees, making compliance execution a key performance indicator.

This quarter, no violations occurred in the Company. Therefore, the assessment results have been incorporated into the employee performance evaluation system for this quarter. In the following quarters, this system will be implemented more seriously and effectively.

**Changes in Internal Control over Financial Reporting**

Other than as described above, there have been no material changes in the Company's **internal control over financial reporting** during the most recent fiscal period that have materially affected, or are reasonably likely to materially affect, the Company's internal controls. The Company remains committed to continuously enhancing its internal control framework to ensure **operational efficiency, regulatory compliance, and financial transparency**.

**PART II OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

We are not a party to any pending legal proceedings and no such proceedings are known to be contemplated.

**ITEM 1A. RISK FACTORS**

As a "smaller reporting company", we are not required to provide the information required by this Item.

**ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

**Shares to Independent Directors as Compensation**

During the three months ended September 30, 2025, the Company recorded $3,900 stock compensation expense to independent directors through the issuance of shares of the Company's common stock at the market price of the stock issuance date, pursuant to the 2018 Equity Incentive Plan.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Not applicable.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* Item 407(c)(3) of Regulation
 S-K: During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders
 may recommend nominees to the Board of Directors.

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Item 408(a) of Regulation S-K – Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading Arrangements -* During the three months ended December 31, 2024, no director or officer of the Company adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

**ITEM 6. EXHIBITS.**

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| 31.1 | [Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302](ea026433101ex31-1_datasea.htm) |
| 31.2 | [Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302](ea026433101ex31-2_datasea.htm) |
| 32.1\* | [Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350](ea026433101ex32-1_datasea.htm) |
| 32.2\* | [Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350](ea026433101ex32-2_datasea.htm) |
| 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 XBRL |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

\* The certifications attached as Exhibits 32.1 and 32.2 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

**SIGNATURES**

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **DATASEA INC.** | **DATASEA INC.** |
| Date: November 13, 2025 | By: | /s/ Zhixin Liu |
|  | Name: | Zhixin Liu |
|  | Title: | President |
|  |  | Chief Executive Officer |
|  |  | *(principal executive officer)* |

---

---

| | | |
|:---|:---|:---|
| Date: November 13, 2025 | By: | /s/ Mingzhou Sun |
|  | Name: | Mingzhou Sun |
|  | Title: | Chief Financial Officer |
|  |  | *(principal financial officer and <br> principal accounting officer)* |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Zhixin Liu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Datasea Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 13, 2025

---

| |
|:---|
| /s/ Zhixin Liu |
| Zhixin Liu |
| Chief Executive Officer<br> (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Mingzhou Sun, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Datasea Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 13, 2025

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| |
|:---|
| /s/ Mingzhou Sun |
| Mingzhou Sun |
| Chief Financial Officer<br> (Principal Financial Officer and Principal Accounting Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Datasea Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2025 as filed with the Securities and Exchange Commission (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

---

| |
|:---|
| Date: November 13, 2025 |
| */s/ Zhixin Liu* |
| Zhixin Liu |
| Chief Executive Officer and Chairman <br> (Principal Executive Officer) |

---

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of Datasea Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2025 as filed with the Securities and Exchange Commission (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

---

| |
|:---|
| Date: November 13, 2025 |
| /s/ Mingzhou Sun |
| Mingzhou Sun |
| Chief Financial Officer (Principal Financial and <br> Principal Accounting Officer) |

---