Exhibit 99.2
Management’s discussion and analysis of
the financial condition and results of operations of Pop Culture Group Co., Ltd (the “Company,” “we,” “our,”
or “us”) for six months ended December 31, 2023 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 discussion contains forward-looking statements.
All statements contained in this discussion 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 conduct our business in mainland China through
the PRC operating entities. With 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 brand
promotion 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 mainland 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 285,000 and 209,000 during the six months ended December 31, 2023 and
2022, respectively, and their online hip-hop programs generated over 158 million and 592 million views during the six months ended December
31, 2023 and 2022, 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, 2023 and 2022, the PRC operating entities served 9 and 23 clients in 13 and 70 events with respect to
event planning and execution, respectively. Revenue for event hosting and event planning and execution decreased by 8% and 88% from
US$2.18 million and US$3.14 million for the six months ended December 31, 2022 to US$2.01 million and US$0.38 million for the six months
ended December 31, 2023, respectively, primarily due to the trend of online promotions and the economic
downturn in general in China.
The PRC operating entities provide brand promotion
services, such as trademark and logo design, visual identity system design, brand positioning, brand personality design, and digital solutions,
to corporate clients for service fees (“Brand Promotion”). Revenue for brand promotion increased by 280% from US$5.56 million
for the six months ended December 31, 2022 to US$21.14 million for the six months ended December 31, 2023, primarily attributable to their
cooperation with key opinion leaders (“KOLs”) and the trend of increasing in advertisers’ online promotion budgets.
We believe that the main reason corporate clients
hire the PRC operating entities to plan and execute events and provide brand promotion services geared towards the younger generation
is for their deep understanding of the taste and preferences of this generation (age between 14 to 28).
The PRC operating entities also sell digital collections
to individual collectors, provide music recording services to a corporate client and SaaS software services to hip-hop dance training
institutions for service fees, and distribute advertisements for corporate customers for service fees (“Other Services”).
Other revenue for the six months ended December 31, 2023 was US$0.48 million, which represents an increase of US$0.12 million, or 33%,
as compared to that in the six months ended December 31, 2022.
RECENT DEVELOPMENTS
On February 5, 2024, shareholders of the Company
held an extraordinary general meeting and approved (1) the increase of the authorized share capital of the Company from US$50,000 divided
into 4,400,000 Class A ordinary shares of par value US$0.01 each and 600,000 Class B ordinary shares of par value US$0.01 each, to US$60,000
divided into 5,400,000 Class A ordinary shares of par value US$0.01 each and 600,000 Class B ordinary shares of par value US$0.01 each,
and that (2) the re-designation and re-classification of 1,000,000 of its authorized but unissued Class A ordinary shares into Class C
ordinary shares such that the Company’s authorized share capital is US$60,000 divided into 4,400,000 Class A ordinary shares of
par value US$0.01 each, 600,000 Class B ordinary share of par value US$0.01 each, and 1,000,000 Class C ordinary shares of par value US$0.01
each.
On March 19, 2024, the Company entered into a
series of subscription agreements (collectively, the “Subscription Agreements”) with three purchasers, each an unrelated third
party to the Company (collectively, the “Purchasers”). Pursuant to the Subscription Agreements, the Purchasers agreed to subscribe
for and purchase, and the Company agreed to issue and sell to the Purchasers, an aggregate of 1,500,000 Class A ordinary shares of the
Company, par value $0.01 per share (the “Shelf Takedown Shares”), at a purchase price of $2.86 per share, and for an aggregate
purchase price of $4,290,000 (the “Shelf Takedown”). The Shelf Takedown Shares were offered under the Company’s registration
statement on Form F-3 (File No. 333-266130), initially filed with the U.S. Securities and Exchange Commission on July 14, 2022 and declared
effective on November 18, 2022 (the “F-3 Registration Statement”). A prospectus supplement to the F-3 Registration Statement
in connection with this Shelf Takedown was filed with the U.S. Securities and Exchange Commission on March 19, 2024. The Subscription
Agreements, the transactions contemplated thereby, and the issuance of the Shelf Takedown Shares were approved by the Company’s
board of directors. The closing of the transactions contemplated by the Subscription Agreements took place on March 21, 2024.
On March 26, 2024, shareholders of the Company
held an extraordinary general meeting and approved (1) a resolution pursuant to which each holder of Class B ordinary shares shall be
entitled to exercise 100 votes for each Class B ordinary share they hold (the “Class B Variation”), and (2) the increase of
the authorized share capital of the Company from US$60,000 divided into 4,400,000 Class A ordinary shares of par value US$0.01 each, 600,000
Class B ordinary shares of par value US$0.01 each and 1,000,000 Class C ordinary shares of par value US$0.01 each, to US$760,000 divided
into 64,400,000 Class A ordinary shares of par value US$0.01 each, 10,600,000 Class B ordinary shares of par value US$0.01 each and 1,000,000
Class C ordinary shares of par value US$0.01 each (the “Share Capital Increase”).
COVID-19 IMPACT
The COVID-19 pandemic
triggered the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended
to control the spread of the virus. The Chinese government 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, 2022 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, during certain periods or in certain cities, all of the offline events the PRC operating entities expected to host, plan,
or execute were suspended because government authorities imposed restrictions on large scale in-person gatherings, resulting in a significant
decrease in our revenue generated from event hosting and event planning and execution. The PRC operating entities also suffered a decrease
in the marketing business because of the sluggish demand for advertising and marketing activities during the six months ended December
31, 2022. The PRC operating entities also experienced difficulties in collecting accounts receivable during the six months ended December
31, 2022.
Although the pandemic control measures had been
lifted, our clients were still adversely affected by the effects of the pandemic during the six months ended December 31, 2023. The COVID-19
pandemic continued to adversely affect our business operations and condition and operating results for the six months ended December 31,
2023, including delays in execution of offline events, material negative impact on total revenue, slower collection of accounts receivable,
and additional allowance for doubtful accounts. However, we expect such effects to gradually phase-out in the following years.
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.
RESULTS OF OPERATIONS
Revenue
Following table presents our revenue by sources and proportion:
| | |
For the Six Months Ended December 31, | | |
Change | |
| | |
2023 | | |
% | | |
2022 | | |
% | | |
Amount | | |
% | |
| Event Hosting | |
$ | 2,007,048 | | |
| 8 | % | |
$ | 2,182,778 | | |
| 19 | % | |
$ | (175,730 | ) | |
| (8 | )% |
| Event Planning and Execution | |
| 377,997 | | |
| 2 | % | |
| 3,143,637 | | |
| 28 | % | |
| (2,765,640 | ) | |
| (88 | )% |
| Brand Promotion | |
| 21,140,921 | | |
| 88 | % | |
| 5,566,143 | | |
| 50 | % | |
| 15,574,778 | | |
| 280 | % |
| Other Services | |
| 482,497 | | |
| 2 | % | |
| 363,213 | | |
| 3 | % | |
| 119,284 | | |
| 33 | % |
| Total revenue | |
$ | 24,008,463 | | |
| 100 | % | |
$ | 11,255,771 | | |
| 100 | % | |
$ | 12,752,692 | | |
| 113 | % |
Total revenue for the six months ended December
31, 2023 was US$24.0 million, representing an increase of US$12.75 million, or 113%, compared to the same period in the prior year.
Revenue for event hosting and event planning and
execution decreased by 8% and 88% from US$2.18 million and US$3.14 million for the six months ended December 31, 2022 to US$2.01 million
and US$0.38 million for the six months ended December 31, 2023, respectively, primarily due to the
trend of online promotions and the economic downturn in general in China. As a result of the trends, more and more of our clients
cut down their offline events budgets, which resulted in the decrease of the demand on event planning and execution.
Revenue for brand promotion increased by 280% from US$5.56 million
for the six months ended December 31, 2022 to US$21.14 million for the six months ended December 31, 2023, primarily attributable to following
reasons: (i) we started to cooperate with key opinion leaders (“KOLs”) to conduct online promotion business in early 2023,
with a combined audience of approximately 71 million followers or viewers through 176 KOLs as of December 31, 2023; and (ii) we also benefited
from the trend of increasing in advertisers’ online promotion budgets.
