| Summary of significant accounting policies | 2. Summary of significant accounting policies
(a) Basis of presentation The consolidated financial statements are prepared
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) to reflect the financial
position, results of operations and cash flows of the Group. Significant accounting policies followed by the Group in the preparation
of the accompanying consolidated financial statements are summarized below.
(b) Principles of consolidation The consolidated financial statements include
the financial statements of the Company and its subsidiaries. All transactions and balances among the Group have been eliminated upon
consolidation. All intercompany transactions and balances among the Group have been eliminated upon consolidation. Subsidiaries are those entities in which the Company,
directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies,
to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. Non-controlling interest represents the portion
of the net assets of subsidiaries attributable to interests that are not owned by the Group. The non-controlling interest is presented
in the consolidated balance sheets, separately from equity attributable to the shareholders of the Group. Non-controlling interest’s
operating result is presented on the face of the consolidated statements of income and comprehensive income as an allocation of the total
income for the year between non-controlling shareholders and the shareholders of the Group.
(c) Use of estimates The preparation of the consolidated financial
statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses
during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include,
but not limited to revenue recognition, allowance for doubtful accounts, accounting for deferred income taxes and valuation allowance
for deferred tax assets. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates,
and as such, differences may be material to the consolidated financial statements.
(d) Foreign currency translation The Group uses Renminbi (“RMB”) as
its reporting currency. The functional currency of the Company and the Company’s subsidiaries incorporated in Cayman, British Virgin
Islands and Hong Kong is US dollars (“US$”), while the functional currency of the Company’s PRC subsidiaries is RMB.
The determination of the respective functional currency is based on the criteria set out by ASC 830, Foreign Currency Matters. Transactions denominated in foreign currencies
other than functional currency are translated into the functional currency at the exchange rates prevailing on the transaction dates.
Monetary assets and liabilities denominated in foreign currencies other than functional currency are remeasured into the functional currency
at the exchange rates prevailing at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign
currency are remeasured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign
currency transactions are recorded in the consolidated statements of operations and comprehensive income. The consolidated financial statements of the Group’s
non-PRC entities are translated from their respective functional currency into RMB. Assets and liabilities are translated into RMB using
the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated
into RMB at the appropriate historical rates. Revenues, expenses, gains and losses are translated into RMB using the average exchange
rates for the relevant period. The resulting foreign currency translation adjustments are recorded as a component of accumulated other
comprehensive income in the consolidated statements of changes in equity and a component of other comprehensive income in the consolidated
statement of operations and comprehensive income.
(e) Convenience translation Amounts in US$ are presented for the convenience
of the reader and are translated at the rate of US$1.00 = RMB7.2672, representing the noon buying rate set forth in the H.10 statistical
release of the U.S. Federal Reserve Board on June 30, 2024. No representation is made that the RMB amounts could have been, or could be,
converted, realized or settled into US$ at that rate, or at any other rate.
(f) Cash Cash consists of cash on hand and in bank, and
deposits that can be added to or withdrawn without limitation, which are unrestricted as to withdrawal and use.
(g) Accounts receivable, net Accounts receivable are stated at the original
amount less an allowance for credit loss. Accounts receivable are recognized in the period when the Group has provided services to its
customers and when its right to consideration is unconditional. The Group reviews the accounts receivable on a periodic basis and makes
general and specific allowances when there is doubt as to the collectability of individual balances. The Group has developed a current
expected credit loss (“CECL”) model based on historical experience, the age of the accounts receivable balances, credit quality
of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that
may affect its ability to collect from customers. The Group considers historical collection rates, current financial status, macroeconomic
factors, and other industry-specific factors when evaluating for current expected credit losses. Accounts receivable balances are written
off after all collection efforts have been exhausted. The allowance for credit losses as of June 30, 2023 and 2024 was nil
(h) Advance to suppliers, net Advances to suppliers consist of balances paid
to suppliers for services and materials that have not been provided or received. The Group reviews its advances to suppliers on a periodic
basis and makes general and specific allowances when there is doubt as to the ability of a supplier to provide supplies to the Group or
refund an advance. The allowance for advance to suppliers as of June 30, 2023 and 2024 were RMB5,216,045 and RMB4,871,715, respectively.
(i) Deferred offering costs Deferred offering costs consist of underwriting,
legal, advisory and other expenses incurred through the reporting date that are directly related to an anticipated offering and that will
be charged as a reduction against additional paid-in capital upon the completion of the offering. Should the offering prove to be unsuccessful,
these deferred costs, as well as additional expenses to be incurred, will be charged to operations.
