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    CVTV   US16954T1088

CHINA VTV LTD.

(CVTV)
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CHINA VTV : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

10/21/2020 | 04:23pm EST

This section of this Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Organization and Business Operations

China VTV Limited ("China VTV"), formerly known as T-Bamm., was incorporated in the State of Nevada on February 19, 2015 and is a holding company which has not carried out substantive business operations of its own.

China VTV Ltd. ("China VTV HK") was incorporated on January 9, 2015 under the laws of Hong Kong. China VTV HK provided a streaming media platform that distributes streaming media as a standalone product directly to viewers over the Internet, bypassing telecommunications, multichannel television, and broadcast television platforms that traditionally act as a controller or distributor of such content. China VTV HK provides news, entertainment shows, TV episodes and other programs on its website and social media accounts.

Pursuant to the Share Exchange Agreement dated March 15, 2019, on May 6, 2019, we issued an aggregate of 115,550,000 shares of our common stock to the shareholders of China VTV HK in exchange for all of the issued and outstanding equity interests of China VTV HK and five individuals who provided prior services to China VTV HK.

As a result, China VTV HK has become our wholly-owned subsidiary. The acquisition of China VTV HK is treated as a reverse acquisition, and the business of China VTV became our business.

On December 18, 2019, the Company, VTV Global Culture Media (Beijing) Co., Ltd., a Chinese wholly foreign owned entity and a wholly-owned subsidiary of the Company ("WFOE"), Butterfly Effect Culture Media (Beijing) Co., Ltd., a corporation formed under the laws of China (the "Butterfly Effect") and each and all of the shareholders of the Butterfly Effect (each, a "Butterfly Effect Shareholder", and collectively, "Butterfly Effect Shareholders") entered into a business acquisition agreement (the "Acquisition Agreement"), pursuant to which the Company through its WFOE agreed to acquire the Butterfly Effect through a series of management agreements (the "VIE Agreements") to effectively control and own the Butterfly Effect (the "Acquisition"). In accordance with the Acquisition Agreement, in consideration for the effective control over the Butterfly Effect, the Company issued an aggregate of 24,000,000 shares of its common stock (the "Common Stock") to the Butterfly Effect Shareholders in accordance with the percentage (the "Butterfly Effect Shareholder Equity Percentage") as set forth in the Acquisition Agreement. In addition, subject to the terms and conditions in the Acquisition Agreement, the Company and its subsidiaries agreed to pay a total of RMB 288,000,000 (the "Cash Consideration") to the Butterfly Effect Shareholders pro rata with the Butterfly Effect Shareholder Equity Percentage over a period of time as set forth therein.

Pursuant to the terms and conditions of the Acquisition Agreement, the Company also agreed to dedicate forty percent (40%) of the net proceeds actually received in any public or private equity offering (the "Qualified Offering"), in which the Company raises at least $20,000,000 USD in gross proceeds before deducting any underwriter or placement agent's discount and commissions and any offering expenses, to be used to pay the Butterfly Effect Shareholders pro rata with the Butterfly Effect Shareholder Equity Percentage until the total amount of the Cash Consideration is paid in full, without the obligation to pay any interest thereon.

In addition, the Acquisition Agreement provides that in the event that the Butterfly Effect fails to meet the net profit milestones as set forth in the Acquisition Agreement, each Butterfly Effect Shareholder shall return the Common Stock or equivalent amount of cash (the "Claw-back") according to the formula specified in the Acquisition Agreement. However, subject to the Claw-back provision, the Acquisition Agreement prescribes that if the Company does not make payments of at least half of the Cash Consideration to the Butterfly Effect Shareholders within one (1) year commencing on the first trading day (excluding the first trading day) of the Common Stock on a national stock exchange, i) the Butterfly Effect shall have the right to appoint the majority of the Company's Board and manage and operate the Company and its subsidiaries and ii) each of the Butterfly Effect Shareholders shall have the right to receive the number of shares of the Common Stock equal to the result of (the total amount of Cash Consideration - the sum of cash received by the Butterfly Effect Shareholders)/ $2.00 per share* Butterfly Effect Shareholder Equity Percentage.

The Company completed this acquisition transaction on February 24, 2020 (the "Closing Date") and acquired Butterfly Effect Media's business.