Other revenue for the six months ended December
31, 2023 was US$0.48 million, which represents an increase of US$0.12 million, or 33%, as compared to that in the six months ended December
31, 2022. Other revenue includes software development services and digital collection sales. The increase mainly represents additional
software development services revenue incurred during the six months ended December 31, 2023, as this business became more mature after
a growing stage during the first few years.
Cost of Revenue
The cost of revenue for the six months ended December
31, 2023 increased by 63% to US$22.23 million from US$13.63 million of the previous period.
Cost of Event Hosting Revenue
Cost of event hosting revenue decreased by 71%
from US$6.12 million for the six months ended December 31, 2022 to US$1.77 million for the six months ended December 31, 2023, which was
due to the decrease in the revenue for event hosting, and higher investment in the promotion and implementation in the segment during
the six months ended December 31, 2022 to maintain a high level of scale and quality of its intellectual property.
Cost of Event Planning and Execution Revenue
Cost of event planning and execution revenue decreased
by 92% from US$2.64 million for the six months ended December 31, 2022 to US$0.21 million for the six months ended December 31, 2023,
which was generally in line with the decrease in the revenue for event planning and execution.
Cost of Brand Promotion Revenue
Cost of brand promotion revenue increased by 318%
from US$4.74 million for the six months ended December 31, 2022 to US$19.83 million for the six months ended December 31, 2023, which
was in line with the growth in the revenue for brand promotion.
Cost of other services
Cost of other services revenue increased by 279%
from US$0.11 million for the six months ended December 31, 2022 to US$0.43 million for the six months ended December 31, 2023, which was
resulted from the growth in the revenue for other services.
The cost of revenue was derived from the following sources:
| | |
For the Six Months Ended December 31, | | |
Change | |
| | |
2023 | | |
% | | |
2022 | | |
% | | |
Amount | | |
% | |
| Event Hosting | |
$ | 1,765,613 | | |
| 8 | % | |
$ | 6,124,146 | | |
| 45 | % | |
$ | (4,358,533 | ) | |
| (71 | )% |
| Event Planning and Execution | |
| 206,420 | | |
| 1 | % | |
| 2,644,865 | | |
| 19 | % | |
| (2,438,445 | ) | |
| (92 | )% |
| Brand Promotion | |
| 19,825,672 | | |
| 89 | % | |
| 4,744,569 | | |
| 35 | % | |
| 15,081,103 | | |
| 318 | % |
| Other Services | |
| 430,344 | | |
| 2 | % | |
| 113,623 | | |
| 1 | % | |
| 316,721 | | |
| 279 | % |
| Total Cost of revenue | |
$ | 22,228,049 | | |
| 100 | % | |
$ | 13,627,203 | | |
| 100 | % | |
$ | 8,600,846 | | |
| 63 | % |
Gross Profit and Gross Margin
Gross profit increased by US$4.18 million from
negative US$2.34 million in the six months ended December 31, 2022 to positive US$1.78 million in the six months ended 2023. Gross margin
was positive 12% in the six months ended December 31, 2023 compared to negative 21% in the six months ended December 31, 2022. The negative
margin during the six months ended December 31, 2022 primarily resulted from the negative margin in the segment of event hosting. During
the six months ended December 31, 2023, brand promotion contributed 74% of the total gross profit, which mainly resulted from the 88%
revenue contribution of this segment. However, the gross margin of this segment decreased to 6% during the six months ended December 31,
2023, from 15% for the previous period. The decrease was mainly due to the Company’s intention to lower the service price to expand
this segment to adapt to the industry trend of increased online promotion.
The following table displays the gross profit (loss):
| | |
For the Six Months Ended December 31, | | |
Change | |
| | |
2023 | | |
% | | |
Gross Margin | | |
2022 | | |
% | | |
Gross Margin | | |
Amount | | |
% | |
| Event Hosting | |
$ | 241,435 | | |
| 14 | % | |
| 12 | % | |
$ | (3,941,368 | ) | |
| 167 | % | |
| (181 | )% | |
$ | 4,182,803 | | |
| (106 | )% |
| Event Planning and Execution | |
| 171,577 | | |
| 10 | % | |
| 45 | % | |
| 498,772 | | |
| (21 | )% | |
| 16 | % | |
| (327,195 | ) | |
| (66 | )% |
| Brand Promotion | |
| 1,315,249 | | |
| 74 | % | |
| 6 | % | |
| 821,574 | | |
| (35 | )% | |
| 15 | % | |
| 493,675 | | |
| 60 | % |
| Other services | |
| 52,153 | | |
| 3 | % | |
| 11 | % | |
| 249,590 | | |
| (11 | )% | |
| 69 | % | |
| (197,437 | ) | |
| (79 | )% |
| Total gross profit (loss) | |
$ | 1,780,414 | | |
| 100 | % | |
| 12 | % | |
$ | (2,371,432 | ) | |
| 100 | % | |
| (21 | )% | |
$ | 4,151,846 | | |
| (175 | )% |
Operating Expenses
Total operating expenses for the six months ended
December 31, 2023 decreased by 26% to US$2.25 million from US$2.25 million for the six months ended December 31, 2022. Operating expenses
as a percentage of total revenue increased to 20.0% from 15.1% in the same period of last fiscal year.
The following table shows the breakdown of our operating expenses:
| | |
For the Six Months Ended December 31, | | |
Change | |
| | |
2023 | | |
% | | |
2022 | | |
% | | |
Amount | | |
% | |
| Selling and marketing expenses | |
$ | 236,900 | | |
| 6 | % | |
$ | 448,371 | | |
| 20 | % | |
$ | (211,471 | ) | |
| (47 | )% |
| General and administrative expenses | |
| 3,934,301 | | |
| 94 | % | |
| 1,800,312 | | |
| 80 | % | |
| 2,133,989 | | |
| 119 | % |
| Total operating expenses | |
$ | 4,171,201 | | |
| 100 | % | |
$ | 2,248,683 | | |
| 100 | % | |
$ | 1,922,518 | | |
| 85 | % |
| ● | Selling
and marketing expenses for the six months ended December 31, 2023 were US$0.24 million, representing a decrease of 47% year-over-year
from US$0.45 million in the same period of last fiscal year. This decrease was primarily due to the Company having laid-off some employees
of the department responsible for event planning and execution to adapt to the reduced demand in this segment (see “Results of
Operations—Revenues”) during the six months ended December 31, 2023. The lay-offs directly resulted in a decrease
in selling and marketing expenses of $0.25 million. |
| ● | General and administrative expenses for the six months ended December
31, 2023 were US$3.93 million, representing an increase of 119% year-over-year from US$1.80 million in the previous period. The increase
was mainly due to following reasons: (i) expenses for bad debt allowance increased by $1.1 million, resulting from our inability to collect
more receivables as a result of the reduction in demand in event planning and execution industry; and (ii) additional research and development
expenses incurred for online promotion and web3.0 related products. |
Operating Loss for the Period
Operating loss was US$2.39 million in the six
months ended December 31, 2023, compared to US$4.65 million in the same period of 2022.
Income Tax Expenses
Income tax expenses amounted to US$144,708 and
US$176,028 for the six months ended December 31, 2023 and 2022, respectively. The decrease resulted from the decreased taxable income.
Net Loss for the Period
Net loss attributable to the Company’s equity
holders for the six months ended December 31, 2023 was US$2.37 million, compared to a net loss of US$4.71 million in the same period of
2022.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2023, the combined balance
of the Company’s cash, cash equivalents, term deposits, and short-term investments amounted to US$3.11 million, compared to US$3.63
million as of June 30, 2023.
Our principal sources of liquidity are cash and cash equivalents and
cash flows generated from our operations. As of December 31, 2023, we had cash and cash equivalents of approximately US$1.69 million.
