Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2018 | Sep. 28, 2018 | Dec. 31, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | China Media Inc. | ||
Entity Central Index Key | 1,434,674 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1,124,300 | ||
Entity Common Stock, Shares Outstanding | 39,750,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
Consoldiated Balance Sheets
Consoldiated Balance Sheets - USD ($) | Jun. 30, 2018 | Jun. 30, 2017 |
Current assets | ||
Cash and cash equivalents | $ 7,179 | $ 13,199 |
Prepaid and other receivable, net of allowance of $122,544 and $109,302 at June 30, 2018 and 2017, respectively | 3,920 | 14,742 |
Total current assets | 11,099 | 27,941 |
Fixed assets, net | 15,285 | 16,222 |
Film costs | 755,395 | 737,800 |
Prepaid and other assets, non-current, net of allowance of $784,095 and $28,036 at June 30, 2018 and 2017, respectively | 737,800 | |
Total assets | 781,779 | 1,519,763 |
Current liabilities | ||
Accounts payable | 9,145 | 9,001 |
Accrued liabilities and other payable | 312,851 | 285,813 |
Due to related parties | 597,726 | 407,208 |
Total current liabilities | 919,722 | 702,022 |
Total liabilities | 919,722 | 702,022 |
Stockholders' equity | ||
Common stock, $0.00001 par value, 180,000,000 shares authorized; 39,750,000 shares issued and outstanding at June 30, 2018 and 2017 | 398 | 398 |
Additional paid-in capital | 11,298,300 | 11,272,079 |
Accumulated other comprehensive income | 619,693 | 583,053 |
Accumulated deficit | (12,056,334) | (11,037,789) |
Total stockholders' equity | (137,943) | 817,741 |
Total liabilities and stockholders' equity | $ 781,779 | $ 1,519,763 |
Consoldiated Balance Sheets (Pa
Consoldiated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Jun. 30, 2017 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 39,750,000 | 39,750,000 |
Common stock, shares outstanding | 39,750,000 | 39,750,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||
Selling, general and administrative | $ 990,921 | $ 2,984,397 |
Depreciation and amortization expense | 1,347 | 1,555 |
Total operating expenses | 992,268 | 2,985,952 |
Other income (expense) | ||
Interest expense | (26,277) | (14,320) |
Other expense | 4,313 | |
Net income before income taxes | (1,018,545) | (2,995,959) |
Income taxes benefit | ||
Net loss | (1,018,545) | (2,995,959) |
Net loss | (1,018,545) | (2,995,959) |
Foreign currency translation gain (loss) | 36,640 | (91,938) |
Comprehensive income (loss) | $ (981,905) | $ (3,087,897) |
Net income per common share, basic and diluted | $ (0.03) | $ (0.08) |
Weighted average number of shares outstanding-basic and diluted | 39,750,000 | 39,750,000 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Balance at Jun. 30, 2016 | $ 398 | $ 11,257,801 | $ 674,991 | $ (8,041,830) | $ 3,891,360 |
Balance (in Shares) at Jun. 30, 2016 | 39,750,000 | ||||
Foreign currency translation | (91,938) | (91,938) | |||
Imputed interest on related party loan | 14,278 | 14,278 | |||
Net Income (Loss) | (2,995,959) | (2,995,959) | |||
Balance at Jun. 30, 2017 | $ 398 | 11,272,079 | 583,053 | (11,037,789) | 817,741 |
Balance (in Shares) at Jun. 30, 2017 | 39,750,000 | ||||
Foreign currency translation | 36,640 | 36,640 | |||
Imputed interest on related party loan | 26,221 | 26,221 | |||
Net Income (Loss) | (1,018,545) | (1,018,545) | |||
Balance at Jun. 30, 2018 | $ 398 | $ 11,298,300 | $ 619,693 | $ (12,056,334) | $ (137,943) |
Balance (in Shares) at Jun. 30, 2018 | 39,750,000 |
Consoldiated Statements of Cash
Consoldiated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS OPERATING ACTIVITIES | ||
Net loss | $ (1,018,545) | $ (2,995,959) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Imputed interest | 26,221 | 14,278 |
Depreciation expense | 1,347 | 1,555 |
Bad debt expense | 779,439 | 2,783,418 |
Changes in operating assets and liabilities: | ||
Prepaid and other receivable | 546 | (113) |
Accrued liabilities and other payable | 20,576 | 4,993 |
Net cash provided by (used in) operating activities | (190,416) | (191,828) |
CASH FLOW INVESTING ACTIVITIES | ||
Collection of notes receivable | 30,004 | |
Net cash provided by investing activities | 30,004 | |
CASH FLOW FINANCING ACTIVITIES | ||
Proceeds from related parties | 183,971 | 139,365 |
Net cash used in financing activities | 183,971 | 139,365 |
Effect of exchange rate changes on cash | 425 | (1,532) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (6,020) | (23,991) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR | 13,199 | 37,190 |
CASH AND CASH EQUIVALENTS AT END OF THE YEAR | 7,179 | 13,199 |
SUPPLEMENTAL INFORMATION: | ||
Interest paid | ||
Income taxes paid |
Description of Business
Description of Business | 12 Months Ended |
Jun. 30, 2018 | |
Description Of Business | |
