UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2020 (February 24, 2020)
CHINA VTV LIMITED |
(Exact name of registrant as specified in its charter) |
Nevada |
|
333-203754 |
|
47-3176820 |
(State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
New Times Centre, 393 Jaffe Road, Suite 17A, Wan Chai, Hong Kong
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: +85267353339
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Securities registered pursuant to Section 12(b) of the Act: None.
|
Item 2.01. Completion of Acquisition or Disposition of Assets.
On March 2, 2020, China VTV Limited, a Nevada corporation (the “Company” or “we”), filed a current report on Form 8-K (the “8-K”) with the United States Securities and Exchange Commission to disclose that the Company consummated the acquisition of Butterfly Effect Culture Media (Beijing) Co., Ltd. (the “Target”) on February 24, 2020. The Company herein amends the 8-K to include the required audited financial statements of the Target for the years ended December 31, 2019 and 2018.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
The financial statements of the Target are included in this Form 8-K/A as Exhibit 99.1.
(d) Exhibits.
The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K/A.
Exhibit No. |
|
Description |
|
||
2 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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China VTV Limited |
||
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|||
Date: July 29, 2020 |
By: |
/s/ Tijin Song |
|
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Name: |
Tijin Song |
|
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Title: |
Chief Executive Officer |
3 |
EXHIBIT 99.1
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
BUTTERFLY EFFECT CULTURE MEDIA (BEIJING) CO., LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page |
|||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
F-2 |
|
Consolidated Balance Sheets |
F-3 |
||
Consolidated Statements of Operations and Comprehensive Income |
F-4 |
||
Consolidated Statements of Changes in Stockholders Equity |
|
F-5 |
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Consolidated Statements of Cash Flows |
F-6 |
||
Notes to Consolidated Financial Statements |
F-7 |
F-1 |
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
To the Shareholders and the Board of Directors of
Butterfly Effect Culture Media (Beijing) Co., Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Butterfly Effect Culture Media (Beijing) Co., Ltd., and its subsidiaries (the “Company”), which comprise the consolidated statements of balance sheets as at December 31, 2019 and 2018, and the consolidated statements of operations and comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and the related notes, including a summary of significant accounting policies and other explanatory information (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, British Columbia
July 20, 2020
We have served as the Company’s auditor since 2020.
F-2 |
|
BUTTERFLY EFFECT CULTURE MEDIA (BEIJING) CO., LTD. | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
EXPRESSED IN US DOLLARS |
|
|
|
|
December 31, |
|
|
December 31, |
|
||||
AS AT |
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Note |
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2019 |
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2018 |
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ASSETS |
|
|
|
|
|
|
|
|
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Current assets: |
|
|
|
|
|
|
|
|
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|||
Cash |
|
|
|
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$ | 79,161 |
|
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$ | 156,375 |
|
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Accounts receivable, net |
|
|
|
|
|
315,405 |
|
|
|
1,625,572 |
|
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Other receivables |
|
|
|
|
|
3,796,330 |
|
|
|
1,033,092 |
|
|
Copyrights and development costs, net |
|
|
3 |
|
|
|
9,373,436 |
|
|
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6,584,804 |
|
Prepaids and deposits |
|
|
4 |
|
|
|
10,186,214 |
|
|
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8,433,348 |
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Other current assets |
|
|
|
|
|
|
256,319 |
|
|
|
349,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total current assets |
