Exhibit 99.2
Included with this report as Exhibit 99.1 hereto are the unaudited financial results and statements of Pop Culture Group Co., Ltd. (the “Company,” “we,” “our,” or “us”) for the six (6) months ended December 31, 2021. Management’s discussion and analysis of our financial condition and results of operations for the semi-annual period ended December 31, 2021 is set forth below:
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this filing. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. All statements contained in this report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
OVERVIEW
We are a hip-hop culture company aiming to promote hip-hop culture and its values of love, peace, unity, respect, and having fun, and to promote cultural exchanges with respect to hip-hop between the United States and the People’s Republic of China (the “PRC” or “China”). With the values of hip-hop culture at their core and the younger generation as their primary target audience, the PRC operating entities host entertainment events, operate hip-hop related online programs, and provide event planning and execution services and marketing services to corporate clients. They seek to create value for stakeholders in all parts of the hip-hop ecosystem, from fans to artists, corporate clients, and sponsors.
The PRC operating entities have in recent years focused on developing and hosting their own hip-hop events. The PRC operating entities own an extensive portfolio of intellectual property rights related to hip-hop events, including a stage play, three dance competitions or events, two cultural and musical festivals, and two promotional parties that feature live hip-hop performances in karaoke bars or amusement parks to promote hip-hop culture, and they cooperate with music companies and artists to host various concerts in China; starting from March 2020, the PRC operating entities have been developing and operating hip-hop related online programs (collectively, “Event Hosting”). The PRC operating entities’ concerts and hip-hop events generated an aggregate attendance of 120,200 and 203,233 during the six months ended December 31, 2020, and 2021, respectively, and their online hip-hop programs generated over 153 million and 156.86 million views during the six months ended December 31, 2020 and 2021, respectively. The PRC operating entities generate revenue from their Event Hosting business by providing sponsorship packages to advertisers in exchange for sponsorship fees and by selling tickets for those concerts.
The PRC operating entities help corporate clients with the design, logistics, and layout of events, coordinate and supervise the actual event set-up and implementation, and generate revenue through service fees (“Event Planning and Execution”). Their services feature significant hip-hop elements and cover each aspect of corporate and marketing events, including communication, planning, design, production, reception, execution, and analysis. During the six months ended December 31, 2020, and 2021, the PRC operating entities served 21 and 11 clients in 42 and 23 events with respect to event planning and execution, respectively.
The PRC operating entities provide marketing services, including (i) brand promotion services, such as trademark and logo design, visual identity system design, brand positioning, brand personality design, and digital solutions, and (ii) other services, primarily advertisement distribution, to corporate clients for service fees.
We believe that the main reason corporate clients hire the PRC operating entities to plan and execute events and provide marketing services geared towards the younger generation is for their deep understanding of the taste and preferences of this generation.
RECENT DEVELOPMENTS
Regular Season of 2021 China Battle Championships (“CBC”) Completed
The preseason of 2021 CBC was completed in September 2021. A total of 294 outstanding street dancers from eight regions, namely Guangxi autonomous region, Shaanxi province, Fujian province, Yunnan province, Sichuan province, Shandong province, Chongqing city, and Hubei province, participated in this online competition.
The regular season was divided into a northern division and a southern division and was held during the China National Day holidays. Four teams representing Guangxi autonomous region, Yunnan province, Fujian province and Hubei province competed in the southern division and four teams representing Sichuan province, Chongqing city, Shaanxi province and Shandong province competed in the northern division.
Established Joint Venture Shenzhen Jam Box Technology Co., Ltd
On November 18, 2021, the Company established a joint venture with Shenzhen HipHopJust Information Technology Co., Ltd. (“HIT”), Shenzhen Jam Box Technology Co., Ltd (“JBT”). The Company owns a 60% controlling interest in JBT, while HIT owns a 20% interest and a third-party investor owns a 20% interest.
We believe that JBT will be the first-ever software-as-a-service(“SaaS”) platform provider that focuses on street dance chain in China, and it will enable the Company to scale its business and to support the growing number of dance organizations. JBT is expected to provide comprehensive services on its SaaS platform, covering event intellectual property services, educational services, teaching and research services, sales services, and management services.
Organizational Structure Upgraded
The Company has upgraded its organizational structure and determined its growth strategies, which center on three core business groups: POPIDEA, POPSPORTS, and POPFUN. As a result of the organizational structure upgrade, the Company now has businesses in Northeast, North, Central, East, and South China, which are expected to establish an efficient operating system and abundant resource reserves.
The POPIDEA business includes marketing strategic consulting services, creative design services, implementation of offline brand promotion activities, and online marketing promotion activities. In the future, this business portfolio will be strategy-oriented to provide customers with a variety of one-stop services.
2
The POPSPORTS business is dedicated to find excellent hip-hop dancers and coaches through the promotion and use of SaaS system of hip-hop dance training institutions and the holding of CBC and other hip-hop dance events, to transport excellent hip-hop dance talents for the local and national hip-hop dance teams, and cooperate with them to establish a hip-hop dance vocational education system, and eventually the Company expects to build a hip-hop dance industry base and seek the business opportunities for the Company.