Description of Business | NOTE 1. Description of Business China Media Inc. (the “Company”, “China Media”), formerly Protecwerx Inc., was incorporated in the State of Nevada on October 16, 2007. The Company does not conduct any substantive operations of its own; rather, it conducts its primary business operations through Vallant Pictures Entertainment Co., Ltd., its wholly owned subsidiary incorporated under the laws of the British Virgin Islands, which in turn, conducts its business through Xi’an TV Media Co. Ltd. (“Xi’An TV”). Effective control over Xi’An TV was transferred to the Company through the series of contractual arrangements without transferring legal ownership in Xi’An TV. As a result of these contractual arrangements, the Company maintained the ability to approve decisions made by Xi’An TV and was entitled to substantially all of the economic benefits of Xi’An TV. Xi’An TV was incorporated in Xi’An, Shaan’xi Province, People’s Republic of China (“PRC”) and is in the business of investing, producing and developing film and television programming for the Chinese market. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2018 | |
Summary Of Significant Accounting Policies | |
Summary of Significant Accounting Policies | NOTE 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and Xi’An TV, which is a variable interest entity with the Company as the primary beneficiary. In accordance with United States generally accepted accounting principles (“U.S. GAAP”) regarding “Consolidation of Variable Interest Entities”, the Company identifies entities for which control is achieved through means other than through voting rights (a "variable interest entity" or "VIE") and determines when and which business enterprise, if any, should consolidate the VIE. The Company evaluated its participating interest in Xi’An TV and concluded it is the primary beneficiary of Xi’An TV, a variable interest entity. The Company consolidated Xi’An TV and all significant intercompany transactions and balances have been eliminated. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television products, the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements and loss contingencies. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are made based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis. Concentration of Credit Risk The Company maintains cash balances at various financial institutions in the PRC which do not provide insurance for amounts on deposit. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area. The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations. Fair Value of Financial Instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The fair value of financial instruments, which consist of cash and cash equivalents, prepaid and other receivable, accounts payable, accrued liabilities and other payable, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less. Other Receivable Other receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for bad debts and a credit to other receivable. Fixed Assets Fixed assets are recorded at cost and depreciated using the straight-line method, with an estimated 5% salvage value of original cost, over the estimated useful lives of the assets as follows: Asset Category Estimated Useful Life Electronic Equipment 5 years Communication Equipment 3 years Machinery Equipment 5 years Automobiles 10 years Office Furniture 5 years Film Costs The Company capitalizes film costs in accordance with ASC 926. Film costs are stated at the lower of cost, less accumulated amortization, or fair value. Production overhead, a component of film costs, includes allocable costs of individuals or departments with exclusive or significant responsibility for the production of films. Substantially all of the Company’s resources are dedicated to the production of its films. Capitalized production overhead does not include selling, general and administrative expenses. Interest expense on funds invested in production is capitalized into film costs until production is completed. In addition to the films being produced, costs of productions in development are capitalized as development film costs in accordance with the provisions of the ASC and are transferred to film production costs when a film is set for production. In the event a film is not set for production within three years from the time the first costs are capitalized or the film is abandoned, all such costs are generally expensed. Once a film is released, film costs are amortized and participations and residual costs are accrued on an individual film basis in the proportion that the revenue during the period for each film (“Current Revenue”) bears to the estimated remaining total revenue to be received from all sources for each film (“Ultimate Revenue”) as of the beginning of the current fiscal period as required by the ASC. The amount of film costs that is amortized each period will depend on the ratio of Current Revenue to Ultimate Revenue for each film for such period. The Company makes certain estimates and judgments of Ultimate Revenue to be received for each film based on information received from its distributor and its knowledge of the industry. Ultimate Revenue does not include estimates of revenue that will be earned beyond ten years of a film’s initial theatrical release date. Unamortized film costs are evaluated for impairment each reporting period on a film-by-film basis in accordance with the requirements of the ASC. If