|
|
|
|
|
|
24,006,865 |
|
|
|
18,182,985 |
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Investments, net |
|
|
5 |
|
|
|
82,501 |
|
|
|
621,949 |
|
Property and equipment, net |
|
|
6 |
|
|
|
633,501 |
|
|
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173,363 |
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Intangible assets, net |
|
|
7 |
|
|
|
990,750 |
|
|
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1,205,951 |
|
Right-of-use assets |
|
|
8 |
|
|
|
88,175 |
|
|
|
- |
|
Deferred income tax assets |
|
|
13 |
|
|
|
165,021 |
|
|
|
- |
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TOTAL ASSETS |
|
|
|
|
|
$ | 25,966,813 |
|
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$ | 20,184,248 |
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LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
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Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
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Accounts payable |
|
|
9 |
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|
$ | 8,318,850 |
|
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$ | 5,650,576 |
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Accrued liabilities |
|
|
|
|
|
|
106,640 |
|
|
|
21,414 |
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Loans payable |
|
|
10 |
|
|
|
2,604,904 |
|
|
|
1,017,800 |
|
Wages payable |
|
|
|
|
|
|
294,775 |
|
|
|
202,333 |
|
Taxes payable |
|
|
|
|
|
|
223,620 |
|
|
|
22,572 |
|
Deferred revenue |
|
|
|
|
|
|
2,445,135 |
|
|
|
436,200 |
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Lease liabilities |
|
|
8 |
|
|
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52,296 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total current liabilities |
|
|
|
|
|
|
14,046,220 |
|
|
|
7,350,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Lease liabilities |
|
|
8 |
|
|
|
41,876 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
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TOTAL LIABILITIES |
|
|
|
|
|
|
14,088,096 |
|
|
|
7,350,895 |
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STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
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Capital |
|
|
12 |
|
|
|
1,294,733 |
|
|
|
1,294,733 |
|
Capital reserve |
|
|
|
|
|
|
8,497,015 |
|
|
|
8,497,015 |
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Non-controlling interest |
|
|
12 |
|
|
|
(394,072 | ) |
|
|
2,073 |
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Retained earnings |
|
|
|
|
|
|
2,922,772 |
|
|
|
3,329,595 |
|
Accumulated other comprehensive loss |
|
|
|
|
|
|
(441,731 | ) |
|
|
(290,063 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
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Total equity |
|
|
|
|
|
|
11,878,717 |
|
|
|
12,833,353 |
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TOTAL LIABILITIES AND EQUITY |
|
|
|
|
|
$ | 25,966,813 |
|
|
$ | 20,184,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Subsequent Events (Note 16) |
|
|
|
|
|
|
|
|
|
|
|
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The accompanying notes are an integral part of these consolidated financial statements
F-3 |
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BUTTERFLY EFFECT CULTURE MEDIA (BEIJING) CO., LTD. | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||||
EXPRESSED IN US DOLLARS |
|
|
|
|
Year Ended |
|
|
Year Ended |
|
||||
|
|
|
|
December 31, |
|
|
December 31, |
|
||||
|
|
Note |
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|
2019 |
|
|
2018 |
|
|||
Revenues |
|
|
|
|
$ | 8,899,556 |
|
|
$ | 8,609,804 |
|
|
Cost of revenue |
|
|
|
|
|
2,596,756 |
|
|
|
3,052,972 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,302,800 |
|
|
|
5,556,832 |
|
|
General and administrative expenses |
|
|
|
|
|
4,158,337 |
|
|
|
3,147,834 |
|
|
Finance charges |
|
|
|
|
|
123,788 |
|
|
|
283,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
|
|
|
2,020,675 |
|
|
|
2,125,082 |
|
|
Investment income |
|
|
|
|
|
- |
|
|
|
1,126,038 |
|
|
Impairment loss on copyrights and prepaids |
|
|
|
|
|
(2,828,942 | ) |
|
|
- |
|
|
Other income (expenses) |
|
|
|
|
|
5,299 |
|
|
|
(4,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before income taxes |
|
|
|
|
|
(802,968 | ) |
|
|
3,246,613 |
|
|
Income tax expenses |
|
|
13 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
(802,968 | ) |
|
|
3,246,613 |