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Butterfly Effect is primarily engaging in literary adaptation business. The Company centers its business on internet Chinese literary and literary adaptation for television shows, movies, audible books and mobile phone video games that are primarily distributed through online platforms to provide marketing and media services to the entertainment industry in China, including production of media promotion and advertising services to movies, television shows, actors and commercial products in China. For the year ended February 29, 2020, the focus and revenue stream for the Company was the purchase and sale of literature copyrights, and licensing of the copyrights to video game software development companies.

Following the acquisition, China VTV Limited and its consolidated subsidiaries and variable interest entities ("VIE") are referred collectively herein as the "Company". The Company plans to focus on the businesses of outdoor LED billboard advertisement in South Asia, Australia, the U.S., Taiwan and the People's Republic of China (the "PRC"); the e-media online streaming platform; and the literary adaptation whereby the Company adapts original stories or books into TV shows, movies and mobile video games that will be distributed outside PRC through the internet. The Company is currently exploring the model to distribute contents, such as TV show episodes, produced by the Company on its online streaming platform.



Consumer


As of August 31, 2020, the Company had approximately 3.82 million viewers and subscribers, and most of them reside in Malaysia, Singapore, Australia, Canada, Hong Kong, Taiwan, Indonesia, India, Thailand, the U.S. and other countries and regions, including mainland China.

Strategic Development with CybEye and Chief Technology Officer

On September 30, 2019, we entered into a strategic development agreement (the "Strategic Development Agreement") with CybEye Image, Inc. ("CybEye"), pursuant to which CybEye is developing and providing technical support and maintenance to the Company's online streaming media OTT Platform and incorporating blockchain technologies to the Company's OTT Platform to enhance security. CybEye is a mobile video-messaging APP platform company that builds customized applications for various industries. The Strategic Development Agreement shall continue in full force and effect until September 29, 2022. During the term of the Strategic Development Agreement, CybEye will develop the OTT Platform only for the Company, and will not engage in providing any services to other media companies. Subject to the terms and conditions of the Strategic Development Agreement, the Company shall issue to CybEye two million and five hundred thousand (2,500,000) shares of its unissued and registered common stock at one time and forty thousand (40,000) shares its unissued and registered common stock per month during the term of the Strategic Development Agreement upon the effectiveness of a registration statement to register those shares. Pursuant to the terms of the Strategic Development Agreement, upon listing of the Company's common stock on a national stock exchange market, the Company shall make a cash payment of $150,000 to CybEye instead of the stock payment at the end of each whole month for CybEye's services pursuant to this Agreement.

In connection with the Strategic Development Agreement, on September 30, 2019, the Company and CybEye entered into a non-exclusive licensing agreement (the "Licensing Agreement"), pursuant to which the Company and its affiliates were granted a fully-paid perpetual non-exclusive right and license to use and develop any intellectual property and proprietary information, including, without limitation, any patents and trademarks as set forth in Schedule A thereto, which CybEye owns, to carry out the purposes and goals of the Strategic Development Agreement. On December 13, 2019, the Company and CybEye entered into an amendment to the Licensing Agreement dated September 30, 2019, pursuant to which the term of the Licensing Agreement was amended to twenty (20) years (from September 30, 2019 to September 29, 2039) and the Company agreed to issue 2,500,000 shares of its common stock to CybEye as set forth in the Strategic Development Agreement dated September 30, 2019. A copy of such amendment was filed in a current report on Form 8-K on December 17, 2019.