POPFUN includes the strategic cooperation with multiple hip-hop music labels, the entertainment and performing arts brokerage service provider, the Chinese cultural and hip-hop relative commodities e-commerce platforms, POPFUN also includes business development in metaverse and promotion of digital hip-pop contents to further develop the company's business in the field of digital content copyright.
Won the Tender for Hanfu Cultural Festival
On October 22, 2021, the Company won the tender for Hanfu Cultural Festival (the “Festival”) put out by Migu Comic Co., Ltd., a digital content provider that operates the app Migu Quanquan. Migu Quanquan promotes Hanfu (traditional styles of clothing worn by the Han people in China) culture and provides Hanfu fans with a one-stop service of various Hanfu culture related activities. The Company expects to provide customized services for the Festival, including online and offline special event planning, event execution, and app promotion.
According to a report by iiMedia Research, the sales of Hanfu in China surged from RMB190 million (approximately US$29.7 million) in 2015 to RMB6.36 billion in 2020 (approximately US$1 billion). The Hanfu market is projected by iiMedia Research to grow significantly, as the sales are expected to exceed RMB10 billion (approximately US$1.6 billion) in 2021. As of the end of 2020, the number of Hanfu merchandizers had grown to over 1,500 in China, despite the impact of the COVID-19 pandemic. The “2020 Hanfu Consumer Trend Insight Report” released by CBNData and Tmall.com shows that the number of consumers who had purchased Hanfu on Tmall.com reached 18 million in 2020.
Appointed New Chief Financial Officer
On December 1, 2021, Mr. Renrong Zhu was appointed as the Chief Financial Officer of the Company to replace Ms. Rongdi Zhang, who resigned on November 22, 2021 due to personal reasons. Mr. Zhang’s resignation was not due to any disagreement with the Company on any matter related to the operations, policies, or practices of the Company.
COVID-19 IMPACT
The COVID-19 pandemic has spread throughout the world. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic—the first pandemic caused by a coronavirus. The pandemic has resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus. The Chinese government has ordered quarantines, travel restrictions, and the temporary closure of stores and facilities. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and temporarily closing businesses.
Since the PRC operating entities primarily engage in the businesses of hosting events and providing services related to events, their results of operations and financial condition for the six months ended December 31, 2021 were adversely affected by the spread of COVID-19 as the Chinese government took a number of actions, including encouraging employees of enterprises to work remotely from home and cancelling public activities. In particular, at certain periods or in certain cities, all of the offline events the PRC operating entities expected to host or plan and execute were suspended because governmental authorities-imposed restrictions on large scale in-person gatherings and the PRC operating entities also suffered a decrease in the marketing business because of the sluggish demand for advertising or marketing activities, resulting in lower growth rate of revenue and net income from the event planning and execution, and a decrease revenue from other services, during the six months ended December 31, 2021. Also, the PRC operating entities experienced more difficulties in collecting accounts receivable during the first half of fiscal 2022.
The COVID-19 pandemic may continue to materially and adversely affect our business operations and condition and operating results for fiscal 2022, including delays in their execution of offline events, material negative impact on their total revenue, slower collection of accounts receivable, and additional allowance for doubtful accounts. The extent to which COVID-19 impacts the PRC operating entities’ results of operations during 2022 will depend on the future developments of the outbreak, including new information concerning the global severity of and actions taken to contain the outbreak, which are highly uncertain and unpredictable.
KEY FACTORS AFFECTING OUR FINANCIAL PERFORMANCE
In assessing our financial performance, we consider a variety of financial performance measures, including principal growth in net revenue and gross profit, our ability to control costs and operating expenses to improve our operating efficiency and net income. Our review of these indicators facilitates timely evaluation of the performance of our business and effective communication of results and key decisions, allowing our business to respond promptly to competitive market conditions and different demands and preferences from our customers. The key measures that we use to evaluate the performance of our business are set forth below.
3
RESULTS OF OPERATIONS
Revenue
Following table presents our revenue by revenue source and by proportion:
| For the Six Months Ended December 31, | Change | |||||||||||||||||||||||
| 2021 | % | 2020 | % | Amount | % | |||||||||||||||||||
| Event Hosting | $ | 11,966,659 | 59 | % | $ | 6,932,911 | 50 | % | $ | 5,033,748 | 73 | % | ||||||||||||
| Event Planning and Execution | 6,724,615 | 33 | % | 6,177,834 | 45 | % | 546,781 | 9 | % | |||||||||||||||
| Brand Promotion | 1,456,929 | 7 | % | 542,179 | 4 | % | 914,750 | 169 | % | |||||||||||||||
| Other services | - | - | % | 188,278 | 1 | % | (188,278 | ) | (100 | )% | ||||||||||||||
| Total revenue | $ | 20,148,203 | 100 | % | $ | 13,841,202 | 100 | % | $ | 6,307,001 | 46 | % | ||||||||||||
Total revenue for the six months ended December 31, 2021 was US$20.15 million, representing an increase of US$ 6.31 million or 46% year-over-year.
