Document and Entity Information
Document and Entity Information | 12 Months Ended |
Jun. 30, 2019shares | |
Document and Entity Information | |
Document Type | 20-F/A |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Jun. 30, 2019 |
Entity Registrant Name | Leaping Group Co., Ltd. |
Trading Symbol | YZCM |
Entity Common Stock, Shares Outstanding | 16,021,126.7606 |
Entity Well Known Seasoned Issuer | No |
Document Transition Report | false |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Entity Central Index Key | 0001757083 |
Current Fiscal Year End Date | --06-30 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 | |
CURRENT ASSETS: | |||
Cash | $ 194,488 | $ 19,564 | |
Accounts receivable, net | 7,384,640 | 2,122,803 | |
Deposits | 570,204 | 362,549 | |
Deferred offering costs | 1,403,604 | 0 | |
Advances to suppliers | 22,862 | 2,518 | |
Prepaid expenses and other receivables | 96,499 | 29,985 | |
Assets, Current | 9,672,297 | 2,537,419 | |
Inventories, net | 332,542 | 291,509 | |
Property and equipment, net | 1,015,959 | 0 | |
Deferred tax assets | 78,222 | 64,581 | |
TOTAL ASSETS | 11,099,020 | 2,893,509 | |
CURRENT LIABILITIES: | |||
Accounts payable | 449,058 | 997 | |
Deferred revenue | 189,268 | 219,936 | |
Taxes payable | 2,726,821 | 1,616,184 | |
Accrued expense and other payables | 1,173,555 | 162,777 | |
Due to related parties | 567,346 | 25,541 | |
TOTAL CURRENT LIABILITIES | 5,106,048 | 2,025,435 | |
TOTAL LIABILITIES | 5,106,048 | 2,025,435 | |
Commitments and contingencies | |||
SHAREHOLDERS? EQUITY: | |||
Ordinary Shares, $0.00284 par value 50,000,000 shares authorized; 16,021,126.7606 and 17,605,633.8028 shares issued and outstanding as of June 30, 2019 and June 30, 2018, respectively * | [1] | 45,500 | 50,000 |
Additional paid-in capital | 421,398 | 416,898 | |
Statutory reserve | 875,271 | 356,336 | |
Accumulated other comprehensive income (loss) | (54,021) | 10,000 | |
Retained earnings | 4,704,824 | 34,840 | |
TOTAL SHAREHOLDERS' EQUITY | [2] | 5,992,972 | 868,074 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 11,099,020 | $ 2,893,509 | |
[1] | Retrospectively restated for effect of reverse split. Prior to the reverse split, the authorized share capital was US$50,000 and consisted of 50,000 ordinary shares of US$0.001 par value. | ||
[2] | Retrospectively restated for effect of reverse split. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2019 | Feb. 26, 2019 | Feb. 25, 2019 | Aug. 21, 2018 | Jun. 30, 2018 |
CONSOLIDATED BALANCE SHEETS | |||||
Ordinary shares, value authorized | $ 142,000 | $ 50,000 | |||
Ordinary shares, par value | $ 0.00284 | $ 0.00284 | $ 0.001 | $ 0.001 | $ 0.00284 |
Ordinary shares, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 |
Ordinary shares, shares issued | 16,021,126.7606 | 17,605,633.8028 | |||
Ordinary shares, shares outstanding | 16,021,126.7606 | 17,605,633.8028 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | ||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
REVENUE | $ 11,679,690 | $ 5,037,793 | $ 3,817,574 | |
Cost of revenue | 3,297,582 | 1,544,569 | 869,772 | |
Business taxes and surcharges | 90,011 | 108,230 | 67,008 | |
Total cost of revenue | 3,387,593 | 1,652,799 | 936,780 | |
GROSS PROFIT | 8,292,097 | 3,384,994 | 2,880,794 | |
Selling expenses | 62,811 | 61,587 | 485,594 | |
General and administrative expenses | 1,342,480 | 256,423 | 198,027 | |
Total operating expenses | 1,405,291 | 318,010 | 683,621 | |
INCOME FROM OPERATIONS | 6,886,806 | 3,066,984 | 2,197,173 | |
OTHER INCOME (EXPENSES) | ||||
Interest income | 158 | 174 | 58 | |
Other income (expenses) | 1,645 | (2) | (141) | |
Total other income (expenses), net | 1,803 | 172 | (83) | |
INCOME BEFORE INCOME TAX PROVISION | 6,888,609 | 3,067,156 | 2,197,090 | |
PROVISION FOR INCOME TAXES | 1,699,690 | 741,557 | 554,521 | |
NET INCOME | [1] | 5,188,919 | 2,325,599 | 1,642,569 |
Other comprehensive income (loss) | (64,021) | 13,470 | 2,855 | |
COMPREHENSIVE INCOME | $ 5,124,898 | $ 2,339,069 | $ 1,645,424 | |
Earnings per common share - basic and diluted | $ 0.310 | $ 0.132 | $ 0.093 | |
Weighted average shares - basic and diluted* | [1] | 16,728,728.5356 | 17,605,633.8028 | 17,605,633.8028 |
[1] | Retrospectively restated for effect of reverse split. |
CONSOLIDATION STATEMENTS OF CHA
CONSOLIDATION STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Ordinary Shares | Additional Paid-In Capital | Statutory Reserve | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | [1] | |
Balance at Jun. 30, 2016 | $ 50,000 | $ 416,898 | $ (433,325) | $ (6,325) | $ 27,248 | |||
Balance (in shares) at Jun. 30, 2016 | [1] | 17,605,633.8028 | ||||||
Net income for the year | 1,642,569 | 1,642,569 | ||||||
Appropriation of statutory reserves | $ 123,759 | (123,759) | ||||||
Foreign currency translation gain | 2,855 | 2,855 | ||||||
Profit dividend | (986,044) | (986,044) | ||||||
Balance at Jun. 30, 2017 | $ 50,000 | 416,898 | 123,759 | 99,441 | (3,470) | 686,628 | ||
Balance (in shares) at Jun. 30, 2017 | [1] | 17,605,633.8028 | ||||||
Net income for the year | 2,325,599 | 2,325,599 | ||||||
Appropriation of statutory reserves | 232,577 | (232,577) | ||||||
Foreign currency translation gain | 13,470 | 13,470 | ||||||
Profit dividend | (2,157,623) | (2,157,623) | ||||||
Balance at Jun. 30, 2018 | $ 50,000 | 416,898 | 356,336 | 34,840 | 10,000 | 868,074 | ||
Balance (in shares) at Jun. 30, 2018 | [1] | 17,605,633.8028 | ||||||
Net income for the year | 5,188,919 | 5,188,919 | ||||||
Share cancellation | $ (4,500) | 4,500 | ||||||
Share cancellation (in shares) | [1] | (1,584,507.0422) | ||||||
Appropriation of statutory reserves | 518,935 | (518,935) | ||||||
Foreign currency translation gain | (64,021) | (64,021) | ||||||
Balance at Jun. 30, 2019 | $ 45,500 | $ 421,398 | $ 875,271 | $ 4,704,824 | $ (54,021) | $ 5,992,972 | ||
Balance (in shares) at Jun. 30, 2019 | [1] | 16,021,126.7606 | ||||||
[1] | Retrospectively restated for effect of reverse split. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | |||
Net Income | $ 5,188,919 | $ 2,325,599 | $ 1,642,569 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Provision for doubtful accounts | 87,166 | 39,055 | 0 |
Depreciation of property and equipment | 59,297 | 0 | 0 |
Deferred tax benefit | (16,066) | (38,019) | 172,525 |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | (5,494,486) | (1,297,604) | (588,414) |
Deposits | (222,100) | (279,725) | 49,321 |
Advances to suppliers | (20,565) | 271,154 | (223,329) |
Prepaid expenses and other receivables | (59,977) | (30,508) | |
Inventories, net | (59,891) | (141,640) | (147,989) |
Accounts payable | 327,165 | (75,833) | (767,522) |
Deferred revenue | (22,902) | 113,021 | 8,891 |
Taxes payable | 1,176,205 | 1,013,951 | 597,083 |
Accrued expense and other payables | 1,023,101 | (260,813) | 357,363 |
Net cash provided by operating activities | 1,965,866 | 1,638,638 | 1,100,498 |
Cash flows from investing activities: | |||
Purchase of property and equipment | (883,871) | ||
Purchase of construction in progress | (34,807) | ||
Net cash used in investing activities | (918,678) | ||
Cash flows from financing activities: | |||
Proceeds from related party loans | 542,088 | 417,857 | (20,384) |
Deferred offering costs | (1,412,531) | ||
Dividend payment to shareholders | (2,157,623) | (986,044) | |
Net cash used in financing activities | (870,443) | (1,739,766) | (1,006,428) |
Effect of exchange rate fluctuation on cash | (1,821) | 4,499 | 52 |
Net increase (decrease) in cash | 174,924 | (96,629) | 94,122 |
Cash at beginning of year | 19,564 | 116,193 | 22,071 |
Cash at end of year | 194,488 | 19,564 | 116,193 |
Supplemental cash flow information | |||
Cash paid for interest | 415,688 | $ 4,572 | $ 3,809 |
Non-cash investing and financing activities | |||
Non-cash payment for property and equipment purchase | $ 35,173 |
ORGANIZATION AND BUSINESS DESCR
ORGANIZATION AND BUSINESS DESCRIPTION | 12 Months Ended |
Jun. 30, 2019 | |
ORGANIZATION AND BUSINESS DESCRIPTION | |
ORGANIZATION AND BUSINESS DESCRIPTION | NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION Leaping Group Co., Ltd. (“Leaping Group” or the “Company”) was incorporated under the laws of the Cayman Islands on August 21, 2018. On July 16, 2018, Yuezhong Media Co., Limited (“Yuezhong Media HK”) was incorporated in accordance with laws and regulations of Hong Kong. On September 4, 2018, Yuezhong International Co., Ltd (“Yuezhong International”) was incorporated under the law of British Virgin Islands. Leaping Group owns 100% of Yuezhong International. Yuezhong International owns 100% of Yuezhong Media HK. Yuezhong Media HK and Yuezhong International are currently not engaging in any active business and merely acting as holding companies. On October, 12, 2018, Yuezhong (Shenyang) Technology Co., Ltd. (“Yuezhong Shenyang” or “WFOE”) was incorporated, as a wholly foreign-owned enterprise in the People’s Republic of China (“PRC” or “China”). WFOE is wholly owned by Yuezhong Media HK. Leaping Media Group Co., Ltd (“LMG”) was incorporated on November 19, 2013, as a limited company pursuant to PRC laws. LMG also owns 100% of the following companies: Horgos Xinyuezhong Film Media Co., Ltd., incorporated on December 25, 2017 and dissolved on April 17, 2019; Shenyang Tianniu Media Co., Ltd. (“Shenyang Tianniu”), incorporated on January 10, 2013; Yuezhong Media (Dalian) Co., Ltd., incorporated on March 15, 2016; Yuezhong (Beijing) Film Co., Ltd., incorporated on May 26, 2017; Harbin Yuechuzhong Media Co., Ltd. (“Harbin Yuechuzhong”), incorporated on January 10, 2018; Shenyang Xiagong Hotel Management Co., Ltd., incorporated on June 11, 2018; and Liaoning Leaping International Cinema Management Co., Ltd. (“Liaoning Cinema”), incorporated on September 29, 2018. On October 15, 2018, WFOE entered into a series of agreements with the shareholders of LMG. These agreements are designed to provide WFOE with the power, rights, and obligations equivalent in all material respects to those it would possess as the sole equity holder of LMG, including absolute control rights and the rights to the assets, property, and revenue of LMG. According to the Exclusive Service Agreement, LMG is obligated to pay service fees to WFOE approximately equal to the net income of LMG. In essence, WFOE has gained effective control over LMG. Therefore, the Company believes that LMG should be considered as a Variable Interest Entity (“VIE”) under the Statement of Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 810 “Consolidation.” Accordingly, the accounts of LMG are consolidated with those of WFOE and are ultimately consolidated into those of Leaping Group. The above-mentioned transaction was considered a reorganization of the Company (the “Reorganization”). After the Reorganization, Leaping Group ultimately owns 100% equity interests of Yuezhong Media HK and WFOE, which further has the effective control over the operating entity, LMG and its subsidiaries through the VIE agreements. In accordance with Accounting Standards Codification (“ASC”) 805‑50‑25, the Reorganization has been accounted for as a recapitalization among entities under common control since the same controlling shareholder controlled all these entities before and after the Reorganization. The consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Results of operations for the period presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period. By eliminating the effects of intra-entity transactions in determining the results of operations for the period before the Reorganization, those results will be on substantially the same basis as the results of operations for the period after the date of combination. The effects of intra-entity transactions on current assets, current liabilities, revenue, and cost of sales for periods presented and on retained earnings (accumulated deficit) at the beginning of the periods presented are eliminated to the extent possible. Furthermore, ASC 805‑50‑45‑5 indicates that the financial statements and financial information presented for prior years also shall be retrospectively adjusted to furnish comparative information. Leaping Group, through its subsidiaries and its VIE (collectively, the “Group”), is principally engaged in the Multi-Channel Advertising Business, Event Planning and Execution Business, Film Production Business and Movie Theater Operating Business in China. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”) and have been consistently applied. The consolidated financial statements include the financial statements of Leaping Group, its subsidiaries and its affiliates controlled by the VIE agreements. All inter-company balances and transactions have been eliminated upon consolidation. Details of the subsidiaries and VIEs of the Company are set out below: Name of Entity Date of Incorporation Place of % of Ownership Principal Activities Parent company: Leaping Group Co., Ltd August 21, 2018 Cayman Islands Parent Investment holding Subsidiaries: Yuezhong International Co., Ltd September 4, 2018 British Virgin Islands 100% Investment holding Yuezhong Media Co., Limited July 16, 2018 Hong Kong 100% Investment holding Yuezhong (Shenyang) Technology Co., Ltd. October, 12, 2018 PRC 100% Investment holding Variable interest entities: Leaping Media Group Co., Ltd. November 19, 2013 PRC Nil Multi-Channel advertising, event Subsidiaries of variable interest entity: Yuezhong (Beijing) Film Co., Ltd. May 26, 2017 PRC Nil Film production Yuezhong Media (Dalian) Co., Ltd. March 15, 2016 PRC Nil Advertising Shenyang Tianniu Media Co., Ltd. January 10, 2013 PRC Nil Advertising Shenyang Xiagong Hotel Management Co., Ltd. June 11, 2018 PRC Nil Hotel management Harbin Yuechuzhong Media Co., Ltd. January 10, 2018 PRC Nil Event planning and execution Horgos Xinyuezhong Film Media Co., Ltd. December 25, 2017 PRC Nil Film production Liaoning Leaping International Cinema Management Co., Ltd. September 29, 2018 PRC Nil Movie Theater Operating The Company has adopted the guidance of accounting for VIE, which requires the VIE to be consolidated by the primary beneficiary of the entity. The Company’s management made evaluations of the relationships between the Company and its VIE and the economic benefit flow of contractual arrangements with the VIE. In connection with such evaluation, management also took into account the fact that, as a result of such contractual arrangements, the Company controls the shareholders’ voting interests in the VIE. As a result of such evaluation, management concluded that the Company is the primary beneficiary of its VIE. As a result, the Company consolidates all of its VIE in its consolidated financial statements. Consolidation of Variable Interest Entities In accordance with accounting standards regarding consolidation of VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has determined that WFOE is the primary beneficiary of LMG’s risks and rewards. The following tables set forth the assets, liabilities, results of operations, and changes in cash of the VIE, LMG, which were included in the Company’s consolidated balance sheets, statements of income and comprehensive income and cash flows: As of June 30, As of June 30, 2019 2018 Current assets $ 9,672,297 $ 2,537,419 Non-current assets 1,426,723 356,090 Total assets 11,099,020 2,893,509 Current liabilities 5,106,048 2,025,435 Total liabilities 5,106,048 2,025,435 Net assets $ 5,992,972 $ 868,074 For the years ended June 30, 2019 2018 2017 Revenue $ 11,679,690 $ 5,037,793 $ 3,817,574 Net income $ 5,188,919 $ 2,325,599 $ 1,642,569 For the years ended June 30, 2019 2018 2017 Net cash provided by operating activities $ 1,965,866 $ 1,638,638 $ 1,100,498 Net cash used in investing activities (918,678) — — Net cash used in financing activities (870,443) (1,739,766) (1,006,428) Effect of exchange rate fluctuation on cash (1,821) 4,499 52 Net increase (decrease) in cash $ 174,924 $ (96,629) $ 94,122 Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions. Significant accounting estimates reflected in the Company’s consolidated financial statements include the allowances for doubtful accounts. Actual results could differ from these estimates. Cash The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. As of June 30, 2019 and 2018, the Company had no cash equivalents. The Company maintains cash with various financial institutions mainly in the PRC. Balances in banks in the PRC are uninsured. Accounts Receivable, net Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of June 30, 2019 and 2018, the allowances for doubtful accounts from accounts receivable were $123,621 and $38,386, respectively. Inventories, net The Company produces and contracts third parties to produce films and television series to be shown in movie theaters and/or on popular online portal. Produced content includes direct production costs, production overhead and acquisition costs and is stated at the lower of unamortized cost or estimated fair value. Produced content also includes cash expenditures made to enter into arrangements with third parties to co-produce certain of its theatrical and television productions. The Company uses the individual-film-forecast-computation method and amortizes the produced content based on the ratio of current period actual revenue (numerator) to estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year (denominator) in accordance with ASC subtopic 926‑20, Entertainment — Films, Other Assets — Film Costs (“ASC 926‑20”). Ultimate revenue estimates for the produced content are periodically reviewed and adjustments, if any, will result in prospective changes to amortization rates. When estimates of total revenues and other events or changes in circumstances indicate that a film or television series has a fair value that is less than its unamortized cost, a loss is recognized currently for the amount by which the unamortized cost exceeds the film or television series’ fair value. For the years ended June 30, 2019, 2018 and 2017, based on management analysis, no impairment was recorded. Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is provided using the straight-line method over their expected useful lives, as follows: Useful life Furniture, fixtures and equipment 5 years Transportation vehicles 3‑5 years Leasehold improvement Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in income from operations. Accounts Payable Accounts payable includes all operating payables, including those related to all media and production costs. These payables are due within 12 months. Revenue Recognition The Company’s revenues are principally derived from the Multi-Channel Advertising Business, Event Planning and Execution Business, Film Production Business, and Movie Theater Operating Business. On July 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014‑09 Revenue from Contracts with Customers (“ASC Topic 606”) using the modified retrospective method for contracts that were not completed as of July 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements, and no adjustments to opening retained earnings were made as the Company’s revenue was recognized based on the amount of consideration expects to receive in exchange for satisfying the performance obligations. ASC 606, Revenue from Contracts with Customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606. Multi-Channel advertising The Company’s Multi-Channel Advertising Services include pre-movie advertisements display, elevator and supermarket advertising, and brand promotion. Most of the Company’s client contracts are individually negotiated and, accordingly, the service period and prices vary significantly. Service periods typically range from one day to one year. The Company provides advertising services over the contract period. Revenues from advertising services are recognized on straight-line basis over the contract period, which approximates the pattern of when the underlying services are performed. Prepayments for advertising services are deferred and recognized as revenue when the advertising services are rendered and the Company’s performance obligations are satisfied. The Company also provides advertising services through its regional distributors. Pursuant to advertising services distribution agreements, the Company grants the regional distributors the exclusive rights to provide local pre-movie advertising. The advertising services distribution agreements with these regional distributors typically have terms ranging from 11 to 24 months without automatic renewal provisions. Under the advertising services distribution agreements, the Company has the right to set the minimum local pre-movie advertisement prices in the movie theaters, regulate the content and quality of local pre-movie advertisements according to related laws and movie theater rules, and examine the source of local pre-movie advertisements and refuse to display advertisements from any competitors. The receipt of distribution fee is initially recorded as deferred revenue and is recognized as revenue ratably as services are rendered and the Company’s performance obligations are satisfied. Event planning and execution The Company’s Event Planning and Execution Business includes planning and arrangement of events, and production of related advertising materials. From the preparation of the events to executing it typically takes no more than one week. Revenue is realized when the service is performed in accordance with the client arrangement and upon the completion of the earnings process. Film production The Company has already finished the production of one television series and is in the process of producing more television series and movies. Revenues from the online distribution of the television series are recognized when viewers have clicked the content and viewed the content for certain length, as agreed with the distributors. Movie Theater Operating The Company’s movie theater operating revenues are generated primarily from box office admissions and theater food and beverage sales. Revenues of this business line are recognized when admissions and food and beverage sales are received at the theaters and are reported net of sales tax. The Company defers 100% of the revenue associated with the sales of gift cards and packaged tickets until such time as the items are redeemed. Contract Balances and Remaining Performance Obligations Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. The Company’s contract assets, consist primarily of accounts receivable related to providing multi-channel advertising and event planning and execution services to customers, in which the Company’s contracted performance obligations have been satisfied, amount billed and the Company has an unconditional right to payment. The Company had accounts receivable related to revenues from contracts with customers of $7,384,640 and $2,122,803 as of June 30, 2019 and 2018, respectively. The Company’s contract liabilities, which are reflected in its consolidated balance sheets as deferred revenue of $189,268 and $219,936 as of June 30, 2019 and 2018, respectively, consist primarily of the Company’s unsatisfied performance obligations as of the balance sheet dates. Refer to Note 12 — Segment reporting for details of revenue segregation. Cost of Revenue Cost of the multi-channel advertising revenues consists primarily of payments to movie theater operators for pre-movie advertising right and the billboards of elevators and supermarkets. Cost of event planning and execution consists primarily of advertising design costs, salary and benefits expenses, leasing costs, and other related expenses. Cost of film production consists primarily of direct production costs and production overhead. Cost of movie theater operating consists primarily of film exhibition costs, which is accrued on the applicable admissions revenues and estimates of the final settlement pursuant to film licenses of the Company. These licenses typically state that rental fees are based on aggregate terms established prior to the opening of the film. 