Of that amount, US$1.48 million was held in financial institutions inside Mainland China and US$0.21 million was held in financial institutions
outside of Mainland China. The Company is actively applying for new bank credit and expects to obtain a new credit line of not less than
RMB8 million (approximately $1.1 million) in 2024. 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 12 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 are summarized below:
| | |
For the
Six Months Ended
December 31, | | |
For the
Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | |
| Net cash used in operating activities | |
| (586,093 | ) | |
| (5,787,201 | ) |
| Net cash used in investing activities | |
| (552,605 | ) | |
| (7,457,178 | ) |
| Net cash provided by financing activities | |
| 110,067 | | |
| 796,554 | |
| Effect of exchange rates on cash | |
| (34,666 | ) | |
| (789,060 | ) |
Net Cash Used in Operating Activities
Net cash used in operating activities was US$0.59
million for the six months ended December 31, 2023, compared to net cash used in operating activities of US$5.8 million for the same period
of 2022.
Net Cash Used in Investing Activities
The net cash used in investing activities was
US$0.55 million for the six months ended December 31, 2023, representing a decrease of US$7.91 million as compared to $7.46 in the same
period of 2022. The cash used in investing activities for the six months ended December 31, 2023 mainly represented the cash outflows
for short-term investment of $0.5 million.
Net Cash Provided by Financing Activities
The net cash provided by financing activities
was US$0.11 million for the six months ended December 31, 2023, a decrease of US$0.69 million, as compared to US$0.80 million in the six
months ended December 31, 2022. The cash provided by financing activities for the six months ended December 31, 2023 mainly represented
the cash proceeds from short-term bank loans of $0.12 million.
EXCHANGE RATE
This report contains translations of certain RMB,
the legal currency in mainland China, amounts into U.S. dollars (“USD,” “US$,” 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 RMB7.0999
to US$1.00, the noon buying rate in effect on December 31, 2023, 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, 2023, there were no off-balance
sheet arrangements.
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In U.S. dollars, except the number of shares)
| | |
As of
December 31 | | |
As of
June 30 | |
| | |
2023 | | |
2023 | |
| ASSETS | |
| | |
| |
| CURRENT ASSETS: | |
| | |
| |
| Cash | |
$ | 1,688,012 | | |
$ | 2,751,309 | |
| Short-Term Investment | |
| 1,421,657 | | |
| 885,824 | |
| Accounts receivable, net | |
| 20,115,150 | | |
| 19,642,337 | |
| Advance to suppliers | |
| 11,619,485 | | |
| 8,864,972 | |
| Due from related parties | |
| - | | |
| 13,280 | |
| Prepaid expenses and other current assets | |
| 133,738 | | |
| 95,992 | |
| TOTAL CURRENT ASSETS | |
| 34,978,042 | | |
| 32,253,714 | |
| Property and equipment, net | |
| 506,603 | | |
| 844,614 | |
| Intangible assets, net | |
| 115,025 | | |
| 119,519 | |
| Operating right-of-use asset | |
| 61,910 | | |
| 84,892 | |
| Prepaid Taxes | |
| 628,309 | | |
| 621,990 | |
| Deferred tax assets | |
| 10,819 | | |
| - | |
| Other non-current assets | |
| 4,890,344 | | |
| 5,120,599 | |
| TOTAL ASSETS | |
$ | 41,191,052 | | |
$ | 39,045,328 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| CURRENT LIABILITIES: | |
| | | |
| | |
| Short-term bank loans | |
$ | 4,183,158 | | |
$ | 3,971,702 | |
| Long-term bank loans - current portion | |
| 415,499 | | |
| 1,158,413 | |
| Accounts payable | |
| 5,556,663 | | |
| 2,697,089 | |
| Deferred revenue | |
| 1,746,025 | | |
| 393,003 | |
| Taxes payable | |
| 4,327,585 | | |
| 4,327,182 | |
| Accrued liabilities and other payables | |
| 234,698 | | |
| 215,042 | |
| Operating lease liability - current | |
| 64,884 | | |
| 65,115 | |
| TOTAL CURRENT LIABILITIES | |
| 16,528,512 | | |
| 12,827,546 | |
| Long-term bank loans - non-current | |
| 739,447 | | |
| - | |
| Operating lease liability - non-current | |
| 13,351 | | |
| 39,634 | |
| TOTAL LIABILITIES | |
| 17,281,310 | | |
| 12,867,180 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Ordinary Shares (par value $0.01 per share; 4,400,000 Class A
Ordinary Shares authorized as of December 31, 2023 and June 30, 2023; 1,862,733 and 1,828,692 Class A Ordinary Shares issued and outstanding
as of December 31, 2023 and June 30, 2023, respectively; 600,000 Class B Ordinary Shares authorized, 576,308 Class B Ordinary Shares
issued and outstanding as of December 31, 2023 and June 30, 2023, respectively; 1,000,000 Class C Ordinary Shares authorized, nil
Class C Ordinary Shares issued and outstanding as of December 31, 2023 and June 30, 2023)* | |
| 24,390 | | |
| 24,050 | |
| Subscription receivable | |
| (15,441 | ) | |
| (15,441 | ) |
| Additional paid-in capital | |
| 40,173,920 | | |
| 40,174,260 | |
| Statutory reserve | |
| 1,537,228 | | |
| 1,537,228 | |
| Retained earnings | |
| (15,705,178 | ) | |
| (13,339,929 | ) |
| Accumulated other comprehensive (loss) income | |
| (1,411,004 | ) | |
| (1,644,872 | ) |
| TOTAL POP CULTURE GROUP CO., LTD SHAREHOLDERS’ EQUITY | |
| 24,603,915 | | |
| 26,735,296 | |
| Non-controlling interests | |
| (694,173 | ) | |
| (557,148 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | |
| 23,909,742 | | |
| 26,178,148 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | |
$ | 41,191,052 | | |
$ | 39,045,328 | |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(In U.S. dollars, except the number of shares)
(UNAUDITED)
| | |
For the Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | |
| REVENUE, NET | |
$ | 24,008,463 | | |
$ | 11,255,771 | |
| Cost of revenue | |
| 22,228,049 | | |
| 13,627,203 | |
| GROSS PROFIT (LOSS) | |
| 1,780,414 | | |
| (2,371,432 | ) |
| | |
| | | |
| | |
| Selling and marketing | |
| 236,900 | | |
| 448,371 | |
| General and administrative | |
| 3,934,301 | | |
| 1,800,312 | |
| Total operating expenses | |
| 4,171,201 | | |
| 2,248,683 | |
| | |
| | | |
| | |
| LOSS FROM OPERATIONS | |
| (2,390,787 | ) | |
| (4,620,115 | ) |
| | |
| | | |
| | |
| Other (expenses) income: | |
| | | |
| | |
| Interest expenses, net | |
| (105,442 | ) | |
| (222,208 | ) |
| Other (expenses) income, net | |
| 123,418 | | |
| 189,181 | |
| Total other income (expenses), net | |
| 17,976 | | |
| (33,027 | ) |
| | |
| | | |
| | |
| LOSS BEFORE INCOME TAX PROVISION | |
| (2,372,811 | ) | |
| (4,653,142 | ) |
| | |
| | | |
| | |
| PROVISION FOR INCOME TAXES | |
| 144,708 | | |
| 176,028 | |
| | |
| | | |
| | |
| NET LOSS | |
| (2,517,519 | ) | |
| (4,829,170 | ) |
| Less: net loss attributable to non-controlling interests | |
| (152,270 | ) | |
| (114,789 | ) |
| NET LOSS ATTRIBUTABLE TO POP CULTURE GROUP CO., LTD SHAREHOLDERS | |
| (2,365,249 | ) | |
| (4,714,381 | ) |
| | |
| | | |
| | |
| Other comprehensive (loss) income: | |
| | | |
| | |
| Foreign currency translation adjustment | |
| 249,113 | | |
| (875,608 | ) |
| COMPREHENSIVE LOSS | |
| (2,268,406 | ) | |
| (5,704,778 | ) |
| Less: comprehensive loss attributable to non-controlling interest | |
| (137,025 | ) | |
| (97,189 | ) |
| COMPREHENSIVE LOSS ATTRIBUTABLE TO POP CULTURE GROUP CO., LTD SHAREHOLDERS | |
$ | (2,131,381 | ) | |