Event hosting revenue for the six months ended December 31, 2021 was US$ 11.97 million and grew by 73% year-over-year. The increase was primarily caused by the increased number of live events (dance competitions, musical festivals, and promotional parties) for the PRC operating entities as well as an increase in average sponsorship fees.
Revenue from event planning and execution was US$6.72 million for the six months ended December 31, 2021, an increase of 9% year-over-year. The increase was primarily attributable to the size of the events the PRC operating entities undertook.
Revenue from brand promotion for the six months ended December 31, 2021 was US$1.46 million, an increase of 169% year-over-year. The increase was primarily caused by a brand promotion business contract undertaken by the PRC operating entities.
No other revenue from other services occurred in this period.
Cost of Revenue
The cost of revenue for six months ended December 31, 2021 increased by 61% to US$16.03 million from US$9.96 million of the previous period. Event hosting costs mainly include staff costs, venue rental fees, stage construction costs, actor performance compensations, online program production costs, and other miscellaneous expenses. The increase was proportionate to the rise in revenue due to the increased number of clients and more events executed.
The cost of revenue was derived from the following sources:
| For the Six Months Ended December 31, | Change | |||||||||||||||||||||||
| 2021 | % | 2020 | % | Amount | % | |||||||||||||||||||
| Event Hosting | $ | 8,956,898 | 56 | % | $ | 4,718,706 | 47 | % | $ | 4,238,192 | 90 | % | ||||||||||||
| Event Planning and Execution | 5,778,554 | 36 | % | 4,972,303 | 50 | % | 806,251 | 16 | % | |||||||||||||||
| Brand Promotion | 1,295,843 | 8 | % | 250,713 | 3 | % | 1,045,130 | 417 | % | |||||||||||||||
| Other services | - | - | % | 17,043 | - | % | (17,043 | ) | (100 | )% | ||||||||||||||
| Total Cost of revenue | $ | 16,031,295 | 100 | % | $ | 9,958,765 | 100 | % | $ | 6,072,530 | 61 | % | ||||||||||||
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Gross Profit and Gross Margin
Gross profit increased by 6% to US$4.12 million from US$3.88 million of the previous period. There was a 20% gross margin for the first six months of fiscal 2022, compared to 28% in the same period of 2021. The impact of the COVID-19 pandemic was the primary cause of the slight decrease in gross margin. The Company had to outsource part of the events to a third party.
The following table displays the gross profit:
| For the Six Months Ended December 31, | Change | |||||||||||||||||||||||||||||||
| 2021 | % | Gross Margin | 2020 | % | Gross Margin | Amount | % | |||||||||||||||||||||||||
| Event Hosting | $ | 3,009,761 | 73 | % | 25 | % | $ | 2,214,205 | 57 | % | 32 | % | $ | 795,556 | 36 | % | ||||||||||||||||
| Event Planning and Execution | 946,061 | 23 | % | 14 | % | 1,205,531 | 31 | % | 20 | % | (259,470 | ) | (22 | )% | ||||||||||||||||||
| Brand Promotion | 161,086 | 4 | % | 11 | % | 291,466 | 8 | % | 54 | % | (130,380 | ) | (45 | )% | ||||||||||||||||||
| Other services | - | - | % | - | % | 171,235 | 4 | % | 91 | % | (171,235 | ) | (100 | )% | ||||||||||||||||||
| Total gross profit | $ | 4,116,908 | 100 | % | 20 | % | $ | 3,882,437 | 100 | % | 28 | % | $ | 234,471 | 6 | % | ||||||||||||||||
Operating Expenses
Total operating expenses for the six months ended December 31, 2021 increased by 289.3% to US$3.04 million from US$0.78 million for the previous period. Operating expenses as a percentage of total revenue increased to 15.1% in the first half of fiscal 2022 from 5.6% in the same period of fiscal 2021.
The following table shows the breakdown of our operating expenses:
| For the Six Months Ended December 31, | Change | |||||||||||||||||||||||
| 2021 | % | 2020 | % | Amount | % | |||||||||||||||||||
| Selling and marketing expenses | $ | 193,720 | 6 | % | $ | 104,961 | 13 | % | $ | 88,759 | 85 | % | ||||||||||||
| General and administrative expenses | 2,844,154 | 94 | % | 675,325 | 87 | % | 2,168,829 | 321 | % | |||||||||||||||
| Total operating expenses | $ | 3,037,874 | 100 | % | $ | 780,286 | 100 | % | $ | 2,257,588 | 289 | % | ||||||||||||
| ● | Selling and marketing expenses for the six months ended December 31, 2021 were US$0.19 million, representing an increase of 85% year-over-year from US$0.10 million in the same period of last year. This increase was primarily due to the domain service fee of approximately US$0.04 million, salary and bonus growth in 2021 of approximately US$0.06 million, and increased travel expenses, which aligned with the increased revenue. |
| ● | General and administrative expenses for the six months ended December 31, 2021 were US$2.84 million, representing an increase of 321% year-over-year from US$0.68 million in the previous period. The increase was mainly due to the Company’s salary and bonus growth in 2021 of approximately US$0.1 million, the relevant expense for IPO of approximately US$0.6 million, and the increase of bad debt provisions of US$0.9 million. |
Operating Profit for the Period
Operating profit was US$0.96 million in the first six months of fiscal 2022, compared to US$3.05 million in the same period of fiscal 2021.