|
Net loss attributable to non-controlling interest |
|
|
|
|
|
|
396,145 |
|
|
|
412,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to equity holders |
|
|
|
|
|
|
(406,823 | ) |
|
|
3,659,425 |
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaltion gain (loss) |
|
|
|
|
|
|
(151,668 | ) |
|
|
(606,208 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive income attributable to stockholders |
|
|
|
|
|
$ | (558,491 | ) |
|
$ | 3,053,217 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-4 |
|
BUTTERFLY EFFECT CULTURE MEDIA (BEIJING) CO., LTD. |
|||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY HOLDERS' EQUITY |
|||||||||||||||
EXPRESSED IN US DOLLARS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Capital |
|
|
Capital reserve |
|
|
Retained earnings (deficit) |
|
|
Accumulated other comprehensive income (loss) |
|
|
Non-controlling interest |
|
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at December 31, 2017 |
|
|
1,181,041 |
|
|
|
4,068,707 |
|
|
|
(329,830 | ) |
|
|
316,145 |
|
|
|
(115,015 | ) |
|
|
5,121,048 |
|
Shares issuance |
|
|
113,692 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
113,692 |
|
Non-controlling interest additions |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
529,900 |
|
|
|
529,900 |
|
Capital reserve additions |
|
|
- |
|
|
|
4,428,308 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,428,308 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
3,246,613 |
|
|
|
- |
|
|
|
- |
|
|
|
3,246,613 |
|
Net loss attributed to non-controlling interest |
|
|
- |
|
|
|
- |
|
|
|
412,812 |
|
|
|
- |
|
|
|
(412,812 | ) |
|
|
- |
|
Foreign currency translation loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(606,208 | ) |
|
|
- |
|
|
|
(606,208 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018 |
|
|
1,294,733 |
|
|
|
8,497,015 |
|
|
|
3,329,595 |
|
|
|
(290,063 | ) |
|
|
2,073 |
|
|
|
12,833,353 |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
(802,968 | ) |
|
|
- |
|
|
|
- |
|
|
|
(802,968 | ) |
Net loss attributed to non-controlling interest |
|
|
- |
|
|
|
- |
|
|
|
396,145 |
|
|
|
- |
|
|
|
(396,145 | ) |
|
|
- |
|
Foreign currency translation loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(151,668 | ) |
|
|
- |
|
|
|
(151,668 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
|
$ | 1,294,733 |
|
|
$ | 8,497,015 |
|
|
$ | 2,922,772 |
|
|
$ | (441,731 | ) |
|
$ | (394,072 | ) |
|
$ | 11,878,717 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-5 |
|
BUTTERFLY EFFECT CULTURE MEDIA (BEIJING) CO., LTD. |
||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||
EXPRESSED IN US DOLLARS |
|
|
Year Ended |
|
|
Year Ended |
|
||
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2019 |
|
|
2018 |
|
||
Cash flows provided by (used in) operating activities: |
|
|
|
|
|
|
||
Net income (loss) |
|
$ | (802,968 | ) |
|
$ | 3,246,613 |
|
Adjustments to reconcile net loss to net cash provided by |
|
|
|
|
|
|
|
|
(used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
585,151 |
|
|
|
842,779 |
|
Investment income |
|
|
- |
|
|
|
(1,126,038 | ) |
Impairment loss on copyrights and prepaids |
|
|
2,828,942 |
|
|
|
- |
|
Deferred income tax recovery |
|
|
(166,515 | ) |
|
|
- |
|
Accreted interest |
|
|
11,055 |
|
|
|
- |
|
Changes in operating assets and liabilities, net of effect from acquisitions |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
1,301,721 |
|
|
|
(360,332 | ) |
Other receivables |
|
|
(2,801,158 | ) |
|
|
(447,753 | ) |
Copyrights and development costs |
|
|
(3,545,715 | ) |
|
|
(4,071,273 | ) |
Prepaids and deposits |
|
|
(3,469,495 | ) |
|
|
(8,527,381 | ) |
Other current assets |
|
|
89,952 |
|
|
|
29,989 |
|
Accounts payable |
|
|
2,763,014 |
|
|
|
4,571,246 |
|
Accrued liabilities |
|
|
86,265 |
|
|
|
22,297 |
|
Wages payable |
|
|
95,806 |
|
|
|
69,019 |
|
Income taxes payable |
|
|
203,150 |
|
|
|
(20,054 | ) |
Deferred revenue |
|
|
2,032,570 |
|
|
|
454,200 |
|
|
|
|
(788,225 | ) |
|
|
(5,316,688 | ) |
Cash flows provided by (used in) investment activities: |
|
|
|
|
|
|
|
|
Proceeds from sale of investments |
|
|
- |
|
|
|
1,135,500 |
|
Increase in investments |
|
|
(47,385 | ) |
|
|
(278,576 | ) |
Purchase of property and equipment |
|
|
(663,824 | ) |
|
|
(188,914 | ) |
Purchase of intangibles |
|
|
(129,017 | ) |
|
|
- |
|
|
|
|
(840,226 | ) |
|
|
668,010 |
|
Cash flows provided by (used in) financing activities: |
|
|
|
|
|
|
|
|