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In addition, on September 30, 2019, the Company and Mr. Bing Liu (the "Executive") entered into an executive employment agreement (the "Executive Employment Agreement"), in accordance with which, subject to the approval of the board of directors of the Company (the "Board"), the Executive shall be elected as a member of the Board and the Chief Technology Officer ("CTO") of the Company. The Executive Employment Agreement has a term (the "Term") of three (3) years, unless terminated earlier pursuant to the termination provisions therein. In accordance with the Employment Agreement, the Executive shall receive incentive stock options to purchase five hundred thousand (500,000) shares of the Company's common stock each year during the Term of the employment pursuant to the stock option agreement (the "Stock Option Agreement"). Upon termination of the Strategic Development Agreement, the Executive Employment Agreement shall also be terminated, unless otherwise mutually agreed in writing. In connection with the Executive Employment Agreement, on September 30, 2019 (the "Grant Date"), the Company and the Executive entered into the Stock Option Agreement under the Company's 2019 stock plan (the "Plan"), whereby the Company issued the Executive options (the "Options") to purchase an aggregate of five hundred thousand (500,000) shares of the Company's common stock, at an exercise price of $12.00 per share. The Stock Option Agreement provides that the Options shall become exercisable on September 29, 2020, one year from the Grant Date, and shall expire on September 29, 2026. Subject to the terms of the Stock Option Agreement and Plan, the Options shall vest in equal amounts each quarter from the Grant Date.

Copies of the Strategic Development Agreement, Licensing Agreement, Executive Employment Agreement and Stock Option Agreement were filed in a current report on Form 8-K on October 3, 2019.

Since November 2019, our blockchain-operated App platform has been available for both iPhone and Android mobile phone users, and we have been trying to recruit more mobile phone users to use our App to watch our online programs.



Impact of Covid-19


A novel strain of coronavirus, COVID-19, was first identified in China in December 2019 and subsequently declared a pandemic on March 11, 2020, by the World Health Organization. As a result of the COVID-19 pandemic, all travel has been severely curtailed to protect the health of our employees and comply with local guidelines, and we temporarily closed our china offices from February and resumed the office operations in early March 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns in affected areas. The full impact of the pandemic on our business, operations and financial results will depend on various factors that continue to evolve which we may not accurately predict.



Results of Operations


Three and Six Months Ended August 31, 2020 compared to Three and Six Months Ended August 31, 2019




The following table sets forth selected financial information from our
statements of comprehensive income for the three months ended August 31, 2020
and 2019:



                                              For the Three Months Ended
                                      August 31,      August 31,        Dollar
                                         2020            2019           Change
Net Revenue                           $ 3,024,268     $     3,828     $ 3,020,440
Cost of Revenue                         1,261,904           1,276       1,260,628
Gross Profit                            1,762,364           2,552       1,759,812

General and Administrative Expenses 1,558,470 117,030 1,441,440 Income (Loss) from Operations

             203,894        (114,478 )       318,372
Interest Expense                          (11,530 )             -         (11,530 )
Other Loss                                   (308 )             -            (308 )
Income (Loss) Before Income Tax           192,056        (114,478 )       306,534
Provision for Income Tax                        -               -               -
Net Income (Loss)                         192,056        (114,478 )       306,534
Comprehensive Income (Loss)           $   742,766     $  (114,366 )   $   857,132





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The following table sets forth selected financial information from our
statements of comprehensive income for the six months ended August 31, 2020 and
2019:



                                               For the Six Months Ended
                                      August 31,      August 31,        Dollar
                                         2020            2019           Change
Net Revenue                           $ 6,745,886     $     3,828     $ 6,742,058
Cost of Revenue                         2,843,471           1,276       2,842,195
Gross Profit                            3,902,415           2,552       3,899,863

General and Administrative Expenses 2,884,987 220,069 2,664,918 Income (Loss) from Operations

           1,017,428        (217,517 )     1,234,945
Interest Expense                          (27,072 )             -         (27,072 )
Other Loss                                (19,082 )             -         (19,082 )
Income (Loss) Before Income Tax           971,274        (217,517 )     1,188,791
Provision for Income Tax                        -               -               -
Net Income (Loss)                         971,274        (217,517 )     1,188,791
Comprehensive Income (Loss)           $ 1,428,496     $  (217,632 )   $ 1,646,128




Revenue:


During the three and six months ended August 31, 2020, we realized $3,024,268 and $6,745,886 in revenue, representing an increase of $3,020,440 and $6,742,058, respectively, as compared to $3,828 in revenue for the three and six months ended August 31, 2019. The revenues were generated from sales of literature copyrights and licensing of copyrights to video game software development companies. Prior to the acquisition of Butterfly Effect in February 2020, we did not conduct any significant revenue generating activities. During the three and six months ended August 31, 2019, we only generated revenue of $3,828 as a result of one-time advertising income.