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. The provisions of ASC 740‑10‑25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company does not believe that there was any uncertain tax position at June 30, 2019 and 2018. The Company’s operating subsidiary and VIE in China are subject to the income tax laws of the PRC. No taxable income was generated outside the PRC for the years ended June 30, 2019, 2018 and 2017. As of June 30, 2019, the tax years ended December 31, 2014, through December 31, 2018, for the Company’s PRC subsidiary and VIE remain open for statutory examination by PRC tax authorities. Value Added Tax (“VAT”) Sales revenue derived from advertising service revenues is subject to VAT. The applicable VAT rates for the Company is 6% for the years ended June 30, 2019, 2018 and 2017. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in the line item of taxes payable on the consolidated balance sheets. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. Foreign Currency Translation Since the Company operates in the PRC, the Company’s functional currency is the Chinese Renminbi (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency, the United States Dollar (“USD or US$”). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the result of operations. RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. June 30, 2019 June 30, 2018 June 30, 2017 Year-end spot rate US$1=RMB6.8668 US$1=RMB6.6198 US$1=RMB6.7774 Average rate US$1=RMB6.8234 US$1=RMB6.5064 US$1=RMB6.8124 Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (for example, convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (namely those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the years ended June 30, 2019, 2018 and 2017. Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive income. Fair Value of Financial Instruments The Company follows the provisions of FASB ASC 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 — Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 — Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the balance sheets for cash, accounts receivable, deposits, deferred offering costs, other current assets, accounts payable, deferred revenue, taxes payable, other payables, and due to related parties approximate their fair value based on the short-term maturity of these instruments. Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. Concentration and Credit Risk Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The Company maintains certain bank accounts in the PRC, Hong Kong, and British Virgin Islands, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of June 30, 2019 and 2018, $143,128 and $14,205 of the Company’s cash were on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company’s sales are made to customers that are located primarily in China. The Company has a concentration of its revenues and receivables with specific customers. For the years ended June 30, 2019, 2018 and 2017, a major customer accounted for 15%, 13% and 43% of the Company’s total revenue, respectively. As of June 30, 2019, four customers represented 29%, 13%, 11% and 11% of the net accounts receivable balance. As of June 30, 2018, two customers represented 36% and 22% of the net accounts receivable balance, respectively. For the year ended June 30, 2019, the Company purchased 51% and 18% of its services from two suppliers, respectively. For the years ended June 30, 2018 and 2017, the Company purchased approximately 84% and 80% of its services from one major supplier, respectively. Statements of Cash Flows In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company are calculated based upon the local currencies and translated at the average rate of exchange during the reporting period. As a result, amounts related to assets and liabilities reported on the Company’s consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842). The main objective is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for (1) public business entities, (2) not-for-profit entities that have issued, or are conduit bond obligors for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and (3) employee benefit plans that file financial statements with the SEC. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The Company will adopt this new lease standard within annual reporting period of June 30, 2020, and the Company is currently evaluating the impact of this new standard on its financial statements and related disclosures, and the Company estimated that the adoption of this AUS will not have material impact on the results of the operations and cash flows. In July 2017, the FASB issued ASU 2017‑11, “Earnings Per Share (Topic 260),” Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company expects that the adoption of this ASU will not have a material impact on its financial statements. In September 2017, the FASB issued ASU 2017‑13, “Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842).” The main objective of this pronouncement is to clarify the effective date of the adoption of ASC Topic 606 and ASC Topic 842 and the definition of public business entity as stipulated in ASU 2014‑09 and ASU 2016‑02. ASU 2014‑09 provides that a public business entity and certain other specified entities adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities are required to adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. ASU 2016‑12 requires that “a public business entity and certain other specified entities adopt ASC Topic 842 for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All other entities are required to adopt ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.” ASU 2017‑13 clarifies that the SEC would not object to certain public business entities electing to use the non-public business entities effective dates for applying ASC 606 and ASC 842. ASU 2017‑13, however, limits such election to certain public business entities that “otherwise would not meet the definition of a public business entity except for a requirement to include or inclusion of its financial statements or financial information in another entity’s filings with the SEC.” The Company adopted ASC 606 on July 1, 2018, using the modified retrospective method. The Company has completed the assessment of the impact of this new guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that might result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in the scope of Topic 606. The adoption of Topic 606 did not result in a cumulative catch-up adjustment to the Company’s opening balance sheets of retained earnings at the effective date and therefore there were no material changes to the Company’s consolidated financial statements. In November 2017, the FASB issued ASU 2017‑14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the new revenue recognition standard. This standard will be effective for fiscal years beginning after December 15, 2018. The Company adopted ASC 606 on July 1, 2018, using the modified retrospective method. There was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606. The adoption of Topic 606 did not result in a cumulative catch-up adjustment to the Company’s opening balance sheets of retained earnings at the effective date and therefore there were no material changes to the Company’s consolidated financial statements. 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 |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 12 Months Ended |
Jun. 30, 2019 | |
ACCOUNTS RECEIVABLE, NET | |
ACCOUNTS RECEIVABLE, NET | NOTE 3 — ACCOUNTS RECEIVABLE, NET Accounts receivable consisted of the following: As of June 30, As of June 30, 2019 2018 Accounts receivable $ 7,508,261 $ 2,161,189 Less: allowance for doubtful accounts (123,621) (38,386) Accounts receivable, net $ 7,384,640 $ 2,122,803 Allowance for doubtful accounts movement is as follows: For the years ended June 30, 2019 2018 2017 Beginning balance $ 38,386 $ — $ — Provision for doubtful accounts 87,166 39,055 — Foreign currency translation adjustments (1,931) (669) — Ending balance $ 123,621 $ 38,386 $ — |
DEFERRED OFFERING COSTS
DEFERRED OFFERING COSTS | 12 Months Ended |
Jun. 30, 2019 | |
DEFERRED OFFERING COSTS | |
DEFERRED OFFERING COSTS | NOTE 4 — DEFERRED OFFERING COSTS Deferred offering costs consisted principally of legal, underwriting, and other professional service expenses in connection with the Initial Public Offering (the “IPO”) of the Company’s ordinary shares. As of June 30, 2019 and 2018, the Company capitalized $1,403,604 and $Nil of deferred offering costs. Such costs will be deferred until the closing of the IPO, at which time the deferred costs will be offset against the offering proceeds. |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Jun. 30, 2019 | |
INVENTORIES, NET | |
INVENTORIES, NET | NOTE 5 — INVENTORIES, NET As of June 30, As of June 30, 2019 2018 Film production costs $ $ In development 8,817 109,739 In production 323,725 — Total film production costs 332,542 109,739 Television production costs Released, less accumulated amortization — 181,770 Total television production costs — 181,770 Total inventories $ 332,542 $ 291,509 Amortization expense was $176,346, $Nil and $Nil for the years ended June 30, 2019, 2018 and 2017, respectively. The Company expects to amortize $323,725 of the film production costs during the fiscal year ending June 30, 2020. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Jun. 30, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | NOTE 6 — PROPERTY AND EQUIPMENT, NET Property and equipment, net, consist of the following: As of June 30, As of June 30, 2019 2018 Furniture, fixtures and equipment $ 404,352 $ — Leasehold improvement 600,991 — Transportation vehicles 34,951 — Subtotal 1,040,294 — Less: accumulated depreciation (58,922) — $ 981,372 $ — Construction in Progress $ 34,587 $ — Property and equipment, net $ 1,015,959 $ — Depreciation expense was $59,297, $Nil and $Nil for the years ended June 30, 2019, 2018 and 2017, respectively. |
ACCRUED EXPENSE AND OTHER PAYAB
ACCRUED EXPENSE AND OTHER PAYABLES | 12 Months Ended |
Jun. 30, 2019 | |
ACCRUED EXPENSE AND OTHER PAYABLES | |
ACCRUED EXPENSE AND OTHER PAYABLES | NOTE 7 — ACCRUED EXPENSE AND OTHER PAYABLES As of June 30, As of June 30, 2019 2018 Deposits from customers $ 36,255 $ 162,241 Deferred offering costs payable 901,763 — Professional service fees payable 104,982 — Accrued expense 123,932 — Others 6,623 536 $ 1,173,555 $ 162,777 Deposits from customers were mainly received from advertising agents for multi-channel advertising. |
TAXES
TAXES | 12 Months Ended |
Jun. 30, 2019 | |
TAXES | |