Cash from capital contribution |
|
|
- |
|
|
|
113,692 |
|
Cash from capital reserve contribution |
|
|
- |
|
|
|
4,428,308 |
|
Advance from (repayment of) loans |
|
|
1,614,186 |
|
|
|
(348,220 | ) |
Increase in lease, net |
|
|
83,970 |
|
|
|
- |
|
Cash from capital contributed by non-controlling interest |
|
|
- |
|
|
|
529,900 |
|
Increase in right-of-use assets |
|
|
(145,668 | ) |
|
|
- |
|
|
|
|
1,552,488 |
|
|
|
4,723,680 |
|
Effect of exchange rate changes on cash |
|
|
(1,251 | ) |
|
|
(7,789 | ) |
Cash: |
|
|
|
|
|
|
|
|
Net change during the year |
|
|
(77,214 | ) |
|
|
67,213 |
|
Balance, beginning of year |
|
|
156,375 |
|
|
|
89,162 |
|
Balance, end of year |
|
$ | 79,161 |
|
|
$ | 156,375 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ | 38,562 |
|
|
$ | 262,502 |
|
Income tax paid |
|
$ | - |
|
|
$ | - |
|
The accompanying notes are an integral part of these consolidated financial statements
F-6 |
|
BUTTERFLY EFFECT CULTURE MEDIA (BEIJING) CO., LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
1. ORGANIZATION AND BUSINESS BACKGROUND
The Company’s business is primarily engaging in literary adaptation business. The Company centers its business on internet Chinese literary and literary adaptation for television shows, movies, audible books and mobile phone video games that are primarily distributed through online platforms.to provide For the years ended December 31, 2018 and 2019, the main focus and revenue stream for the Company was the purchase and sale of literature copyrights, and licensing of the copyrights to video game software development companies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”).
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Consolidation
The accompanying consolidated financial statements, including the accounts of the Company and its subsidiaries incorporated under the Companies Law of China, as presented below. Subsidiaries are those entities which the Company controls by having the power to govern the financial and operational policies of the entity. This control is generally evidenced through owning more than 50% of the voting rights or currently exercisable voting rights through control of the board of directors or contribution of capital. All intercompany transactions are balances have been eliminated.
Ownership Interest |
|
2019 |
|
|
2018 |
|
||
|
|
% |
|
|
% |
|
||
Khorgos Butterfly Effect Cultural Medium Company Ltd. |
|
|
100.0 |
|
|
|
100.0 |
|
Khorgos JinLi Cultural Medium Company |
|
|
86.5 |
|
|
|
86.5 |
|
Hangzhou Butterfly Effect Network Technology |
|
|
62.2 |
|
|
|
62.2 |
|
Hainan Butterfly Effect Technology Company Ltd. |
|
|
40.0 |
|
|
|
40.0 |
|
Cash and Cash Equivalents
The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. There was no cash equivalents as at December 31, 2019 and 2018.
F-7 |
|
Accounts Receivable
Accounts receivable are stated at net realizable value. The Company usually grants credit to customers with a maximum of 60 days. An allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. For the years ended December 31, 2019 and 2018, there were no accounts receivable allowance required.
Advances to Suppliers
The Company advances funds to certain authors or publishers for the purchase of literature copyrights and productions. Based on management’s evaluation, no allowance for advances to suppliers is required at the balance sheet date.
Inventories
Inventories comprises work-in-progress which are stated at the lower of cost or net realizable value. Costs include direct production cost of audiobooks and related production overhead. The cost of inventories is calculated using the title-by-title basis. Any excess of the cost over the net realizable value of each item of inventories is recognized as a loss in the statement of operations.
Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.
Copyrights
Licensed copyrights consist of payments made to holders for use of the copyrights during the licensed term. Amortization of capitalized copyrights commences when the copyrights is available for use by the Company and is recorded on a title-by-title basis in statement of operations over the licensed term, ranges from 3 to 10 years. Copyrights are stated at the lower of amortized cost or net realizable value. The valuation of copyrights is reviewed on a title-by-title basis when an event or change in circumstances indicated that the fair value of a copyright is less than its unamortized cost.
