Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document and Entity Information [Abstract] | |
Document Type | 20-F |
Document Annual Report | true |
Document Transition Report | false |
Document Period End Date | Dec. 31, 2020 |
Entity Registrant Name | Baosheng Media Group Holdings Ltd |
Title of 12(b) Security | Ordinary Shares |
Trading Symbol | BAOS |
Security Exchange Name | NASDAQ |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | No |
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 Common Stock, Shares Outstanding | 20,400,000 |
Entity Central Index Key | 0001811216 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Document Shell Company Report | false |
Document Registration Statement | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 6,576,658 | $ 8,120,622 |
Restricted cash | 3,695,598 | 2,896,326 |
Notes receivable | 57,406 | |
Accounts receivable, net of provision for doubtful accounts | 65,154,845 | 54,623,760 |
Prepayments | 6,058,481 | 5,520,806 |
Media deposits | 6,837,879 | 8,662,456 |
Deferred offering cost | 425,537 | |
Other current assets | 3,323,532 | 2,527,261 |
Total Current Assets | 92,072,530 | 82,408,637 |
Property and equipment, net | 909,236 | 1,084,331 |
Intangible assets, net | 5,504 | 778,425 |
Right of use assets | 353,238 | 422,907 |
Deferred tax assets | 107,643 | |
Total Assets | 93,340,508 | 84,801,943 |
Current Liabilities | ||
Bank borrowing | 1,532,567 | |
Loan from third parties | 4,305,396 | |
Accounts payable | 35,376,612 | 35,832,633 |
Advance from advertisers | 3,287,653 | 595,561 |
Advertiser deposits | 5,881,908 | 6,561,975 |
Dividends payable, current | 3,371,648 | |
Tax payable | 570,540 | 376,263 |
Due to related parties | 715,546 | 635,133 |
Operating lease liabilities, current | 351,551 | 391,629 |
Accrued expenses and other liabilities | 591,622 | 735,249 |
Total Current Liabilities | 51,679,647 | 49,433,839 |
Dividends payable, noncurrent | 3,157,290 | |
Operating lease liabilities, noncurrent | 26,320 | |
Total Liabilities | 51,679,647 | 52,617,449 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Ordinary Share (par value $0.0005 per share, 100,000,000 shares authorized; 20,400,000 and 20,400,000 shares issued and outstanding at December 31, 2020 and 2019*) | 10,200 | 10,200 |
Additional paid-in capital | 3,814,665 | 3,814,665 |
Statutory reserve | 898,133 | 680,874 |
Retained earnings | 35,743,917 | 29,016,485 |
Accumulated other comprehensive income (loss) | 1,193,946 | (1,337,730) |
Total Shareholders' Equity | 41,660,861 | 32,184,494 |
Total Liabilities and Shareholders' Equity | $ 93,340,508 | $ 84,801,943 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Jul. 06, 2020 | Dec. 31, 2019 | Jul. 06, 2019 | Jul. 05, 2019 | May 13, 2019 | Dec. 04, 2018 |
CONSOLIDATED BALANCE SHEETS | |||||||
Ordinary shares, par value | $ 0.0005 | $ 0.0005 | $ 0.0005 | $ 0.01 | $ 0.01 | $ 0.01 | |
Ordinary shares, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 5,000,000 | 5,000,000 | ||
Ordinary shares, shares issued | 20,400,000 | 20,400,000 | 20,400,000 | 2,040 | 102 | ||
Ordinary shares, shares outstanding | 20,400,000 | 20,400,000 | 20,400,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | |||
Revenues | $ 11,911,229 | $ 17,846,900 | $ 16,156,876 |
Cost of revenues | (1,256,353) | (1,855,164) | (1,469,927) |
Gross profit | 10,654,876 | 15,991,736 | 14,686,949 |
Operating Expenses | |||
Selling and marketing expenses | (947,834) | (411,391) | (450,779) |
General and administrative expenses | (4,063,867) | (5,129,987) | (4,547,071) |
Total Operating Expenses | (5,011,701) | (5,541,378) | (4,997,850) |
Income from Operations | 5,643,175 | 10,450,358 | 9,689,099 |
Other Income (Expenses) | |||
Interest expense, net | (183,896) | (48,311) | (192,140) |
Subsidy income | 955,439 | 819,755 | 189,683 |
Other income (expenses), net | 638,611 | (65,754) | (187,690) |
Total Other Income (Expenses), Net | 1,410,154 | 705,690 | (190,147) |
Income Before Income Taxes | 7,053,329 | 11,156,048 | 9,498,952 |
Income tax benefit (expense) | (108,638) | 18,528 | (306,042) |
Net Income | 6,944,691 | 11,174,576 | 9,192,910 |
Other Comprehensive Income (Loss) | |||
Foreign currency translation adjustment | 2,531,676 | (333,548) | (1,371,911) |
Comprehensive Income | $ 9,476,367 | $ 10,841,028 | $ 7,820,999 |
Weighted average number of ordinary share outstanding | |||
Basic and Diluted* | 20,400,000 | 20,254,247 | 20,000,000 |
Earnings per share | |||
Basic and Diluted | $ 0.34 | $ 0.55 | $ 0.46 |
Dividend distributed per common share | |||
Basic and Diluted | $ 0.36 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | Ordinary SharesUSD ($)shares | Additional Paid-in CapitalUSD ($) | Statutory ReservesUSD ($) | Retained EarningsUSD ($) | Other Comprehensive LossUSD ($) | CNY (¥)shares | USD ($)shares |
Balance at the beginning at Dec. 31, 2017 | $ 10,000 | $ 2,017,134 | $ 529,732 | $ 16,070,119 | $ 367,729 | $ 18,994,714 | |
Balance at the beginning (in shares) at Dec. 31, 2017 | shares | 20,000,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 9,192,910 | 9,192,910 | |||||
Appropriation to statutory reserve | 151,142 | (151,142) | |||||
Declaration of dividends | (7,269,978) | ¥ (50,000,000) | (7,269,978) | ||||
Foreign currency translation adjustments | (1,371,911) | (1,371,911) | |||||
Balance at the end at Dec. 31, 2018 | $ 10,000 | 2,017,134 | 680,874 | 17,841,909 | (1,004,182) | 19,545,735 | |
Balance at the end (in shares) at Dec. 31, 2018 | shares | 20,000,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Capital injection from shareholders | $ 200 | 1,797,531 | 1,797,731 | ||||
Capital injection from shareholders (in shares) | shares | 400,000 | ||||||
Net income | 11,174,576 | 11,174,576 | |||||
Foreign currency translation adjustments | (333,548) | (333,548) | |||||
Balance at the end at Dec. 31, 2019 | $ 10,200 | 3,814,665 | 680,874 | 29,016,485 | (1,337,730) | $ 32,184,494 | |
Balance at the end (in shares) at Dec. 31, 2019 | shares | 20,400,000 | 20,400,000 | 20,400,000 | ||||
Balance at the beginning (in shares) at Jul. 05, 2019 | shares | 102 | 102 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Capital injection from shareholders (in shares) | shares | 20,397,960 | 20,397,960 | |||||
Balance at the end (in shares) at Jul. 06, 2019 | shares | 2,040 | 2,040 | |||||
Balance at the beginning (in shares) at Dec. 31, 2019 | shares | 20,400,000 | 20,400,000 | 20,400,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 6,944,691 | $ 6,944,691 | |||||
Appropriation to statutory reserve | 217,259 | (217,259) | |||||
Foreign currency translation adjustments | 2,531,676 | 2,531,676 | |||||
Balance at the end at Dec. 31, 2020 | $ 10,200 | $ 3,814,665 | $ 898,133 | $ 35,743,917 | $ 1,193,946 | $ 41,660,861 | |
Balance at the end (in shares) at Dec. 31, 2020 | shares | 20,400,000 | 20,400,000 | 20,400,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Cash Flows from Operating Activities: | |||
Net income | $ 6,944,691 | $ 11,174,576 | $ 9,192,910 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Depreciation and amortization expenses | 449,035 | 340,894 | 36,142 |
Amortization of right-of-use assets | 92,979 | 410,516 | |
Provision for doubtful accounts of accounts receivables | 1,960,604 | 1,561,805 | 630,980 |
Provision for doubtful accounts of prepayments and other current assets | 66,711 | 5,559 | |
Gain from disposal of intangible assets | (639,792) | ||
Deferred income tax expense (benefit) | 108,638 | (18,528) | (46,031) |
Changes in operating assets and liabilities: | |||
Notes receivable | 57,936 | 208,676 | (278,358) |
Accounts receivable | (12,463,921) | 2,982,760 | (29,467,731) |
Prepayments | (153,907) | (3,150,578) | (1,062,112) |
Media deposits | 2,280,182 | 1,493,687 | (4,735,613) |
Other current assets | (590,378) | (46,275) | (1,970,304) |
Accounts payable | (2,730,134) | 5,093,900 | 9,262,850 |
Advance from advertisers | 2,506,020 | (7,931,953) | 7,033,117 |
Advertiser deposits | (1,063,757) | (1,540,450) | 3,181,764 |
Income tax payable | 121,077 | (338,653) | 149,831 |
Accrued expenses and other liabilities | (182,909) | (527,212) | 741,307 |
Operating lease liabilities | (89,568) | (415,517) | |
Net Cash Provided by (Used in) Operating Activities | (3,393,204) | 9,364,359 | (7,325,689) |
Cash Flows from Investing Activities: | |||
Purchases of property and equipment | (1,007) | (691,376) | (635,846) |
Purchases of intangible assets | (887,575) | (48,857) | |
Proceeds from disposal of intangible assets | 1,245,619 | ||
Loan to related parties | (7,438) | ||
Net Cash Provided by (Used in) Investing Activities | 1,244,612 | (1,586,389) | (684,703) |
Cash Flows from Financing Activities: | |||
Capital injection from shareholders | 1,797,731 | 1 | |
Proceeds from bank borrowing | 1,448,394 | ||
Proceeds from borrowings from third parties | 6,611,917 | 6,947,661 | 19,421,731 |
Repayment of borrowings to third parties | (6,901,596) | (2,605,373) | (19,421,731) |
Proceeds from borrowings from related parties | 36,115 | 650,823 | |
Repayment of borrowings to related parties | (29,867) | ||
Payment of issuance cost related to initial public offering | (422,457) | ||
Payments of dividends to shareholders | (4,052,802) | ||
Net Cash Provided by Financing Activities | 772,373 | 2,057,350 | 650,824 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 631,527 | (70,130) | (194,373) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (744,692) | 9,765,190 | (7,553,941) |
Cash, cash equivalents and restricted cash at beginning of year | 11,016,948 | 1,251,758 | 8,805,699 |
Cash, cash equivalents and restricted cash at end of year | 10,272,256 | 11,016,948 | 1,251,758 |
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets | |||
Total cash, cash equivalents and restricted cash | 10,272,256 | 11,016,948 | 1,251,758 |
Supplemental Cash Flow Information | |||
Cash paid for interest expense | 191,486 | 28,750 | 210,339 |
Cash paid for income tax | 252,878 | $ 182,939 | |
Non-cash operating, investing and financing activities | |||
Right of use assets obtained in exchange for operating lease obligations | 355,450 | $ 840,892 | |
Settlement of borrowings from a third party by netting off against accounts receivable due from a third party | $ 4,055,502 |
ORGANIZATION AND BUSINESS DESCR
ORGANIZATION AND BUSINESS DESCRIPTION | 12 Months Ended |
Dec. 31, 2020 | |
ORGANIZATION AND BUSINESS DESCRIPTION | |
ORGANIZATION AND BUSINESS DESCRIPTION | 1. Baosheng Media Group Holdings Limited (“Baosheng Group”) was incorporated on December 4, 2018 under the laws of the Cayman Islands as an exempted company with limited liability. On February 10, 2021, the Company completed its initial public offering (“IPO”) of 6,000,000 shares of its ordinary shares at a public offering price of $5.00 per share. In connection with the offering, the Company’s ordinary shares began trading on the NASDAQ Capital Market beginning on February 10, 2021 under the symbol “BAOS”. Baosheng Group owns 100% of the equity interests of Baosheng Media Group Limited (“Baosheng BVI”), an entity incorporated under the laws of British Virgin Islands (“BVI”) on December 14, 2018. Baosheng BVI owns 100% of the equity interests of Baosheng Media Group (Hong Kong) Holdings Limited (“Baosheng HK”), a business company incorporated in accordance with the laws and regulations of Hong Kong on January 7, 2019. Baosheng HK owns 100% of the equity interests of Beijing Baosheng Network Technology Co., Ltd. (“Baosheng Network”), a business company incorporated on March 22, 2021 in accordance with the laws and regulations of the People’s Republic of China (“China” or “PRC”) with a registered capital of $23,052,098 (RMB 150,000,000). Beijing Baosheng Technology Company Limited (“Beijing Baosheng”) was established in October 17, 2014 under the laws of the People’s Republic of China (“China” or “PRC”) with a registered capital of $289,540 (RMB 2,000,000). Beijing Baosheng has three wholly-owned subsidiaries, Horgos Baosheng Advertising Co., Ltd. (“Horgos Baosheng”), Kashi Baosheng Information Technology Co., Ltd. ("Kashi Baosheng”), and Baosheng Technology (Horgos) Co., Ltd. (“Baosheng Technology”), which were established on August 30, 2016, May 15, 2018 and January 2, 2020 in China, respectively. On January 21, 2019, Baosheng HK entered into an equity transfer agreement with Beijing Baosheng and the shareholders of Beijing Baosheng. Pursuant to the equity transfer agreement, each of the shareholders of Beijing Baosheng transferred to Baosheng HK their respective equity interests in Beijing Baosheng at a consideration aggregating $13,844,895 (RMB94,045,600), determined by reference to the evaluation of the equity interest of Beijing Baosheng as of June 30, 2018 (“reorganization). Upon completion of such transfers, Beijing Baosheng became a direct wholly-owned subsidiary of Baosheng HK and an indirect-wholly owned subsidiary of the Company. On June 4, 2019, Baosheng Group completed the reorganization of entities under common control of its then existing shareholders, who collectively owned 100% of the equity interests of Beijing Baosheng prior to the reorganization. Baosheng Group, Baosheng BVI and Baosheng HK were established as holding companies of Beijing Baosheng and its subsidiaries, and all of these entities are under common control which results in the consolidation of Beijing Baosheng and its subsidiaries, which have been accounted for as a reorganization of entities under common control at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the consolidated financial statements. Baosheng Group, Baosheng BVI, Baosheng HK, Beijing WFOE, Beijing Baosheng and its subsidiaries (herein collectively referred to as the “Company”) are engaged in providing online marketing channels to advertisers for them to manage their online marketing activities. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. 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 (“SEC”). The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful accounts, valuation allowance for deferred tax assets, revenue recognition, and other provisions and contingencies. Cash and cash equivalents Cash and cash equivalents primarily consist of bank deposits, as well as highly liquid investments, with original maturities of three months or less, which are unrestricted as to withdrawal and use. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs. Restricted cash Restricted cash represents cash or cash equivalents at banks subject to withdrawal restrictions. As of December 31, 2020, the Company had restricted cash in bank accounts in the amount of $3,695,598, which were frozen by a local court due to a pending proceeding. The Company expects to close this proceeding within a year, and thus restricted cash is classified as a current asset. Accounts receivable, net of provision for doubtful accounts Accounts receivable are recorded at the gross billing amount less an allowance for any uncollectible accounts due from the advertisers for the acquisition of ad inventory and other advertising services on their behalf. Accounts receivable do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary. An allowance for doubtful accounts is made and recorded into general and administrative expenses based on any specifically identified accounts receivable that may become uncollectible. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Prepayments Prepayments represent amounts advanced to media or their authorized agencies (collectively “publishers”) for running of advertising campaigns of the advertisers. The publishers usually require advance payments when the Company orders advertising campaign services on behalf of its advertisers, and the prepayments will be utilized to offset the Company’s future payments. These amounts are unsecured, non-interest bearing and generally short-term in nature, which are reviewed periodically to determine whether their carrying value has become impaired. As of December 31, 2020 and 2019, the allowances for doubtful accounts accrued for prepayments were $67,369 and $63,086, respectively. Media deposits Media deposits represent performance security deposit upon becoming an authorized agency of the relevant media (platforms where online advertisement are delivered) as a guarantee of performance and obligations and deposit associated with committed advertising spend on behalf of selected advertisers as required by certain media before running their advertising campaigns, which are paid to media pursuant to the terms of the framework agreements and contracts. In the event that the advertisers or their advertising agencies on behalf of their advertising clients (collectively “advertisers”) commit to spending a guaranteed minimum amount on a particular media with the Company, the Company enters into a back-to-back framework agreement with the relevant publishers committing the same level of guaranteed minimum spend and securing a preferential rebate policy applicable to the advertising spend of that advertiser. With the committed minimum spend, the Company is entitled to enjoy certain rebates and discounts and usually be required to pay a deposit of up to 10% of the guaranteed minimum spend. If the Company fails to fulfil the committed minimum spend, the Company would not be entitled to the additional rebates and discounts, and any deposit that has been paid may be forfeited or deducted to pay up the additional amount without the benefit of the additional rebates and discounts. The media may deduct damages from performance security deposit if the Company has breached the agency agreement or authorized agency management rules and conditions formulated by medias. As of December 31, 2020 and 2019, the balances of media deposits were $6,837,879 and $8,662,456, respectively. Operating leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016‑02, Leases (Topic 842), which is effective for annual reporting periods (including interim periods) beginning after December 15, 2018, and early adoption is permitted. The Company early adopted the Topic 842 on January 1, 2019 using a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The Company leases its offices, which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of December 31, 2020 and 2019. Property and equipment, net Property and equipment primarily consist of property, leasehold improvement, office equipment and electronic equipment, which is stated at cost less accumulated depreciation and impairment losses. Depreciation is provided using the straight-line method based on the estimated useful life. The useful lives of property and equipment as follows: Property 20 years Office equipment 5 years Electronic equipment 3 years Leasehold improvement Shorter of useful life or lease term Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed 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 disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income and other comprehensive income in other income or expenses. Intangible assets, net Purchased intangible assets primarily consist of copyrights and software, which are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method based on their estimated useful lives as. The useful lives of copyrights and software are 3 years. Impairment of long-lived assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment of long-lived assets was recognized for the years ended December 31, 2020 and 2019. Advertiser deposits The advertiser deposits represented deposits made by the advertisers who undertake a minimum total advertising spend as a condition for enjoying rebates and discounts. The Company generally requires these advertisers to place deposits with the Company at a percentage (usually up to 10%) of the committed spend, which usually equals to the amount of deposit payable to the media under the corresponding framework agreement with the media specific to such advertiser (see note 2 – media deposits). If the advertiser fails to reach the committed minimum spend upon expiry or termination of the framework agreement; (i) the advertiser would not be entitled to the rebates and discounts under the preferential pricing policy, if any; (ii) the advertiser’s deposit may be forfeited or deducted to pay up the additional amount it should pay without the benefits of rebates or discounts. As of December 31, 2020 and 2019, the balances of advertiser deposits were $5,881,908 and $6,561,975, respectively. Revenue recognition The Company early adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018, using the modified retrospective approach for contracts that were not completed as of December 31, 2017. ASC 606 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. In according with ASC 606, revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company identified each distinct service, or each series of distinct services that are substantially the same and that have the same pattern of transfer to the customer, as a performance obligation. The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company has no material incremental costs of obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year, which need to be recognized as assets. The Company has advertising agency revenues from search engine marketing (‘SEM”, a form of online marketing that involves the promotion of websites by increasing their visibility in search engine results pages and search-related products and services) services and non-SEM services, including deployment of in-feed and mobile app ads on other media and social media marketing services in relation to running advertising campaigns on selected social media accounts. The Company acts as an agent between media or their authorized agencies (collectively “publishers”) and advertisers by helping publishers procure advertisers and facilitate ad deployment on their advertising channels, and purchasing ad inventories and advertising services from publishers for advertisers. The Company places orders with publishers as per request from advertisers. Each order is materialized by a contract and explicitly quotes one agency service to arrange for the advertising service to be provided by a third party publisher for a period of ad term. The Company provides advice and services on advertising strategies and ad optimization to advertisers to improve the effectiveness of their ads, all of which are highly interrelated and not separately identifiable. The Company’s overall promise represents a combined output that is a single performance obligation; there is no multiple performance obligations. The Company evaluated its advertising agency contracts and determined that it was not acting as principal in these arrangements with publishers and advertisers since it never takes control of the ad inventories at any time. The Company collects the costs of purchasing ad inventories and advertising services from advertisers on behalf of publishers. The Company generates advertising agency revenues either by charging additional fees to advertisers or receiving rebates and incentives offered by publishers. Accordingly, both advertisers or publishers can be identified as customers, depending on the revenue model applicable to the relevant services. The Company recognizes revenues on a net basis, which equal to: (i) rebates and incentives offered by publishers, netting the rebates to advertisers (if any); and (ii) net fees from advertisers. Rebates and incentives offered by publishers Rebates and incentives offered by publishers are determined based on the contract terms with publishers and their applicable rebate policies, which typically in the form of across-the-board standard-rate rebates, differential standard-rate rebates and progressive-rate rebates. Rebates and incentives offered by publishers are accounted for as variable consideration. The Company accrues and recognizes revenues in the form of rebates and incentives based on its evaluation as to whether the contractually stipulated thresholds of advertising spend are likely to being reached, or other benchmarks or certain prescribed classification are likely to being qualified (e.g. the number of new advertisers secured, growth in actual advertising spend), and to the extent that a significant reversal of cumulative revenue would not occur in future periods. These evaluations are based on the past experience and regularly monitoring of various performance factors set within the rebate policies (e.g. accumulated advertising spend, number of new advertisers). At the end of each subsequent reporting period, the Company re-evaluates the probability of achieving such advertising spend volume and any related constraint, and if necessary, adjusts the estimate of the amount of rebates and incentives. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. The rebates and incentives are generally ascertained and settled on a quarterly or annual basis. Historically, adjustments to the estimations for the actual amounts have been immaterial. These rebates and incentives take the form of cash which, when paid, are applied to set off accounts payable with the relevant publishers or settled separately; or can be in the form of ad currency units which will be deposited in the account in the back-end platform of the media, and can then be utilized to acquire their ad inventory. The Company may offer rebates to advertisers on a case by case basis, generally with reference to the rebates and incentives offered by publishers, the advertiser’s committed total spend, and the business relationships with such advertiser. The rebates offered by the Company to advertisers are in the form of cash discounts or ad currency units that can be utilized to acquire ad inventory from relevant media, both of which are account for as a deduction of revenues. Net fees from advertisers Net fees from advertisers are the difference between the gross billing amount charged to the advertisers and the costs of purchasing ad inventories and advertising services on their behalf. The publishers do not receive the benefits from the Company’s facilitation services until the publishers deliver advertising services to the advertisers. The Company recognizes advertising agency revenues when it transfers the control of the facilitation service commitments, i.e., when the publishers deliver advertising services to the advertisers. Under the CPC and CPA pricing model of media, the Company recognizes revenues at the point of time as the publishers deliver advertising services at the point in time. Under the CPT pricing model of media, the publishers delivers advertising services over time when the advertising links are displayed over the contract periods, and therefore the Company recognizes revenue on a straight-line basis over the contracted display period. During the years ended December 31, 2020, 2019 and 2018, revenues from the advertising services under CPT pricing model that the Company arranged are immaterial. The Company records revenues and costs on a net basis and the related accounts receivable and payable amounts on a gross basis. The gross billing amounts charged to the advertisers are collected either in advance to provision of services or after the services. Accounts receivable represent the gross billing charged to advertisers that the Company has an unconditional right to consideration (including billed and unbilled amount) when the Company has satisfied its performance obligation. Payment terms and conditions of accounts receivables vary by customers, and terms typically include a requirement for payment within a period from three to six months. The Company has determined that all the contracts generally do not include a significant financing component. The Company does not have any contract assets since revenue is recognized when control of the promised services is transferred and the payment from customers is not contingent on a future event. In cases where the gross billing amounts are collected in advance, the amounts are recorded as “advance from advertisers” in the consolidated balance sheets. Advance from advertisers related to unsatisfied performance obligations at the end of the year is recognized as revenue when the Company delivers the services to its advertisers. The fees are non-refundable. In cases where amounts are collected after the services, accounts receivable are recognized upon delivery of ad inventories and advertising services to the advertisers. The gross billing amounts are determinable at the inception of the services. The cost of purchasing ad inventories and advertising services are recorded as accounts payable or a deduction against prepayments in cases where prepayments are required by the publishers. The following table identifies the disaggregation of our revenue for the years ended December 31, 2020 and 2019 and 2018, respectively. For the Years Ended December 31, 2020 2019 2018 Nature of Revenue: Rebates and incentives offered by publishers $ 9,430,758 $ 15,953,148 $ 10,166,602 Net fees from advertisers 2,480,471 1,893,752 5,990,274 Total $ 11,911,229 $ 17,846,900 $ 16,156,876 Category of Revenue: SEM services $ 8,165,614 $ 8,432,232 $ 7,394,490 Non-SEM services 3,745,615 9,414,668 8,762,386 Total $ 11,911,229 $ 17,846,900 $ 16,156,876 Value-added taxes The Company’s PRC subsidiaries are subject to value-added tax (“VAT”) and related surcharges based on gross service price depending on the type of services provided in the PRC (“output VAT”), and the VAT may be offset by VAT paid by the Company on service purchases (“input VAT”). The applicable rate of output VAT or input VAT for the Company is 6%. Gross billing charged to advertisers, which is reflected as accounts receivable on gross basis in the consolidated balance sheet, is subject to output VAT at a rate of 6% and subsequently paid to PRC tax authorities after netting input VAT on purchases incurred during the period. The Company’s revenues are presented net of costs of purchasing ad inventories and services paid on behalf of advertisers, VAT collected on behalf of PRC tax authorities and its related surcharges; the VAT is not included in the consolidated statements of income and comprehensive income. Cost of revenues Cost of revenues related to advertising agency is primarily personnel related costs and business taxes. These costs are expensed as incurred. Income Taxes The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is probable that taxable income to be utilized with prior net operating loss carried forwards. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company does not believe that there was any uncertain tax position as of December 31, 2019 and 2020. As of December 31, 2020, income tax returns for the tax years ended December 31, 2016 through December 31, 2020 remain open for statutory examination. Segment Reporting The Company uses the management approach to determine operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. The Company manages its business as a single operating segment engaged in the media business in the PRC. Substantially all of its revenues are derived in the PRC. All long-lived assets are located in PRC.ASC 280 “Segment reporting” establishes standards for reporting information on operating segments in interim and annual financial statements. Related Parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions in Note 13. Earnings per share Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary share that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended December 31, 2020, 2019 and 2018, the Company had no dilutive stocks. Foreign currency translation The reporting currency of the Company is U.S. dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency U.S. Dollars (“US$” or “$”). 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. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. 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 results of operations. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: December 31, December 31, 2020 2019 Year-end spot rate 6.5250 6.9680 For the Years Ended December 31, 2020 2019 2018 Average rate 6.9042 6.9088 6.6163 Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy are described below: Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. As of December 31, 2020 and 2019, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, notes receivable, accounts receivable, media deposits, other receivables, bank borrowing, loan from third parties, accounts payables, advertiser deposits, dividend payable, tax payable, other payables and due to related parties, which approximate their fair values because of the short-term nature of these instruments. Concentration and credit risk Substantially all of the Company’s operating activities are transacted into 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 require 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 Cayman Islands, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of December 31, 2020 and 2019, $6,061,340 and $6,869,664 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 services rendered to advertisers that are located primarily in China, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of advertisers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company has a concentration of its receivables with specific advertisers. As of December 31, 2020, two advertisers accounted for 21.6% and 11.0% of accounts receivable, respectively. As of December 31, 2019, one advertiser accounted for 17.6% of accounts receivable. For the year ended December 31, 2020, two publishers accounted for approximately 68.9% and 12.8% of the total revenue, respectively. For the year ended December 31, 2019, two publishers accounted for approximately 45.6% and 13.6% of the total revenue, respectively. For the year ended December 31, 2018, one publisher accounted for approximately 45.3% of the total revenue. As of December 31, 2020, five publishers accounted for 22.1%, 16.0%, 15.7%, 14.6% and 14.3% of the total accounts payable balance, respectively. As of December 31, 2019, two publishers accounted for 67.6% and 13.0% of the total accounts payable balance, respectively. Other risk In January 2020, the World Health Organization (“WHO”) declared a global public health emergency as the novel coronavirus outbreak; later known as the COVID-19 pandemic, which has continued to spread beyond China. The headquarter of the Company is located in Beijing, China. In compliance with the government health emergency rules in place, the Company temporarily closed all the offices in China and conducted home-based production operations from February 3, 2020 to February 29, 2020. As affected by COVID-19, the gross billing and revenues for the fiscal year ended December 31, 2020, decreased by 33.5% and 33.3%, respectively as compared with the fiscal year ended December 31, 2019. In the short term, the COVID-19 pandemic has created uncertainties and risks. In the short term, the COVID-19 pandemic has created uncertainties and risks. With resume of work within China, the Company expects the revenues will continue to increase in the long-term. Based on the current situation, the Company does not expect a significant impact o |
ACCOUNTS RECEIVABLE, NET OF PRO
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS | 12 Months Ended |
Dec. 31, 2020 | |
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS | |
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS | 3. The Company records revenues and costs on a net basis and the related accounts receivable and payable amounts on a gross basis. Accounts receivable, net of provision for doubtful accounts consist of the following: December 31, December 31, 2020 2019 Accounts receivable $ 69,857,239 $ 57,084,540 Less: provision for doubtful accounts (4,702,394) (2,460,780) Accounts receivable, net of provision for doubtful accounts $ 65,154,845 $ Provisions for doubtful accounts of accounts receivable were $1,960,604, $1,561,805 and $630,980 for the years ended December 31, 2020, 2019 and 2018, respectively. Movement of allowance for doubtful accounts was as follows: December 31, December 31, 2020 2019 Balance at beginning of the year $ 2,460,780 $ 924,236 Charge to expenses 1,960,604 1,561,805 Foreign exchange loss (gain) 281,010 (25,261) Balance at end of the year $ 4,702,394 $ 2,460,780 |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
OTHER CURRENT ASSETS | |
OTHER CURRENT ASSETS | 4. Other current assets consist of the following: December 31, December 31, 2020 2019 Recoverable value-added taxes $ 3,141,867 $ 2,475,711 Others 190,568 59,887 Less: provision for doubtful accounts (8,903) (8,337) $ 3,323,532 $ 2,527,261 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 5. Property and equipment, net consisted of the following: December 31, December 31, 2020 2019 Property $ 838,798 $ 785,470 Leasehold improvements 373,966 350,191 Office equipment 139,848 130,957 Electronic equipment 68,269 62,931 1,420,881 1,329,549 Less: accumulated depreciation (511,645) (245,218) $ 909,236 $ 1,084,331 Depreciation expense was $236,059, $202,024 and $25,285 for the years ended December 31, 2020, 2019 and 2018, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 6. Intangible assets consisted of the following: December 31, December 31, 2020 2019 Software $ 49,540 $ 46,391 Copyrights — 880,034 Less: accumulated amortization (44,036) (148,000) $ 5,504 $ 778,425 In September 2020, the Company sold the copyrights to a third party in exchange for cash consideration of $1,245,619, and a gain of $639,792 was recorded in the account of “Other income (expenses), net”. Amortization expense was $212,976, $138,870 and $10,857 for the years ended December 31, 2020, 2019 and 2018, respectively. |
OPERATING LEASE
OPERATING LEASE | 12 Months Ended |
Dec. 31, 2020 | |
OPERATING LEASE | |
OPERATING LEASE | 7. As of December 31, 2020, the Company leases offices space under two non-cancelable operating leases, with terms of two and three years, respectively. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payment is recognized on a straight-line basis over the lease term. The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discount lease payments based on an estimate of its incremental borrowing rate. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The table below presents the operating lease related assets and liabilities recorded on the balance sheets. December 31, December 31, 2020 2019 Rights of use lease assets $ 353,238 $ 422,907 Operating lease liabilities, current 351,551 391,629 Operating lease liabilities, noncurrent — 26,320 Total operating lease liabilities $ 351,551 $ 417,949 The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2020: December 31, December 31, 2020 2019 Remaining lease term and discount rate Weighted average remaining lease term (years) 0.86 1.10 Weighted average discount rate 4.75 % 4.75 % During the years ended December 31, 2020, 2019 and 2018, the Company incurred total operating lease expenses of $350,344, $596,340 and $706,123, respectively. The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2020: 2021 $ 359,273 2022 and thereafter — Total lease payments 359,273 Less: imputed interest (7,722) Present value of lease liabilities $ 351,551 |
BANK BORROWING
BANK BORROWING | 12 Months Ended |
Dec. 31, 2020 | |
BANK BORROWING | |
BANK BORROWING | 8. December 31, December 31, 2020 2019 Bank borrowing $ 1,532,567 $ — On March 24, 2020, Beijing Baosheng entered into a two-year credit facility agreement of maximum RMB 10,000,000 (equivalent to $1,448,394) with Bank of Communications. On April 1, 2020, Beijing Baosheng withdrew RMB 10,000,000 (equivalent to $1,448,394), which will be due on March 30, 2021. The loan bears a fixed interest rate of 4.785% per annum. The loan is guaranteed by Beijing Guohua Wenke Finance Guarantee Co., Ltd., for whom a counter-guarantee was provided by Kashi Baosheng and Ms. Wenxiu Zhong, the Chairperson of the Company’s board of directors and CEO. Beijing Baosheng also provided counter-guarantee to Beijing Guohua Wenke Finance Guarantee Co., Ltd. with accounts receivable from one customer of RMB 105,000,000 (equivalent to $14,852,115) pledged as the collateral. As of December 31, 2020, the outstanding balance was RMB 10,000,000 (equivalent to $1,532,567), which was fully repaid as of the maturity date in March 2021. For the year ended December 31, 2020, interest expense arising from the bank borrowing amounted to $50,824. |
LOAN FROM THIRD PARTIES
LOAN FROM THIRD PARTIES | 12 Months Ended |
Dec. 31, 2020 | |
LOAN FROM THIRD PARTIES | |
LOAN FROM THIRD PARTIES | 9. December 31, December 31, 2020 2019 Loan from third parties $ — $ 4,305,396 On January 22, 2019, Beijing Baosheng entered into a loan agreement with a third party individual to borrow RMB 10,000,000 (equivalent to $1,435,132) as working capital with a maturity date of March 22, 2019. On March 21, 2019, Horgos Baosheng entered into a loan agreement with a third party individual to borrow RMB 8,000,000 (equivalent to $1,148,106) as working capital with a maturity date of June 20, 2019. Both of these loans bore a fixed interest rate of 4.35% per annum. These two loans were fully repaid in the year ended December 31, 2019. On October 21, 2019, Kashi Baosheng entered into a half-year credit facility agreement of maximum RMB 14,000,000 (equivalent to $ 2,009,185) with Guangzhou Yihui Commercial Factoring Co., Ltd. During the year ended December 31, 2019, Kashi Baosheng withdrew an aggregate of RMB 14,000,000 (equivalent to $2,009,185), which was due from April 21 to 28, 2020. RMB 6,000,000 (equivalent to $ 861,079) of the loan bears a fixed interest rate of 9.7% per annum and RMB 8,000,000 (equivalent to $ 1,148,106) of the loan bears a fixed interest rate of 10% per annum. The loan was guaranteed by Beijing Baosheng, Ms. Wenxiu Zhong, the chairperson of the Company’s board of directors and CEO, and a third party individual for whom Ms. Wenxiu Zhong provided counter-guarantee with her indirectly held 5% equity interest in Beijing Baosheng pledged as the collateral. The Company fully repaid as of the maturity dates in April 2020. On December 24, 2019, Horgos Baosheng entered into a loan agreement with Beijing Ruisiqiguo Film Production Co., Ltd. to borrow RMB 16,000,000 (equivalent to $2,296,211) as working capital with a maturity date of January 31, 2020, which was subsequently extended to March 31, 2020. The total interest was RMB 50,000 (equivalent to $7,176). As of December 31, 2019, the outstanding balance was RMB 16,000,000 (equivalent to $2,296,211), which was fully repaid as of the maturity date in March 2020. On January 20, 2020, Horgos Baosheng entered into a loan agreement with Beijing Ruisiqiguo Film Production Co., Ltd. to borrow RMB 10,650,000 (equivalent to $1,542,539) as working capital with a maturity date of April 30, 2020. The total interest was RMB 33,290 (equivalent to $4,733). On March 31, 2020, the loan had been fully repaid in advance. On February 20, 2020, Horgos Baosheng entered into another loan agreement with Beijing Ruisiqiguo Film Production Co., Ltd. to borrow RMB 35,000,000 (equivalent to $5,069,378) as working capital with a maturity date of May 30, 2020, which was extended to October 31, 2020. The total interest was RMB 109,375 (equivalent to $15,550). On March 26, 2020, the Company repaid a total of RMB 7,000,000 (equivalent to $1,013,876) in advance and settled the outstanding balance of RMB 28,000,000 (equivalent to $4,055,502) on in September 2020 in advance by transferring the right to collect equivalent amount of RMB 28,000,000 (equivalent to $4,055,502) due from a customer. The weighted average interest rate for loans from third parties was approximately 6.54%, 7.05% and 7.88% for the years ended December 31, 2020, 2019 and 2018, respectively. For the years ended December 31, 2020, 2019 and 2018, interest expense related to the above borrowings amounted to $105,733, $64,996 and $207,458, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 10. Cayman Islands Under the current and applicable laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. British Virgin Islands Under the current and applicable laws of BVI, Baosheng BVI is not subject to tax on income or capital gains. Hong Kong Baosheng HK is incorporated in Hong Kong and is subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate for the first HKD$2 million of assessable profits is 8.25% and assessable profits above HKD$2 million will continue to be subject to the rate of 16.5% for corporations in Hong Kong, effective from the year of assessment 2018/2019. Before that, the applicable tax rate was 16.5% for corporations in Hong Kong. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Under Hong Kong tax laws, Baosheng HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. PRC Beijing Baosheng, Horgos Baosheng, Kashi Baosheng and Baosheng Technology were incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises. Horgos Baosheng, Kashi Baosheng and Baosheng Technology are subject to a preferential income tax rate of 0% CIT for a period since generating revenues, as they were incorporated in the Horgos and Kashi Economic District, Xinjiang province. The five-year preferential income tax treatment ends on December 31, 2020, December 31, 2022 and December 31, 2025, respectively, for Horgos Baosheng, Kashi Baosheng and Baosheng Technology. In addition, each of Beijing Baosheng and Horgos Baosheng have a branch in Beijing. The two branches are subject to an EIT of 25%. Income tax expenses (benefits) consist of the following: For the Years Ended December 31, 2020 2019 2018 Current income tax expense $ — $ — $ 352,073 Deferred income tax expense (benefit) 108,638 (18,528) (46,031) Income tax expense (benefit) $ 108,638 $ (18,528) $ 306,042 Below is a reconciliation of the statutory tax rate to the effective tax rate: For the Years Ended December 31, 2020 2019 2018 PRC statutory income tax rate 25 % $ 25 % $ 25 % Impact of different income tax rates in other jurisdictions 1.4 % 0.5 % 0.0 % Effect of preferential tax benefits (a) (38.1) % (33.7) % (28.6) % Effect of non-deductible expenses 7.9 % 4.9 % 2.7 % Effect of change in valuation allowance 5.4 % 3.1 % 4.1 % Effective tax rate 1.6 % $ (0.2) % $ 3.2 % (a) The Company’s subsidiaries, Horgos Baosheng, Kashi Baosheng and Baosheng Technology are subject to a favorable tax rate of 0%. For the years ended December 31, 2020, 2019 and 2018, the tax saving as the result of the favorable tax rate amounted to $2,686,911, $3,761,148 and $2,712,084, respectively, and per share effect of the favorable tax rate (after stock split and share reorganization) were $0.13, $0.19 and $0.14. Deferred tax assets as of December 31, 2020 and 2019 consist of the following: December 31, December 31, 2020 2019 Deferred tax assets: Net operating losses carryforwards $ 1,072,893 $ 748,976 Allowance for doubtful accounts of accounts receivable 67,712 105,560 Allowance for doubtful accounts of other current assets 2,224 2,082 Accrued labor cost compensation — 15,219 Less: allowance on deferred tax assets (1,142,829) (764,194) $ — $ 107,643 The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carryforward period available under applicable tax law. As of December 31, 2020, due to uncertainties surrounding future utilization on the Beijing branch of Horgos Baosheng and Baosheng HK, the Company accrued full valuation allowance of $1,142,829 against the deferred tax assets based upon management’s assessment as to their realization. As of December 31, 2019, due to uncertainties surrounding future utilization on the Beijing branch of Horgos Baosheng and Baosheng HK, the Company estimates there will not be sufficient future income to realize the deferred tax assets arising from net operating losses carryforwards of $3,098,239 and labor cost compensation of $60,873, and the Company accrued valuation allowance of $764,194 against the deferred tax assets based upon management’s assessment as to their realization. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2020 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 11. The following table sets forth the computation of basic and diluted loss per common share for the years ended December 31, 2020, 2019 and 2018, respectively: For the Years Ended December 31, 2020 2019 2018 Net Income $ 6,944,691 $ 11,174,576 $ 9,192,910 Weighted average number of ordinary share outstanding (after stock split and share reorganization) Basic and Diluted 20,400,000 20,254,247 20,000,000 Earnings per share Basic and Diluted $ 0.34 $ 0.55 $ 0.46 Dividend distributed per common share Basic and Diluted $ — $ — $ For the years ended December 31, 2020, 2019 and 2018, the Company had no dilutive stocks. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
EQUITY | |
EQUITY | 12. Ordinary shares The Company’s authorized share capital is 5,000,000 ordinary shares, par value $0.01 per share. On December 4, 2018, the Company issued 100 ordinary shares, which issuance was considered as being part of the reorganization of the Company and was retroactively applied as if the transaction occurred at the beginning of the period presented (see Note 1). On May 13, 2019, the Company issued two ordinary shares, par value $0.01 per share, to Etone Investment, in exchange of capital contribution of $1,797,731 (HK$14,000,000). On July 6, 2020, the Company’s shareholders and Board of Directors approved: (i) an increase of the authorized ordinary shares from 5,000,000 shares of a nominal or par value of US$0.01 to 100,000,000 shares of a nominal or par value of US$0.0005, (ii) a 20-for-1 stock split to sub-divide the original 102 shares of issued ordinary shares in the capital of the Company into 2,040 shares of ordinary shares, and (iii) the issuance of an aggregated 20,397,960 shares of ordinary shares, at par value of$0.0005, to all existing shareholders on a pro rata basis. No cash or other consideration was paid for the issuance of 20,397,960 ordinary shares. All the existing shareholders and directors of the Company consider this stock issuance was part of the Company’s reorganization to result in 20,400,000 ordinary shares issued and outstanding prior to completion of this offering and similar to stock split. The Company believes it is appropriate to reflect stock split on a retroactive basis pursuant to ASC 260. The Company has retroactively restated all shares and per share data for all periods presented. As a result, the Company had 100,000,000 authorized shares, par value of US$0.0005, of which 20,400,000 and 20,400,000 were issued and outstanding as of December 31, 2020 and 2019 respectively. Cash dividends On December 31, 2018, the Company’s Board of Directors approved a resolution to declare cash dividends of $7,269,978 (RMB 50,000,000) to its shareholders. During the year ended December 31, 2019, the Company paid dividends of $4,052,802 (RMB 28,000,000). As of December 31, 2020 and 2019, the Company had dividends payable of $3,371,648 (RMB 22,000,000) and $3,157,290 (RMB 22,000,000), respectively. The Company does not intend to pay dividends payable out of the proceeds from its initial public offering. The Company plans to pay the remaining balance of dividend payable out of the retained earnings balance before December 31, 2021. Restricted net assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by Beijing Baosheng and its subsidiaries only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of the PRC subsidiaries included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Beijing Baosheng and its subsidiaries. The Company is required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. As of December 31, 2020 and 2019, the Company’s PRC profit generating subsidiaries accrued statutory reserve funds of $898,133 and $680,874, respectively. As of December 31, 2020 and 2019, the Company had net assets restricted in the aggregate, which include paid-in capital and statutory reserve of the Company’s PRC subsidiaries that are included in the Company’s consolidated net assets, of $4,722,998 and $4,505,738, respectively. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 12 Months Ended |
Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
RELATED PARTY TRANSACTIONS AND BALANCES | 13. 1) Name Relationship with the Company EJAM GROUP Co., Ltd. (‘‘EJAM Group’’) Indirectly hold a 9.8% equity interest in the Company Pubang Landscape Architecture (HK) Company Limited (‘‘Pubang Hong Kong’’) Indirectly hold a 25.4% equity interest in the Company Horgos Meitui Network Technology Co., Ltd. (‘‘Horgos Meitui’’) Controlled by EJAM Group, and was disposed of by EJAM Group on March 24, 2020 Horgos Intelligent Media Advertising Co., Ltd. (‘‘Horgos Zhimei’’) Controlled by EJAM Group, and was disposed of by EJAM Group on October 30, 2019 Ms. Wenxiu Zhong Chairperson of the Board of Directors, CEO and indirect equity shareholder of the Company 2) For the Years Ended December 31, 2020 2019 2018 EJAM Group (a) $ — $ 120,284 $ 489,249 Service fees charged by related parties Horgos Meitui $ — $ 8,530 $ — (a) On October 1, 2017, the Company entered into an office rental agreement with EJAM Group with a monthly rental fee of approximately $40,000 (RMB 293,349,45). The lease agreement expired on March 31, 2019. 3) As of December 31, 2020 and 2019, the balances with related parties were as follows: December 31, December 31, 2020 2019 EJAM Group (a) $ 74,330 $ 89,133 Pubang Hongkong (b) 626,628 531,476 Ms. Wenxiu Zhong 14,588 14,524 $ 715,546 $ 635,133 (a) As of December 31, 2020 and 2019, the accounts payable balance of $nil and $10,201 was due for the media services charged by EJAM Group, and the remaining balance of $74,330, and $78,932 was daily operating expenses paid by EJAM Group on behalf of the Company. (b) As of December 31, 2020 and 2019, the balance of $626,628 and $531,476 represents the third party services and consulting fees that were paid by Pubang Hong Kong on behalf of the Company. The Company has fully repaid the outstanding balance subsequently in March 2021. |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
CONTINGENCIES | |
CONTINGENCIES | 14. In the normal course of business, the Company is subject to loss contingencies, such as certain legal proceedings, claims and disputes. The Company records a liability for such loss contingencies when the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. On April 16, 2019, Ms. Chen Chen filed a lawsuit in a court in Beijing against Beijing Baosheng, with Baosheng Hong Kong named as third party in the complaint, requesting to be recognized as a 5% equity interest holder in Beijing Baosheng pursuant to an equity ownership agreement Ms. Chen Chen previously signed with Beijing Baosheng on March 17, 2016 (the “Equity Ownership Agreement”) (the “Equity Ownership Dispute”). Ms. Chen Chen claimed that she had satisfied the conditions set forth in the Equity Ownership Agreement and was accordingly entitled to the 5% equity interest in Beijing Baosheng. Ms. Chen Chen sought to be recognized as 5% equity interest holder in Beijing Baosheng and receive such equity interest, and to be compensated for litigation related expenses. On June 2, 2020, Ms. Chen Chen voluntarily filed a motion to withdraw this case. On June 16, 2020, the court granted the motion. In addition, in June 2019, Ms. Chen Chen filed a lawsuit in a court in Beijing against Beijing Baosheng (the “Contractual Dispute”), seeking to terminate the Equity Ownership Agreement and be compensated in the amount of RMB47.65 million ($6,838,404), representing the fair market value of the 5% equity interest in Beijing Baosheng to which she claimed title, and for any litigation related expenses. The Contractual Dispute was heard in the court on November 19, 2020 and February 24, 2021, and the case is still being reviewed as of the date of this report. As confirmed by the PRC counsel, if the court rules in favor of Ms. Chen Chen and grants her all her demands, the Company may be exposed to an amount of RMB10 million ($1,532,567) in liabilities. There is uncertainty, however, regarding the timing or ultimate resolution of this lawsuit and other legal proceedings in which the Company is involved. Further, Ms. Chen Chen filed a labor dispute case against Horgos Baosheng, Beijing Branch with the Beijing Shijingshan District Labor Dispute Arbitration Committee (the “Committee”) on the grounds that her previous employment with Horgos Baosheng, Beijing Branch was wrongfully terminated. Ms. Chen Chen sought compensation for her lost pay, lost benefits, and litigation related expenses, and award of punitive damages. The Committee issued a judgment on August 23, 2019, ruling in favor of Ms. Chen Chen and granted her the damages in the sum of RMB424,161 (approximately $60,000). Horgos Baosheng, Beijing Branch appealed the case to a court in Beijing in December 2019. On April 23, 2020, the court issued a final judgment that upheld the previous ruling. As a result, the Company will compensate Ms. Chen Chen a total of RMB424,161 (approximately $60,000). As of December 31, 2019, the Company recorded RMB424,161 (approximately $60,873) as a component of accrued expenses and other liabilities related to litigation contingencies, respectively, which has been settled on May 28, 2020. As of December 31, 2020 and 2019, the Court froze the 100% equity interests in Horgos Baosheng and Kashi Baosheng held by Beijing Baosheng, and the two bank accounts of Beijing Baosheng with a total balance of $3,695,598 and $2,896,326, respectively. The frozen bank balance was reclassified as restricted cash as of December 31, 2020 and 2019. Through a guarantee letter dated April 2, 2020 (the “Guarantee Letter”), Ms. Zhong promised to unconditionally, irrevocably and personally bear all the potential economic expenses and losses arising from the Equity Ownership Dispute and the Contract Dispute. The Company expects to have the restricted cash and share equity of Beijing Baosheng to be unfrozen upon (i) the issuance of a final judgment in the Contractual Dispute or (ii) the entry of a settlement agreement between the parties to the Contractual Dispute, whichever is earlier. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 15. On February 10, 2021, the Company closed its initial public offering (IPO) on the Nasdaq Global Market. The Company offered 6,000,000 ordinary shares in the IPO, par value $0.0005 per share at $5.00 per share. In addition, on March 3, 2021, the underwriters of the Company's IPO have exercised in full their over-allotment option to purchase additional 900,000 ordinary shares, par value $0.0005 per share at $5.00 per share. Gross proceeds of the Company's IPO, including the proceeds from the sale of the over-allotment shares, totaled $34.5 million, before deducting underwriting discounts and other related expenses. On March 8, 2021, Beijing Baosheng entered into a three-year office lease agreement with an unrelated third party for a period from March 16, 2021 through March 31, 2024. The monthly rent fee is approximately $45,000 and is payable on a quarterly basis. On March 5, 2021, Beijing Baosheng entered into a revolving credit facility agreement of with Bank of Communications under which the Company can draw-down up to RMB 50,000,000 (approximately $8.7 million) by June 8, 2021. Each borrowing under the credit facility is due within three months. The interest rate for this credit facility was fixed at 3.85% per annum, and required the Company to make a deposit of $8.7 million. The loan is guaranteed by Ms. Wenxiu Zhong. As of the date of this report, the Company has drawn down borrowings of RMB 50,000,000. On March 17, 2021, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with two investors, including a wholly-owned subsidiary of Ebang International Holdings Inc. (Nasdaq: EBON) for an investment of US$10 million. Pursuant to the Securities Purchase Agreement and an exemption from registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) contained in Regulation S promulgated under the Securities Act, the Company issued an aggregate of 1,960,784 units to the investors, with each unit consisting of one ordinary share of the Company, par value $0.0005 per share (the “Ordinary Shares”) and a warrant to purchase one half of one Ordinary Share at an exercise price of $5.61 per Ordinary Share. On March 18, 2021, the Company closed the private placement. On April 14, 2021, the Company entered into a cryptocurrency miner purchase agreement with a third party entity named Link (Shanghai) Networking Technology Co., Ltd, pursuant to which the Company would purchase 1,000 EBIT-E10C miners with aggregation value of RMB 4.67 million (approximately $0.72 million). The miners are expected to be delivered to the Company by no later than May 20, 2021. On March 22, 2021, Baosheng HK established a wholly-owned subsidiary named Beijing Baosheng Network Technology Co., Ltd. (“Baosheng Network”), which was a limited liability company in the PRC with a registered capital of $23,052,098 (RMB 150,000,000). On April 26, 2021, Baosheng Technology entered into an entrusted loan agreement with Baosheng Network to borrow RMB 50,000,000 (approximately $8.7 million) from Bank of Communications for working capital needs, which will be due on April 26, 2024. The interest rate is fixed at 1.0% per annum. Pursuant to the entrusted loan agreement, Baosheng Network deposited a total of RMB 50,000,000 (approximately $8.7 million) into the entrusted fund bank account on April 26, 2021. On April 27, 2021, Baosheng Technology has received the full amount of this entrusted loan of RMB 50,000,000 (approximately $8.7 million). |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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 (“SEC”). The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on past experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Estimates are used when accounting for items and matters including, but not limited to, determinations of the useful lives and valuation of long-lived assets, estimates of allowances for doubtful accounts, valuation allowance for deferred tax assets, revenue recognition, and other provisions and contingencies. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents primarily consist of bank deposits, as well as highly liquid investments, with original maturities of three months or less, which are unrestricted as to withdrawal and use. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs. |