Income Tax Expenses
Income tax expenses amounted to US$512,259 and US$686,102 for the first six months of fiscal 2022 and fiscal 2021, respectively. The decrease resulted from the decreased taxable income.
Net Profit for the Period
Net profit attributable to the Company’s equity holders for the first six months of fiscal 2022 was US$0.45 million, compared to net profit of US$2.37 million in the same period of fiscal 2021.
5
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2021, the combined balance of the Company’s cash, cash equivalents, term deposits and short-term investments amounted to US$28.51 million, compared to US$1.32 million as of June 30, 2021. Cash injection by selling ordinary shares of the Company drove the increase.
Our principal sources of liquidity are cash and cash equivalents and cash flows generated from our operations. As of December 31, 2021, we had cash and cash equivalents of approximately US$28.5 million. In the amount of our cash and cash equivalents, US$3.2 million was held in financial institutions inside Mainland China and US$25.3 million was held in financial institutions outside of Mainland China.
We believe our current liquidity and capital resources are sufficient to meet anticipated working capital needs (net cash used in operating activities), commitments, and capital expenditures for at least the next twelve months. We may, however, require additional cash resources due to changes in business conditions and other future developments, or changes in general economic conditions.
Cash Generating Ability
Our cash flows were summarized below:
| For the Six Months Ended December 31, |
For the Six Months Ended December 31, |
|||||||
| 2021 | 2020 | |||||||
| Net cash (used in) generated from operating activities | (5,485,143 | ) | 77,099 | |||||
| Net cash (used in) generated from investing activities | (74,411 | ) | - | |||||
| Net cash generated from (used in) financing activities | 32,387,841 | 2,272,999 | ||||||
| Effect of exchange rates on cash | 362,729 | 190,760 | ||||||
Net Cash Provided by/(Used in) Operating Activities
Net cash used in operating activities was US$5.5 million for the six months ended December 31, 2021, compared to net cash provided by operation activities of US$0.8 million for the same period of last year. It was mainly attributable to net profit decrease from US$2.4 million in first six months of fiscal 2021 to US$0.4 million in the first six months of fiscal 2022 primarily due to the combined impact of significant increases in both operating costs and expenses.
In addition to the increase in operating costs and expenses, the decrease in net cash provided by operating activities was the result of the following major changes in our working capital and non-cash items:
| ● | A cash outflow of US$4.5 million from change in advance to suppliers for the six months ended December 31, 2021; and | |
| ● | A cash outflow of US$1.3 million from changes in deferred revenue for the six months ended December 31, 2021, compared with a cash outflow of $0.4 million for the same period in 2020. |
Net Cash Provided by/(Used in) Investing Activities
The net cash used in investing activities was US$0.7 million for the six months ended December 31, 2021, representing an increase of US$0.7 million in the first six months of fiscal 2022 compared to $nil in the same period of fiscal 2021, primarily attributable to a vehicle purchase.
Net Cash Provided by/(Used in) Financing Activities
The net cash generated from financing activities was US$32.4 million for the six months ended December 31, 2021, an increase of US$30.1 million compared to the same period of 2020. The increase was primarily attributable to the proceeds received in the amount of US$34.1 million from the Class A ordinary shares issued in July 2021.
EXCHANGE RATE
This report contains translations of certain RMB amounts into U.S. dollars (“USD,” “US$,” or $) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.3726 to US$1.00, the noon buying rate in effect on December 31, 2021, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.
OFF BALANCE SHEET ARRANGEMENTS
As of December 31, 2021, there were no off-balance sheet arrangements.