$ | (5,607,589 | ) |
| | |
| | | |
| | |
| Net income per share | |
| | | |
| | |
Basic and diluted * | |
$ | (0.98 | ) | |
$ | (2.01 | ) |
| | |
| | | |
| | |
| Weighted average shares used in calculating net income per share * | |
| | | |
| | |
Basic and diluted | |
| 2,439,041 | | |
| 2,405,000 | |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’
EQUITY
(In U.S. dollars, except the number of shares)
(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, 2022 | |
| 2,405,000 | | |
$ | 24,050 | | |
$ | (15,441 | ) | |
$ | 40,158,643 | | |
$ | 11,028,345 | | |
$ | 1,499,369 | | |
$ | 69,019 | | |
$ | 52,763,985 | | |
$ | 8,367 | | |
$ | 52,772,352 | |
| Capital
contribution from shareholders | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 338,132 | | |
| 338,132 | |
| Acquisition
of Non-controlling interests | |
| - | | |
| - | | |
| - | | |
| 15,617 | | |
| - | | |
| - | | |
| - | | |
| 15,617 | | |
| (15,617 | ) | |
| - | |
| Net
income for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (24,330,415 | ) | |
| - | | |
| - | | |
| (24,330,415 | ) | |
| (927,281 | ) | |
| (25,257,696 | ) |
| Appropriation
of statutory reserve | |
| - | | |
| - | | |
| - | | |
| - | | |
| (37,859 | ) | |
| 37,859 | | |
| - | | |
| - | | |
| - | | |
| - | |
| Foreign
currency translation loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,713,891 | ) | |
| (1,713,891 | ) | |
| 39,251 | | |
| (1,674,640 | ) |
| Balance
June 30, 2023 | |
$ | 2,405,000 | | |
$ | 24,050 | | |
$ | (15,441 | ) | |
$ | 40,174,260 | | |
$ | (13,339,929 | ) | |
$ | 1,537,228 | | |
$ | (1,644,872 | ) | |
$ | 26,735,296 | | |
$ | (557,148 | ) | |
$ | 26,178,148 | |
| Capital
contribution from shareholders | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Fractional
shares on reverse stock split | |
| 34,041 | | |
| 340 | | |
| - | | |
| (340 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Net
income for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (2,365,249 | ) | |
| - | | |
| - | | |
| (2,365,249 | ) | |
| (152,270 | ) | |
| (2,517,519 | ) |
| Appropriation
of statutory reserve | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Foreign
currency translation loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 233,868 | | |
| 233,868 | | |
| 15,245 | | |
| 249,113 | |
| Balance
Dec 31, 2023 | |
| 2,439,041 | | |
| 24,390 | | |
| (15,441 | ) | |
| 40,173,920 | | |
| (15,705,178 | ) | |
| 1,537,228 | | |
| (1,411,004 | ) | |
| 24,603,915 | | |
| (694,173 | ) | |
| 23,909,742 | |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
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 | |
| | |
2023 | | |
2022 | |
| Cash flows from operating activities: | |
| | |
| |
| Net Loss | |
$ | (2,517,519 | ) | |
$ | (4,829,170 | ) |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |
| | | |
| | |
| Allowance for doubtful accounts | |
| 1,386,885 | | |
| 290,151 | |
| Depreciation and amortization | |
| 373,068 | | |
| 375,010 | |
| Amortization of operating lease right-of-use assets | |
| 24,330 | | |
| 91,984 | |
| Deferred tax benefit | |
| (10,617 | ) | |
| (72,538 | ) |
| Changes in assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (1,439,834 | ) | |
| 99,751 | |
| Advance to suppliers | |
| (2,572,054 | ) | |
| (1,518,385 | ) |
| Deferred COGS | |
| - | | |
| (319,884 | ) |
| Amounts due from related parties | |
| - | | |
| (1,369,415 | ) |
| Prepaid expenses and other current assets | |
| (35,407 | ) | |
| (541,764 | ) |
| Long-term deferred expenses | |
| - | | |
| (19,264 | ) |
| Other non-current assets | |
| 231,483 | | |
| (573 | ) |
| Accounts payable | |
| 2,749,836 | | |
| 1,238,772 | |
| Deferred revenue | |
| 1,319,581 | | |
| 715,885 | |
| Taxes payable | |
| (83,343 | ) | |
| 197,279 | |
| Accrued liabilities and other payables | |
| 15,710 | | |
| 72,710 | |
| Due to a related party | |
| - | | |
| (128,679 | ) |
| Operating lease liability | |
| (28,212 | ) | |
| (69,071 | ) |
| Net cash used in operating activities | |
| (586,093 | ) | |
| (5,787,201 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Purchase of property and equipment | |
| (16,771 | ) | |
| (1,467,243 | ) |
| Purchase of intangible assets | |
| - | | |
| (105,000 | ) |
| deposits for long-term assets | |
| - | | |
| (3,747,384 | ) |
| Investment (redemption) of long-term investment | |
| - | | |
| 566,318 | |
| Investment (redemption) of short-term investment | |
| (535,834 | ) | |
| (2,703,869 | ) |
| Net cash used in investing activities | |
| (552,605 | ) | |
| (7,457,178 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Proceeds from short-term bank loans | |
| 124,400 | | |
| 2,149,339 | |
| Repayments of short-term bank loans | |
| - | | |
| (1,490,208 | ) |
| Proceeds from long-term bank loans | |
| - | | |
| - | |
| Repayments of long-term bank loans | |
| (27,644 | ) | |
| (171,947 | ) |
| Contribution from shareholders | |
| - | | |
| 309,370 | |
| Repayments of related party loan | |
| 13,311 | | |
| - | |
| Net cash provided by financing activities | |
| 110,067 | | |
| 796,554 | |
| | |
| | | |
| | |
| Effect of exchange rate changes | |
| (34,666 | ) | |
| (789,060 | ) |
| | |
| | | |
| | |
| Net decrease in cash | |
| (1,063,297 | ) | |
| (13,236,885 | ) |
| Cash at beginning of year | |
| 2,751,309 | | |
| 14,396,032 | |
| Cash at end of year | |
$ | 1,688,012 | | |
$ | 1,159,147 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |
| | | |
| | |
| Income tax paid | |
$ | 52,789 | | |
$ | 294,894 | |
| Interest expense paid | |
$ | 108,853 | | |
$ | 114,685 | |
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements.
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 brand promotion services to corporate clients.
Pop Culture has seven wholly-owned subsidiaries in the PRC as follows:
| ● | Shanghai
Pupu Sibo Sports Technology Development Co., Ltd. (“Pupu Sibo,” formerly known as “Shanghai Pudu Culture Communications
Co., Ltd.”), 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,” formerly known as “Zhongjing Pop (Guangzhou) Culture Media
Co., Ltd.”), a company incorporated on December 19, 2018 in Guangzhou, China; |
| ● | Shenzhen
Pop Digital Industry Development Co., Ltd. (“Shenzhen Pop,” formerly known as “Shenzhen Pop Culture Co., Ltd.”),
a company incorporated on January 17, 2020 in Shenzhen, China; |
| ● | Hualiu
Digital Entertainment (Beijing) International Culture Media Co., Ltd. (“Hualiu Digital”), a company incorporated on April
14, 2022 in Beijing, China; |
| ● | Xiamen
Pupu Digital Technology Co., Ltd. (“Pupu Digital”), a company incorporated on June 20, 2022 in Xiamen, China; and |
| ● | Xiamen
Pop Shuzhi Culture Communication Co., Ltd. (“Xiamen Shuzhi”), a company incorporated on May 16, 2022 in Xiamen, China. |
Pop
Culture also indirectly held a 56 % equity interest in Shenzhen
Jam Box Technology Co., Ltd. (“Shenzhen Jam Box”), a joint venture incorporated on November 18, 2021 in Shenzhen, China. In
January 2024, Pop Culture sold out a 36% equity interest in Shenzhen
Jam Box and became a 20% equity shareholder of Shenzhen Jam Box. Wanquan Yi, the legal representative and executive director of Shenzhen
Pop Digital Industry Development Co., Ltd., Shenzhen HipHopJust Information Technology Co., Ltd., and Zhaowei Wu, two unrelated third
parties, collectively hold 80% of the equity interests in Shenzhen Jam Box.