estimated remaining net cash flows are not sufficient to recover the unamortized film costs for that film, the unamortized film costs will be written down to fair value determined using a net present value calculation. Impairment of Long-Lived Assets The Company reviews its long-lived assets used in operations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. Income Taxes The Company accounts for income tax under the provisions of ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company adopted the accounting standard for uncertainty in income taxes which requires a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not file a return in a particular jurisdiction). Comprehensive Income (Loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of stockholders’ equity but are excluded from net income (loss). During the years presented, other comprehensive income (loss) includes changes in cumulative translation adjustment from foreign currency translation. Foreign Currency Translation The Company uses United States dollars (“U.S. dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in Renminbi (“RMB”), the currency of China, the economic environment in which the Company’s primary subsidiaries conduct their operations. Transactions denominated in foreign currencies are translated into U.S. dollar at exchange rate in effect on the date of the transactions. Exchange gains or losses on transactions are included in earnings. The financial statements of the Company are translated into United States dollars in accordance with U.S. GAAP, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The exchange rates used for foreign currency translation were as follows (US$1 = RMB): Period Covered Balance Sheet Average Rate Year ended June 30, 2018 6.6191 6.5052 Year ended June 30, 2017 6.7769 6.8114 Earnings (Loss) Per Share The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of June 30, 2018 and 2017, the Company had no common stock equivalents that could potentially dilute future earnings per share. Recent Accounting Pronouncements In March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international tax consequences for many companies that operate internationally. The amendments are effective upon addition to the FASB Accounting Standards Codification. The Company does not expect the adoption of this guidance will have a material impact on the consolidated financial statements. Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations and has a working capital deficit as of June 30, 2018. The Company also generated negative operating cash flows for the year ended June 30, 2018. These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, management intends to raise additional funds by way of cooperation with other film and television producers, obtaining loans from shareholders and borrowing from Dean Li, the President and Chief Executive Officer of the Company, to fund operations. The consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern |
Prepaid and Other Receivable
Prepaid and Other Receivable | 12 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Prepaid and Other Receivable | NOTE 3. Prepaid and Other Receivable June 30, 2018 2017 Prepaid and other receivable $ 126,464 $ 124,044 Bad debt allowance 122,544 109,302 Prepaid and other receivable, net $ 3,920 $ 14,742 The bed debt expense recorded for the years ended June 30, 2018 and 2017 was $10,823 and $108,748, respectively. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Jun. 30, 2018 | |
Fixed Assets | |
Fixed Assets | NOTE 4. Fixed Assets Fixed assets consist of the following: June 30, Asset Category 2018 2017 Electronic Equipment $ 164,192 $ 160,368 Communication Equipment 647 632 Machinery Equipment 88,221 86,166 Automobiles 48,217 47,094 Office Furniture 2,251 2,198 303,528 296,458 Less: Accumulated depreciation (288,243 ) (280,236 ) Fixed assets, net $ 15,285 $ 16,222 Depreciation expense for the years ended June 30, 2018 and 2017 was $1,347 and $1,555, respectively. |
Film Costs
Film Costs | 12 Months Ended |
Jun. 30, 2018 | |
Film Costs | |
Film Costs | NOTE 5. Film Costs Film costs consist of the following: June 30, 2018 2017 Completed and not released: In development - Film $ 755,395 $ 737,800 Film costs $ 755,395 $ 737,800 In July 2015, the Company entered into an agreement to invest RMB 5 million (approximately $752,627 at the time of investment) in a film that is produced by Beijing Huaxia Star Media Co., Ltd., a related party, and the payment was made in August 2015. Also see Note 7. |
Prepaid and Other Assets, Non-c
Prepaid and Other Assets, Non-current | 12 Months Ended |
Jun. 30, 2018 | |
Prepaid And Other Assets Non-current | |