Property and Equipment
Property and equipment is carried at cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Depreciation is calculated on the straight-line method, including property and equipment under capital leases, generally based on the following useful lives:
Leasehold improvement |
2 – 3 years |
Equipment and furniture |
3 years – 5 years |
Software |
3 years |
F-8 |
|
Intangible assets
Intangible assets for purchased are recognized and measured at cost upon acquisition. Intangible assets that have determinable lives are amortized over their contract term, being their estimated useful lives using the straight-line method as follows:
Licensed to copyrights |
2 - 10 years |
Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the asset.
Investments
Investments in companies in which the Company does not have a controlling voting interest or over which it is unable to exert significant influence are generally accounted for at fair value if the investments are publicly trade. If the investment is not publicly traded and without readily determinable fair value, the investment is accounted for at cost less any impairment, and adjusted for subsequent observable price changes as of the date that an observable transaction takes place.
Impairment of Long-Lived Assets
The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed to be reported at the lower of the carrying amount or the fair value less costs to sell.
Revenue Recognition
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to a customer. Topic 606 requires the Company to recognize revenues when control of the promised goods or services and receipt of payment is probable. The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied. The Company follows Topic 606 for revenue recognition for since it commenced operations.
Revenue derived from license of the Company’s copyrights and original stories providing customers with a right to use the intellectual properties as they exist are recognized at the point in time when the intellectual property is made available to customers. Prepayments for sales of product is recorded as deferred revenue from customers and is generally recognized as revenue when the production is completed, and the product is transferred, or copyrights have been passed to customers and collectability is reasonably assured.
F-9 |
|
For revenue from licensing of literal copyrights, the Company recognizes the fixed fee proportionately over the licensing term. For royalty derived from licensing of literature copyrights, royalty as revenue is recognized as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, revenue is based on historical data, industry information and other relevant trends.
Business Combinations and Noncontrolling Interests
The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations” (“ASC 805”). The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred.
For subsidiaries that are not wholly-owned by the Company, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Consolidated net income (loss) on the consolidated income statements includes the net income (loss) attributable to noncontrolling interests. The cumulative results of operations attributable to non-controlling interests are recorded as non-controlling interests in the Company’s consolidated balance sheets. Cash flows related to transactions with non-controlling interests are presented under financing activities in the consolidated statements of cash flows.
Translation Adjustment
The accounts of the Company and the subsidiaries were maintained, and its financial statements were expressed, in Chinese Yuan (RMB). Such financial statements were translated into U.S. Dollars (“$” or “USD”) in accordance ASC 830, “Foreign Currency Matters”, with the RMB as the functional currencies. Pursuant to the ASC 830, all assets and liabilities are translated at the current exchange rate, stockholders’ equity (deficit) are translated at the historical rates, and income statement items are translated at an average exchange rate for the period.
The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit).
Comprehensive Income (Loss)
Comprehensive income (loss) includes accumulated foreign currency translation gains and losses. The Company has reported the components of comprehensive income (loss) on its consolidated statements of stockholders’ equity (deficit) and consolidated statements of operations and comprehensive income (loss).
Leases
The Company’s lease portfolio consists operating real estate leases for its corporate offices. Under ASC 842, a contract is or contains a lease when (1) an explicitly or implicitly identified asset has been deployed in the contract and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company determines if an arrangement is or contains a lease at inception of the contract. For all leases (finance and operating), other than those that qualify for the short-term recognition exemption, the Company will recognize on the balance sheet a lease liability for its obligation to make lease payments arising from the lease and a corresponding right of use (“ROU”) asset representing its right to use the underlying asset over the period of use based on the present value of lease payments over the lease term as of the lease commencement date. ROU assets are adjusted for initial direct costs, lease payments made and incentives. As the rates implicit in our leases are not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The lease term used to calculate the lease liability will include options to extend or terminate the lease when the option to extend or terminate is at the Company’s discretion and it is reasonably certain that the Company will exercise the option. Fixed payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of one year or less (“short-term leases”), the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term.