Restricted cash | Restricted cash Restricted cash represents cash or cash equivalents at banks subject to withdrawal restrictions. As of December 31, 2020, the Company had restricted cash in bank accounts in the amount of $3,695,598, which were frozen by a local court due to a pending proceeding. The Company expects to close this proceeding within a year, and thus restricted cash is classified as a current asset. |
Accounts receivable, net of provision for doubtful accounts | Accounts receivable, net of provision for doubtful accounts Accounts receivable are recorded at the gross billing amount less an allowance for any uncollectible accounts due from the advertisers for the acquisition of ad inventory and other advertising services on their behalf. Accounts receivable do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary. An allowance for doubtful accounts is made and recorded into general and administrative expenses based on any specifically identified accounts receivable that may become uncollectible. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Prepayments | Prepayments Prepayments represent amounts advanced to media or their authorized agencies (collectively “publishers”) for running of advertising campaigns of the advertisers. The publishers usually require advance payments when the Company orders advertising campaign services on behalf of its advertisers, and the prepayments will be utilized to offset the Company’s future payments. These amounts are unsecured, non-interest bearing and generally short-term in nature, which are reviewed periodically to determine whether their carrying value has become impaired. As of December 31, 2020 and 2019, the allowances for doubtful accounts accrued for prepayments were $67,369 and $63,086, respectively. |
Media deposits | Media deposits Media deposits represent performance security deposit upon becoming an authorized agency of the relevant media (platforms where online advertisement are delivered) as a guarantee of performance and obligations and deposit associated with committed advertising spend on behalf of selected advertisers as required by certain media before running their advertising campaigns, which are paid to media pursuant to the terms of the framework agreements and contracts. In the event that the advertisers or their advertising agencies on behalf of their advertising clients (collectively “advertisers”) commit to spending a guaranteed minimum amount on a particular media with the Company, the Company enters into a back-to-back framework agreement with the relevant publishers committing the same level of guaranteed minimum spend and securing a preferential rebate policy applicable to the advertising spend of that advertiser. With the committed minimum spend, the Company is entitled to enjoy certain rebates and discounts and usually be required to pay a deposit of up to 10% of the guaranteed minimum spend. If the Company fails to fulfil the committed minimum spend, the Company would not be entitled to the additional rebates and discounts, and any deposit that has been paid may be forfeited or deducted to pay up the additional amount without the benefit of the additional rebates and discounts. The media may deduct damages from performance security deposit if the Company has breached the agency agreement or authorized agency management rules and conditions formulated by medias. As of December 31, 2020 and 2019, the balances of media deposits were $6,837,879 and $8,662,456, respectively. |
Operating leases | Operating leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016‑02, Leases (Topic 842), which is effective for annual reporting periods (including interim periods) beginning after December 15, 2018, and early adoption is permitted. The Company early adopted the Topic 842 on January 1, 2019 using a modified retrospective approach reflecting the application of the standard to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The Company leases its offices, which are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of December 31, 2020 and 2019. |
Property and equipment, net | Property and equipment, net Property and equipment primarily consist of property, leasehold improvement, office equipment and electronic equipment, which is stated at cost less accumulated depreciation and impairment losses. Depreciation is provided using the straight-line method based on the estimated useful life. The useful lives of property and equipment as follows: Property 20 years Office equipment 5 years Electronic equipment 3 years Leasehold improvement Shorter of useful life or lease term Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed 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 disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income and other comprehensive income in other income or expenses. |
Intangible assets, net | Intangible assets, net Purchased intangible assets primarily consist of copyrights and software, which are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method based on their estimated useful lives as. The useful lives of copyrights and software are 3 years. |
Impairment of long-lived assets | Impairment of long-lived assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment of long-lived assets was recognized for the years ended December 31, 2020 and 2019. |
Advertiser deposits | Advertiser deposits The advertiser deposits represented deposits made by the advertisers who undertake a minimum total advertising spend as a condition for enjoying rebates and discounts. The Company generally requires these advertisers to place deposits with the Company at a percentage (usually up to 10%) of the committed spend, which usually equals to the amount of deposit payable to the media under the corresponding framework agreement with the media specific to such advertiser (see note 2 – media deposits). If the advertiser fails to reach the committed minimum spend upon expiry or termination of the framework agreement; (i) the advertiser would not be entitled to the rebates and discounts under the preferential pricing policy, if any; (ii) the advertiser’s deposit may be forfeited or deducted to pay up the additional amount it should pay without the benefits of rebates or discounts. As of December 31, 2020 and 2019, the balances of advertiser deposits were $5,881,908 and $6,561,975, respectively. |
Revenue recognition | Revenue recognition The Company early adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”) on January 1, 2018, using the modified retrospective approach for contracts that were not completed as of December 31, 2017. ASC 606 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. In according with ASC 606, revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company identified each distinct service, or each series of distinct services that are substantially the same and that have the same pattern of transfer to the customer, as a performance obligation. The Company applied a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. The Company has no material incremental costs of obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year, which need to be recognized as assets. The Company has advertising agency revenues from search engine marketing (‘SEM”, a form of online marketing that involves the promotion of websites by increasing their visibility in search engine results pages and search-related products and services) services and non-SEM services, including deployment of in-feed and mobile app ads on other media and social media marketing services in relation to running advertising campaigns on selected social media accounts. The Company acts as an agent between media or their authorized agencies (collectively “publishers”) and advertisers by helping publishers procure advertisers and facilitate ad deployment on their advertising channels, and purchasing ad inventories and advertising services from publishers for advertisers. The Company places orders with publishers as per request from advertisers. Each order is materialized by a contract and explicitly quotes one agency service to arrange for the advertising service to be provided by a third party publisher for a period of ad term. The Company provides advice and services on advertising strategies and ad optimization to advertisers to improve the effectiveness of their ads, all of which are highly interrelated and not separately identifiable. The Company’s overall promise represents a combined output that is a single performance obligation; there is no multiple performance obligations. The Company evaluated its advertising agency contracts and determined that it was not acting as principal in these arrangements with publishers and advertisers since it never takes control of the ad inventories at any time. The Company collects the costs of purchasing ad inventories and advertising services from advertisers on behalf of publishers. The Company generates advertising agency revenues either by charging additional fees to advertisers or receiving rebates and incentives offered by publishers. Accordingly, both advertisers or publishers can be identified as customers, depending on the revenue model applicable to the relevant services. The Company recognizes revenues on a net basis, which equal to: (i) rebates and incentives offered by publishers, netting the rebates to advertisers (if any); and (ii) net fees from advertisers. Rebates and incentives offered by publishers Rebates and incentives offered by publishers are determined based on the contract terms with publishers and their applicable rebate policies, which typically in the form of across-the-board standard-rate rebates, differential standard-rate rebates and progressive-rate rebates. Rebates and incentives offered by publishers are accounted for as variable consideration. The Company accrues and recognizes revenues in the form of rebates and incentives based on its evaluation as to whether the contractually stipulated thresholds of advertising spend are likely to being reached, or other benchmarks or certain prescribed classification are likely to being qualified (e.g. the number of new advertisers secured, growth in actual advertising spend), and to the extent that a significant reversal of cumulative revenue would not occur in future periods. These evaluations are based on the past experience and regularly monitoring of various performance factors set within the rebate policies (e.g. accumulated advertising spend, number of new advertisers). At the end of each subsequent reporting period, the Company re-evaluates the probability of achieving such advertising spend volume and any related constraint, and if necessary, adjusts the estimate of the amount of rebates and incentives. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. The rebates and incentives are generally ascertained and settled on a quarterly or annual basis. Historically, adjustments to the estimations for the actual amounts have been immaterial. These rebates and incentives take the form of cash which, when paid, are applied to set off accounts payable with the relevant publishers or settled separately; or can be in the form of ad currency units which will be deposited in the account in the back-end platform of the media, and can then be utilized to acquire their ad inventory. The Company may offer rebates to advertisers on a case by case basis, generally with reference to the rebates and incentives offered by publishers, the advertiser’s committed total spend, and the business relationships with such advertiser. The rebates offered by the Company to advertisers are in the form of cash discounts or ad currency units that can be utilized to acquire ad inventory from relevant media, both of which are account for as a deduction of revenues. Net fees from advertisers Net fees from advertisers are the difference between the gross billing amount charged to the advertisers and the costs of purchasing ad inventories and advertising services on their behalf. The publishers do not receive the benefits from the Company’s facilitation services until the publishers deliver advertising services to the advertisers. The Company recognizes advertising agency revenues when it transfers the control of the facilitation service commitments, i.e., when the publishers deliver advertising services to the advertisers. Under the CPC and CPA pricing model of media, the Company recognizes revenues at the point of time as the publishers deliver advertising services at the point in time. Under the CPT pricing model of media, the publishers delivers advertising services over time when the advertising links are displayed over the contract periods, and therefore the Company recognizes revenue on a straight-line basis over the contracted display period. During the years ended December 31, 2020, 2019 and 2018, revenues from the advertising services under CPT pricing model that the Company arranged are immaterial. The Company records revenues and costs on a net basis and the related accounts receivable and payable amounts on a gross basis. The gross billing amounts charged to the advertisers are collected either in advance to provision of services or after the services. Accounts receivable represent the gross billing charged to advertisers that the Company has an unconditional right to consideration (including billed and unbilled amount) when the Company has satisfied its performance obligation. Payment terms and conditions of accounts receivables vary by customers, and terms typically include a requirement for payment within a period from three to six months. The Company has determined that all the contracts generally do not include a significant financing component. The Company does not have any contract assets since revenue is recognized when control of the promised services is transferred and the payment from customers is not contingent on a future event. In cases where the gross billing amounts are collected in advance, the amounts are recorded as “advance from advertisers” in the consolidated balance sheets. Advance from advertisers related to unsatisfied performance obligations at the end of the year is recognized as revenue when the Company delivers the services to its advertisers. The fees are non-refundable. In cases where amounts are collected after the services, accounts receivable are recognized upon delivery of ad inventories and advertising services to the advertisers. The gross billing amounts are determinable at the inception of the services. The cost of purchasing ad inventories and advertising services are recorded as accounts payable or a deduction against prepayments in cases where prepayments are required by the publishers. The following table identifies the disaggregation of our revenue for the years ended December 31, 2020 and 2019 and 2018, respectively. For the Years Ended December 31, 2020 2019 2018 Nature of Revenue: Rebates and incentives offered by publishers $ 9,430,758 $ 15,953,148 $ 10,166,602 Net fees from advertisers 2,480,471 1,893,752 5,990,274 Total $ 11,911,229 $ 17,846,900 $ 16,156,876 Category of Revenue: SEM services $ 8,165,614 $ 8,432,232 $ 7,394,490 Non-SEM services 3,745,615 9,414,668 8,762,386 Total $ 11,911,229 $ 17,846,900 $ 16,156,876 |