Prepaid and Other Assets, Non-current | NOTE 6. Prepaid and Other Assets, Non-current In November 2015, the Company entered into an agreement with Xi’an Lianying Network Culture Media Co., Ltd. to invest RMB 5 million (approximately $752,627 at the time of investment) in the advertising, promotion and publicizing of a new film that is in the preparation stage. The prepayment was made in November 2015 and is non-refundable pursuant to the agreement. The prepayment will be amortized within the period of promotion process which will begin once the production of the film starts. As of June 30, 2018, the production of the film has not started, the Company reserved full allowance of RMB 5 million (approximately $752,627) against the prepayment. The Company prepaid another RMB 190,000 (approximately $28,036) for the writing of one film script which was not completed as of June 30, 2018. Of the total RMB 190,000, RMB 160,000 (approximately $23,500) was paid in 2010 and remaining RMB 30,000 (approximately $4,536) was paid in 2011. An allowance of RMB 190,000 (approximately $28,036) was reserved by the Company against the prepayment as of June 30, 2018 and 2017. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions | |
Related Party Transactions | NOTE 7. Related Party Transactions From time to time, the Company borrowed loans from Dean Li, the President and Chief Executive Officer of the Company. As of June 30, 2018 and 2017, the Company owed Dean Li $597,726 and $407,208, respectively. The loans borrowed from Mr. Dean Li are non-secured, free of interest with no specified maturity date. The imputed interests are assessed as an expense to the business operation and an addition to the paid-in-capital and calculated based on annual interest rate in the range of 4.67%-5.34% with reference to one-year loan. In July 2015, the Company entered into an agreement to invest RMB 5 million (approximately $752,627 at the time of investment) in a film that is produced by Beijing Huaxia Star Media Co., Ltd. and the payment was made in August 2015. As of June 30, 2018, the film was still in preparation stage. Dean Li, the President and Chief Executive Officer of the Company, holds 13% equity interest in Beijing Huaxia Star Media Co., Ltd. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2018 | |
Income Taxes | |
Income Taxes | NOTE 8. Income Taxes China Media is incorporated in the State of Nevada and is subject to the United States Federal and state income tax at a statutory rate of 21%. No provision for the U.S. Federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting periods. Vallant is incorporated in the British Virgin Islands (“BVI”) and under the current laws of the BVI, is not subject to income taxes. Before December 31, 2012, Xi’An TV’s taxable income was assessed at 10% of its taxable revenue. Starting from January 1, 2013, the tax authority determined that Xi’An TV should be taxed at 25% of its taxable income until further notice. No provision for income taxes has been made as Xi’An TV had no taxable income for the years ended June 30, 2018 and 2017. The following table reconciles the Company’s statutory tax rates to its effective tax rate as a percentage of income before income taxes: For The Years Ended June 30, 2018 2017 U.S. statutory rate 21.0 % 34.0 % Foreign income not recognized in the U.S. -21.0 % -34.0 % PRC preferential enterprise income tax rate 25.0 % 25.0 % Valuation allowance -24.7 % -27.1 % Effect of expenses not deductible for tax purposes -0.3 % 2.1 % Effective tax rate 0.0 % 0.0 % The components of the Company’s deferred income tax assets are set forth below: June 30, 2018 June 30, 2017 Deferred tax assets Net operating losses $ 276,110 $ 161,751 Total deferred income tax assets 276,110 161,751 Less: Valuation allowance (276,110 ) (161,751 ) Net deferred income tax assets $ — $ — On December 22, 2017, U.S. tax reform legislation known as the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 34% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years or in a single lump sum. With the enactment of the Act, the Company’s financial results for the year ended June 30, 2018 included a re-valuation of the U.S. deferred tax assets and corresponding valuation allowance at the new lower 21% U.S. federal statutory tax rate. There was no impact of the re-valuation to the net income because it was fully offset by the valuation allowance that was recorded against the deferred tax asset. The Company has suffered recurring losses from operations and retained an accumulated deficit of $12,056,334 as of June 30, 2018, therefore did not recognize any one-time transition tax. The actual impact of the Act on the Company may differ from management’s estimates, and management may update its judgments based on its continuing evaluation and on future regulations or guidance issued by the U.S. Department of the Treasury, and specific actions the Company may take in the future. The Company has net taxable operating loss carry forwards of approximately $1,104,439 for the year ended June 30, 2018. The PRC income tax laws allow the enterprises to offset their future taxable income with taxable operating losses carried forward in a 5-year period. The management is uncertain whether the Company will generate sufficient taxable PRC statutory income in the near future and it is more likely than not that not all of the deferred income tax assets will be realized. Consequently, a full valuation allowance has been established for deferred income tax assets as of June 30, 2018. The tax authority of the PRC conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises have completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies | |
Commitments and Contingencies | NOTE 9. Commitments and Contingencies On January 1, 2015, the Company entered into a lease agreement to lease its main office for a monthly rent of RMB 11,167 (approximately $1,737). The lease had a term of three years and expired on December 31, 2017. On January 1, 2018, the Company renewed this lease for another five years with the lease term remaining unchanged. The Company’s commitments for minimum lease payments under the non-cancelable operating leases are as follows: For The Years Ended June 30, 2019 $ 20,600 2020 $ 20,600 2021 $ 20,600 2022 $ 20,600 2023 and thereafter $ 10,300 Total: $ 92,700 Rent expense for the years ended June 30, 2018 and 2017 was $27,462 and $26,411, respectively. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Jun. 30, 2018 | |
Subsequent Event | |
Subsequent Event | NOTE 10. Subsequent Event On August 10, 2018, the Company borrowed a loan of RMB 175,000 (approximately $25,571) from Dean Li, the President and Chief Executive Officer of the Company. The loans borrowed from Mr. Dean Li are non-secured, free of interest with no specified maturity date. The annual interest rate in the range of 4.67%-5.34% with reference to one-year loan. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Summary Of Significant Accounting Policies Policies Abstract | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and Xi’An TV, which is a variable interest entity with the Company as the primary beneficiary. In accordance with United States generally accepted accounting principles (“U.S. GAAP”) regarding “Consolidation of Variable Interest Entities”, the Company identifies entities for which control is achieved through means other than through voting rights (a "variable interest entity" or "VIE") and determines when and which business enterprise, if any, should consolidate the VIE. The Company evaluated its participating interest in Xi’An TV and concluded it is the primary beneficiary of Xi’An TV, a variable interest entity. The Company consolidated Xi’An TV and all significant intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television products, the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements and loss contingencies. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are made based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash balances at various financial institutions in the PRC which do not provide insurance for amounts on deposit. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area. The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The fair value of financial instruments, which consist of cash and cash equivalents, prepaid and other receivable, accounts payable, accrued liabilities and other payable, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments. Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits with banks and liquid investments with an original maturity of three months or less. |
Other Receivable | Other Receivable Other receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for bad debts and a credit to other receivable. |
Fixed Assets | Fixed Assets Fixed assets are recorded at cost and depreciated using the straight-line method, with an estimated 5% salvage value of original cost, over the estimated useful lives of the assets as follows: Asset Category Estimated Useful Life Electronic Equipment 5 years Communication Equipment 3 years Machinery Equipment 5 years Automobiles 10 years Office Furniture 5 years |
Film Cost | Film Costs The Company capitalizes film costs in accordance with ASC 926. Film costs are stated at the lower of cost, less accumulated amortization, or fair value. Production overhead, a component of film costs, includes allocable costs of individuals or departments with exclusive or significant responsibility for the production of films. Substantially all of the Company’s resources are dedicated to the production of its films. Capitalized production overhead does not include selling, general and administrative expenses. Interest expense on funds invested in production is capitalized into film costs until production is completed. In addition to the films being produced, costs of productions in development are capitalized as development film costs in accordance with the provisions of the ASC and are transferred to film production costs when a film is set for production. In the event a film is not set for production within three years from the time the first costs are capitalized or the film is abandoned, all such costs are generally expensed. Once a film is released, film costs are amortized and participations and residual costs are accrued on an individual film basis in the proportion that the revenue during the period for each film (“Current Revenue”) bears to the estimated remaining total revenue to be received from all sources for each film (“Ultimate Revenue”) as of the beginning of the current fiscal period as required by the ASC. The amount of film costs that is amortized each period will depend on the ratio of Current Revenue to Ultimate Revenue for each film for such period. The Company makes certain estimates and judgments of Ultimate Revenue to be received for each film based on information received from its distributor and its knowledge of the industry. Ultimate Revenue does not include estimates of revenue that will be earned beyond ten years of a film’s initial theatrical release date. Unamortized film costs are evaluated for impairment each reporting period on a film-by-film basis in accordance with the requirements of the ASC. If estimated remaining net cash flows are not sufficient to recover the unamortized film costs for that film, the unamortized film costs will be written down to fair value determined using a net present value calculation. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews its long-lived assets used in operations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. |
Income Taxes | Income Taxes The Company accounts for income tax under the provisions of ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company adopted the accounting standard for uncertainty in income taxes which requires a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not file a return in a particular jurisdiction). |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of stockholders’ equity but are excluded from net income (loss). During the years presented, other comprehensive income (loss) includes changes in cumulative translation adjustment from foreign currency translation. |
Foreign Currency Translation | Foreign Currency Translation The Company uses United States dollars (“U.S. dollar” or “US$” or “$”) for financial reporting purposes. The subsidiaries within the Company maintain their books and records in Renminbi (“RMB”), the currency of China, the economic environment in which the Company’s primary subsidiaries conduct their operations. Transactions denominated in foreign currencies are translated into U.S. dollar at exchange rate in effect on the date of the transactions. Exchange gains or losses on transactions are included in earnings. The financial statements of the Company are translated into United States dollars in accordance with U.S. GAAP, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. The exchange rates used for foreign currency translation were as follows (US$1 = RMB): Period Covered Balance Sheet Average Rate Year ended June 30, 2018 6.6191 6.5052 Year ended June 30, 2017 6.7769 6.8114 |
Earnings (Loss) Per Share | Earnings (Loss) Per Share The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. As of June 30, 2018 and 2017, the Company had no common stock equivalents that could potentially dilute future earnings per share. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international tax consequences for many companies that operate internationally. The amendments are effective upon addition to the FASB Accounting Standards Codification. The Company does not expect the adoption of this guidance will have a material impact on the consolidated financial statements. |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered recurring losses from operations and has a working capital deficit as of June 30, 2018. The Company also generated negative operating cash flows for the year ended June 30, 2018. These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, management intends to raise additional funds by way of cooperation with other film and television producers, obtaining loans from shareholders and borrowing from Dean Li, the President and Chief Executive Officer of the Company, to fund operations. The consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Summary Of Significant Accounting Policies Tables Abstract | |
Schedule of Fixed Assets | Fixed assets are recorded at cost and depreciated using the straight-line method, with an estimated 5% salvage value of original cost, over the estimated useful lives of the assets as follows: Asset Category Estimated Useful Life Electronic Equipment 5 years Communication Equipment 3 years Machinery Equipment 5 years Automobiles 10 years Office Furniture 5 years |
Exchange rates used for foreign currency translation | The exchange rates used for foreign currency translation were as follows (US$1 = RMB): Period Covered Balance Sheet Average Rate Year ended June 30, 2018 6.6191 6.5052 Year ended June 30, 2017 6.7769 6.8114 |
Prepaid and Other Receivable (T
Prepaid and Other Receivable (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Schedule of Prepaid and Other Receivable | June 30, 2018 2017 Prepaid and other receivable $ 126,464 $ 124,044 Bad debt allowance 122,544 109,302 Prepaid and other receivable, net $ 3,920 $ 14,742 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Fixed Assets Tables Abstract | |
Schedule of Fixed Asstes | Fixed assets consist of the following: June 30, Asset Category 2018 2017 Electronic Equipment $ 164,192 $ 160,368 Communication Equipment 647 632 Machinery Equipment 88,221 86,166 Automobiles 48,217 47,094 Office Furniture 2,251 2,198 303,528 296,458 Less: Accumulated depreciation (288,243 ) (280,236 ) Fixed assets, net $ 15,285 $ 16,222 |