(j) Borrowings Borrowings comprise short-term borrowings. Borrowings
are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference
between the proceeds net of transaction costs and the redemption value is recognized in profit or loss over the period of the borrowings
using the effective interest method.
(k) Related parties and transactions The Group identifies related parties, and accounts
for, discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards. Parties, which can be a corporation or individual,
are considered to be related if the Group has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are
subject to common control or common significant influence. Transactions between related parties commonly
occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are also
considered to be related party transactions even though they may not be given accounting recognition. While ASC does not provide accounting
or measurement guidance for such transactions, it nonetheless requires their disclosure.
(l) Fair value measurement Accounting guidance defines fair value as the
price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded
at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that
market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy
that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. The three levels of inputs are:
● Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities
in active markets.
● Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
● Level 3—Unobservable inputs which are supported by little or no market activity. Accounting guidance also describes three main
approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The
market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets
or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement
is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that
would currently be required to replace an asset. Financial assets and liabilities of the Group
primarily consist of cash, accounts receivable, other receivables included in prepayments and other current assets, short-term borrowings,
accounts payable, amounts due to related parties, and other payables included in accrued expenses. As of June 30, 2023 and 2024, the carrying
amounts of above financial assets and liabilities approximated to their fair values due to the short-term nature of these instruments.
(m) Credit Losses On July 1, 2023, the Group adopted ASU 2016-13,
“Financial Instruments—Credit Losses (Topic 326): Measurement on Credit Losses on Financial Instruments” using the modified
retrospective method, including certain subsequent amendments, transitional guidance and other interpretive guidance within ASU 2018-19.ASU
2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02 and ASU 2020-03 (collectively, including ASU 2016-13, “ASC 326”). ASC 326 introduces
an approach based on expected losses to estimate the allowance for credit losses, which replaces the previous incurred loss impairment
model. The Group’s accounts receivable, amounts
due from related parties and other receivable which is included in prepaid expenses and other assets line item in the balance sheet are
within the scope of ASC Topic 326. The Group uses the roll-rate method to measure the expected credit losses of account receivables, amounts
due from related parties and other receivables, on a collective basis when similar risk characteristics exist. The roll-rate method stratifies
the receivables balance by delinquency stages and projected forward in one-year increments using historical roll rate. In each year of
the simulation, losses on the receivables are captured, and the ending delinquency stratification serves as the beginning point of the
next iteration. This process is repeated on a yearly rolling basis. The loss rate calculated for each delinquency stage is then applied
to respective receivables balance. The management adjusts the allowance that is determined by the roll-date method for both current conditions
and forecast of economic conditions. When establishing the loss rate, the Group makes the assessment on various factors, including historical
experience, credit-worthiness of debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions,
and other factors that may affect its ability to collect from, the debtors. The Group also provides specific provisions for allowance
when facts and circumstances indicate that the receivable is unlikely to be collected. The cumulative effect from the adoption as of
July 1, 2023 was nil to the consolidated financial statements. For the year ended June 30, 2024, allowance of credit losses made by the
Group was nil
(n) Revenue recognition The Group’s revenues are mainly generated
from marketing campaign planning and execution, offline advertising services and online precision marketing services. The Group recognizes revenues pursuant to ASC
606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with customers
are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects
the consideration the Group expects to be entitled to in exchange for those goods or services, reduced by value added tax (“VAT”).