Pop Culture indirectly holds a 51% controlling
interest in Zhongpu Shuyuan (Xiamen) Digital Technology Co., Ltd. (“Zhongpu Shuyuan”), a joint venture incorporated on March
30, 2022 in Xiamen, China, while three unrelated parties own the remaining 49% interests.
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 93.55% of the shares in Pop Culture, including
an Exclusive Services Agreement, an Exclusive Option Agreement, a Share Pledge Agreement, Powers of Attorney, and Spousal Consents (collectively
the “VIE Agreements”). All the above contractual arrangements obligate WFOE to absorb a majority of the risk of loss from
business activities of Pop Culture and entitle WFOE to receive a majority of its residual returns. In essence, WFOE has gained effective
control over Pop Culture. Therefore, the Company believes that Pop Culture should be considered as a variable interest entity (“VIE”)
under the Statement of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
810 “Consolidation.”
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 $0.001 per share (“Ordinary Shares”), into Class A and Class B Ordinary Shares in April 2020,
and share issuances and transfers in May 2020. See “Note 13—Ordinary Shares.”
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 100% equity interests of Pop HK and WFOE, which further has effective control over the operating entities, Pop Culture, and
its subsidiaries through the VIE Agreements.
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 1,065,089 Class
A Ordinary Shares to non-controlling shareholders of Pop Culture to acquire their 6.45% non-controlling interests in Pop Culture.
See “Note 13—Ordinary Shares.” On February 19, 2021, the VIE Agreements were amended and restated, through which WFOE
gained 100% control over Pop Culture. WFOE is obliged to absorb all risk of loss from business activities of Pop Culture and is entitled
to receive all its residual returns. Upon the above transactions, the Company consummated the acquisition of non-controlling interests
in Pop Culture, and Pop Culture does not have any non-controlling interests anymore.
The consolidated financial statements of the Company included the following
entities (subsequent changes on equity holding of the entities were not included below):
| |
|
Date of
incorporation |
|
Place of
incorporation |
|
Percentage of
ownership |
|
Principal activities |
| The Company |
|
January 3, 2020 |
|
Cayman Islands |
|
100% |
|
Parent Holding |
| Wholly owned subsidiaries |
|
|
|
|
|
|
|
|
| Pop HK |
|
January 20, 2020 |
|
Hong Kong |
|
100% |
|
Investment holding |
| WFOE |
|
March 13, 2020 |
|
PRC |
|
100% |
|
WFOE, consultancy and information technology support |
| Pop Culture Global Operations Inc. |
|
December 3, 2021 |
|
California |
|
100% |
|
Overseas hip-hop resource integration and business development |
| Xiamen
Pop Investment Co., Ltd. (“Pop Investment”) |
|
January 25, 2022 |
|
PRC |
|
60% owned by Heliheng; 40% owned by the VIE |
|
Cross-border funds management |
| Fujian Pupu Shuzhi Sports Industry Development Co., Ltd. (“Shuzhi Sports”) |
|
July 21, 2022 |
|
PRC |
|
100% |
|
Holding sports performance activities |
| VIE |
|
|
|
|
|
|
|
|
| Pop Culture |
|
March 29, 2007 |
|
PRC |
|
VIE |
|
Event planning, execution, and hosting |
| VIE’s subsidiaries |
|
|
|
|
|
|
|
|
| Pupu Sibo |
|
March 30, 2017 |
|
PRC |
|
100% owned by VIE |
|
Event planning and execution |
| Pop Network |
|
June 6, 2017 |
|
PRC |
|
100% owned by VIE |
|
Marketing |
| Guangzhou Shuzhi |
|
December 19, 2018 |
|
PRC |
|
100% owned by VIE |
|
Event planning and execution |
| Shenzhen Pop |
|
January 17, 2020 |
|
PRC |
|
100% owned by VIE |
|
Event planning and execution |
| Pupu Digital |
|
June 20, 2022 |
|
PRC |
|
100% owned by the VIE |
|
Acting broker and self-branding development |
| Zhongpu Shuyuan |
|
March 30, 2022 |
|
PRC |
|
51% owned by the VIE |
|
Digital collection and Metaverse |
| Shenzhen Jam box Technology Co., Ltd. |
|
November 18, 2020 |
|
PRC |
|
56% owned by VIE |
|
Event planning and execution |
| Xiamen
Pop Shuzhi Culture Communication Co., Ltd. (“Xiamen Shuzhi”) |
|
May 16, 2022 |
|
PRC |
|
100% owned by the VIE |
|
Online and offline advertising marketing and exhibitions |
| Hualiu Digital |
|
April 14, 2022 |
|
PRC |
|
100% owned by the VIE |
|
Digital Entertainment |
Risks in relation to the VIE structure
The Company believes that the VIE Agreements 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 VIE Agreements. If the legal structure and the VIE Agreements 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. |
The following financial statement amounts and
balances of the VIE and its subsidiaries were included in the accompanying consolidated financial statements after the elimination of
intercompany transactions:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| | |
| | |
| |
| Total assets | |
$ | 31,026,866 | | |
$ | 16,775,802 | |
| Total liabilities | |
$ | 27,308,942 | | |
$ | 12,336,610 | |
| | |
For the
Six Months Ended,
December 31, | |
| | |
2023 | | |
2022 | |
| Total revenue | |
$ | 24,008,463 | | |
$ | 8,727,933 | |
| Net loss | |
$ | (648,451 | ) | |
$ | (4,118,522 | ) |
| | |
| | | |
| | |
| Net cash (used in) provided by operating activities | |
$ | (1,294,161 | ) | |
$ | 2,063,270 | |
| Net cash used in investing activities | |
$ | (16,771 | ) | |
$ | (4,753,309 | ) |
| Net cash provided by financing activities | |
$ | 2,037,165 | | |
$ | 796,554 | |
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 a limited liability company 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 Accounting Standards Updates (“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.
3. ACCOUNTS RECEIVABLE, NET
As of December 31, 2023 and June 30, 2023, accounts receivable consisted
of the following:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Accounts receivable - gross | |
$ | 25,979,344 | | |
$ | 24,000,374 | |
| Allowance for doubtful accounts | |
| (5,864,194 | ) | |
| (4,358,037 | ) |
| Accounts receivable, net | |
$ | 20,115,150 | | |
$ | 19,642,337 | |
The Company recorded bad debt expenses of
$1,386,885 and $290,138 for the six months ended December 31, 2023 and 2022, respectively.
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of December 31, 2023 and June 30, 2023, prepaid expenses and other
current assets consisted of the following:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Deferred costs (1) | |
$ | 738 | | |
$ | 683 | |
| Other receivables | |
| 147,085 | | |
| 109,100 | |
| | |
| 147,823 | | |
| 109,783 | |
| Allowance for doubtful accounts (2) | |
| (14,085 | ) | |
| (13,791 | ) |
| | |
$ | 133,738 | | |
$ | 95,992 | |
5. PROPERTY AND EQUIPMENT
As of December 31, 2023 and June 30, 2023, property and equipment consisted
of the following:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Leasehold improvement | |
$ | 960,232 | | |
$ | 939,825 | |
| Building | |
| 466,488 | | |
| 456,748 | |
| Office equipment | |
| 134,497 | | |
| 115,314 | |
| | |
| 1,561,217 | | |
| 1,511,887 | |
| Less: accumulated depreciation | |
| (1,054,614 | ) | |
| (667,273 | ) |
| | |
$ | 506,603 | | |
$ | 844,614 | |
Depreciation expenses were $366,157 and $46,195 for
the six months ended December 31, 2023 and 2022, respectively.