6
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In U.S. dollars, except share data)
| As of December 31 |
As of June 30 |
|||||||
| 2021 | 2021 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Advance to suppliers | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible asset, net | ||||||||
| Operating right-of-use asset | ||||||||
| Deferred tax assets | ||||||||
| Other non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term bank loans | $ | $ | ||||||
| Accounts payable | ||||||||
| Deferred revenue | ||||||||
| Taxes payable | ||||||||
| Due to a related party | ||||||||
| Accrued liabilities and other payables | ||||||||
| Operating lease liability - current | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Long-term bank loans | ||||||||
| Operating lease liability - non-current | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary Shares (par value $ |
||||||||
| Subscription receivable | ( |
) | ( |
) | ||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive (loss) income | ||||||||
| TOTAL POP CULTURE GROUP CO., LTD SHAREHOLDERS’ EQUITY | ||||||||
| Non-controlling interests | ||||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In U.S. dollars, except share data)
(UNAUDITED)
| For the Six Months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| REVENUE, NET | $ | $ | ||||||
| Cost of revenue | ||||||||
| GROSS PROFIT | ||||||||
| Selling and marketing | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| INCOME FROM OPERATIONS | ||||||||
| Other (expenses) income: | ||||||||
| Interest expenses, net | ( |
) | ( |
) | ||||
| Other (expenses) income, net | ||||||||
| Total other expenses, net | ( |
) | ( |
) | ||||
| INCOME BEFORE INCOME TAX PROVISION | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||
| NET INCOME | ||||||||
| Less: net income attributable to non-controlling interests | ||||||||
| NET INCOME ATTRIBUTABLE TO POP CULTURE GROUP CO., LTD SHAREHOLDERS | ||||||||
| Other comprehensive (loss) income: | ||||||||
| Foreign currency translation adjustment | ( |
) | ||||||
| COMPREHENSIVE INCOME | ||||||||
| Less: comprehensive income attributable to non-controlling interest | - | |||||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO POP CULTURE GROUP CO., LTD SHAREHOLDERS | $ | $ | ||||||
| Net income per share | ||||||||
| Basic and diluted | $ | $ | ||||||
| Weighted average shares used in calculating net income per share | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In U.S. dollars, except share data)
(UNAUDITED)
| Ordinary shares | Subscription | Additional paid-in | Retained | Statutory | Accumulated other comprehensive | Total Pop Culture Group Co., Ltd’s Shareholders’ | Non-Controlling | Total shareholders’ | ||||||||||||||||||||||||||||||||
| Shares | Amount | receivable | capital | earnings | reserve | (loss) income | Equity | Interests | Equity | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2019 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Issuance of additional shares | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net income for the period | - | |||||||||||||||||||||||||||||||||||||||
| Appropriation of statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2020 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||||
| Shares issued for acquisition of non-controlling interests | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net income for the period | - | - | - | |||||||||||||||||||||||||||||||||||||
| Appropriation of statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | $ | $ | - | $ | ||||||||||||||||||||||||||||
| Acquisition of Non-controlling interests | - | |||||||||||||||||||||||||||||||||||||||
| Net income for the period | - | - | - | |||||||||||||||||||||||||||||||||||||
| Appropriation of statutory reserve | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Foreign currency translation loss | - | ( | ) | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||||||
Balance, Dec 31, 2021
| ( | ) | - | |||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
9
POP CULTURE GROUP CO. LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars)
(UNAUDITED)
For the Six Months Ended December 31 | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Allowance for doubtful accounts | ||||||||
| Depreciation and amortization | ||||||||
| Deferred tax benefit | ( | ) | ||||||
| Non-cash lease expense | ( | ) | ||||||
| Loss from disposal of property and equipment | ( | ) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Advance to suppliers | ( | ) | ||||||
| Amounts due from related parties | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other non-current assets | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Taxes payable | ||||||||
| Accrued liabilities and other payables | ( | ) | ||||||
| Due to a related party | ( | ) | ||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term bank loans | ||||||||
| Repayments of short-term bank loans | ( | ) | ( | ) | ||||
| Proceeds from long-term bank loans | ( | ) | ||||||
| Contribution from shareholders | ||||||||
| Payment for deferred offering costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes | ||||||||
| Net increase (decrease) in cash | ||||||||
| Cash at beginning of year | ||||||||
| Cash at end of year | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Income tax paid | $ | $ | ||||||
| Interest expense paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Xiamen Pop Culture Co., Ltd (“Pop Culture”) was incorporated in Xiamen, China on March 29, 2007 under the laws of the People’s Republic of China (the “PRC” or “China”). Pop Culture hosts entertainment events and provides event planning and execution services and marketing services to corporate clients.
Pop Culture has four wholly-owned subsidiaries in the PRC as follows:
| ● | Shanghai Pudu Culture Communication Co., Ltd. (“Shanghai Pudu”), a company incorporated on March 30, 2017 in Shanghai, China; |
| ● | Xiamen Pop Network Technology Co., Ltd. (“Pop Network”), a company incorporated on June 6, 2017 in Xiamen, China; |
| ● | Guangzhou Shuzhi Culture Communication Co., Ltd (“Guangzhou Shuzhi,” previously named “Zhongjing Pop (Guangzhou) Culture Media Co., Ltd.”), a company incorporated on December 19, 2018 in Guangzhou, China; and |
| ● | Shenzhen Pop Culture Co., Ltd. (“Shenzhen Pop”), a company incorporated on January 17, 2020 in Shenzhen, China. |
Pop Culture also holds a
Reorganization
On January 3, 2020, Pop Culture Group Co., Ltd (“Pop Group” or the “Company”) was incorporated as an exempted company with limited liability under the laws of the Cayman Islands.
On January 20, 2020, Pop Culture (HK) Holding Limited (“Pop HK”) was established as a wholly-owned subsidiary of Pop Group formed in accordance with laws and regulations of Hong Kong. Pop HK is a holding company and holds all the equity interests of Heliheng Culture Co., Ltd. (“WFOE”), which was established in the PRC on March 13, 2020.
On March 30, 2020, WFOE entered
into a series of agreements with Pop Culture and the shareholders of Pop Culture who collectively held
Between February and May 2020, the Company and
its shareholders undertook a series of corporation actions, including share issuances in February 2020, re-designation of ordinary shares
of the Company, par value $
The above-mentioned transactions,
including the incorporation of Pop Group, Pop HK, and WFOE, the entry into the VIE Agreements, the share issuances, share re-designation,
and share transfers, were considered a reorganization of the Company (the “Reorganization”). After the Reorganization, Pop
Group ultimately owns
In accordance with ASC 805-50-25, the Reorganization has been accounted for as a recapitalization among entities under common control since the same controlling shareholder controls all these entities before and after the Reorganization. The consolidation of the Company and its subsidiaries and VIE have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements. Furthermore, ASC 805-50-45-5 indicates that the financial statements and financial information presented for prior years shall also be retrospectively adjusted to furnish comparative information.