TAXES | NOTE 8 — TAXES a. VAT, Business Tax and related surcharges Effective on September 1, 2012, a pilot program (the “Pilot Program”) for transition from the imposition of PRC business tax (“Business Tax”) to the imposition of VAT for revenues from certain industries and certain cities. On May 1, 2016, the transition from the imposition of Business Tax to the imposition of VAT, was expanded to all industries in China, and as a result all of the Company’s revenues have been subject to a 6% VAT and related surcharges on VAT payable at a rate of 12% since that date. To record VAT payable, the Company adopted the net presentation method, which presents the difference between the output VAT (at a rate of 6%) and the available input VAT amount (at the rate applicable to the supplier). There is a culture construction fee surcharge of 3% on gross revenues from the multi-channel advertising businesses. b. Income tax Cayman Islands Under the current tax laws of the Cayman Islands, the Company is not subject to tax on its income or capital gains. In addition, no Cayman Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders. British Virgin Islands Yuezhong International was incorporated in the British Virgin Islands and is not subject to income taxes or capital gain tax under current laws of British Virgin Islands. Hong Kong Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5% for the years ended June 30, 2019, 2018 and 2017, and there are no withholding taxes in Hong Kong on remittance of dividends. China The Corporate Income Tax Law generally applies an income tax rate of 25% to all enterprises. Once an enterprise meets certain requirements and is identified as a small-scale minimal profit enterprise, the part of its taxable income not more than RMB1 million is subject to a reduced rate of 5% and the part between RMB1 million and 3 million is subject to a reduced rate of 10%. (i)The components of the income tax provision are as follows: For the years ended June 30, 2019 2018 2017 Current income tax provision $ 1,715,756 $ 779,576 $ 381,996 Deferred income tax benefit (16,066) (38,019) 172,525 Total $ 1,699,690 $ 741,557 $ 554,521 (ii)The following table summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities: As of June 30, As of June 30, 2019 2018 Allowance for doubtful accounts $ 30,905 $ 9,597 Deferred revenue 47,317 54,984 Total deferred tax assets $ 78,222 $ 64,581 No valuation allowance against the deferred tax assets is considered necessary since the Company believes that it will more likely than not to utilize the future benefits. The following table reconciles the statutory rates to the Company’s effective tax rate for the years ended June 30, 2019, 2018 and 2017: For the years ended June 30, 2019 2018 2017 China Statutory income tax rate 25 % 25 % 25 % Favorable tax rate impact (a) (0.4) % — — Non-deductible expenses (non-taxable income)-permanent difference 0.1 % (0.8) % 0.2 % Effective tax rate 24.7 % 24.2 % 25.2 % (a) Shenyang Tianniu, Harbin Yuechuzhong and Liaoning Cinema are subject to corporate income tax at a reduced rate of 10% as approved by local government as small-scaled minimal profit enterprises. c. Taxes payable Taxes payable consisted of the following: As of June 30, As of June 30, 2019 2018 Value-added tax $ 160,781 $ 297,366 Corporate income tax 2,399,384 1,148,887 Related surcharges on VAT payable 166,656 169,931 Total $ 2,726,821 $ 1,616,184 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Jun. 30, 2019 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 9 — SHAREHOLDERS’ EQUITY Ordinary shares When the Company was incorporated in the Cayman Islands on August 21, 2018, 50,000,000 Ordinary Shares were authorized, issued and outstanding at par value of US$0.001. On August 24, 2018, the Company issued 50,000,000 Ordinary Shares to certain founder shareholders in connection with entering into the VIE contractual arrangements. On October 19, 2018, one of the Company’s founder shareholders, Asia Equity Exchange Group Co., Ltd., transferred 5,000,000 Ordinary Shares it owned to Mr. Bo Jiang, chairman of the Company. On October 23, 2018, Mr. Bo Jiang transferred 4,500,000 Ordinary Shares to ATIF Holdings Limited, (“ATIF,” formerly known as Asia Times Holdings Limited), a British Virgin Islands company, as compensation for consulting services to be provided by Qianhai Asia Era (Shenzhen) International Financial Services Co., Ltd., a PRC company and a VIE of ATIF (“Qianhai,” formerly known as Qianhai Asia Times (Shenzhen) International Financial Services Co., Ltd.), in connection with the Company’s proposed initial public offering. Pursuant to that certain Amended and Restated Consulting Agreement between Qianhai and LMG dated December 10, 2018, ATIF agreed to receive cash instead of Ordinary Shares as compensation. As a result, the 4,500,000 Ordinary Shares previously held by ATIF have been returned to the Company and cancelled. On February 26, 2019, the Company’s shareholders approved a reverse split of the outstanding Ordinary Shares at a ratio of 1‑for‑2.84 shares, which was effected on February 26, 2019 (the “Share Consolidation”). All references to Ordinary Shares, options to purchase Ordinary Shares, share data, per share data, and related information have been retroactively adjusted, where applicable, in this annual report to reflect the reverse split of the Company’s Ordinary Shares as if it had occurred at the beginning of the earlier period presented. Furthermore, on February 26, 2019, the authorized share capital was increased to US$142,000 divided into 50,000,000 Ordinary Shares of $0.00284 each, and therefore the Company maintains the same number of shares that were previously available to be issued prior to the Share Consolidation (that being 50,000,000). The Company believes it is appropriate to reflect the Share Consolidation on a retroactive basis pursuant to ASC 260. As of June 30, 2019 and 2018, there were 50,000,000 Ordinary Shares authorized at par value of $0.00284, and 16,021,126.7606 and 17,605,633.8028 (respectively) shares issued and outstanding, giving the effect of the Share Consolidation and the share repurchase detailed above. Statutory reserve The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the surplus reserve are made at the discretion of the Board of Directors. As of June 30, 2019 and 2018, the balance of statutory reserves was $875,271 and $356,336, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | NOTE 10 — RELATED PARTY TRANSACTIONS a) The table below sets forth the major related parties and their relationships with the Company: Name of related party Relationship with the Company Tao Jiang CEO and director of the Company b) The Group had the following related party balances with the major related party: As of June 30, 2019 and 2018, the balances of due to related party were mainly loans provided by the CEO and director of the Company to fund the Company’s operations as set forth in the table below. The payables are unsecured, non-interest bearing and due on demand. As of June 30, As of June 30, 2019 2018 Amount due to Tao Jiang $ 567,346 $ 25,541 Total due to related party $ 567,346 $ 25,541 |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Jun. 30, 2019 | |
COMMITMENTS | |
COMMITMENTS | NOTE 11 — COMMITMENTS Operating lease commitments The Company leases facilities in the PRC under non-cancelable operating leases expiring on different dates. Payments under operating leases are expensed on a straight-line basis over the periods of the respective leases. The Company’s lease agreements are entered into with third parties and usually have a renewal option with an advance notice period of one to 12 months, and no restrictions or contingent rents. For lease agreements with escalated rental payments, they are recognized on a straight-line basis over the lease term. The Company’s leases mainly include office buildings and movie theaters. Rental expense charged to operations under operating leases for the years ended June 30, 2019, 2018 and 2017, amounted to 335,379, $50,212 and $34,801, respectively. Future minimum lease obligations for operating leases with initial terms in excess of one year at June 30, 2019 are as follows: For the 12 months ending June 30, 2020 $ 521,905 2021 475,359 2022 474,797 2023 486,265 2024 489,823 Thereafter 2,646,590 Total $ 5,094,739 |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Jun. 30, 2019 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 12 — SEGMENT REPORTING ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of different services. Based on management’s assessment, the Company has determined that it has four operating segments: multi-channel advertising, event planning and execution, film production and movie theater operating. The following tables present summary information by segment for the years ended June 30, 2019, 2018 and 2017, respectively: For the year ended June 30, 2019 Multi- Event Movie Channel Planning and Film Theater Advertising Execution Production Operating Total Revenue $ 7,958,143 $ 2,604,892 $ 775,080 $ 341,575 $ 11,679,690 Cost of revenue and related taxes 2,580,905 475,901 182,319 148,468 3,387,593 Gross profit 5,377,238 2,128,991 592,761 193,107 8,292,097 Operating expenses 957,517 313,419 93,257 41,098 1,405,291 Income from operations 4,419,721 1,815,572 499,504 152,009 6,886,806 Net income $ 3,330,128 $ 1,367,902 $ 376,347 $ 114,542 $ 5,188,919 For the year ended June 30, 2018 Multi- Event Movie Channel Planning and Film Theater Advertising Execution Production Operating Total Revenue $ 4,005,598 $ 1,032,195 $ — $ — $ 5,037,793 Cost of revenue and related taxes 1,443,464 209,335 — — 1,652,799 Gross profit 2,562,134 822,860 — — 3,384,994 Operating expenses 252,853 65,157 — — 318,010 Income from operations 2,309,281 757,703 — — 3,066,984 Net income $ 1,751,062 $ 574,537 $ — $ — $ 2,325,599 For the year ended June 30, 2017 Multi- Event Movie Channel Planning and Film Theater Advertising Execution Production Operating Total Revenue $ 2,175,371 $ 1,642,203 $ — $ — $ 3,817,574 Cost of revenue and related taxes 807,590 129,190 — — 936,780 Gross profit 1,367,781 1,513,013 — — 2,880,794 Operating expenses 389,548 294,073 — — 683,621 Income from operations 978,233 1,218,940 — — 2,197,173 Net income $ 731,303 $ 911,266 $ — $ — $ 1,642,569 As of June 30, As of June 30, 2019 2018 Total assets: $ — $ — Multi-Channel Advertising 7,311,842 2,068,875 Event Planning and Execution 2,393,342 533,125 Film Production 332,542 291,509 Movie Theater Operating 1,061,294 — Total Assets $ 11,099,020 $ 2,893,509 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 13 — SUBSEQUENT EVENTS These consolidated financial statements were approved by management and available for issuance on September 30, 2019. The Company evaluated subsequent events through the date these consolidated financial statements were issued. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”) and have been consistently applied. The consolidated financial statements include the financial statements of Leaping Group, its subsidiaries and its affiliates controlled by the VIE agreements. All inter-company balances and transactions have been eliminated upon consolidation. Details of the subsidiaries and VIEs of the Company are set out below: Name of Entity Date of Incorporation Place of % of Ownership Principal Activities Parent company: Leaping Group Co., Ltd August 21, 2018 Cayman Islands Parent Investment holding Subsidiaries: Yuezhong International Co., Ltd September 4, 2018 British Virgin Islands 100% Investment holding Yuezhong Media Co., Limited July 16, 2018 Hong Kong 100% Investment holding Yuezhong (Shenyang) Technology Co., Ltd. October, 12, 2018 PRC 100% Investment holding Variable interest entities: Leaping Media Group Co., Ltd. November 19, 2013 PRC Nil Multi-Channel advertising, event Subsidiaries of variable interest entity: Yuezhong (Beijing) Film Co., Ltd. May 26, 2017 PRC Nil Film production Yuezhong Media (Dalian) Co., Ltd. March 15, 2016 PRC Nil Advertising Shenyang Tianniu Media Co., Ltd. January 10, 2013 PRC Nil Advertising Shenyang Xiagong Hotel Management Co., Ltd. June 11, 2018 PRC Nil Hotel management Harbin Yuechuzhong Media Co., Ltd. January 10, 2018 PRC Nil Event planning and execution Horgos Xinyuezhong Film Media Co., Ltd. December 25, 2017 PRC Nil Film production Liaoning Leaping International Cinema Management Co., Ltd. September 29, 2018 PRC Nil Movie Theater Operating The Company has adopted the guidance of accounting for VIE, which requires the VIE to be consolidated by the primary beneficiary of the entity. The Company’s management made evaluations of the relationships between the Company and its VIE and the economic benefit flow of contractual arrangements with the VIE. In connection with such evaluation, management also took into account the fact that, as a result of such contractual arrangements, the Company controls the shareholders’ voting interests in the VIE. As a result of such evaluation, management concluded that the Company is the primary beneficiary of its VIE. As a result, the Company consolidates all of its VIE in its consolidated financial statements. |