6. INTANGIBLE ASSETS
As of December 31, 2023 and June 30, 2023, intangible assets consisted
of the following:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Copyright licenses | |
$ | 2,005,550 | | |
$ | 1,963,676 | |
| SaaS | |
| 140,847 | | |
| 137,906 | |
| | |
| 2,146,397 | | |
| 2,101,582 | |
| Less: accumulated amortization | |
| (945,033 | ) | |
| (918,405 | ) |
| Less: impairment for production copyright | |
| (1,086,339 | ) | |
| (1,063,658 | ) |
| | |
$ | 115,025 | | |
$ | 119,519 | |
Acquired intangible assets are recognized based
on their cost to the Company, which generally includes the transaction costs of the asset acquisition. These assets are amortized over
their useful lives if the assets are deemed to have a finite life and they are reviewed for impairment by testing for recoverability whenever
events or changes in circumstances indicate that their carrying amount may not be recoverable. The fair value of an intangible asset is
the amount that would be determined if the entity used the assumptions that market participants would use if they were pricing the intangible
asset. The useful life of the Company’s intangible assets is 10 years, which is determined by using the time period that an intangible
is estimated to contribute directly or indirectly to the Company’s future cash flows.
Currently the MOVE IT project organized by the
PRC operating entities, the first street dance stage play in China, is losing money; the carrying value of the amortizable intangible
asset could not be recovered due to the poor financial performance, including declining customer numbers. The Company recognized a $1.0
million impairment loss for the production copyright.
For the six months ended December 31, 2023 and
2022, amortization expenses amounted to $6,911 and $146,055, respectively.
The following is a schedule, by fiscal year, of
the amortization amount of intangible assets as of December 31, 2023:
| By December 31, 2024 | |
$ | 14,085 | |
| By December 31, 2025 | |
| 14,085 | |
| By December 31, 2026 | |
| 14,085 | |
| By December 31, 2027 | |
| 14,085 | |
| By December 31, 2028 | |
| 14,085 | |
| Thereafter | |
| 44,600 | |
| Total | |
$ | 115,025 | |
7. ACCRUED LIABILITIES AND OTHER PAYABLES
As of December 31, 2023 and June 30, 2023, accrued liabilities and
other payables consisted of the following:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Payroll payables | |
$ | 136,964 | | |
$ | 92,856 | |
| Other payables | |
| 97,734 | | |
| 122,186 | |
| | |
$ | 234,698 | | |
$ | 215,042 | |
8. TAXES PAYABLE
As of December 31, 2023 and June 30, 2023, taxes
payable consisted of the following:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Corporate income tax | |
$ | 3,636,001 | | |
$ | 3,495,646 | |
| Value-added tax (“VAT”) | |
| 641,095 | | |
| 828,488 | |
| Related surcharges on VAT payable | |
| 7,821 | | |
| 108 | |
| IIT | |
| 8,977 | | |
| 702 | |
| Other tax | |
| 33,691 | | |
| 2,238 | |
| | |
$ | 4,327,585 | | |
$ | 4,327,182 | |
9. BANK LOANS
Bank loans represent the amounts due to various
banks. As of December 31, 2023 and June 30, 2023, short-term and long-term bank loans consisted of the following:
Summary of short-term bank loans
| | |
Annual
Interest | | |
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
Rate | | |
Maturities | | |
2023 | | |
2023 | |
| Short-term loans: | |
| | |
| | |
| | |
| |
| Bank of China Ltd. (3) | |
| 4.25 | % | |
| May 18, 2024 | | |
$ | 943,675 | | |
$ | 979,135 | |
| Industrial Bank Co., Ltd. | |
| 4.80 | % | |
| December 7, 2023 | | |
| - | | |
| 1,379,063 | |
| China Merchants Bank (4) | |
| 4.93 | % | |
| March 29, 2024 | | |
| - | | |
| 372,347 | |
| Xiamen Bank (1) | |
| 4 | % | |
| June 25,2024 | | |
| 563,388 | | |
| 551,625 | |
| Industrial and Commercial Bank (5) | |
| 3.65 | % | |
| September 23, 2023 | | |
| - | | |
| 689,532 | |
| Industrial and Commercial Bank of China (3) | |
| 3.65 | % | |
| August 30, 2024 | | |
| 704,235 | | |
| - | |
| Xiamen International Bank (1) | |
| 4.50 | % | |
| October 8, 2024 | | |
| 845,083 | | |
| - | |
| Industrial Bank Co., Ltd. | |
| 4.80 | % | |
| December 26, 2024 | | |
| 1,126,777 | | |
| - | |
| Total | |
| | | |
| | | |
$ | 4,183,158 | | |
$ | 3,971,702 | |
| Current portion of long-term loans: | |
| | | |
| | | |
| | | |
| | |
| Bank of China Ltd. (3) | |
| 3.80 | % | |
| November 26, 2023 | | |
$ | - | | |
$ | 330,975 | |
| Bank of China Ltd. (3) | |
| 4.15 | % | |
| December 29, 2023 | | |
| - | | |
| 772,275 | |
| Bank of China Ltd. (3) | |
| 5.10 | % | |
| April 15, 2024 | | |
| 169,017 | | |
| 55,163 | |
| Bank of China Ltd. (3) (6) | |
| 4.35 | % | |
| December 3, 2026 | | |
| 246,482 | | |
| - | |
| Total | |
| | | |
| | | |
$ | 415,499 | | |
$ | 1,158,413 | |
| | |
| | | |
| | | |
$ | 4,598,657 | | |
$ | 5,130,115 | |
Summary of long-term bank loans
| | |
Annual
Interest | | |
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
Rate | | |
Maturities | | |
2023 | | |
2023 | |
| Non-current portion of long-term loans: | |
| | |
| | |
| | |
| |
| Bank of China Ltd. (3) (6) | |
| 4.35 | % | |
| December 3, 2026 | | |
$ | 739,447 | | |
$ | - | |
| Total | |
| | | |
| | | |
$ | 739,447 | | |
$ | - | |
The weighted average interest rate on short-term
bank loans outstanding as of December 31, 2023 and June 30, 2023 was 4.31% and 4.53%, respectively. The effective interest rate for bank
loans was approximately 4.23% and 4.74% for the six months ended December 31, 2023 and 2022, respectively.
| (2) | On
February 4, 2021, Pop Culture entered into a factoring agreement with Industrial Bank Co., Ltd. and received a total of RMB10,000,000 (equivalent
to $1,548,491) on February 4, 2021 by factoring the receivables due from customers of RMB13,000,000 (equivalent to $2,013,038),
for which Industrial Bank Co., Ltd. had the right of recourse to Pop Culture. The factoring was guaranteed by Mr. Zhuoqin Huang, the
chief executive office of the Company. Subsequently, the loans from Industrial Bank Co., Ltd were repaid on September 17, 2021 with the
collections of receivables due from customers. |
10.
RELATED PARTY TRANSACTIONS
Amount due from a related party
| Name of Related Party | |
Relationship | |
Nature | |
Repayment
terms | |
December 31,
2023 | | |
June 30,
2023 | |
| Weiyi Lin | |
Director of the Company | |
Account receivables | |
Repayment in demand | |
$ | - | | |
$ | 13,280 | |
| | |
| |
| |
| |
$ | - | | |
$ | 13,280 | |
Related party transaction
During the six months ended December 31, 2023,
Mr. Zhuoqin Huang, CEO of the Company guaranteed the long-term bank loan of $985,929 for the Company.
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, the Hong Kong Legislative
Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) which introduces the two-tiered profits tax rates
regime. The Bill was signed into law on March 28, 2018 and was announced on the following day. Under the two-tiered profits tax rates
regime, the first 2 million Hong Kong Dollar (“HKD”) of profits of the qualifying group entity will be taxed at 8.25%,
and profits above HKD2 million will be taxed at 16.5%.