Acquisition of non-controlling interest in VIE
On February 9, 2021, the Company issued
11
The consolidated financial statements of the Company included the following entities:
| Date of incorporation |
Place of incorporation |
Percentage of ownership |
Principal activities | |||||||
| The Company | Islands |
|||||||||
| Wholly owned subsidiaries | ||||||||||
| Pop HK | ||||||||||
| WFOE | ||||||||||
| VIE | ||||||||||
| Pop Culture | ||||||||||
| VIE’s subsidiaries | ||||||||||
| Shanghai Pudu | ||||||||||
| Pop Network | ||||||||||
| Guangzhou Shuzhi | ||||||||||
| Shenzhen Pop | ||||||||||
| Xiamen Sikai | ||||||||||
| Shenzhen Jam box Technology Co., Ltd. | ||||||||||
Risks in relation to the VIE structure
The Company believes that the contractual arrangements with its VIE and the respective shareholders of its VIE are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
| ● | revoke the business and operating licenses of the Company’s PRC subsidiary and its VIE; |
| ● | discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and its VIE; |
| ● | limit the Company’s business expansion in China by way of entering into contractual arrangements; |
| ● | impose fines or other requirements with which the Company’s PRC subsidiary and its VIE may not be able to comply; |
| ● | require the Company or the Company’s PRC subsidiary and its VIE to restructure the relevant ownership structure or operations; or |
| ● | restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance. |
12
The following financial statement amounts and balances of the VIE and its subsidiaries were included in the accompanying consolidated financial statements after elimination of intercompany transactions:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Total assets | $ | $ | ||||||
| Total liabilities | $ | $ | ||||||
| For the Six Months Ended, December 31, | ||||||||
| 2021 | 2020 | |||||||
| Total revenue | $ | $ | ||||||
| Net income | $ | $ | ||||||
| Net cash used in operating activities | $ | ( | ) | $ | ||||
| Net cash (used in) provided by investing activities | $ | $ | ||||||
| Net cash provided by financing activities | $ | ( | ) | $ | ||||
The Company believes that there are no assets in Pop Culture that can be used only to settle specific obligations of Pop Culture except for the registered capital of Pop Culture and non-distributable statutory reserves. As Pop Culture is incorporated as limited liability companies under the PRC Company Law, creditors of Pop Culture do not have recourse to the general credit of the Company for any of the liabilities of Pop Culture. There are no terms in any arrangements, explicitly or implicitly, requiring the Company or its subsidiaries to provide financial support to Pop Culture. However, if Pop Culture were ever to need financial support, the Company may, at its discretion and subject to statutory limits and restrictions, provide financial support to Pop Culture through loans.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the financial statements of the Company, its subsidiaries, its VIE, and subsidiaries of its VIE. All inter-company transactions and balances have been eliminated upon consolidation.
Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period and accompanying notes, including allowance for doubtful accounts, the useful lives of property and equipment and intangible asset, impairment of long-lived assets, deferred cost, and valuation for deferred tax assets. Actual results could differ from those estimates.
Recent accounting pronouncements
Recently issued ASUs by the FASB are not expected to have a significant impact on the Company’s consolidated results of operations or financial position. Other accounting standards that have been issued or proposed 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 Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows, or disclosures.