F-10 |
|
The Company’s operating ROU assets are included in operating lease right-of-use assets and the Company’s current and non-current operating lease liabilities are included in operating lease liabilities, current and operating lease liabilities, noncurrent, respectively, in the Company’s balance sheet.
Fair Value Measurements
FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows:
Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available. |
||
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
||
Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. |
Income Taxes
The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
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 income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)". This ASU provides an easier and more cost efficient way for companies to modify contracts that reference the London Interbank Offered Rate ("LIBOR") and other rates that are being phased out. The ASU (1) allows eligible contracts that are modified to be accounted for as a continuation of those contracts - a simplification that eliminates the need for companies to reassess or remeasure the contracts for accounting purposes; (2) permits companies to preserve their hedge accounting during the transition period; and (3) enables companies to make a one-time election to transfer or sell held-to-maturity debt securities that are affected by rate reform. It is effective as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements.
F-11 |
|
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes by removing certain exceptions currently permissible under ASC Topic 740. This ASU also requires entities to: (1) recognize a franchise tax that is partially based on income as an income-based tax and account for any incremental amounts incurred as non-income based tax; (2) evaluate when a step-up in the tax basis of goodwill should be considered as part of the business combination and when it should be considered a separate transaction; (3) specify that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and (4) reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation and other minor improvements. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which requires the use of a new current expected credit loss ("CECL") model in estimating allowances for doubtful accounts with respect to accounts receivable. Receivables from revenue transactions, or trade receivables, are recognized when the corresponding revenue is recognized under ASC Topic 606, Revenue from Contracts with Customers. The CECL model requires that the Company estimate its lifetime expected credit loss with respect to these receivables and record allowances that when deducted from the balance of the receivables, represent the estimated net amounts expected to be collected. Given the generally short term nature of trade receivables, we do not apply a discounted cash flow methodology. However, the Company considers whether historical loss rates are consistent with expectations of forward-looking estimates for our trade receivables. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted of the new standard on January 1, 2020. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. The Company is currently evaluating the potential impact of this ASU on its consolidated financial statements.
3. COPYRIGHTS AND DEVELOPMENT COSTS, NET
Copyrights and development costs consist of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Script development |
|
$ | 2,090,477 |
|
|
$ | 1,390,931 |
|
Mobile audio game |
|
|
1,219,245 |
|
|
|
274,340 |
|
Artwork |
|
|
862,546 |
|
|
|
534,423 |
|
|
|
|
4,172,268 |
|
|
|
2,199,694 |
|
Licensed copyrights at cost |
|
|
7,337,686 |
|
|
|
4,967,310 |
|
Less impairment |
|
|
(670,086 | ) |
|
|
- |
|
|
|
|
6,667,600 |
|
|
|
4,967,310 |
|
Less: amortization |
|
|
(1,466,432 | ) |
|
|
(582,200 | ) |
|
|
|
5,201,168 |
|
|
|
4,385,110 |
|
Total |
|
$ | 9,373,436 |
|
|
$ | 6,584,804 |
|
F-12 |
|
4. PREPAID AND DEPOSITS
Prepaid and deposits consist of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
|
|
$ |
- |
|
|
$ | - |
|
Deposits for copyrights |
|
|
11,781,628 |
|
|
|
8,433,348 |
|
Less: write-offs |
|
|
(1,595,414 | ) |
|
|
- |
|
|
|
$ | 10,186,214 |
|
|
$ | 8,433,348 |
|
5. INVESTMENTS
Investments are in equity of companies which shares are not publicly traded, and that the Company does not have control or significant influence. The investments are recorded at cost less impairment, as the fair value of the share prices are not readily determinable.
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
|
|
$ |
- |
|
|
$ | - |
|
Investment in equity |
|
|
666,448 |
|
|
|
621,949 |
|
Less: write-offs |
|
|
(583,947 | ) |
|
|
- |
|
|
|
$ | 82,501 |
|
|
$ | 621,949 |
|
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Equipment and furniture |
|
$ | 57,061 |
|
|
$ | 57,776 |
|
Software |
|
|
542,848 |
|
|
|
974 |
|
Leasehold improvement |
|
|
296,262 |
|
|
|
300,630 |
|
|
|
|
896,171 |
|
|
|
359,380 |
|
Less: accumulated depreciation |
|
|
|
|
|
|
|
|
Equipment and furniture |
|
|
(30,682 | ) |
|
|
(16,270 | ) |
Software |
|
|
(123 | ) |
|
|
- |
|
Leasehold improvement |
|
|
(231,865 | ) |
|
|
(169,747 | ) |
|
|
|
(262,670 | ) |
|
|
(186,017 | ) |
|
|
$ | 633,501 |
|
|
$ | 173,363 |
|
F-13 |
|
Depreciation expense was $76,653 and $113,252 for the years ended December 31, 2019 and 2018 respectively.