A description of the principal revenue generating activities of Group is as follows: Marketing campaign planning and execution The Group primarily generates revenues by providing
customized marketing campaign planning and execution services upon requests from its customers, including event design, logistics, layout
of events, materials preparation, actual event set-up and implementation. During the planning and execution of the events, the Group chooses
various contents as the carrier and integrates advertisements into offline events and online videos to achieve marketing purposes. The
Group accounts for a contract of marketing campaign planning and execution when it has legally enforceable rights and obligations and
collectability of consideration is probable. Each contract typically contains one single performance obligation, which is to deliver a
successful event, and the contract price is fixed. For marketing campaign planning and execution,
revenue is recognized at a point of time when services are successfully provided (e.g., upon successful carryout of an event), which is
indicated by customer’s acknowledgement of completion on such event and activity, online program or video, as the customer neither
simultaneously receives and consumes the benefits provided by the Group’s performance nor controls an increasingly enhanced asset
or an asset with an alternative use to the customer as the Group performs. Offline advertising The Group also generates revenues by designing
and arranging for display of offline marketing materials mainly on public transports such as bus lines. The consideration of offline advertising
services is fixed stated in the contract. The Group concludes it has a stand ready obligation to fulfill all service and considers the
offline advertising services as a single performance obligation. The Group adopts the output method, using a time-elapsed basis ratably
over the period from the beginning to the end of the advertising schedule, to measure progress. Online precision marketing The Group generates revenues from precision marketing
by designing and integrating advertisements, marketing materials as well as promotion videos into different online platforms, such as
video and social media platforms, including Iqiyi, Xigua Channel, Weibo and Wechat, etc. The consideration of precision marketing is fixed
stated in the contract. The Group concludes it has a stand ready obligation to fulfill all service and considers the series of online
precision marketing as a single performance obligation. The Group adopts the output method, using a time-elapsed basis ratably over the
period from the beginning to the end of the advertising schedule, to measure progress. Principal versus agent considerations For all of the revenue types, relevant services
were mainly purchased from third parties, and the Group evaluates the presentation of revenue on a gross versus net basis based on whether
it controls the services before transfers them to customers. The Group considers itself the principal for transactions that it is in control
of establishing the transaction price, and it is primary responsible for fulfilling the promises to provide relevant marketing campaign
planning and execution, offline advertising and online precision marketing services to the customer. Therefore, such revenues are reported
on a gross basis. The following table disaggregates the Group’s
revenue for the years ended June 30, 2022, 2023 and 2024:
For the years ended June 30,
2022 2023 2024
RMB RMB RMB
By revenue type:
Marketing campaign planning and execution 19,432,684 55,590,318 72,551,148
Online precision marketing 3,031,567 6,112,910 31,619,104
Offline advertising 12,905,957 7,336,177 4,635,050
Total 35,370,208 69,039,405 108,805,302 Contract assets and liabilities
For the years ended June 30,
2022 2023 2024
RMB RMB RMB
Contract liabilities type ：
In time 25,971,938 424,528 2,115,522
Over time 533,426 471,698 -
Total 26,505,364 896,226 2,115,522 Timing of revenue recognition may differ from
the timing of invoicing the customers. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing
when the Group has satisfied its performance obligation and has unconditional right to the payment. Contract assets represent the Group’s
right to consideration in exchange for services that the Group has transferred to a customer when that right is conditioned on something
other than the passage of time. The Group has no contract assets as of June 30, 2023 and 2024. Contract liabilities represent the obligation
to transfer services to a customer for which the entity has received consideration from the customer. Contract liabilities were RMB896,226
and RMB2,115,522 as of June 30, 2023 and 2024, respectively. The Group expects to recognize the balance of contract liabilities as revenue
in the next 12 months.
(o) Cost of revenues Amounts recorded as cost of revenues relate to
direct expenses incurred in order to generate revenue. Cost of revenues primarily consists of online program production costs, live video
broadcast costs, materials costs, and other event hosting and marketing related expenses purchased from suppliers. Such costs are recorded
as incurred.
(p) Selling and marketing expenses Selling and marketing expenses mainly consist
of labor expenses and travel expenses for sales personnel, social and entertainment expenses and other miscellaneous selling expenses.
(q) General and administrative expenses General and administrative expenses mainly consist
of salary and welfare for general and administrative personnel, rental and property management fee, office expenses, and other miscellaneous
corporate expenses.
(r) Employee benefits The Company’s subsidiaries in PRC participate
in a government mandated, multiemployer, defined contribution plan, pursuant to which certain retirement, medical, housing and other welfare
benefits are provided to employees. PRC labor laws require the entities incorporated in the PRC to pay to the local labor bureau a monthly
contribution calculated at a stated contribution rate on the monthly basic compensation of qualified employees. The Group has no further
commitments beyond its monthly contribution. The total expenses recorded for such employee benefits amounted to RMB133,081, RMB182,475
and RMB213,318 for the years ended June 30, 2022, 2023 and 2024 respectively.
(s) Income taxes The Group accounts for current income taxes in
accordance with the laws and regulations of the relevant tax jurisdictions. The charge for taxation is based on the results for the fiscal
year as adjusted for items which are non-assessable or disallowed. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted at the end of the reporting period. The Group accounts for income taxes under ASC
740, Income Taxes (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax
bases (“Temporary differences”). Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those Temporary differences are expected to be recovered
or settled. Deferred income tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability
will be settled, based on rates enacted or substantively enacted at the end of the reporting period. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be realized. The provisions of ASC 740-10-25, “Accounting
for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and
measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition
of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest
and penalties associated with tax positions, and related disclosures. The Group believes there were no uncertain tax positions and unrecognized
tax benefits at June 30, 2023 and 2024, respectively. ASC 740 also provides guidance on derecognition
of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest
and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment
is required in evaluating the Group’s uncertain tax positions and determining its provision for income taxes. Penalties and interest
incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group did not recognize
any interest and penalties associated with uncertain tax positions for the years ended June 30, 2022, 2023 and 2024, respectively, as
there were no uncertain tax positions. The Group’s operating subsidiaries in PRC
are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of
limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent.