13
3. ACCOUNTS RECEIVABLE, NET
As of December 31, 2021 and June 30, 2021, accounts receivable consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Accounts receivable - gross | $ | $ | ||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The Company recorded bad debt expenses of
$
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of December 31, 2021 and June 30, 2021, prepaid expenses and other current assets consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Deferred costs (1) | $ | $ | ||||||
| Deferred offering costs | ||||||||
| Other receivables | ||||||||
| Allowance for doubtful accounts (2) | ( | ) | ( | ) | ||||
| $ | $ | |||||||
| (1) | Deferred costs represent the costs incurred to fulfill a contract with a customer which relates directly to a contract that the Company can specifically identify, generate, or enhance resources of the Company that will be used in satisfying performance obligations in the future as well as are expected to be recovered. |
| (2) | The Company reversed the bad debt expenses of $ |
5. PROPERTY AND EQUIPMENT
As of December 31, 2021 and June 30, 2021, property and equipment consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Leasehold improvement | $ | $ | ||||||
| Office equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
14
Depreciation
expenses were $
6. INTANGIBLE ASSET
As of December 31, 2021 and June 30, 2021, intangible asset consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Production copyright | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
The production copyright was purchased
from a third-party production provider in November 2018 for a total cash consideration of approximately $
For six months ended December 31, 2021 and six months ended December
31, 2020, amortization expense amounted to $
The following is a schedule, by fiscal years, of amortization amount of intangible asset as of December 31, 2021:
| 2022 | $ | ||||
| 2023 | |||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| Thereafter | |||||
| Total | $ |
7. ACCRUED LIABILITIES AND OTHER PAYABLES
As of December 31, 2021 and June 30, 2021, accrued liabilities and other payables consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Payroll payables | $ | $ | ||||||
| Other payables | ||||||||
| $ | $ | |||||||
15
8. TAXES PAYABLE
As of December 31, 2021 and June 30, 2021, taxes payable consisted of the following:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Corporate income tax | $ | $ | ||||||
| Value-added tax (“VAT”) | ||||||||
| Related surcharges on VAT payable | ||||||||
| $ | $ | |||||||
9. BANK LOANS
Bank loans represent the amounts due to various banks. As of December 31, 2021 and June 30, 2021, short-term and current portion of long-term banks consisted of the following:
Summary of short-term bank loans is as follows:
Annual Interest | As of December 31, | As of June 30, | ||||||||||||||
| Rate | Maturities | 2021 | 2021 | |||||||||||||
| Short-term loans: | ||||||||||||||||
| Industrial Bank Co., Ltd. (2) | % | $ | ||||||||||||||
| Xiamen International Bank (1) | % | |||||||||||||||
| Xiamen Bank (4) | % | |||||||||||||||
| Industrial Bank Co., Ltd. (2) | % | |||||||||||||||
| Xiamen Bank (1) | % | |||||||||||||||
| Xiamen Bank (1) | % | |||||||||||||||
| Bank of China Ltd. (3) | % | |||||||||||||||
| Subtotal | ||||||||||||||||
| Current portion of long-term loans: | ||||||||||||||||
| Bank of China Ltd. (3) | % | |||||||||||||||
| Bank of China Ltd. (3) | % | | ||||||||||||||
| Bank of China Ltd. (3) | % | |||||||||||||||
| Total | $ | $ | ||||||||||||||
Summary of long-term bank loans is as follows:
| Annual Interest | As of December 31, | As of June 30, | ||||||||||||||
| Rate | Maturities | 2021 | 2021 | |||||||||||||
| Long-term loans: | ||||||||||||||||
| Bank of China Ltd. (3) | % | $ | $ | |||||||||||||
| Bank of China Ltd. (3) | % | |||||||||||||||
| Bank of China Ltd. (3) | % | |||||||||||||||
| Total | $ | $ | ||||||||||||||
16
The weighted average interest rate on short-term
bank loans outstanding as of June 30, 2021 and December 31, 2021 was
| (1) |
| (2) |
| (3) |
| (4) |
10. RELATED PARTY TRANSACTIONS
As of June 30, 2021, the Company temporarily borrowed $
The Company had no other related party transactions for the period ended December 31, 2021 except for loan guarantees for the Company provided by Mr. Zhuoqin Huang and his spouse (see Note 9).
11. INCOME TAXES
Cayman Islands
The Company was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
Hong Kong
On March 21, 2018,
PRC
Generally, WFOE, Pop Culture, Shanghai Pudu, Pop Network, Guangzhou
Shuzhi, Shenzhen Pop, Xiamen Sikai, and Shenzhen Jam Box, which were incorporated in PRC, are subject to enterprise income tax on their
taxable income as determined under PRC tax laws and accounting standards at a rate of
17
i) The components of the income tax provision are as follows:
| For the Six Months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Current income tax provision | $ | $ | ||||||
| Deferred income tax benefit | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
The following table reconciles the statutory rate to the Company’s effective tax rate for the six months ended December 31, 2021 and 2020:
| For the Six Months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| China Statutory income tax rate | % | % | ||||||
| Permanent difference | % | % | ||||||
| Effect of favorable tax rates on small-scale and low-profit entities | % | ( | )% | |||||
| Effective tax rate | % | % | ||||||
The tax effect of temporary difference under ASC 740 “Accounting for Income Taxes” that gives rise to deferred tax asset as of December 31, 2021 and June 30, 2021 was as follows:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | $ | $ | ||||||
| Allowance for doubtful accounts | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ||||||||
| Total deferred tax assets, net | $ | $ | ||||||
12. LEASE
Supplemental balance sheet information related to the operating lease was as follows:
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liabilities - current | $ | $ | ||||||
| Operating lease liabilities - non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
18
The weighted average remaining lease terms and discount rates for the operating lease as of December 31, 2021 were as follows:
Remaining lease term and discount rate:
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % |
During the six months ended December 31, 2021
and December 31, 2020, the Company incurred total operating lease expenses of $
As of December 31, 2021, the future minimum rent payable under the non-cancelable operating lease for fiscal years ended December 31 were:
| 2022 | $ | |||
| 2023 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ |
13. ORDINARY SHARES
On January 3, 2020,
On April 28, 2020, shareholders of the Company
approved
On May 30, 2020, the Company issued
On May 30, 2020, the Company also
issued an aggregate of
On February 9, 2021, the Company
issued
The subscription receivable presents the receivable for the issuance of Ordinary Shares of the Company and is reported as a deduction of equity. Subscription receivable has no payment terms nor any interest receivable accrual.