7. INTANGIBLES, NET
Intangible assets consist of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Copyrights |
|
$ | 2,025,568 |
|
|
$ | 1,920,377 |
|
Less: accumulated depreciation |
|
|
(1,034,818 | ) |
|
|
(714,426 | ) |
|
|
$ | 990,750 |
|
|
$ | 1,205,951 |
|
Depreciation expense was $332,072 and $333,400 for the years ended December 31, 2019 and 2018 respectively.
8. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Right-of-Use Assets – Office Leases
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Balance, beginning of year |
|
|
- |
|
|
|
- |
|
Adjustment on initial adoption of ASC 842 Leases |
|
|
144,361 |
|
|
|
- |
|
Less: depreciation |
|
|
(56,186 | ) |
|
|
- |
|
Balance, end of year |
|
$ | 88,175 |
|
|
$ | - |
|
Lease Liabilities
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Balance, beginning of year |
|
$ | - |
|
|
$ | - |
|
Adjustment on initial adoption of ASC 842 Leases |
|
|
144,361 |
|
|
|
- |
|
Interest accreted |
|
|
11,055 |
|
|
|
- |
|
Less: payments |
|
|
(61,244 | ) |
|
|
- |
|
|
|
|
94,172 |
|
|
|
- |
|
Less: current portion |
|
|
(52,296 | ) |
|
|
|
|
|
|
$ | 41,876 |
|
|
$ | - |
|
F-14 |
|
9. ACCOUNTS PAYABLE
Accounts payable consist of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Trade payables |
|
$ | 5,484,186 |
|
|
$ | 2,223,498 |
|
Due to director |
|
|
2,834,664 |
|
|
|
3,427,078 |
|
|
|
$ | 8,318,850 |
|
|
$ | 5,650,576 |
|
10. LOANS PAYABLE
Short-term loans payable consist of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Interest at 0% per annum, unsecured, due on demand |
|
$ | 947,760 |
|
|
$ | 72,700 |
|
Interest at 4.35% per annum, unsecured, due on demand |
|
|
508,344 |
|
|
|
72,700 |
|
Interest at 5.22% per annum, unsecured, due on demand |
|
|
430,800 |
|
|
|
- |
|
Interest at 10% per annum, unsecured, due on demand |
|
|
718,000 |
|
|
|
872,400 |
|
|
|
$ | 2,604,904 |
|
|
$ | 1,017,800 |
|
11. RELATED PARTY TRANSACTIONS AND BALANCES
The related parties of the Company with whom transactions are reported in these consolidated financial statements are as follows:
Name of entity or Individual |
Relationship with the Company and its subsidiary |
|||
|
|
|
||
Tijing Song |
Shareholder, Chairman of the Board, CEO and President |
|||
Qiongfang Shi |
|
Shareholder, director |
Due to related parties
As at December 31, 2019, amounts due to a director included in accounts payable was $2,834,664 (2018 - $3,427,078).
F-15 |
|
The Company has received advances from its related parties for working capital purposes. The Company has not entered into any agreement on the repayment terms for these advances. The advances are unsecured, bear no interest and are due on demand.