The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000
(US$13,760). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the
case of tax evasion.
(t) Value added tax (“VAT”) The Group is subject to VAT at the rate of 6%
depending on whether the entity is a general taxpayer, and related surcharges on revenue generated from providing services. Entities that
are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance
between input VAT and output VAT is recorded in the line item of accrued expenses and other current liabilities on the face of balance
sheet. The Group records revenue net of value added tax and related surcharges.
(u) Leases From July 1, 2020, the Group adopted Accounting
Standards Update (“ASU”) 2016-02, Lease (FASB ASC Topic 842). The adoption of Topic 842 resulted in the presentation of operating
lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheet. The Group has elected
the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption
date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct
costs for any expired or existing leases as of the adoption date. Lastly, the Group elected the short-term lease exemption for all contracts
with lease terms of 12 months or less. At inception of a contract, the Group assesses
whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified
asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether
the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from
the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities
are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term. Right-of-use of assets The right-of-use of asset is initially measured
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and less any lease incentive received. Lease liabilities Lease liability is initially measured at the present
value of the outstanding lease payments at the commencement date, discounted using the Group’s incremental borrowing rate. Lease
payments included in the measurement of the lease liability comprise fixed lease payments, variable lease payments that depend on an index
or a rate, amounts expected to be payable under a residual value guarantee and any exercise price under a purchase option that the Group
is reasonably certain to exercise. Lease liability is measured at amortized cost using the effective interest rate method. It is re-measured
when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual
value guarantee, or if there is any change in the Group assessment of option purchases, contract extensions or termination options.
(v) Net profit per share In accordance with ASC 260, Earnings per Share,
basic net profit per share is computed by dividing net profit attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period. For the calculation of diluted net profit per share, the weighted average number of ordinary
shares is adjusted by the effect of dilutive potential ordinary shares, including unvested restricted shares, ordinary shares issuable
upon the exercise of outstanding share options using the treasury stock method. The effect mentioned above is not included in the calculation
of the diluted income per share when inclusion of such effect would be anti-dilutive.
(w) Segment reporting The Group uses the management approach in determining
its operating segments. The Group’s chief operating decision maker (“CODM”) identified as the Group’s Chief Executive
Officer, relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing
the performance of the Group. As a result of the assessment made by CODM, the Group has only one reportable segment. The Group does not
distinguish between markets or segments for the purpose of internal reporting. As the Group’s long-lived assets are substantially
located in the PRC, no geographical segments are presented.
(x) Recent accounting pronouncements The Group is an “emerging growth company”
(“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC
can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards
apply to private companies. The Group elected to take advantage of the extended transition periods. However, this election will not apply
should the Group cease to be classified as an EGC. In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (’‘ASU 2019-12’’), which simplifies the accounting for income taxes by removing exceptions and simplifies
the accounting for income taxes regarding franchise tax, good will, separate financial statements, enacted change in tax laws or rates
and employee stock ownership plans. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods
therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have
not yet been issued. The Group adopted the ASU from July 1, 2022, which did not have a material impact on the Group’s financial
results or financial position. In October 2021, the FASB issued ASU No. 2021-08,
Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08),
which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination
in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for us are effective for fiscal
years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively
to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Group adopted
the ASU from July 1, 2023, which did not have a material impact on the Group’s financial results or financial position. In November 2023, the FASB issued ASU No 2023-07,
“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this update improve financial
reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable
investors to develop more decision-useful financial analyzes. Currently, Topic 280 requires that a public entity disclose certain information
about its reportable segments. Topic 280 also requires other specified segment items and amounts, such as depreciation, amortization,
and depletion expense, to be disclosed under certain circumstances. The amendments in this Update do not change or remove those disclosure
requirements. The amendments in this Update also do not change how a public entity identifies its operating segments, aggregates those
operating segments, or applies the quantitative thresholds to determine its reportable segments. For all public entities that are required
to report segment information in accordance with Topic 280, the amendments in this Update are effective for fiscal years beginning after
December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption
of this guidance is not expected to have a material impact on the Group’s consolidated financial statements. In December 2023, the FASB issued ASU 2023-09,
Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income
tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard also includes certain other
amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for public business entities, for annual periods
beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning
after December 15, 2025. The Group expects the adoption of this ASU will not have a material effect on the Company’s combined financial
statements. Other accounting standards that have been issued
by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements
upon adoption. The Group does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated
financial condition, result |