Consolidation of Variable Interest Entities | Consolidation of Variable Interest Entities In accordance with accounting standards regarding consolidation of VIEs, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. The VIE with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company has determined that WFOE is the primary beneficiary of LMG’s risks and rewards. The following tables set forth the assets, liabilities, results of operations, and changes in cash of the VIE, LMG, which were included in the Company’s consolidated balance sheets, statements of income and comprehensive income and cash flows: As of June 30, As of June 30, 2019 2018 Current assets $ 9,672,297 $ 2,537,419 Non-current assets 1,426,723 356,090 Total assets 11,099,020 2,893,509 Current liabilities 5,106,048 2,025,435 Total liabilities 5,106,048 2,025,435 Net assets $ 5,992,972 $ 868,074 For the years ended June 30, 2019 2018 2017 Revenue $ 11,679,690 $ 5,037,793 $ 3,817,574 Net income $ 5,188,919 $ 2,325,599 $ 1,642,569 For the years ended June 30, 2019 2018 2017 Net cash provided by operating activities $ 1,965,866 $ 1,638,638 $ 1,100,498 Net cash used in investing activities (918,678) — — Net cash used in financing activities (870,443) (1,739,766) (1,006,428) Effect of exchange rate fluctuation on cash (1,821) 4,499 52 Net increase (decrease) in cash $ 174,924 $ (96,629) $ 94,122 |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the reporting date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and assumptions. Significant accounting estimates reflected in the Company’s consolidated financial statements include the allowances for doubtful accounts. Actual results could differ from these estimates. |
Cash | Cash The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. As of June 30, 2019 and 2018, the Company had no cash equivalents. The Company maintains cash with various financial institutions mainly in the PRC. Balances in banks in the PRC are uninsured. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of June 30, 2019 and 2018, the allowances for doubtful accounts from accounts receivable were $123,621 and $38,386, respectively. |
Inventories, net | Inventories, net The Company produces and contracts third parties to produce films and television series to be shown in movie theaters and/or on popular online portal. Produced content includes direct production costs, production overhead and acquisition costs and is stated at the lower of unamortized cost or estimated fair value. Produced content also includes cash expenditures made to enter into arrangements with third parties to co-produce certain of its theatrical and television productions. The Company uses the individual-film-forecast-computation method and amortizes the produced content based on the ratio of current period actual revenue (numerator) to estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year (denominator) in accordance with ASC subtopic 926‑20, Entertainment — Films, Other Assets — Film Costs (“ASC 926‑20”). Ultimate revenue estimates for the produced content are periodically reviewed and adjustments, if any, will result in prospective changes to amortization rates. When estimates of total revenues and other events or changes in circumstances indicate that a film or television series has a fair value that is less than its unamortized cost, a loss is recognized currently for the amount by which the unamortized cost exceeds the film or television series’ fair value. For the years ended June 30, 2019, 2018 and 2017, based on management analysis, no impairment was recorded. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is provided using the straight-line method over their expected useful lives, as follows: Useful life Furniture, fixtures and equipment 5 years Transportation vehicles 3‑5 years Leasehold improvement Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in income from operations. |
Accounts Payable | Accounts Payable Accounts payable includes all operating payables, including those related to all media and production costs. These payables are due within 12 months. |
Revenue Recognition | Revenue Recognition The Company’s revenues are principally derived from the Multi-Channel Advertising Business, Event Planning and Execution Business, Film Production Business, and Movie Theater Operating Business. On July 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014‑09 Revenue from Contracts with Customers (“ASC Topic 606”) using the modified retrospective method for contracts that were not completed as of July 1, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements, and no adjustments to opening retained earnings were made as the Company’s revenue was recognized based on the amount of consideration expects to receive in exchange for satisfying the performance obligations. ASC 606, Revenue from Contracts with Customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that will result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606 and therefore there was no material changes to the Company’s consolidated financial statements upon adoption of ASC 606. Multi-Channel advertising The Company’s Multi-Channel Advertising Services include pre-movie advertisements display, elevator and supermarket advertising, and brand promotion. Most of the Company’s client contracts are individually negotiated and, accordingly, the service period and prices vary significantly. Service periods typically range from one day to one year. The Company provides advertising services over the contract period. Revenues from advertising services are recognized on straight-line basis over the contract period, which approximates the pattern of when the underlying services are performed. Prepayments for advertising services are deferred and recognized as revenue when the advertising services are rendered and the Company’s performance obligations are satisfied. The Company also provides advertising services through its regional distributors. Pursuant to advertising services distribution agreements, the Company grants the regional distributors the exclusive rights to provide local pre-movie advertising. The advertising services distribution agreements with these regional distributors typically have terms ranging from 11 to 24 months without automatic renewal provisions. Under the advertising services distribution agreements, the Company has the right to set the minimum local pre-movie advertisement prices in the movie theaters, regulate the content and quality of local pre-movie advertisements according to related laws and movie theater rules, and examine the source of local pre-movie advertisements and refuse to display advertisements from any competitors. The receipt of distribution fee is initially recorded as deferred revenue and is recognized as revenue ratably as services are rendered and the Company’s performance obligations are satisfied. Event planning and execution The Company’s Event Planning and Execution Business includes planning and arrangement of events, and production of related advertising materials. From the preparation of the events to executing it typically takes no more than one week. Revenue is realized when the service is performed in accordance with the client arrangement and upon the completion of the earnings process. Film production The Company has already finished the production of one television series and is in the process of producing more television series and movies. Revenues from the online distribution of the television series are recognized when viewers have clicked the content and viewed the content for certain length, as agreed with the distributors. Movie Theater Operating The Company’s movie theater operating revenues are generated primarily from box office admissions and theater food and beverage sales. Revenues of this business line are recognized when admissions and food and beverage sales are received at the theaters and are reported net of sales tax. The Company defers 100% of the revenue associated with the sales of gift cards and packaged tickets until such time as the items are redeemed. Contract Balances and Remaining Performance Obligations Contract balances typically arise when a difference in timing between the transfer of control to the customer and receipt of consideration occurs. The Company’s contract assets, consist primarily of accounts receivable related to providing multi-channel advertising and event planning and execution services to customers, in which the Company’s contracted performance obligations have been satisfied, amount billed and the Company has an unconditional right to payment. The Company had accounts receivable related to revenues from contracts with customers of $7,384,640 and $2,122,803 as of June 30, 2019 and 2018, respectively. The Company’s contract liabilities, which are reflected in its consolidated balance sheets as deferred revenue of $189,268 and $219,936 as of June 30, 2019 and 2018, respectively, consist primarily of the Company’s unsatisfied performance obligations as of the balance sheet dates. Refer to Note 12 — Segment reporting for details of revenue segregation. |
Cost of Revenue | Cost of Revenue Cost of the multi-channel advertising revenues consists primarily of payments to movie theater operators for pre-movie advertising right and the billboards of elevators and supermarkets. Cost of event planning and execution consists primarily of advertising design costs, salary and benefits expenses, leasing costs, and other related expenses. Cost of film production consists primarily of direct production costs and production overhead. Cost of movie theater operating consists primarily of film exhibition costs, which is accrued on the applicable admissions revenues and estimates of the final settlement pursuant to film licenses of the Company. These licenses typically state that rental fees are based on aggregate terms established prior to the opening of the film. |
Income Taxes | 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. The provisions of ASC 740‑10‑25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company does not believe that there was any uncertain tax position at June 30, 2019 and 2018. The Company’s operating subsidiary and VIE in China are subject to the income tax laws of the PRC. No taxable income was generated outside the PRC for the years ended June 30, 2019, 2018 and 2017. As of June 30, 2019, the tax years ended December 31, 2014, through December 31, 2018, for the Company’s PRC subsidiary and VIE remain open for statutory examination by PRC tax authorities. |