PRC
Generally, WFOE, Pop Investment, Shuzhi Sports, Pop Culture, Pupu Sibo,
Pop Network, Guangzhou Shuzhi, Shenzhen Pop, Shenzhen Jam Box, Hualiu Digital, Zhongpu Shuyuan, Xiamen Shuzhi, and Pupu Digital,
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 25%.
According to Taxation 2019 No. 13, which was effective
from January 1, 2019 to December 31, 2021, an enterprise is recognized as a small-scale and low-profit enterprise when its taxable income
is less than RMB3 million. A small-scale and low-profit enterprise receives a tax preference, including a preferential tax rate of 5%
on its taxable income below RMB1 million and another preferential tax rate of 10% on its taxable income between RMB1 million
and RMB3 million. In 2021, the preferential tax rate was reduced by half. During the six months ended December 31, 2023, Pop
Network qualified as a small-scale and low-profit enterprise.
i) The components of the income tax
provision are as follows:
| | |
For the
Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | |
| Current income tax provision | |
$ | 155,325 | | |
$ | 193,212 | |
| Deferred income tax benefit | |
| (10,617 | ) | |
| (17,184 | ) |
| Total | |
$ | 144,708 | | |
$ | 176,028 | |
The following table reconciles the statutory rate
to the Company’s effective tax rate for the six months ended December 31, 2023 and 2022:
| | |
For
the Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | |
| China Statutory income tax rate | |
| 25.00 | % | |
| 25.00 | % |
| Temporary difference | |
| 25.73 | % | |
| - | % |
| Permanent difference | |
| (0.37 | )% | |
| (0.18 | )% |
| Effect of different tax jurisdiction | |
| (14.75 | )% | |
| - | % |
| Effect of favorable tax rates on small-scale and low-profit entities | |
| 0.43 | % | |
| (0.31 | )% |
| Valuation allowance | |
| (42.13 | )% | |
| (28.30 | )% |
| Effective tax rate | |
| (6.09 | )% | |
| (3.79 | )% |
The tax effect of temporary difference under ASC
740 “Accounting for Income Taxes” that gives rise to deferred tax assets as of December 31, 2023 and June 30, 2023 was as
follows:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| | |
| | |
| |
| Deferred tax assets: | |
| | |
| |
| Net operating loss carry forwards | |
$ | 2,598,013 | | |
$ | 3,266,711 | |
| Allowance for doubtful accounts | |
| 1,506,510 | | |
| 1,092,957 | |
| Total deferred tax assets | |
| 4,104,523 | | |
| 4,359,668 | |
| Valuation allowance | |
| (4,093,704 | ) | |
| (4,359,668 | ) |
| Total deferred tax assets, net | |
$ | 10,819 | | |
$ | - | |
12. LEASE
Supplemental balance sheet information related to the operating lease
was as follows:
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| Right-of-use assets | |
$ | 61,910 | | |
$ | 84,892 | |
| | |
| | | |
| | |
| Operating lease liabilities - current | |
$ | 64,884 | | |
$ | 65,115 | |
| Operating lease liabilities - non-current | |
| 13,351 | | |
| 39,634 | |
| Total operating lease liabilities | |
$ | 78,235 | | |
$ | 104,749 | |
The weighted average remaining lease terms and
discount rates for the operating lease as of December 31, 2023 were as follows:
Remaining lease term and discount rate:
| Weighted average remaining lease term (years) | |
| 1.17 | |
| Weighted average discount rate | |
| 6.92 | % |
During the six months ended December 31, 2023
and 2022, the Company incurred total operating lease expenses of $43,390 and $91,984, respectively.
As of December 31, 2023, the future minimum rent
payable under the non-cancellable operating lease for fiscal years ended December 31 were:
| 2024 | |
$ | 68,162 | |
| 2025 | |
| 13,468 | |
| Total lease payments | |
| 81,630 | |
| Less: imputed interest | |
| (3,395 | ) |
| Present value of lease liabilities | |
$ | 78,235 | |
13.
ORDINARY SHARES
On February 9, 2021, the Company issued 106,509 Class
A Ordinary Shares to non-controlling shareholders of Pop Culture to acquire their 6.45% non-controlling interests in Pop Culture,
which resulted in Pop Culture becoming a VIE fully controlled by the Company. The Company has accounted this acquisition of non-controlling
interest as an equity transaction with no gain or loss recognized in accordance with ASC 810-10-45.
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.
On July 2, 2021, the Company closed its initial
public offering of 620,000 Class A Ordinary Shares. The Class A Ordinary Shares were priced at $60.0 per share, and the offering was conducted
on a firm commitment basis. The Company received an aggregate amount of $34,839,398, representing payment in full to the Company of the
purchase price for 620,000 shares in the aggregate amount of $37,200,000 less underwriting discounts and expenses pursuant to the underwriting
agreement dated June 30, 2021.
Effective on October 27, 2023, the Company
conducted a share consolidation of the Company’s issued and unissued Class A and Class B ordinary shares (the “Share Consolidation”).
As a result of the Share Consolidation, each 10 Class A and Class B ordinary shares, par value US$0.001 per share, outstanding were automatically
combined and converted into one issued and Outstanding ordinary share, par value US$0.01 per share, without any action on the part of
the shareholders. All share numbers and per share amount as mentioned in the financial statements and the disclosure notes have been changed
retrospectively to reflect the Share Consolidation.
14. STATUTORY RESERVE
WFOE, Pop Investment, Shuzhi Sports, Pop Culture, Pupu Sibo, Pop Network,
Guangzhou Shuzhi, Shenzhen Pop, Shenzhen Jam Box, Hualiu Digital, Zhongpu Shuyuan, Xiamen Shuzhi, and Pupu Digital are required to
reserve 10% of their net profit after income tax, as determined in accordance with the PRC accounting rules and regulations. Appropriation
to the statutory reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each
year. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation
is made to the statutory reserve. Appropriation to the statutory reserve must be made before the distribution of dividends to shareholders.
The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable
in the form of cash dividends.
For the six months ended December 31, 2023, the
Company provided statutory reserve as follows:
| Balance - June 30, 2022 | |
| 1,499,369 | |
| Appropriation to statutory reserve | |
| 37,859 | |
| Balance - June 30, 2023 | |
$ | 1,537,228 | |
| Appropriation to statutory reserve | |
| - | |
| Balance — December 31, 2023 | |
$ | 1,537,228 | |
15. RESTRICTED NET ASSETS
Relevant PRC laws and regulations restrict WFOE,
Pop Culture, and the 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 the 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, 2023 and June
30, 2023, the balance of restricted net assets was $16,610,518 and $16,378,052, respectively.
16. SUBSEQUENT EVENTS
On March 19, 2024, the Company entered into a
series of subscription agreements (collectively, the “Subscription Agreements”) with three purchasers, each an unrelated third
party to the Company (collectively, the “Purchasers”). Pursuant to the Subscription Agreements, the Purchasers agreed to subscribe
for and purchase, and the Company agreed to issue and sell to the Purchasers, an aggregate of 1,500,000 Class A ordinary shares of the
Company, par value $0.01 per share (the “Shelf Takedown Shares”), at a purchase price of $2.86 per share, and for an aggregate
purchase price of $4,290,000. The Shelf Takedown Shares were offered under the Company’s registration statement on Form F-3 (File
No. 333-266130), initially filed with the U.S. Securities and Exchange Commission on July 14, 2022 and declared effective on November
18, 2022. The transaction closed on March 21, 2024.
An extraordinary general meeting of shareholders
of the Company was held on March 26, 2024. It was resolved, by way of special resolution passed by the holders of the Company’s
issued and outstanding Class A ordinary shares, that each holder of Class B ordinary shares shall be entitled to exercise 100 votes for
each Class B ordinary share they hold (the “Class B Variation”). The Company separately obtained a written consent from the
shareholders holding not less than two-thirds of issued Class B ordinary to the Class B Variation. It was further resolved, as an ordinary
resolution, that the authorized share capital of the Company be increased from US$60,000 divided into 4,400,000 Class A ordinary shares
of par value US$0.01 each, 600,000 Class B ordinary shares of par value US$0.01 each and 1,000,000 Class C ordinary shares of par value
US$0.01 each, to US$760,000 divided into 64,400,000 Class A ordinary shares of par value US$0.01 each, 10,600,000 Class B ordinary shares
of par value US$0.01 each and 1,000,000 Class C ordinary shares of par value US$0.01 each.