Film Costs (Tables)
Film Costs (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Film Costs Tables Abstract | |
Film Cost | Film costs consist of the following: June 30, 2018 2017 Completed and not released: In development - Film $ 755,395 $ 737,800 Film costs $ 755,395 $ 737,800 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Income Taxes Tables Abstract | |
Schedule of Income Tax Reconciliation | The following table reconciles the Company’s statutory tax rates to its effective tax rate as a percentage of income before income taxes: For The Years Ended June 30, 2018 2017 U.S. statutory rate 21.0 % 34.0 % Foreign income not recognized in the U.S. -21.0 % -34.0 % PRC preferential enterprise income tax rate 25.0 % 25.0 % Valuation allowance -24.7 % -27.1 % Effect of expenses not deductible for tax purposes -0.3 % 2.1 % Effective tax rate 0.0 % 0.0 % |
Schedule of Deferred Tax Assets | The components of the Company’s deferred income tax assets are set forth below: June 30, 2018 June 30, 2017 Deferred tax assets Net operating losses $ 276,110 $ 161,751 Total deferred income tax assets 276,110 161,751 Less: Valuation allowance (276,110 ) (161,751 ) Net deferred income tax assets $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Commitments And Contingencies Tables Abstract | |
Commitment of Lease | The Company’s commitments for minimum lease payments under the non-cancelable operating leases are as follows: For The Years Ended June 30, 2019 $ 20,600 2020 $ 20,600 2021 $ 20,600 2022 $ 20,600 2023 and thereafter $ 10,300 Total: $ 92,700 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Jun. 30, 2018 | |
Electronic Equipment [Member] | |
Useful Life | 5 years |
Communication Equipment [Member] | |
Useful Life | 3 years |
Machinery Equipment [Member] | |
Useful Life | 5 years |
Automobiles [Member] | |
Useful Life | 10 years |
Office Furniture [Member] | |
Useful Life | 5 years |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details 2) | Jun. 30, 2018 | Jun. 30, 2017 |
Year Ended RMB : USD exchange rate [Member] | ||
Exchange Rate | 6.6191 | 6.7769 |
Year Average RMB : USD exchange rate [Member] | ||
Exchange Rate | 6.5052 | 6.8114 |
Prepaid and Other Receivable (D
Prepaid and Other Receivable (Details) - USD ($) | Jun. 30, 2018 | Jun. 30, 2017 |
Notes to Financial Statements | ||
Prepaid and other receivable | $ 126,464 | $ 124,044 |
Bad debt allowance | 122,544 | 109,302 |
Prepaid and other receivable, net | $ 3,920 | $ 14,742 |
Prepaid and Other Receivable 27
Prepaid and Other Receivable (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Notes to Financial Statements | ||
Bad Debt Expenses | $ 10,823 | $ 108,748 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) | Jun. 30, 2018 | Jun. 30, 2017 |
Disclosure Fixed Assets Details Abstract | ||
Electronic Equipment | $ 164,192 | $ 160,368 |
Communication Equipment | 647 | 632 |
Machinery Equipment | 88,221 | 86,166 |
Automobiles | 48,217 | 47,094 |
Office Furniture | 2,251 | 2,198 |
Fixed Assets, Gross | 303,528 | 296,458 |
Less: Accumulated depreciation | (288,243) | (280,236) |
Fixed assets, net | $ 15,285 | $ 16,222 |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Disclosure Fixed Assets Details Narrative Abstract | ||
Deprication Expenses | $ 1,347 | $ 1,555 |
Film Costs (Details)
Film Costs (Details) - USD ($) | Jun. 30, 2018 | Jun. 30, 2017 |
Disclosure Film Costs Details Abstract | ||
In development - TV Series | $ 755,395 | $ 737,800 |
Film costs | $ 755,395 | $ 737,800 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Maximum [Member] | ||
Range of Annual Imputed Interest Rate (as a percentage) | 5.34% | |
Minimum [Member] | ||
Range of Annual Imputed Interest Rate (as a percentage) | 4.67% | |
Dean Li, President and Shareholder | ||
Advance from Related party | $ 597,726 | $ 407,208 |
Income Taxes (Details)
Income Taxes (Details) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Disclosure Income Taxes Details Abstract | ||
U.S. statutory rate | 21.00% | 34.00% |
Foreign income not recognized in the U.S. | (21.00%) | (34.00%) |
PRC preferential enterprise income tax rate | 25.00% | 25.00% |
Valuation allowance | (24.70%) | (27.10%) |
Effect of expenses not deductible for tax purposes | (0.03%) | 2.10% |
Effective tax rate | 0.00% | 0.00% |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | Jun. 30, 2018 | Jun. 30, 2017 |
Disclosure Income Taxes Details 2Abstract | ||
Net operating losses | $ 276,110 | $ 161,751 |
Total deferred income tax assets | 276,110 | 161,751 |
Less: Valuation allowance | (276,110) | (161,751) |
Net deferred income tax assets |
Commitments and Contingencies34
Commitments and Contingencies (Details) | Jun. 30, 2018USD ($) |
Disclosure Commitments And Contingencies Details Abstract | |
2,019 | $ 20,600 |
2,020 | 20,600 |
2,021 | 20,600 |
2,022 | 20,600 |
2023 and thereafter | 10,300 |
Total | $ 92,700 |
Commitments and Contingencies35
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Disclosure Commitments And Contingencies Details Narrative Abstract | ||
Monthly Rent | $ 1,737 | $ 1,737 |
Operating Leases, Rent Expense | $ 27,462 | $ 26,411 |