Value Added Tax ("VAT") | Value Added Tax (“VAT”) Sales revenue derived from advertising service revenues is subject to VAT. The applicable VAT rates for the Company is 6% for the years ended June 30, 2019, 2018 and 2017. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in the line item of taxes payable on the consolidated balance sheets. All of the VAT returns of the Company have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Foreign Currency Translation | Foreign Currency Translation Since the Company operates in the PRC, the Company’s functional currency is the Chinese Renminbi (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency, the United States Dollar (“USD or US$”). Assets and liabilities of the Company are translated at the exchange rate at each reporting period end date. Equity is translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the result of operations. RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. June 30, 2019 June 30, 2018 June 30, 2017 Year-end spot rate US$1=RMB6.8668 US$1=RMB6.6198 US$1=RMB6.7774 Average rate US$1=RMB6.8234 US$1=RMB6.5064 US$1=RMB6.8124 |
Earnings per Share | Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (for example, convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (namely those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There is no anti-dilutive effect for the years ended June 30, 2019, 2018 and 2017. |
Comprehensive Income | Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows the provisions of FASB ASC 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2 — Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3 — Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. The carrying amounts reported in the balance sheets for cash, accounts receivable, deposits, deferred offering costs, other current assets, accounts payable, deferred revenue, taxes payable, other payables, and due to related parties approximate their fair value based on the short-term maturity of these instruments. |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. |
Concentration and Credit Risk | Concentration and Credit Risk Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. The Company maintains certain bank accounts in the PRC, Hong Kong, and British Virgin Islands, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of June 30, 2019 and 2018, $143,128 and $14,205 of the Company’s cash were on deposit at financial institutions in the PRC where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company’s sales are made to customers that are located primarily in China. The Company has a concentration of its revenues and receivables with specific customers. For the years ended June 30, 2019, 2018 and 2017, a major customer accounted for 15%, 13% and 43% of the Company’s total revenue, respectively. As of June 30, 2019, four customers represented 29%, 13%, 11% and 11% of the net accounts receivable balance. As of June 30, 2018, two customers represented 36% and 22% of the net accounts receivable balance, respectively. For the year ended June 30, 2019, the Company purchased 51% and 18% of its services from two suppliers, respectively. For the years ended June 30, 2018 and 2017, the Company purchased approximately 84% and 80% of its services from one major supplier, respectively. |
Statements of Cash Flows | Statements of Cash Flows In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company are calculated based upon the local currencies and translated at the average rate of exchange during the reporting period. As a result, amounts related to assets and liabilities reported on the Company’s consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842). The main objective is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for (1) public business entities, (2) not-for-profit entities that have issued, or are conduit bond obligors for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market, and (3) employee benefit plans that file financial statements with the SEC. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The Company will adopt this new lease standard within annual reporting period of June 30, 2020, and the Company is currently evaluating the impact of this new standard on its financial statements and related disclosures, and the Company estimated that the adoption of this AUS will not have material impact on the results of the operations and cash flows. In July 2017, the FASB issued ASU 2017‑11, “Earnings Per Share (Topic 260),” Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company expects that the adoption of this ASU will not have a material impact on its financial statements. In September 2017, the FASB issued ASU 2017‑13, “Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842).” The main objective of this pronouncement is to clarify the effective date of the adoption of ASC Topic 606 and ASC Topic 842 and the definition of public business entity as stipulated in ASU 2014‑09 and ASU 2016‑02. ASU 2014‑09 provides that a public business entity and certain other specified entities adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities are required to adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. ASU 2016‑12 requires that “a public business entity and certain other specified entities adopt ASC Topic 842 for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All other entities are required to adopt ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.” ASU 2017‑13 clarifies that the SEC would not object to certain public business entities electing to use the non-public business entities effective dates for applying ASC 606 and ASC 842. ASU 2017‑13, however, limits such election to certain public business entities that “otherwise would not meet the definition of a public business entity except for a requirement to include or inclusion of its financial statements or financial information in another entity’s filings with the SEC.” The Company adopted ASC 606 on July 1, 2018, using the modified retrospective method. The Company has completed the assessment of the impact of this new guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that might result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams in the scope of Topic 606. The adoption of Topic 606 did not result in a cumulative catch-up adjustment to the Company’s opening balance sheets of retained earnings at the effective date and therefore there were no material changes to the Company’s consolidated financial statements. In November 2017, the FASB issued ASU 2017‑14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the new revenue recognition standard. This standard will be effective for fiscal years beginning after December 15, 2018. The Company adopted ASC 606 on July 1, 2018, using the modified retrospective method. There was no change to the timing and pattern of revenue recognition for its current revenue streams in scope of Topic 606. The adoption of Topic 606 did not result in a cumulative catch-up adjustment to the Company’s opening balance sheets of retained earnings at the effective date and therefore there were no material changes to the Company’s consolidated financial statements. 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 Company does not believe this guidance will have a material impact on its consolidated financial statements. In July 2018, the FASB issued ASU No. 2018‑10, “Codification Improvements to Topic 842, Leases,” which clarifies how to apply certain aspects of the new leases standard. This ASU addresses the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. This ASU has the same effective date and transition requirements as the new leases standard, which is effective for annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new standard on its financial statements and related disclosures, and the Company estimated that the adoption of this AUS will not have material impact on the results of the operations and cash flows. In July 2018, the FASB issued ASU No. 2018‑11, “Leases (Topic 842): Targeted Improvements” which provides a new transition method and a practical expedient for separating components of a contract. This ASU is intended to reduce costs and ease the implementation of the new leasing standard for financial statement preparers. The effective date and transition requirements for the amendments related to separating components of a contract are the same as the effective date and transition requirements in ASU 2016‑02. The Company is currently evaluating the impact of this new standard on its financial statements and related disclosures, and the Company estimated that the adoption of this AUS will not have material impact on the results of the operations and cash flows. In August 2018, the FASB issued ASU 2018‑13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” to improve the effectiveness of disclosures in the notes to financial statements related to recurring or nonrecurring fair value measurements by removing amounts and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The new standard requires disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company expects that the adoption of this ASU will not have a material impact on the Company’s consolidated financial statements. On March 6, 2019, the FASB issued ASU 2019‑02, Entertainment — Films — Other Assets — Film Costs (Subtopic 926‑20) and Entertainment — Broadcasters — Intangibles — Goodwill and Other (Subtopic 920‑350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials . ASU 2019‑02 helps organizations align their accounting for production costs for films and episodic content produced for television and streaming services. For public business entities, the amendments in ASU 2019‑02 are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, including early adoption in an interim period. The amendments in this ASU should be applied prospectively. Under a prospective transition, an entity should apply the amendments at the beginning of the period that includes the adoption date. The Company is now assessing the impact of the new guidance and does not expects that the adoption of this ASU will not have a material impact on the Company’s consolidated financial statements. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial position, statements of operations and cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of details of the subsidiaries and VIEs | Name of Entity Date of Incorporation Place of % of Ownership Principal Activities Parent company: Leaping Group Co., Ltd August 21, 2018 Cayman Islands Parent Investment holding Subsidiaries: Yuezhong International Co., Ltd September 4, 2018 British Virgin Islands 100% Investment holding Yuezhong Media Co., Limited July 16, 2018 Hong Kong 100% Investment holding Yuezhong (Shenyang) Technology Co., Ltd. October, 12, 2018 PRC 100% Investment holding Variable interest entities: Leaping Media Group Co., Ltd. November 19, 2013 PRC Nil Multi-Channel advertising, event Subsidiaries of variable interest entity: Yuezhong (Beijing) Film Co., Ltd. May 26, 2017 PRC Nil Film production Yuezhong Media (Dalian) Co., Ltd. March 15, 2016 PRC Nil Advertising Shenyang Tianniu Media Co., Ltd. January 10, 2013 PRC Nil Advertising Shenyang Xiagong Hotel Management Co., Ltd. June 11, 2018 PRC Nil Hotel management Harbin Yuechuzhong Media Co., Ltd. January 10, 2018 PRC Nil Event planning and execution Horgos Xinyuezhong Film Media Co., Ltd. December 25, 2017 PRC Nil Film production Liaoning Leaping International Cinema Management Co., Ltd. September 29, 2018 PRC Nil Movie Theater Operating |