The Company has evaluated subsequent events through
the date the financial statements were available to be issued. Other than the above events, no other matters were identified affecting
the accompanying financial statements or related disclosures.
17. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
The Company performed a test on the restricted
net assets of its consolidated subsidiaries, the VIE, and the 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 dividends 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, 2023, 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.
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY BALANCE SHEETS
| | |
As of
December 31, | | |
As of
June 30, | |
| | |
2023 | | |
2023 | |
| ASSETS | |
| | |
| |
| Cash | |
$ | 192,894 | | |
$ | 1,095,007 | |
| Prepaid expenses and other current assets | |
| 2,425,174 | | |
| 4,179,826 | |
| Due from a related party | |
| 4,109,902 | | |
| 2,607,402 | |
| TOTAL CURRENT ASSETS | |
| 6,727,970 | | |
| 7,882,235 | |
| Intangible assets, net | |
| - | | |
| - | |
| Other non-current assets | |
| 4,831,483 | | |
| 5,062,966 | |
| Investments in subsidiaries, consolidated VIE and VIE’s subsidiaries | |
| 13,089,946 | | |
| 13,821,695 | |
| TOTAL ASSETS | |
| 24,649,399 | | |
| 26,766,896 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Other Payable | |
$ | 45,484 | | |
$ | 31,600 | |
| Due to a related party | |
| - | | |
| - | |
| TOTAL CURRENT LIABILITIES | |
$ | 45,484 | | |
$ | 31,600 | |
| TOTAL LIABILITIES | |
| 45,484 | | |
| 31,600 | |
| | |
| | | |
| | |
| SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| Ordinary Shares (par value $0.01 per share; 4,400,000 Class A
Ordinary Shares authorized as of December 31, 2023 and June 30, 2023; 1,862,733 and 1,828,692 Class A Ordinary Shares issued and outstanding
as of December 31, 2023 and June 30, 2023, respectively; 600,000 Class B Ordinary Shares authorized, 576,308 Class B Ordinary Shares
issued and outstanding as of December 31, 2023 and June 30, 2023, respectively; 1,000,000 Class C Ordinary Shares authorized, nil
Class C Ordinary Shares issued and outstanding as of December 31, 2023 and June 30, 2023) * | |
| 24,390 | | |
| 24,050 | |
| Subscription receivable | |
| (15,441 | ) | |
| (15,441 | ) |
| Additional paid-in capital | |
| 40,173,920 | | |
| 40,174,260 | |
| Retained earnings | |
| (14,167,950 | ) | |
| (11,802,701 | ) |
| Accumulated other comprehensive (loss) income | |
| (1,411,004 | ) | |
| (1,644,872 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | |
| 24,603,915 | | |
| 26,735,296 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | |
$ | 24,649,399 | | |
$ | 26,766,896 | |
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF COMPREHENSIVE LOSS
| | |
For the Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Selling expenses | |
$ | 1,151,120 | | |
$ | 36,000 | |
| General and administrative expenses | |
| 250,000 | | |
| 605,795 | |
| Financial expenses (income) | |
| (1,488 | ) | |
| 114,980 | |
| Loss from operation | |
| (1,399,632 | ) | |
| (756,775 | ) |
| Other loss: | |
| | | |
| | |
| Share of loss of subsidiaries, consolidated VIE, and VIE’s subsidiaries | |
| (965,617 | ) | |
| (3,957,606 | ) |
| | |
| | | |
| | |
| Loss before income tax expense | |
| (2,365,249 | ) | |
| (4,714,381 | ) |
| Income tax expense | |
| - | | |
| - | |
| Net loss | |
$ | (2,365,249 | ) | |
$ | (4,714,381 | ) |
| Other Comprehensive loss | |
| | | |
| | |
| Foreign currency translation (loss) income | |
| 233,868 | | |
| (893,208 | ) |
| Total comprehensive loss | |
$ | (2,131,381 | ) | |
$ | (5,607,589 | ) |
POP CULTURE GROUP CO., LTD AND SUBSIDIARIES
PARENT COMPANY STATEMENTS OF CASH FLOWS
| | |
For the Six Months Ended
December 31, | |
| | |
2023 | | |
2022 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | |
| |
| Net loss | |
| (2,365,249 | ) | |
| (4,714,381 | ) |
| Depreciation and amortization | |
| - | | |
| 36,875 | |
| Equity loss (income) of subsidiaries | |
| 965,617 | | |
| 3,957,606 | |
| Changes in operating assets and liabilities | |
| | | |
| | |
| Other non-current assets | |
| 231,483 | | |
| (4,448,342 | ) |
| Other current assets | |
| 1,754,652 | | |
| - | |
| Due from subsidiaries and the VIE | |
| (1,502,500 | ) | |
| - | |
| Other payable | |
| 13,884 | | |
| (70,000 | ) |
| Due from a related party | |
| - | | |
| (3,500,001 | ) |
| Net cash used in operating activities | |
$ | (902,113 | ) | |
| (8,738,243 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Purchase of intangible assets | |
| - | | |
| (105,000 | ) |
| Net cash used in investing activities | |
| - | | |
| (105,000 | ) |
| | |
| | | |
| | |
| Net decrease in cash | |
| (902,113 | ) | |
| (8,843,243 | ) |
| Cash at the beginning of the period | |
| 1,095,007 | | |
| 9,085,082 | |
| Cash at the end of the period | |
$ | 192,894 | | |
| 241,839 | |
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XIAMEN, China, May 8, 2024 /PRNewswire/ -- In
2022, Pop Culture Group Co., Ltd (“Pop Culture,” or the “Company,” stock code: CPOP) unveiled its plan of conducting
digital collection sales through its own WeChat account. According to the interim financial report for the six months ended December 31,
2023 released by the company, the second half of 2023 witnessed an increase in its overall operational performance. For the six months
ended December 31, 2023, the Company recorded consolidated revenues of approximately $24 million, representing an increase of $12.75 million
compared to the corresponding period of the previous fiscal year, reflecting a 113% year-on-year growth. Additionally,
the Company’s consolidated gross profit for the six months ended December 31, 2023 increased from a deficit of $2.34 million in
the six months ended December 31, 2022 to gross profits of $1.78 million in the six months ended December 31, 2023.
With continuous investment and strategic positioning,
the Company has achieved certain milestones in the four business segments listed above. The Company expects that its business expansion
and growth will also be driven by business operations in certain film and television projects, including “The Legend of the Condor
Heroes: The Legend of Qiao Feng” and “The Legend of the Swordsman”, the staging of “Superstar Concert” series
as scheduled. The company anticipates comprehensive development in both entertainment and street dance sectors throughout the forthcoming
fiscal year of 2024. CEO Huang Zhuoqin remarked, “In 2024, street dance joined the Olympic Games for the first time, which stands
as the pivotal year for our Company’s growth.”
Headquartered in Xiamen, China, Pop Culture Group
Co., Ltd is a hip-hop culture company. The Company aims to promote hip-hop culture and its values of love, peace, unity, respect, and
having fun, and to promote cultural exchange with respect to hip-hop between the United States and China. With the values of hip-hop culture
at its core and the younger generation as its primary target audience, the Company hosts entertainment events, operates hip-hop related
online programs, and provides event planning and execution services and marketing services to corporate clients. The Company has in recent
years focused on developing and hosting its own hip-hop events. For more information, visit the Company’s website at www.cpop.cn.
All statements other than statements of historical
fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties
and are based on current expectations and projections about future events and financial trends that the Company believes may affect its
financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements
by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,”
“intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,”
or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring
events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations
expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct,
and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to
review other factors that may affect its future results in the Company’s registration statement and its other filings with the SEC.