14. STATUTORY RESERVE
WFOE, Pop Culture, Shanghai Pudu, Pop Network,
Guangzhou Shuzhi, Shenzhen Pop, and Xiamen Sikai are required to reserve
19
For the six months ended December 31, 2020 and 2021, the Company provided statutory reserve as follows:
| Balance - June 30, 2020 | $ | |||
| Appropriation to statutory reserve | ||||
| Balance - December 31, 2020 | ||||
| Appropriation to statutory reserve | ||||
| Balance - June 30, 2021 | ||||
| Appropriation to statutory reserve | ||||
| Balance - December 31, 2021 | $ |
15. RESTRICTED NET ASSETS
Relevant PRC laws
and regulations restrict WFOE, Pop Culture, and subsidiaries of Pop Culture from transferring a portion of their net assets, equivalent
to the balance of their paid-in-capital, additional paid-in-capital and statutory reserves to the Company in the form of loans, advances,
or cash dividends. Relevant PRC statutory laws and regulations permit the payments of dividends by WFOE, Pop Culture, and subsidiaries
of Pop Culture from their respective retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.
As of December 31, 2021 and June 30, 2021, the balance of restricted net assets was $
16. SUBSEQUENT EVENTS
The Company has evaluated events subsequent to the balance sheet date of December 31, 2021 through May 17, 2022, the date on which the consolidated financial statements were issued.
On March 20, 2022, Xiamen ZhongPuShuYuan Digital Technology Co., Ltd.
(“ZPSY”) was established with
On April 5, 2022, the Company appointed WWC, P.C (“WWC”). as its independent registered public accounting firm, effective on the same day. WWC replaced Friedman LLP (“Friedman”), the former independent registered public accounting firm of the Company, which the Company dismissed on April 5, 2022. The appointment of WWC and the dismissal of Friedman were made after careful consideration and evaluation process by the Company and were approved by the audit committee of the board of directors of the Company. The Company’s decision to make this change was not the result of any disagreement between the Company and Friedman on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. The audit report of Friedman on the consolidated financial statements of the Company as of June 30, 2020 and 2021 and for the fiscal years ended June 30, 2020 and 2021 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, scope of accounting principles.
On April 14, 2022, Pop Culture established a wholly-owned subsidiary, Hualiu Digital Entertainment (Beijing) International Cultural Media Co., Ltd. (“HLDE”). HLDE intends to develop the entertainment segment among the three major business units. Its main business involves music, performing arts agent, advertising design, digital copyright, and metaverse.
17. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
The Company performed a test on the restricted net assets of its consolidated subsidiaries, VIE, and VIE’s subsidiaries in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e)(3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial information for the parent company only.
The subsidiaries did not pay any dividend to the Company for the years presented. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The footnote disclosures contain supplemental information relating to the operations of the Company, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company.
As of December 31, 2021, the Company did not have significant capital commitments and other significant commitments, or guarantees, except for those which have been separately disclosed in the consolidated financial statements.
20
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY BALANCE SHEETS
| As of December 31, | As of June 30, | |||||||
| 2021 | 2021 | |||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Due from related party | - | |||||||
| TOTAL CURRENT ASSETS | ||||||||
| Investments in subsidiaries, consolidated VIE and VIE’s subsidiaries | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Other Payable | $ | $ | ||||||
| Due to a related party | ||||||||
| TOTAL CURRENT LIABILITIES | $ | $ | ||||||
| TOTAL LIABILITIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary shares (par value $ | ||||||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive (loss) income | ||||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
| * | Certain shares are presented on a retroactive basis to reflect the reorganization (see Note 13). |
21
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME
| For the Six Months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| General and administrative expenses | $ | $ | ||||||
| Financial expenses | ( | ) | ||||||
| Loss from operation | ||||||||
| Other income: | ||||||||
| Share of income of subsidiaries, consolidated VIE and VIE’s subsidiaries | ||||||||
| Income before income tax expense | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Other Comprehensive loss | ||||||||
| Foreign currency translation (loss) income | ( | ) | ||||||
| Total comprehensive income | $ | $ | ||||||
22
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Ordinary shares | Subscription | Additional paid-in | Retained | Accumulated other comprehensive | Total Shareholders’ | |||||||||||||||||||||||
| Shares* | Amount | receivable | capital | earnings | (loss) income | Equity | ||||||||||||||||||||||
| Balance as of June 30, 2019 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Issuance of additional shares | ( | ) | ||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of June 30, 2020 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||||||
| Acquisition of Non-controlling interests | - | - | ( | ) | ||||||||||||||||||||||||
| Net income for the period | - | - | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Balance as of June 30, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||
| Acquisition of Non-controlling interests | - | - | - | |||||||||||||||||||||||||
| Net income for the period | - | - | - | - | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | ||||||||||||||||||||
| * | Certain shares are presented on a retroactive basis to reflect the reorganization (see Note 13). |
23
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF CASH FLOWS
| For the Six Months Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net cash used in operating activities | $ | ( | ) | ( | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in a subsidiary | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Contribution from shareholders | ||||||||
| Payment for deferred offering costs | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | |||||||
24