Summary of assets, liabilities, results of operations, and changes in cash of the VIE | As of June 30, As of June 30, 2019 2018 Current assets $ 9,672,297 $ 2,537,419 Non-current assets 1,426,723 356,090 Total assets 11,099,020 2,893,509 Current liabilities 5,106,048 2,025,435 Total liabilities 5,106,048 2,025,435 Net assets $ 5,992,972 $ 868,074 For the years ended June 30, 2019 2018 2017 Revenue $ 11,679,690 $ 5,037,793 $ 3,817,574 Net income $ 5,188,919 $ 2,325,599 $ 1,642,569 For the years ended June 30, 2019 2018 2017 Net cash provided by operating activities $ 1,965,866 $ 1,638,638 $ 1,100,498 Net cash used in investing activities (918,678) — — Net cash used in financing activities (870,443) (1,739,766) (1,006,428) Effect of exchange rate fluctuation on cash (1,821) 4,499 52 Net increase (decrease) in cash $ 174,924 $ (96,629) $ 94,122 |
Summary of expected useful lives of property and equipment | Useful life Furniture, fixtures and equipment 5 years Transportation vehicles 3‑5 years Leasehold improvement Lesser of useful life and lease term |
Schedule of foreign currency translation | June 30, 2019 June 30, 2018 June 30, 2017 Year-end spot rate US$1=RMB6.8668 US$1=RMB6.6198 US$1=RMB6.7774 Average rate US$1=RMB6.8234 US$1=RMB6.5064 US$1=RMB6.8124 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
ACCOUNTS RECEIVABLE, NET | |
Schedule of accounts receivable | As of June 30, As of June 30, 2019 2018 Accounts receivable $ 7,508,261 $ 2,161,189 Less: allowance for doubtful accounts (123,621) (38,386) Accounts receivable, net $ 7,384,640 $ 2,122,803 |
Schedule of allowance for doubtful accounts | For the years ended June 30, 2019 2018 2017 Beginning balance $ 38,386 $ — $ — Provision for doubtful accounts 87,166 39,055 — Foreign currency translation adjustments (1,931) (669) — Ending balance $ 123,621 $ 38,386 $ — |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
INVENTORIES, NET | |
Schedule of inventory, net | As of June 30, As of June 30, 2019 2018 Film production costs $ $ In development 8,817 109,739 In production 323,725 — Total film production costs 332,542 109,739 Television production costs Released, less accumulated amortization — 181,770 Total television production costs — 181,770 Total inventories $ 332,542 $ 291,509 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment, net | As of June 30, As of June 30, 2019 2018 Furniture, fixtures and equipment $ 404,352 $ — Leasehold improvement 600,991 — Transportation vehicles 34,951 — Subtotal 1,040,294 — Less: accumulated depreciation (58,922) — $ 981,372 $ — Construction in Progress $ 34,587 $ — Property and equipment, net $ 1,015,959 $ — |
ACCRUED EXPENSE AND OTHER PAY_2
ACCRUED EXPENSE AND OTHER PAYABLES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
ACCRUED EXPENSE AND OTHER PAYABLES | |
Schedule of Accrued Expense and other payables | As of June 30, As of June 30, 2019 2018 Deposits from customers $ 36,255 $ 162,241 Deferred offering costs payable 901,763 — Professional service fees payable 104,982 — Accrued expense 123,932 — Others 6,623 536 $ 1,173,555 $ 162,777 |
TAXES (Tables)
TAXES (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
TAXES | |
Summary of components of the income tax provision | For the years ended June 30, 2019 2018 2017 Current income tax provision $ 1,715,756 $ 779,576 $ 381,996 Deferred income tax benefit (16,066) (38,019) 172,525 Total $ 1,699,690 $ 741,557 $ 554,521 |
Summary of deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities | As of June 30, As of June 30, 2019 2018 Allowance for doubtful accounts $ 30,905 $ 9,597 Deferred revenue 47,317 54,984 Total deferred tax assets $ 78,222 $ 64,581 |
Summary of reconciliation of statutory rates to the Company's effective tax rate | For the years ended June 30, 2019 2018 2017 China Statutory income tax rate 25 % 25 % 25 % Favorable tax rate impact (a) (0.4) % — — Non-deductible expenses (non-taxable income)-permanent difference 0.1 % (0.8) % 0.2 % Effective tax rate 24.7 % 24.2 % 25.2 % (a) Shenyang Tianniu, Harbin Yuechuzhong and Liaoning Cinema are subject to corporate income tax at a reduced rate of 10% as approved by local government as small-scaled minimal profit enterprises. |
Summary of taxes payable | As of June 30, As of June 30, 2019 2018 Value-added tax $ 160,781 $ 297,366 Corporate income tax 2,399,384 1,148,887 Related surcharges on VAT payable 166,656 169,931 Total $ 2,726,821 $ 1,616,184 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions | |
Summary of major related parties and their relationships with the Company | Name of related party Relationship with the Company Tao Jiang CEO and director of the Company |
Summary of related party balances with the major related party | As of June 30, As of June 30, 2019 2018 Amount due to Tao Jiang $ 567,346 $ 25,541 Total due to related party $ 567,346 $ 25,541 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
COMMITMENTS | |
Summary of future minimum lease payments under non-cancelable operating leases | For the 12 months ending June 30, 2020 $ 521,905 2021 475,359 2022 474,797 2023 486,265 2024 489,823 Thereafter 2,646,590 Total $ 5,094,739 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Jun. 30, 2019 | |
SEGMENT REPORTING | |
Summary information by segment | For the year ended June 30, 2019 Multi- Event Movie Channel Planning and Film Theater Advertising Execution Production Operating Total Revenue $ 7,958,143 $ 2,604,892 $ 775,080 $ 341,575 $ 11,679,690 Cost of revenue and related taxes 2,580,905 475,901 182,319 148,468 3,387,593 Gross profit 5,377,238 2,128,991 592,761 193,107 8,292,097 Operating expenses 957,517 313,419 93,257 41,098 1,405,291 Income from operations 4,419,721 1,815,572 499,504 152,009 6,886,806 Net income $ 3,330,128 $ 1,367,902 $ 376,347 $ 114,542 $ 5,188,919 For the year ended June 30, 2018 Multi- Event Movie Channel Planning and Film Theater Advertising Execution Production Operating Total Revenue $ 4,005,598 $ 1,032,195 $ — $ — $ 5,037,793 Cost of revenue and related taxes 1,443,464 209,335 — — 1,652,799 Gross profit 2,562,134 822,860 — — 3,384,994 Operating expenses 252,853 65,157 — — 318,010 Income from operations 2,309,281 757,703 — — 3,066,984 Net income $ 1,751,062 $ 574,537 $ — $ — $ 2,325,599 For the year ended June 30, 2017 Multi- Event Movie Channel Planning and Film Theater Advertising Execution Production Operating Total Revenue $ 2,175,371 $ 1,642,203 $ — $ — $ 3,817,574 Cost of revenue and related taxes 807,590 129,190 — — 936,780 Gross profit 1,367,781 1,513,013 — — 2,880,794 Operating expenses 389,548 294,073 — — 683,621 Income from operations 978,233 1,218,940 — — 2,197,173 Net income $ 731,303 $ 911,266 $ — $ — $ 1,642,569 As of June 30, As of June 30, 2019 2018 Total assets: $ — $ — Multi-Channel Advertising 7,311,842 2,068,875 Event Planning and Execution 2,393,342 533,125 Film Production 332,542 291,509 Movie Theater Operating 1,061,294 — Total Assets $ 11,099,020 $ 2,893,509 |
ORGANIZATION AND BUSINESS DES_2
ORGANIZATION AND BUSINESS DESCRIPTION (Details) | Jun. 30, 2019 | Apr. 17, 2019 | Oct. 14, 2018 |
Leaping Group Co., Ltd [Member] | Yuezhong International Co., Ltd [Member] | |||
Ownership percentage | 100.00% | ||
Leaping Group Co., Ltd [Member] | Yuezhong Media HK [Member] | |||
Ownership percentage | 100.00% | ||
Leaping Group Co., Ltd [Member] | Yuezhong (Shenyang) Technology Co., Ltd [Member] | |||
Ownership percentage | 100.00% | ||
Leaping Media Group Co., Ltd. [Member] | Horgos Xinyuezhong Film Media Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Leaping Media Group Co., Ltd. [Member] | Shenyang Tianniu Media Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Leaping Media Group Co., Ltd. [Member] | Yuezhong Media (Dalian) Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Leaping Media Group Co., Ltd. [Member] | Yuezhong (Beijing) Film Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Leaping Media Group Co., Ltd. [Member] | Harbin Yuechuzhong Media Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Leaping Media Group Co., Ltd. [Member] | Shenyang Xiagong Hotel Management Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Leaping Media Group Co., Ltd. [Member] | Liaoning Leaping International Cinema Management Co., Ltd [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Yuezhong International Co., Ltd [Member] | Yuezhong Media HK [Member] | |||
Ownership percentage | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Jun. 30, 2019 | Apr. 17, 2019 | Oct. 14, 2018 |
Yuezhong International Co., Ltd [Member] | Leaping Group Co., Ltd [Member] | |||
Ownership percentage | 100.00% | ||
Yuezhong Media HK [Member] | Leaping Group Co., Ltd [Member] | |||
Ownership percentage | 100.00% | ||
Yuezhong (Shenyang) Technology Co., Ltd [Member] | Leaping Group Co., Ltd [Member] | |||
Ownership percentage | 100.00% | ||
Leaping Media Group Co., Ltd. [Member] | Leaping Group Co., Ltd [Member] | |||
Ownership percentage | 0.00% | ||
Yuezhong (Beijing) Film Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Yuezhong Media (Dalian) Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Shenyang Tianniu Media Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Shenyang Xiagong Hotel Management Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Harbin Yuechuzhong Media Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Horgos Xinyuezhong Film Media Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% | |
Liaoning Leaping International Cinema Management Co., Ltd [Member] | Leaping Media Group Co., Ltd. [Member] | |||
Ownership percentage | 0.00% | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Consolidation of Variable Interest Entities (Details) - WFOE - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Consolidated balance sheets | |||
Current assets | $ 9,672,297 | $ 2,537,419 | |
Non-current assets | 1,426,723 | 356,090 | |
Total assets | 11,099,020 | 2,893,509 | |
Current liabilities | 5,106,048 | 2,025,435 | |
Total liabilities | 5,106,048 | 2,025,435 | |
Net assets | 5,992,972 | 868,074 | |
Statements of income and comprehensive income | |||
Revenue | 11,679,690 | 5,037,793 | $ 3,817,574 |
Net income | 5,188,919 | 2,325,599 | 1,642,569 |
Cash flows | |||
Net cash provided by operating activities | 1,965,866 | 1,638,638 | 1,100,498 |
Net cash used in investing activities | (918,678) | ||
Net cash used in financing activities | (870,443) | (1,739,766) | (1,006,428) |
Effect of exchange rate fluctuation on cash | (1,821) | 4,499 | 52 |
Net increase (decrease) in cash | $ 174,924 | $ (96,629) | $ 94,122 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, Accounts Receivable and Inventories (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Cash | |||
Cash equivalents | $ 0 | $ 0 | |
Accounts Receivable, net | |||
Allowances for doubtful accounts from accounts receivable | 123,621 | 38,386 | |
Inventories, net | |||
Impairment of inventories | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) | 12 Months Ended |
Jun. 30, 2019 | |
Furniture, fixtures and equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Transportation vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Transportation vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Percentage of deferred revenue | 100.00% | |
Accounts receivable related to revenues from contracts with customers | $ 7,384,640 | $ 2,122,803 |
Deferred revenue | $ 189,268 | $ 219,936 |
Advertising [Member] | Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Service periods | 1 day | |
Advertising [Member] | Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Service periods | 1 year | |
Advertising Services Through Regional Distributors [Member] | Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Service periods | 11 months | |
Advertising Services Through Regional Distributors [Member] | Maximum | ||
Disaggregation of Revenue [Line Items] | ||