Value-added taxes | Value-added taxes The Company’s PRC subsidiaries are subject to value-added tax (“VAT”) and related surcharges based on gross service price depending on the type of services provided in the PRC (“output VAT”), and the VAT may be offset by VAT paid by the Company on service purchases (“input VAT”). The applicable rate of output VAT or input VAT for the Company is 6%. Gross billing charged to advertisers, which is reflected as accounts receivable on gross basis in the consolidated balance sheet, is subject to output VAT at a rate of 6% and subsequently paid to PRC tax authorities after netting input VAT on purchases incurred during the period. The Company’s revenues are presented net of costs of purchasing ad inventories and services paid on behalf of advertisers, VAT collected on behalf of PRC tax authorities and its related surcharges; the VAT is not included in the consolidated statements of income and comprehensive income. |
Cost of revenues | Cost of revenues Cost of revenues related to advertising agency is primarily personnel related costs and business taxes. These costs are expensed as incurred. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes. The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is probable that taxable income to be utilized with prior net operating loss carried forwards. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company does not believe that there was any uncertain tax position as of December 31, 2019 and 2020. As of December 31, 2020, income tax returns for the tax years ended December 31, 2016 through December 31, 2020 remain open for statutory examination. |
Segment Reporting | Segment Reporting The Company uses the management approach to determine operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. The Company manages its business as a single operating segment engaged in the media business in the PRC. Substantially all of its revenues are derived in the PRC. All long-lived assets are located in PRC.ASC 280 “Segment reporting” establishes standards for reporting information on operating segments in interim and annual financial statements. |
Related Parties | Related Parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions in Note 13. |
Earnings per share | Earnings per share Basic earnings per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary share that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings per share. For the years ended December 31, 2020, 2019 and 2018, the Company had no dilutive stocks. |
Foreign currency translation | Foreign currency translation The reporting currency of the Company is U.S. dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. Since the Company operates primarily in the PRC, the Company’s functional currency is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into the reporting currency U.S. Dollars (“US$” or “$”). 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. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. 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 results of operations. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: December 31, December 31, 2020 2019 Year-end spot rate 6.5250 6.9680 For the Years Ended December 31, 2020 2019 2018 Average rate 6.9042 6.9088 6.6163 |
Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the fair value hierarchy are described below: Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. As of December 31, 2020 and 2019, financial instruments of the Company comprised primarily current assets and current liabilities including cash and cash equivalents, notes receivable, accounts receivable, media deposits, other receivables, bank borrowing, loan from third parties, accounts payables, advertiser deposits, dividend payable, tax payable, other payables and due to related parties, which approximate their fair values because of the short-term nature of these instruments. |
Concentration and credit risk | Concentration and credit risk Substantially all of the Company’s operating activities are transacted into 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 require 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 Cayman Islands, which are not insured by Federal Deposit Insurance Corporation (“FDIC”) insurance or other insurance. As of December 31, 2020 and 2019, $6,061,340 and $6,869,664 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 services rendered to advertisers that are located primarily in China, thereby exposed to credit risk. The risk is mitigated by the Company’s assessment of advertisers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company has a concentration of its receivables with specific advertisers. As of December 31, 2020, two advertisers accounted for 21.6% and 11.0% of accounts receivable, respectively. As of December 31, 2019, one advertiser accounted for 17.6% of accounts receivable. For the year ended December 31, 2020, two publishers accounted for approximately 68.9% and 12.8% of the total revenue, respectively. For the year ended December 31, 2019, two publishers accounted for approximately 45.6% and 13.6% of the total revenue, respectively. For the year ended December 31, 2018, one publisher accounted for approximately 45.3% of the total revenue. As of December 31, 2020, five publishers accounted for 22.1%, 16.0%, 15.7%, 14.6% and 14.3% of the total accounts payable balance, respectively. As of December 31, 2019, two publishers accounted for 67.6% and 13.0% of the total accounts payable balance, respectively. |
Other risk | Other risk In January 2020, the World Health Organization (“WHO”) declared a global public health emergency as the novel coronavirus outbreak; later known as the COVID-19 pandemic, which has continued to spread beyond China. The headquarter of the Company is located in Beijing, China. In compliance with the government health emergency rules in place, the Company temporarily closed all the offices in China and conducted home-based production operations from February 3, 2020 to February 29, 2020. As affected by COVID-19, the gross billing and revenues for the fiscal year ended December 31, 2020, decreased by 33.5% and 33.3%, respectively as compared with the fiscal year ended December 31, 2019. In the short term, the COVID-19 pandemic has created uncertainties and risks. In the short term, the COVID-19 pandemic has created uncertainties and risks. With resume of work within China, the Company expects the revenues will continue to increase in the long-term. Based on the current situation, the Company does not expect a significant impact on the Company’s operations and financial results in the long run. The extent to which COVID-19 impacts the Company’s results of operations will depend on future development of the circumstances, which is highly uncertain and cannot be predicted with confidence at this time. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In June 2016, the FASB issued ASU No. 2016‑13, “Measurement of Credit Losses on Financial Instruments (Topic 326)”, which significantly changes the way entities recognize impairment of many financial assets by requiring immediate recognition of estimated credit losses expected to occur over their remaining life, instead of when incurred. In November 2018, the FASB issued ASU No. 2018‑19, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses”, which amends Subtopic 326‑20 (created by ASU No.2016‑13) to explicitly state that operating lease receivables are not in the scope of Subtopic 326‑20. Additionally, in April 2019, the FASB issued ASU No.2019‑04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, in May 2019, the FASB issued ASU No. 2019‑05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”, and in November 2019, the FASB issued ASU No. 2019‑10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates”, and ASU No. 2019‑11, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses”, to provide further clarifications on certain aspects of ASU No. 2016‑13 and to extend the nonpublic entity effective date of ASU No. 2016‑13. The changes (as amended) are effective for the Company for annual and interim periods in fiscal years beginning after December 15, 2022, and the Company is in the process of evaluating the potential effect on its 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 consolidated financial position, statements of operations and cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of useful lives of property and equipment | Property 20 years Office equipment 5 years Electronic equipment 3 years Leasehold improvement Shorter of useful life or lease term |
Summary of disaggregation of revenue | For the Years Ended December 31, 2020 2019 2018 Nature of Revenue: Rebates and incentives offered by publishers $ 9,430,758 $ 15,953,148 $ 10,166,602 Net fees from advertisers 2,480,471 1,893,752 5,990,274 Total $ 11,911,229 $ 17,846,900 $ 16,156,876 Category of Revenue: SEM services $ 8,165,614 $ 8,432,232 $ 7,394,490 Non-SEM services 3,745,615 9,414,668 8,762,386 Total $ 11,911,229 $ 17,846,900 $ 16,156,876 |
Summary of currency exchange rates | December 31, December 31, 2020 2019 Year-end spot rate 6.5250 6.9680 For the Years Ended December 31, 2020 2019 2018 Average rate 6.9042 6.9088 6.6163 |
ACCOUNTS RECEIVABLE, NET OF P_2
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS | |
Summary of accounts receivable, net of provision for doubtful accounts | December 31, December 31, 2020 2019 Accounts receivable $ 69,857,239 $ 57,084,540 Less: provision for doubtful accounts (4,702,394) (2,460,780) Accounts receivable, net of provision for doubtful accounts $ 65,154,845 $ |
Summary of movement of allowance for doubtful accounts | December 31, December 31, 2020 2019 Balance at beginning of the year $ 2,460,780 $ 924,236 Charge to expenses 1,960,604 1,561,805 Foreign exchange loss (gain) 281,010 (25,261) Balance at end of the year $ 4,702,394 $ 2,460,780 |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
OTHER CURRENT ASSETS | |
Summary of other current assets | December 31, December 31, 2020 2019 Recoverable value-added taxes $ 3,141,867 $ 2,475,711 Others 190,568 59,887 Less: provision for doubtful accounts (8,903) (8,337) $ 3,323,532 $ 2,527,261 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | |
Summary of property and equipment, net | December 31, December 31, 2020 2019 Property $ 838,798 $ 785,470 Leasehold improvements 373,966 350,191 Office equipment 139,848 130,957 Electronic equipment 68,269 62,931 1,420,881 1,329,549 Less: accumulated depreciation (511,645) (245,218) $ 909,236 $ 1,084,331 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INTANGIBLE ASSETS, NET | |
Summary of intangible assets | December 31, December 31, 2020 2019 Software $ 49,540 $ 46,391 Copyrights — 880,034 Less: accumulated amortization (44,036) (148,000) $ 5,504 $ 778,425 |
OPERATING LEASE (Tables)
OPERATING LEASE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
OPERATING LEASE | |
Summary of operating lease related assets and liabilities recorded on the balance sheets | December 31, December 31, 2020 2019 Rights of use lease assets $ 353,238 $ 422,907 Operating lease liabilities, current 351,551 391,629 Operating lease liabilities, noncurrent — 26,320 Total operating lease liabilities $ 351,551 $ 417,949 |
Summary of weighted average remaining lease terms and discount rates for all of operating leases | December 31, December 31, 2020 2019 Remaining lease term and discount rate Weighted average remaining lease term (years) 0.86 1.10 Weighted average discount rate 4.75 % 4.75 % |
Summary of maturities of lease liabilities | The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2020: 2021 $ 359,273 2022 and thereafter — Total lease payments 359,273 Less: imputed interest (7,722) Present value of lease liabilities $ 351,551 |
BANK BORROWING (Tables)
BANK BORROWING (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
BANK BORROWING | |
Summary of bank borrowings | December 31, December 31, 2020 2019 Bank borrowing $ 1,532,567 $ — |
LOAN FROM THIRD PARTIES (Tables
LOAN FROM THIRD PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
LOAN FROM THIRD PARTIES | |
Summary of loan from third parties | December 31, December 31, 2020 2019 Loan from third parties $ — $ 4,305,396 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
Summary of income tax expenses (benefits) | For the Years Ended December 31, 2020 2019 2018 Current income tax expense $ — $ — $ 352,073 Deferred income tax expense (benefit) 108,638 (18,528) (46,031) Income tax expense (benefit) $ 108,638 $ (18,528) $ 306,042 |
Summary of reconciliation of the statutory tax rate to the effective tax rate | For the Years Ended December 31, 2020 2019 2018 PRC statutory income tax rate 25 % $ 25 % $ 25 % Impact of different income tax rates in other jurisdictions 1.4 % 0.5 % 0.0 % Effect of preferential tax benefits (a) (38.1) % (33.7) % (28.6) % Effect of non-deductible expenses 7.9 % 4.9 % 2.7 % Effect of change in valuation allowance 5.4 % 3.1 % 4.1 % Effective tax rate 1.6 % $ (0.2) % $ 3.2 % (a) The Company’s subsidiaries, Horgos Baosheng, Kashi Baosheng and Baosheng Technology are subject to a favorable tax rate of 0%. For the years ended December 31, 2020, 2019 and 2018, the tax saving as the result of the favorable tax rate amounted to $2,686,911, $3,761,148 and $2,712,084, respectively, and per share effect of the favorable tax rate (after stock split and share reorganization) were $0.13, $0.19 and $0.14. |
Summary of deferred tax assets | December 31, December 31, 2020 2019 Deferred tax assets: Net operating losses carryforwards $ 1,072,893 $ 748,976 Allowance for doubtful accounts of accounts receivable 67,712 105,560 Allowance for doubtful accounts of other current assets 2,224 2,082 Accrued labor cost compensation — 15,219 Less: allowance on deferred tax assets (1,142,829) (764,194) $ — $ 107,643 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
EARNINGS PER SHARE | |
Summary of computation of basic and diluted loss per common share | For the Years Ended December 31, 2020 2019 2018 Net Income $ 6,944,691 $ 11,174,576 $ 9,192,910 Weighted average number of ordinary share outstanding (after stock split and share reorganization) Basic and Diluted 20,400,000 20,254,247 20,000,000 Earnings per share Basic and Diluted $ 0.34 $ 0.55 $ 0.46 Dividend distributed per common share Basic and Diluted $ — $ — $ |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