12. EQUITY
Capital
Authorized Capital: $1,797,246 (RMB12,515,638)
Paid-up capital by equity holders for the years ended December 31, 2019 and 2018 is as follows:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Balance, beginning of year |
|
$ | 1,294,733 |
|
|
$ | 1,181,041 |
|
Additions |
|
|
- |
|
|
|
113,692 |
|
Balance, end of year |
|
$ | 1,294,733 |
|
|
$ | 1,294,733 |
|
Non-controlling Interest
Non-controlling interest continuity for the years ended December 31, 2019 and 2018 is as follows:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Balance, beginning of year |
|
$ | 2,073 |
|
|
$ | 115,015 |
|
Additions |
|
|
- |
|
|
|
529,900 |
|
Allocation of net loss |
|
|
(396,145 | ) |
|
|
(412,812 | ) |
Balance, end of year |
|
$ | (394,072 | ) |
|
$ | 2,073 |
|
13. INCOME TAXES
The Company and its subsidiaries are subject to PRC Enterprise Income Tax (EIT), on the taxable income in accordance with the relevant PRC income tax laws, which have adopted a unified income tax rate of 25% since January 1, 2008.
F-16 |
|
Provision for income tax expense (benefit) consists of the following:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Net income (loss) before income taxes |
|
$ | (802,968 | ) |
|
$ | 3,246,613 |
|
|
|
|
|
|
|
|
|
|
Income tax expenses (recovery) |
|
|
(200,742 | ) |
|
|
811,653 |
|
Non-taxable income |
|
|
(529,312 | ) |
|
|
(1,015,501 | ) |
Loss recognized and other |
|
|
200,088 |
|
|
|
83,913 |
|
Deferred tax assets valuation allowance |
|
|
529,966 |
|
|
|
119,935 |
|
Net income tax expense |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
The net income tax expenses (recovery) comprises: |
|
|
|
|
|
|
|
|
Current income tax expenses |
|
|
166,515 |
|
|
|
- |
|
Deferred income tax recovery |
|
|
(166,515 | ) |
|
|
- |
|
Income tax expenses |
|
$ | - |
|
|
$ | - |
|
The significant component of deferred income tax assets at December 31, 2019 and 2018 are as follows:
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||
Operating losses |
|
$ | 409,680 |
|
|
$ | 522,443 |
|
Other receivables |
|
|
484,650 |
|
|
|
- |
|
Deferred revenue |
|
|
323,100 |
|
|
|
- |
|
Change in deferred tax assets valuation allowance |
|
|
(1,052,409 | ) |
|
|
(522,443 | ) |
Deferred income tax assets |
|
$ | 165,021 |
|
|
$ | - |
|
F-17 |
|
14. FAIR VALUE MEASUREMENTS
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified in the following three categories:
Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available. |
||
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
||
Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. |
The Company’s cash is classified as Level 1.
The carrying values of certain assets and liabilities of the Company, such as accounts receivable, other receivables and other current assets, accounts payable, loans payable and wages payable, approximate to fair value due to their relatively short maturities.
15. SUBSEQUENT EVENTS
a) On December 18, 2019, the Company and each and all of its shareholders entered into a business acquisition agreement (the “Acquisition Agreement”) with China VTV Limited, a Nevada corporation (“China VTV”), VTV Global Culture Media (Beijing) Co., Ltd., a Chinese wholly foreign owned entity and a wholly-owned subsidiary of China VTV (“WFOE”), pursuant to which the China VTV through its WFOE agreed to acquire the Company through a series of management agreements (the “VIE Agreements”) to effectively control the Company (the “Acquisition”). In accordance with the Acquisition Agreement, and in consideration for the effective control over the Company, China VTV agreed to issue an aggregate of 24,000,000 shares of its common stock (the “Common Stock”), par value $0.001 per share, at the stipulated price of $4.00 per share (the “Stock Consideration”) without respect of the stock price at which the Common Stock trades, to the shareholders of the Company pro rata in accordance with the shareholder equity percentage. In addition, subject to the terms and conditions in the Acquisition Agreement, China VTV agreed to pay a total of RMB 288,000,000 (the “Cash Consideration”) to the shareholders of the Company pro rata with the shareholder equity percentage over a period as set forth therein and in the first amended acquisition agreement (“Amendment No. 1”) dated December 28, 2019.
On February 24, 2020, the Company and China VTV closed the transactions contemplated under the Acquisition Agreement, as amended.
b) In March 2020, the World Health Organization declared a global pandemic known as COVID-19. This is causing significant financial market and social dislocation. This has also resulted in significant economic uncertainty and consequently, it is difficult to reliably measure the potential impact of this uncertainty on the Company’s future financial results.
F-18 |