Service periods | 24 months |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes, Vat, Foreign currency translation and EPS (Details) | May 01, 2016 | Jun. 30, 2019USD ($)shares | Jun. 30, 2018USD ($)shares | Jun. 30, 2017shares |
TAXES | ||||
Taxable income generated outside the PRC | $ | $ 0 | $ 0 | ||
Value Added Tax (?VAT?) | ||||
Value Added Tax Rate, at Federal Statutory Tax Rate, Percent | 6.00% | 6.00% | 6.00% | 6.00% |
VAT returns subject to examination by the tax authorities (in years) | 5 years | |||
Foreign Currency Translation | ||||
Year-end spot rate | 6.8668 | 6.6198 | 6.7774 | |
Average rate | 6.8234 | 6.5064 | 6.8124 | |
Earnings per Share | ||||
Anti-dilutive effect | shares | 0 | 0 | 0 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration and Credit Risk (Details) | 12 Months Ended | ||
Jun. 30, 2019USD ($)itemcustomer | Jun. 30, 2018USD ($)itemcustomer | Jun. 30, 2017item | |
Concentration Risk [Line Items] | |||
Cash on deposit at financial institutions in the PRC | $ | $ 143,128 | $ 14,205 | |
Revenue | Customer concentration | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 15.00% | ||
Revenue | Customer concentration | Customer one | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 13.00% | 43.00% | |
Accounts Receivable | Customer concentration | |||
Concentration Risk [Line Items] | |||
Number of customers | customer | 4 | 2 | |
Accounts Receivable | Customer concentration | Customer one | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 29.00% | 36.00% | |
Accounts Receivable | Customer concentration | Customer two | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 13.00% | 22.00% | |
Accounts Receivable | Customer concentration | Customer three | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Accounts Receivable | Customer concentration | Customer four | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Purchases | Supplier concentration | |||
Concentration Risk [Line Items] | |||
Number of suppliers | item | 2 | 1 | 1 |
Supplier one | Purchases | Supplier concentration | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 51.00% | 84.00% | 80.00% |
Supplier two | Purchases | Supplier concentration | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 18.00% |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2016 |
ACCOUNTS RECEIVABLE, NET | ||||
Accounts receivable | $ 7,508,261 | $ 2,161,189 | ||
Less: allowance for doubtful accounts | (123,621) | (38,386) | $ 0 | $ 0 |
Accounts receivable, net | $ 7,384,640 | $ 2,122,803 |
ACCOUNTS RECEIVABLE, NET - Allo
ACCOUNTS RECEIVABLE, NET - Allowance for doubtful accounts (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2016 | |
ACCOUNTS RECEIVABLE, NET | ||||
Beginning balance | $ 123,621 | $ 38,386 | $ 0 | $ 0 |
Provision for doubtful accounts | 87,166 | 39,055 | 0 | |
Foreign currency translation adjustments | (1,931) | (669) | 0 | |
Ending balance | $ 123,621 | $ 38,386 | $ 0 |
DEFERRED OFFERING COSTS (Detail
DEFERRED OFFERING COSTS (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
DEFERRED OFFERING COSTS | ||
Deferred Offering Costs | $ 1,403,604 | $ 0 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Film production costs | |||
In development | $ 8,817 | $ 109,739 | |
In production | 323,725 | ||
Total film production costs | 332,542 | 109,739 | |
Television production costs | |||
Released, less accumulated amortization | 181,770 | ||
Total television production costs | 181,770 | ||
Inventory, Noncurrent, Total | 332,542 | 291,509 | |
Amortization expense | 176,346 | $ 0 | $ 0 |
Expected amortization expense in June 30,2020 | $ 323,725 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 1,040,294 | ||
Less: accumulated depreciation | (58,922) | ||
Property and equipment, Total | 981,372 | ||
Construction in Progress | 34,587 | ||
Property and equipment, net | 1,015,959 | $ 0 | |
Depreciation of property and equipment | 59,297 | $ 0 | $ 0 |
Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 404,352 | ||
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 600,991 | ||
Transportation vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 34,951 |
ACCRUED EXPENSE AND OTHER PAY_3
ACCRUED EXPENSE AND OTHER PAYABLES (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
ACCRUED EXPENSE AND OTHER PAYABLES | ||
Deposits from customers | $ 36,255 | $ 162,241 |
Deferred offering costs payable | 901,763 | |
Professional service fees payable | 104,982 | |
Accrued expense | 123,932 | |
Others | 6,623 | 536 |
Accrued expense and other payables | $ 1,173,555 | $ 162,777 |
TAXES (Details)
TAXES (Details) | May 01, 2016 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 |
VAT, Business Tax and related surcharges | ||||
Applicable VAT rates | 6.00% | 6.00% | 6.00% | 6.00% |
Applicable VAT rates payable | 12.00% | |||
Applicable VAT rates, net presentation method | 6.00% | |||
Surcharge on gross revenues | 3.00% |
TAXES - Income tax (Details)
TAXES - Income tax (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Line Items] | |||
Applicable income tax rate | 25.00% | 25.00% | 25.00% |
Cayman Islands | |||
Income Tax Disclosure [Line Items] | |||
Applicable income tax rate | 0.00% | ||
Withholding tax imposed upon the payment or remittance of dividends | $ 0 | ||
Hong Kong | |||
Income Tax Disclosure [Line Items] | |||
Applicable income tax rate | 16.50% | 16.50% | 16.50% |
Withholding tax imposed upon the payment or remittance of dividends | $ 0 | ||
China | |||
Income Tax Disclosure [Line Items] | |||
Applicable income tax rate | 25.00% |
TAXES - Components of the incom
TAXES - Components of the income tax provision (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Components of the income tax provision | |||
Current income tax provision | $ 1,715,756 | $ 779,576 | $ 381,996 |
Deferred income tax benefit | (16,066) | (38,019) | 172,525 |
Total | $ 1,699,690 | $ 741,557 | $ 554,521 |
TAXES - Summarizes deferred tax
TAXES - Summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Summarizes deferred tax assets resulting from differences between the financial reporting basis and tax basis of assets and liabilities | ||
Allowance for doubtful accounts | $ 30,905 | $ 9,597 |
Deferred revenue | 47,317 | 54,984 |
Total deferred tax assets | 78,222 | $ 64,581 |
Valuation allowance against the deferred tax assets | $ 0 |
TAXES - Reconciliation of statu
TAXES - Reconciliation of statutory rates to the Company?s effective tax rate (Details) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
China Statutory income tax rate | 25.00% | 25.00% | 25.00% |
Favorable tax rate impact (a) | (0.40%) | ||
Non-deductible expenses (non-taxable income)-permanent difference | 0.10% | (0.80%) | 0.20% |
Effective tax rate | 24.70% | 24.20% | 25.20% |
TAXES - Taxes payable (Details)
TAXES - Taxes payable (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Taxes payable | ||
Value-added tax | $ 160,781 | $ 297,366 |
Corporate income tax | 2,399,384 | 1,148,887 |
Related surcharges on VAT payable | 166,656 | 169,931 |
Total | $ 2,726,821 | $ 1,616,184 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | Feb. 26, 2019USD ($)$ / sharesshares | Dec. 10, 2018shares | Oct. 23, 2018shares | Oct. 19, 2018shares | Aug. 24, 2018shares | Jun. 30, 2019$ / sharesshares | Feb. 25, 2019USD ($)$ / sharesshares | Aug. 21, 2018$ / sharesshares | Jun. 30, 2018$ / sharesshares |
Class of Stock [Line Items] | |||||||||
Ordinary shares, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | ||||
Ordinary shares, par value | $ / shares | $ 0.00284 | $ 0.00284 | $ 0.001 | $ 0.001 | $ 0.00284 | ||||
Ordinary Shares issued to certain founder shareholders | 50,000,000 | ||||||||
Number of shares returned to the Company and cancelled | 4,500,000 | ||||||||
Reverse split ratio | 0.35 | ||||||||
Increase in amount of authorized share capital | $ | $ 142,000 | $ 50,000 | |||||||
Ordinary shares, shares issued | 16,021,126.7606 | 17,605,633.8028 | |||||||
Ordinary shares, shares outstanding | 16,021,126.7606 | 17,605,633.8028 | |||||||
Mr. Bo Jiang, chairman | |||||||||
Class of Stock [Line Items] | |||||||||
Number of shares transferred | 5,000,000 | ||||||||
ATIF Holdings Limited [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Number of shares transferred | 4,500,000 |
SHAREHOLDERS' EQUITY - Statutor
SHAREHOLDERS' EQUITY - Statutory reserve (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
SHAREHOLDERS' EQUITY | ||
Appropriations to the statutory surplus reserve (as a percent) | 10.00% | 10.00% |
Appropriations to the statutory surplus reserve until the reserve is equal to certain percentage of the entity's registered capital | 50.00% | 50.00% |
Statutory Reserves | $ 875,271 | $ 356,336 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Related Party Transaction [Line Items] | ||
Total due to related party | $ 567,346 | $ 25,541 |
Tao Jiang | ||
Related Party Transaction [Line Items] | ||
Total due to related party | $ 567,346 | $ 25,541 |
COMMITMENTS (Details)
COMMITMENTS (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2017 | |
Lessee, Lease, Description [Line Items] | |||
Renewal option | true | ||
Rental expense | $ 335,379 | $ 50,212 | $ 34,801 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term | 1 month | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term | 12 months |
COMMITMENTS - Future minimum le
COMMITMENTS - Future minimum lease obligations (Details) | Jun. 30, 2019USD ($) |
Future minimum lease obligations for operating leases | |
2020 | $ 521,905 |
2021 | 475,359 |
2022 | 474,797 |
2023 | 486,265 |
2024 | 489,823 |
Thereafter | 2,646,590 |
Total | $ 5,094,739 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) | 12 Months Ended | |||
Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | ||
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 4 | |||
Revenue | $ 11,679,690 | $ 5,037,793 | $ 3,817,574 | |
Cost of revenue and related taxes | 3,387,593 | 1,652,799 | 936,780 | |
Gross profit | 8,292,097 | 3,384,994 | 2,880,794 | |
Operating expenses | 1,405,291 | 318,010 | 683,621 | |
Income from operations | 6,886,806 | 3,066,984 | 2,197,173 | |
Net income | [1] | 5,188,919 | 2,325,599 | 1,642,569 |
Assets | ||||
Assets | 11,099,020 | 2,893,509 | ||
Multi-Channel Advertising | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 7,958,143 | 4,005,598 | 2,175,371 | |
Cost of revenue and related taxes | 2,580,905 | 1,443,464 | 807,590 | |
Gross profit | 5,377,238 | 2,562,134 | 1,367,781 | |
Operating expenses | 957,517 | 252,853 | 389,548 | |
Income from operations | 4,419,721 | 2,309,281 | 978,233 | |
Net income | 3,330,128 | 1,751,062 | 731,303 | |
Assets | ||||
Assets | 7,311,842 | 2,068,875 | ||
Event Planning and Execution | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 2,604,892 | 1,032,195 | 1,642,203 | |
Cost of revenue and related taxes | 475,901 | 209,335 | 129,190 | |
Gross profit | 2,128,991 | 822,860 | 1,513,013 | |
Operating expenses | 313,419 | 65,157 | 294,073 | |
Income from operations | 1,815,572 | 757,703 | 1,218,940 | |
Net income | 1,367,902 | 574,537 | $ 911,266 | |
Assets | ||||
Assets | 2,393,342 | 533,125 | ||
Film Production | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 775,080 | |||
Cost of revenue and related taxes | 182,319 | |||
Gross profit | 592,761 | |||
Operating expenses | 93,257 | |||
Income from operations | 499,504 | |||
Net income | 376,347 | |||
Assets | ||||
Assets | 332,542 | $ 291,509 | ||
Movie Theater Operating | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 341,575 | |||
Cost of revenue and related taxes | 148,468 | |||
Gross profit | 193,107 | |||
Operating expenses | 41,098 | |||
Income from operations | 152,009 | |||
Net income | 114,542 | |||
Assets | ||||
Assets | $ 1,061,294 | |||
[1] | Retrospectively restated for effect of reverse split. |