RELATED PARTY TRANSACTIONS AND BALANCES | |
Summary of nature of relationships with related parties | Name Relationship with the Company EJAM GROUP Co., Ltd. (‘‘EJAM Group’’) Indirectly hold a 9.8% equity interest in the Company Pubang Landscape Architecture (HK) Company Limited (‘‘Pubang Hong Kong’’) Indirectly hold a 25.4% equity interest in the Company Horgos Meitui Network Technology Co., Ltd. (‘‘Horgos Meitui’’) Controlled by EJAM Group, and was disposed of by EJAM Group on March 24, 2020 Horgos Intelligent Media Advertising Co., Ltd. (‘‘Horgos Zhimei’’) Controlled by EJAM Group, and was disposed of by EJAM Group on October 30, 2019 Ms. Wenxiu Zhong Chairperson of the Board of Directors, CEO and indirect equity shareholder of the Company |
Summary of transactions with related parties | For the Years Ended December 31, 2020 2019 2018 EJAM Group (a) $ — $ 120,284 $ 489,249 Service fees charged by related parties Horgos Meitui $ — $ 8,530 $ — |
Summary of balances with related parties | December 31, December 31, 2020 2019 EJAM Group (a) $ 74,330 $ 89,133 Pubang Hongkong (b) 626,628 531,476 Ms. Wenxiu Zhong 14,588 14,524 $ 715,546 $ 635,133 |
ORGANIZATION AND BUSINESS DES_2
ORGANIZATION AND BUSINESS DESCRIPTION (Details) - $ / shares | Feb. 10, 2021 | Jul. 06, 2019 | May 13, 2019 | Dec. 04, 2018 |
Organization And Description of Business [Line Items] | ||||
Number of shares issued during period | 20,397,960 | 2 | 100 | |
Initial public offering | ||||
Organization And Description of Business [Line Items] | ||||
Number of shares issued during period | 6,000,000 | |||
Public offering price | $ 5 |
ORGANIZATION AND BUSINESS DES_3
ORGANIZATION AND BUSINESS DESCRIPTION - Additional information (Details) | Jun. 30, 2018CNY (¥) | Jun. 30, 2018USD ($) | Oct. 17, 2014CNY (¥)subsidiary | Mar. 22, 2021CNY (¥) | Mar. 22, 2021USD ($) | Jun. 04, 2019 | Jan. 08, 2019 | Dec. 14, 2018 | Oct. 17, 2014USD ($) |
Beijing Baosheng | |||||||||
Organization And Description of Business [Line Items] | |||||||||
Consideration for equity transfer | ¥ 94,045,600 | $ 13,844,895 | |||||||
Baosheng BVI | |||||||||
Organization And Description of Business [Line Items] | |||||||||
Ownership interest held | 100.00% | ||||||||
Baosheng HK | |||||||||
Organization And Description of Business [Line Items] | |||||||||
Ownership interest held | 100.00% | ||||||||
Baosheng WFOE | |||||||||
Organization And Description of Business [Line Items] | |||||||||
Ownership interest held | 100.00% | 100.00% | |||||||
Registered capital | ¥ 150,000,000 | $ 23,052,098 | |||||||
Beijing Baosheng | |||||||||
Organization And Description of Business [Line Items] | |||||||||
Ownership interest held | 100.00% | ||||||||
Registered capital | ¥ 2,000,000 | $ 289,540 | |||||||
Number of wholly-owned subsidiaries | 3 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restricted cash | ||
Restricted cash in bank accounts | $ 3,695,598 | $ 2,896,326 |
Prepayments | ||
Allowances for doubtful accounts accrued for prepayments | $ 67,369 | 63,086 |
Media deposits | ||
Percentage of deposit on guaranteed minimum spend | 10.00% | |
Media deposits | $ 6,837,879 | 8,662,456 |
Operating leases | ||
Impairment for right-of-use lease assets | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment, net (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Property | |
Property, Plant and Equipment [Line Items] | |
Useful lives of property and equipment | 20 years |
Office equipment | |
Property, Plant and Equipment [Line Items] | |
Useful lives of property and equipment | 5 years |
Electronic equipment | |
Property, Plant and Equipment [Line Items] | |
Useful lives of property and equipment | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible assets, net (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Software | |
Finite-Lived Intangible Assets [Line Items] | |
Useful lives of intangible assets | 3 years |
Copyrights | |
Finite-Lived Intangible Assets [Line Items] | |
Useful lives of intangible assets | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertiser deposits (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Impairment of long-lived assets | ||
Impairment of long-lived assets | $ 0 | $ 0 |
Advertiser deposits | ||
Percentage of the committed spend | 10.00% | |
Advertiser deposits | $ 5,881,908 | $ 6,561,975 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 11,911,229 | $ 17,846,900 | $ 16,156,876 |
Minimum [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Payment term for accounts receivables | 3 months | ||
Maximum [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Payment term for accounts receivables | 6 months | ||
SEM services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 8,165,614 | 8,432,232 | 7,394,490 |
Non-SEM services | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 3,745,615 | 9,414,668 | 8,762,386 |
Rebates and incentives offered by publishers | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 9,430,758 | 15,953,148 | 10,166,602 |
Net fees from advertisers | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 2,480,471 | $ 1,893,752 | $ 5,990,274 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Value-added taxes (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Value-added taxes | |||
Value-added taxes rate | 6.00% | ||
EARNINGS PER SHARE | |||
Dilutive stocks | $ 0 | $ 0 | $ 0 |
Foreign Currency Translation | |||
Year-end spot rate | 6.5250 | 6.9680 | |
Average rate | 6.9042 | 6.9088 | 6.6163 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration and credit risk (Details) | 12 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Concentration Risk [Line Items] | |||
FDIC, deposit at financial institutions | $ 6,061,340 | $ 6,869,664 | |
Accounts receivable | Credit concentration risk | |||
Concentration Risk [Line Items] | |||
Number of advertisers | 2 | ||
Number of publishers | 1 | ||
Accounts receivable | Credit concentration risk | Advertiser/ publisher one | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 21.60% | 17.60% | |
Accounts receivable | Credit concentration risk | Advertiser/ publisher two | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 11.00% | ||
Revenue | Customer concentration risk | |||
Concentration Risk [Line Items] | |||
Number of publishers | 2 | 2 | 1 |
Revenue | Customer concentration risk | Publisher one | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 68.90% | 45.60% | 45.30% |
Revenue | Customer concentration risk | Publisher two | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 12.80% | 13.60% | |
Accounts payable | Supplier concentration risk | |||
Concentration Risk [Line Items] | |||
Number of publishers | 5 | 2 | |
Accounts payable | Supplier concentration risk | Publisher one | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 22.10% | 67.60% | |
Accounts payable | Supplier concentration risk | Publisher two | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 16.00% | 13.00% | |
Accounts payable | Supplier concentration risk | Publisher three | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 15.70% | ||
Accounts payable | Supplier concentration risk | Publisher four | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 14.60% | ||
Accounts payable | Supplier concentration risk | Publisher five | |||
Concentration Risk [Line Items] | |||
Concentration of risk (as a percent) | 14.30% |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other risk (Details) - COVID-19 | 12 Months Ended |
Dec. 31, 2020 | |
Accounts receivable | |
Unusual or Infrequent Item, or Both [Line Items] | |
Concentration of risk (as a percent) | 33.50% |
Revenue | |
Unusual or Infrequent Item, or Both [Line Items] | |
Concentration of risk (as a percent) | 33.30% |
ACCOUNTS RECEIVABLE, NET OF P_3
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS - Accounts receivable, net of provision (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | |||
Accounts receivable | $ 69,857,239 | $ 57,084,540 | |
Less: provision for doubtful accounts | (4,702,394) | (2,460,780) | |
Accounts receivable, net of provision for doubtful accounts | 65,154,845 | 54,623,760 | |
Provisions for doubtful accounts of accounts receivable | $ 1,960,604 | $ 1,561,805 | $ 630,980 |
ACCOUNTS RECEIVABLE, NET OF P_4
ACCOUNTS RECEIVABLE, NET OF PROVISION FOR DOUBTFUL ACCOUNTS - Movement of allowance for doubtful accounts (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Movement of allowance for doubtful accounts | |||
Balance at beginning of the year | $ 2,460,780 | $ 924,236 | |
Charge to expenses | 1,960,604 | 1,561,805 | $ 630,980 |
Foreign exchange loss (gain) | 281,010 | (25,261) | |
Balance at end of the year | $ 4,702,394 | $ 2,460,780 | $ 924,236 |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
OTHER CURRENT ASSETS | ||
Recoverable value-added taxes | $ 3,141,867 | $ 2,475,711 |
Others | 190,568 | 59,887 |
Less: provision for doubtful accounts | (8,903) | (8,337) |
Other current assets | $ 3,323,532 | $ 2,527,261 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, gross | $ 1,420,881 | $ 1,329,549 | |
Less: accumulated depreciation | (511,645) | (245,218) | |
Property and equipment, net | 909,236 | 1,084,331 | |
Depreciation expense | 236,059 | 202,024 | $ 25,285 |
Property | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, gross | 838,798 | 785,470 | |
Leasehold improvements | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, gross | 373,966 | 350,191 | |
Office equipment | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, gross | 139,848 | 130,957 | |
Electronic equipment | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, gross | $ 68,269 | $ 62,931 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Less: accumulated amortization | $ (44,036) | $ (148,000) | ||
Intangible assets, net | 5,504 | 778,425 | ||
Proceeds from disposal of intangible assets | $ 1,245,619 | 1,245,619 | ||
Gain (loss) on disposal of intangible assets | $ 639,792 | 639,792 | ||
Amortization expense | 212,976 | 138,870 | $ 10,857 | |
Software | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross | $ 49,540 | 46,391 | ||
Copyrights | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Intangible assets, gross | $ 880,034 |
OPERATING LEASE (Details)
OPERATING LEASE (Details) | 12 Months Ended |
Dec. 31, 2020lease | |
Lessee, Lease, Description [Line Items] | |
Number of non-cancelable operating leases | 2 |
Non-cancelable operating lease, one | |
Lessee, Lease, Description [Line Items] | |
Lease term | 2 years |
Non-cancelable operating lease, two | |
Lessee, Lease, Description [Line Items] | |
Lease term | 3 years |
OPERATING LEASE - Operating lea
OPERATING LEASE - Operating lease related assets and liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Operating lease related assets and liabilities recorded on the balance sheets | ||
Rights of use lease assets | $ 353,238 | $ 422,907 |
Operating lease liabilities, current | 351,551 | 391,629 |
Operating lease liabilities, noncurrent | 26,320 | |
Total operating lease liabilities | $ 351,551 | $ 417,949 |
OPERATING LEASE - Weighted aver
OPERATING LEASE - Weighted average remaining lease terms and discount rates (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
OPERATING LEASE | |||
Weighted average remaining lease term (years) | 10 months 10 days | 1 year 1 month 6 days | |
Weighted average discount rate | 4.75% | 4.75% | |
Total operating lease expenses | $ 350,344 | $ 596,340 | $ 706,123 |
OPERATING LEASE - Maturities of
OPERATING LEASE - Maturities of lease liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Maturities of lease liabilities | ||
2021 | $ 359,273 | |
Total lease payments | 359,273 | |
Less: imputed interest | (7,722) | |
Total operating lease liabilities | $ 351,551 | $ 417,949 |
BANK BORROWING (Details)
BANK BORROWING (Details) | Dec. 31, 2020USD ($) |
BANK BORROWING | |
Bank borrowing | $ 1,532,567 |
BANK BORROWING - Additional det
BANK BORROWING - Additional details (Details) | Apr. 01, 2020CNY (¥) | Apr. 01, 2020USD ($) | Mar. 24, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Mar. 24, 2020USD ($) |
Line of Credit Facility [Line Items] | |||||||||
Amount drawn | $ 1,448,394 | ||||||||
Bank borrowing | $ 1,532,567 | ||||||||
Interest expense arising from the bank borrowing | 105,733 | $ 64,996 | $ 207,458 | ||||||
Bank of Communications | Credit facility agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Term of credit facility | 2 years | ||||||||
Maximum borrowing capacity | ¥ 10,000,000 | $ 1,448,394 | |||||||
Amount drawn | ¥ 10,000,000 | $ 1,448,394 | |||||||
Fixed interest rate | 4.785% | ||||||||
Accounts receivable pledged as the collateral | ¥ 105,000,000 | $ 14,852,115 | |||||||
Bank borrowing | ¥ 10,000,000 | $ 1,532,567 | |||||||
Interest expense arising from the bank borrowing | $ 50,824 |
LOAN FROM THIRD PARTIES (Detail
LOAN FROM THIRD PARTIES (Details) | Dec. 31, 2019USD ($) |
LOAN FROM THIRD PARTIES | |
Loan from third parties | $ 4,305,396 |
LOAN FROM THIRD PARTIES - Loan
LOAN FROM THIRD PARTIES - Loan agreement with a third party individual (Details) - Beijing Baosheng | 12 Months Ended | ||||
Dec. 31, 2019item | Mar. 21, 2019CNY (¥) | Mar. 21, 2019USD ($) | Jan. 22, 2019CNY (¥) | Jan. 22, 2019USD ($) | |
Short-term Debt [Line Items] | |||||
Debt instrument, face amount | ¥ 8,000,000 | $ 1,148,106 | ¥ 10,000,000 | $ 1,435,132 | |
Fixed interest rate | 4.35% | 4.35% | 4.35% | 4.35% | |
Number of loans repaid | 2 |
LOAN FROM THIRD PARTIES - Credi
LOAN FROM THIRD PARTIES - Credit facility agreement (Details) | Oct. 21, 2019CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Oct. 21, 2019USD ($) |
Beijing Baosheng | ||||
Line of Credit Facility [Line Items] | ||||
Equity interest held | 5.00% | 5.00% | ||
Credit facility agreement | Kashi Baosheng | Guangzhou Yihui Commercial Factoring Co., Ltd | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | ¥ 14,000,000 | $ 2,009,185 | ||
Proceeds from credit facility | ¥ 14,000,000 | $ 2,009,185 | ||
Credit facility agreement | Kashi Baosheng | Guangzhou Yihui Commercial Factoring Co., Ltd | Loans with fixed interest rate of 9.7% | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | ¥ 6,000,000 | 861,079 | ||
Fixed interest rate | 9.70% | |||
Credit facility agreement | Kashi Baosheng | Guangzhou Yihui Commercial Factoring Co., Ltd | Loans with fixed interest rate of 10% | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | ¥ 8,000,000 | $ 1,148,106 | ||
Fixed interest rate | 10.00% |
LOAN FROM THIRD PARTIES - Loa_2
LOAN FROM THIRD PARTIES - Loan agreement with Beijing Ruisiqiguo Film Production Co (Details) | Mar. 26, 2020CNY (¥) | Mar. 26, 2020USD ($) | Feb. 20, 2020CNY (¥) | Feb. 20, 2020USD ($) | Jan. 20, 2020CNY (¥) | Jan. 20, 2020USD ($) | Dec. 24, 2019CNY (¥) | Dec. 24, 2019USD ($) | Sep. 30, 2020CNY (¥) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Feb. 20, 2020USD ($) | Jan. 20, 2020USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 24, 2019USD ($) |
Short-term Debt [Line Items] | ||||||||||||||||||
Interest expense arising from the bank borrowing | $ 105,733 | $ 64,996 | $ 207,458 | |||||||||||||||
Outstanding balance | $ 4,305,396 | |||||||||||||||||
Settlement of borrowings from a third party by netting off against accounts receivable due from a third party | $ 4,055,502 | |||||||||||||||||
Horgos Baosheng | ||||||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||||||
Debt instrument, face amount | ¥ 35,000,000 | ¥ 10,650,000 | ¥ 16,000,000 | $ 5,069,378 | $ 1,542,539 | $ 2,296,211 | ||||||||||||
Interest expense arising from the bank borrowing | ¥ 109,375 | $ 15,550 | ¥ 33,290 | $ 4,733 | ¥ 50,000 | $ 7,176 | ||||||||||||
Outstanding balance | ¥ 16,000,000 | $ 2,296,211 | ||||||||||||||||
Repayments of short term debt | ¥ 7,000,000 | $ 1,013,876 | ||||||||||||||||
Settlement of borrowings from a third party by netting off against accounts receivable due from a third party | ¥ 28,000,000 | $ 4,055,502 |
LOAN FROM THIRD PARTIES - Addit
LOAN FROM THIRD PARTIES - Additional information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
LOAN FROM THIRD PARTIES | |||
Weighted average interest rate | 6.54% | 7.05% | 7.88% |
Interest expense arising from the bank borrowing | $ 105,733 | $ 64,996 | $ 207,458 |
INCOME TAXES (Details)
INCOME TAXES (Details) - HKD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Line Items] | |||
Income tax rate | 25.00% | 25.00% | 25.00% |
Hong Kong | Assessable profits of first HKD$2 million | |||
Income Tax Disclosure [Line Items] | |||
Assessable profits | $ 2 | ||
Income tax rate | 8.25% | ||
Hong Kong | Assessable profits above HKD$2 million | |||
Income Tax Disclosure [Line Items] | |||
Assessable profits | $ 2 | ||
Income tax rate | 16.50% | ||
PRC | |||
Income Tax Disclosure [Line Items] | |||
Income tax rate | 25.00% | ||
Preferential income tax rate term | 5 years | ||
PRC | Beijing Baosheng | |||
Income Tax Disclosure [Line Items] | |||
Income tax rate | 25.00% | ||
PRC | Horgos Baosheng | |||
Income Tax Disclosure [Line Items] | |||
Income tax rate | 25.00% | ||
Preferential income tax rate | 0.00% | ||
PRC | Kashi Baosheng | |||
Income Tax Disclosure [Line Items] | |||
Preferential income tax rate | 0.00% | ||
PRC | Baosheng Technology | |||
Income Tax Disclosure [Line Items] | |||
Preferential income tax rate | 0.00% |
INCOME TAXES - Income tax expen
INCOME TAXES - Income tax expenses (benefits) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||
Current income tax expense | $ 352,073 | ||
Deferred income tax expense (benefit) | $ 108,638 | $ (18,528) | (46,031) |
Income tax expense (benefit) | $ 108,638 | $ (18,528) | $ 306,042 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory tax rate (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of the statutory tax rate to the effective tax rate | |||
PRC statutory income tax rate | 25.00% | 25.00% | 25.00% |
Impact of different income tax rates in other jurisdictions | 1.40% | 0.50% | 0.00% |
Effect of preferential tax benefits (a) | (38.10%) | (33.70%) | (28.60%) |
Effect of non-deductible expenses | 7.90% | 4.90% | 2.70% |
Effect of change in valuation allowance | 5.40% | 3.10% | 4.10% |
Effective Income Tax Rate Reconciliation, Percent, Total | 1.60% | (0.20%) | 3.20% |
PRC | |||
Reconciliation of the statutory tax rate to the effective tax rate | |||
PRC statutory income tax rate | 25.00% | ||
Tax saving as the result of favorable tax rate | $ 2,686,911 | $ 3,761,148 | $ 2,712,084 |
Per share effect of the favorable tax rate | $ 0.13 | $ 0.19 | $ 0.14 |
PRC | Horgos Baosheng | |||
Reconciliation of the statutory tax rate to the effective tax rate | |||
PRC statutory income tax rate | 25.00% | ||
Preferential income tax rate | 0.00% | ||
PRC | Kashi Baosheng | |||
Reconciliation of the statutory tax rate to the effective tax rate | |||
Preferential income tax rate | 0.00% | ||
PRC | Baosheng Technology | |||
Reconciliation of the statutory tax rate to the effective tax rate | |||
Preferential income tax rate | 0.00% |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Net operating losses carryforwards | $ 1,072,893 | $ 748,976 |
Allowance for doubtful accounts of accounts receivable | 67,712 | 105,560 |
Allowance for doubtful accounts of other current assets | 2,224 | 2,082 |
Accrued labor cost compensation | 15,219 | |
Less: allowance on deferred tax assets | $ (1,142,829) | (764,194) |
Deferred tax assets | $ 107,643 |
INCOME TAXES - Additional detai
INCOME TAXES - Additional details (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Valuation Allowance [Line Items] | ||
Valuation allowance | $ 1,142,829 | $ 764,194 |
Net operating losses carryforwards | ||
Valuation Allowance [Line Items] | ||
Valuation allowance | 3,098,239 | |
Labor cost compensation | ||
Valuation Allowance [Line Items] | ||
Valuation allowance | $ 60,873 |
EARNINGS PER SHARE - the comput
EARNINGS PER SHARE - the computation of basic and diluted loss per common share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
EARNINGS PER SHARE | |||
Net Income | $ 6,944,691 | $ 11,174,576 | $ 9,192,910 |
Weighted average number of ordinary share outstanding (after stock split and share reorganization) | |||
Basic and Diluted | 20,400,000 | 20,254,247 | 20,000,000 |
Earnings per share | |||
Basic and Diluted | $ 0.34 | $ 0.55 | $ 0.46 |
Dividend distributed per common share | |||
Basic and Diluted | $ 0.36 | ||
Dilutive stocks | $ 0 | $ 0 | $ 0 |
EQUITY - Ordinary shares (Detai
EQUITY - Ordinary shares (Details) | Jul. 06, 2019$ / sharesshares | May 13, 2019HKD ($)shares | May 13, 2019USD ($)$ / sharesshares | Dec. 04, 2018$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Dec. 31, 2020$ / sharesshares | Jul. 05, 2019$ / sharesshares |
EQUITY | ||||||||
Authorized share capital | 100,000,000 | 5,000,000 | 100,000,000 | 100,000,000 | 5,000,000 | |||
Par value per share | $ / shares | $ 0.0005 | $ 0.01 | $ 0.01 | $ 0.0005 | $ 0.0005 | $ 0.01 | ||
Number of shares issued during period | 20,397,960 | 2 | 2 | 100 | ||||
Capital contribution | $ 14,000,000 | $ 1,797,731 | $ 1,797,731 | $ 1 |
EQUITY - Board of directors app
EQUITY - Board of directors approved (Details) | Jul. 06, 2019$ / sharesshares | May 13, 2019$ / sharesshares | Dec. 04, 2018$ / sharesshares | Dec. 31, 2020$ / sharesshares | Jul. 06, 2020shares | Dec. 31, 2019$ / sharesshares | Jul. 05, 2019$ / sharesshares |
EQUITY | |||||||
Authorized share capital | 100,000,000 | 5,000,000 | 100,000,000 | 100,000,000 | 5,000,000 | ||
Par value per share | $ / shares | $ 0.0005 | $ 0.01 | $ 0.01 | $ 0.0005 | $ 0.0005 | $ 0.01 | |
Stock split | 20 | ||||||
Already issued shares | 2,040 | 20,400,000 | 20,400,000 | 20,400,000 | 102 | ||
Number of shares issued during period | 20,397,960 | 2 | 100 | ||||
Ordinary shares, shares issued | 2,040 | 20,400,000 | 20,400,000 | 20,400,000 | 102 | ||
Ordinary shares, shares outstanding | 20,400,000 | 20,400,000 | 20,400,000 |
EQUITY - Restarted all shares (
EQUITY - Restarted all shares (Details) - $ / shares | Dec. 31, 2020 | Jul. 06, 2020 | Dec. 31, 2019 | Jul. 06, 2019 | Jul. 05, 2019 | May 13, 2019 | Dec. 04, 2018 |
EQUITY | |||||||
Ordinary shares, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | 5,000,000 | 5,000,000 | ||
Ordinary shares, par value | $ 0.0005 | $ 0.0005 | $ 0.0005 | $ 0.01 | $ 0.01 | $ 0.01 | |
Ordinary shares, shares issued | 20,400,000 | 20,400,000 | 20,400,000 | 2,040 | 102 | ||
Ordinary shares, shares outstanding | 20,400,000 | 20,400,000 | 20,400,000 |
EQUITY - Cash dividends (Detail
EQUITY - Cash dividends (Details) | 12 Months Ended | ||||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
EQUITY | |||||||
Cash dividends | ¥ 50,000,000 | $ 7,269,978 | |||||
Payments of dividends | ¥ 28,000,000 | $ 4,052,802 | |||||
Dividends payable | ¥ 22,000,000 | ¥ 22,000,000 | $ 3,371,648 | $ 3,157,290 |
EQUITY - Restricted net assets
EQUITY - Restricted net assets (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
EQUITY | ||
Statutory reserve | $ 898,133 | $ 680,874 |
Net assets | $ 4,722,998 | $ 4,505,738 |
RELATED PARTY TRANSACTIONS AN_3
RELATED PARTY TRANSACTIONS AND BALANCES - Nature of relationships with related parties (Details) | Dec. 31, 2020 |
EJAM Group | |
Related Party Transaction [Line Items] | |
Ownership interest held | 9.80% |
Pubang Hong Kong | |
Related Party Transaction [Line Items] | |
Ownership interest held | 25.40% |
RELATED PARTY TRANSACTIONS AN_4
RELATED PARTY TRANSACTIONS AND BALANCES - Transactions with related parties (Details) | Oct. 01, 2017CNY (¥) | Oct. 01, 2017USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
EJAM Group | ||||
Related Party Transaction [Line Items] | ||||
Transactions with related parties | $ 120,284 | $ 489,249 | ||
Monthly rental fee | ¥ 29,334,945 | $ 40,000 | ||
Service fees charged by related parties | Horgos Meitui | ||||
Related Party Transaction [Line Items] | ||||
Transactions with related parties | $ 8,530 |
RELATED PARTY TRANSACTIONS AN_5
RELATED PARTY TRANSACTIONS AND BALANCES - Balances with related parties (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | ||
Due to related parties | $ 715,546 | $ 635,133 |
EJAM Group | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 74,330 | 89,133 |
Pubang Hongkong | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 626,628 | 531,476 |
Ms. Wenxiu Zhong | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 14,588 | 14,524 |
Accounts payable balance | EJAM Group | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 0 | 10,201 |
Daily operating expenses | EJAM Group | ||
Related Party Transaction [Line Items] | ||
Due to related parties | 74,330 | 78,932 |
Third party services and consulting fees | Pubang Hongkong | ||
Related Party Transaction [Line Items] | ||
Due to related parties | $ 626,628 | $ 531,476 |
CONTINGENCIES - Beijing Baoshen
CONTINGENCIES - Beijing Baosheng (Details) - Beijing Baosheng ¥ in Thousands | Apr. 16, 2019 | May 17, 2016 | Jun. 30, 2019CNY (¥) | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) |
Equity Ownership Dispute | |||||
Loss Contingencies [Line Items] | |||||
Equity interest under litigation | 5.00% | 5.00% | 5.00% | 5.00% | |
Contractual Dispute | |||||
Loss Contingencies [Line Items] | |||||
Damge sought | ¥ 47,650 | $ 6,838,404 | |||
Loss contingencies, amount accrued | ¥ 10,000 | $ 1,532,567 |
CONTINGENCIES - Horgos Baosheng
CONTINGENCIES - Horgos Baosheng (Details) - Horgos Baosheng - Wrongfully terminated dispute | Apr. 23, 2020CNY (¥) | Apr. 23, 2020USD ($) | Aug. 23, 2019CNY (¥) | Aug. 23, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) |
Loss Contingencies [Line Items] | ||||||
Loss contingencies, amount accrued | ¥ 424,161 | $ 60,873 | ||||
Arbitration Committee | ||||||
Loss Contingencies [Line Items] | ||||||
Damage awarded | ¥ 424,161 | $ 60,000 | ||||
Court in Beijing | ||||||
Loss Contingencies [Line Items] | ||||||
Damage awarded | ¥ 424,161 | $ 60,000 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) | 12 Months Ended | |
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Loss Contingencies [Line Items] | ||
Restricted cash | $ 3,695,598 | $ 2,896,326 |
Beijing Baosheng | ||
Loss Contingencies [Line Items] | ||
Number of bank accounts frozen | 2 | 2 |
Horgos Baosheng | ||
Loss Contingencies [Line Items] | ||
Percentage of equity interest frozen | 100.00% | 100.00% |
Restricted cash | $ 3,695,598 | $ 3,695,598 |
Kashi Baosheng | ||
Loss Contingencies [Line Items] | ||
Restricted cash | $ 2,896,326 | $ 2,896,326 |
SUBSEQUENT EVENTS - Initial pub
SUBSEQUENT EVENTS - Initial public offering (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 03, 2021 | Feb. 10, 2021 | Jul. 06, 2019 | May 13, 2019 | Dec. 04, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Jul. 05, 2019 |
Subsequent Event [Line Items] | ||||||||
Number of shares issued during period | 20,397,960 | 2 | 100 | |||||
Par value per share | $ 0.0005 | $ 0.01 | $ 0.01 | $ 0.0005 | $ 0.0005 | $ 0.01 | ||
Initial public offering | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of shares issued during period | 6,000,000 | |||||||
Price per share | $ 5 | |||||||
Subsequent event | Initial public offering | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of shares issued during period | 6,000,000 | |||||||
Par value per share | $ 0.0005 | |||||||
Price per share | $ 5 | |||||||
Gross proceeds of the Company's IPO | $ 34.5 | |||||||
Subsequent event | Over-allotment option | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of shares issued during period | 900,000 | |||||||
Par value per share | $ 0.0005 | |||||||
Price per share | $ 5 |
SUBSEQUENT EVENTS - Lease agree
SUBSEQUENT EVENTS - Lease agreement (Details) - USD ($) | Mar. 08, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Subsequent Event [Line Items] | ||||
Monthly rent fee | $ 350,344 | $ 596,340 | $ 706,123 | |
Subsequent event | Beijing Baosheng | ||||
Subsequent Event [Line Items] | ||||
Term of office lease agreement | 3 years | |||
Monthly rent fee | $ 45,000 |
SUBSEQUENT EVENTS - Revolving c
SUBSEQUENT EVENTS - Revolving credit facility (Details) - Beijing Baosheng - Revolving credit facility - Bank of Communications $ in Millions | Mar. 05, 2021CNY (¥) | Mar. 05, 2021USD ($) | Dec. 31, 2020CNY (¥) |
Subsequent Event [Line Items] | |||
Total borrowings | ¥ | ¥ 50,000,000 | ||
Subsequent event | |||
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | ¥ 50,000,000 | $ 8.7 | |
Term of credit facility | 3 months | ||
Fixed interest rate | 3.85% | ||
Deposit | $ | $ 8.7 |
SUBSEQUENT EVENTS - Securities
SUBSEQUENT EVENTS - Securities purchase agreement (Details) $ / shares in Units, $ in Millions | Mar. 17, 2021USD ($)instrument$ / sharesshares | Dec. 31, 2020$ / shares | Dec. 31, 2019$ / shares | Jul. 06, 2019$ / shares | Jul. 05, 2019$ / shares | May 13, 2019$ / shares | Dec. 04, 2018$ / shares |
Subsequent Event [Line Items] | |||||||
Par value per share | $ / shares | $ 0.0005 | $ 0.0005 | $ 0.0005 | $ 0.01 | $ 0.01 | $ 0.01 | |
Subsequent event | Securities Purchase Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Number of investors | instrument | 2 | ||||||
Investments | $ | $ 10 | ||||||
Number of units issued | shares | 1,960,784 | ||||||
Number of shares per unit | shares | 1 | ||||||
Par value per share | $ / shares | $ 0.0005 | ||||||
Number of warrants per unit | shares | 0.50 | ||||||
Warrants, exercise price | $ / shares | $ 5.61 |
SUBSEQUENT EVENTS - Cryptocurre
SUBSEQUENT EVENTS - Cryptocurrency miner purchase agreement (Details) - Subsequent event - Cryptocurrency miner purchase agreement ¥ in Thousands, $ in Thousands | Apr. 14, 2021CNY (¥)shares | Apr. 14, 2021USD ($)shares |
Subsequent Event [Line Items] | ||
Number of miners purchased | 1,000 | 1,000 |
Aggregation value for purchase of miners | ¥ 4,670 | $ 720 |
SUBSEQUENT EVENTS - Baosheng WF
SUBSEQUENT EVENTS - Baosheng WFOE (Details) | Apr. 26, 2021CNY (¥) | Apr. 26, 2021USD ($) | Apr. 27, 2021CNY (¥) | Apr. 27, 2021USD ($) | Apr. 26, 2021USD ($) | Mar. 22, 2021CNY (¥) | Mar. 22, 2021USD ($) |
Baosheng WFOE | |||||||
Subsequent Event [Line Items] | |||||||
Registered capital | ¥ 150,000,000 | $ 23,052,098 | |||||
Subsequent event | Baosheng WFOE | |||||||
Subsequent Event [Line Items] | |||||||
Registered capital | ¥ 150,000,000 | $ 23,052,098 | |||||
Subsequent event | Baosheng Technology | |||||||
Subsequent Event [Line Items] | |||||||
Network To Borrow | ¥ 50,000,000 | $ 8,700,000 | |||||
Interest rate is fixed | 1.00% | 1.00% | |||||
Network deposited | ¥ 50,000,000 | $ 8,700,000 | |||||
Fund bank account | ¥ 50,000,000 | $ 8,700,000 |