Cost of Revenue


Our cost of sales primarily consisted of direct production cost of audiobooks and related production overhead. During the three and six months ended August 31, 2020, we had cost of revenue of $1,261,904 and $2,843,471, respectively, compared to $1,276 during the three and six months ended August 31, 2019, as a result of the increase in revenue.

Cost of Revenue during the three and six months ended August 31, 2019 mainly consisted of the fees we pay to telecommunications carriers and other service providers for telecommunications and other content delivery-related services.

General and Administrative Expenses

General and administrative expenses primarily consisted of accrued salaries and benefits for the Company's executives, directors and administrative staff, depreciation and amortization expenses, legal and other professional service fees, and rental expenses. General and administrative expenses were $1,558,470 and $2,884,987 for the three and six months ended August 31, 2020, as compared to $117,030 and $220,069 for the three and six months ended August 31, 2019, representing an increase of $1,441,440 and $2,664,918, respectively.




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The increase in general and administrative expenses for the three and six months ended August 31, 2020 were primarily attributable to the increase in depreciation and amortization expenses of $631,440 and $1,229,589, salaries and benefits accruals for the Company's executives, directors and administrative staff of $565,535 and $1,099,442, legal and other professional service fees of $130,427 and $147,447, rental expenses of $47,772 and $117,599, and other office and miscellaneous expenses of $50,688 and $55,263.



Net Income (Loss):


Our net income were $192,056 and $971,274 for the three and six months ended August 31, 2020, as compared to a losses of $114,478 and $217,517 for the three and six months ended August 31, 2019, representing an increase of $306,534 and $1,188,791, respectively. Prior to the acquisitions of China VTV HK and Butterfly Effect, the Company had only nominal operations and did not conduct any revenue generating activities. The Company substantially expanded its business operations in the beginning of its first fiscal quarter in 2020 through business combination transactions.



Comprehensive Income (Loss):


Our business operates in Chinese RMB and Hong Kong Dollars, but we report our results in our SEC filings in U.S. Dollars. The conversion of our accounts from RMB and Hong Kong Dollars to U.S. Dollars results in translation adjustments, which are reported as a middle step between net income and comprehensive income. The net loss is added to the accumulated deficit while the translation adjustment is added to a line item on our balance sheet labeled "other comprehensive income," since it is more reflective of changes in the relative values of U.S. and the foreign currencies than of the success of our business. During the three and six months ended August 31, 2020, the effect of converting our financial results to USD were gains of $607,812 and $373,737 to our other comprehensive income, as compared to a gain of $112 and a loss of $115 during the three and six months ended August 31, 2019, respectively, as a result of the currency exchange rate fluctuations.

Liquidity and Capital Resources



Overview


The Company substantially expanded its business operations in the beginning of its first fiscal quarter in 2020 through mergers and acquisitions. For the six months ended August 31, 2020, we had net cash inflow of $686,896 from operations, compared to the same quarter of the prior year's net cash outflow of $87,019.We expect to expand our business and grow our revenue with consistent operating profitability. We believe that cash flow from operations, financing arrangements, and cash on hand will adequately fund our operations for, at least, the next twelve months.




The following table sets forth a summary of our cash flows for periods
indicated:



                                                           For the Six Months Ended
                                                          August 31,       August 31,
                                                             2020             2019

Net Cash Provided by (Used in) Operating Activities $ (1,932,996 ) $ (133,408 ) Net Cash Provided by Investing Activities

                    2,963,314        (111,166 )
Net Cash Provided by (Used in) Financing Activities           (925,919 )       233,727
Effect of Exchange Rate Changes on Cash and Cash
Equivalents                                                      2,725               -
Net Increase (Decrease) in Cash and Cash Equivalents           107,124         (10,847 )
Cash and Cash Equivalents
Beginning                                                       51,551          17,548
Ending                                                  $      158,675     $     6,701





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Net Cash Provided by (Used in) Operating Activities

Net cash used in operating activities was $1,932,996 during the six months ended August 31, 2020, compared to net cash provided by operating activities of $133,408 for the six months ended August 31, 2019, reflecting an increase in the amount of $1,799,588. The increase in the cash provided by operating activities was primarily due to the increase in net income from the business operations, the increase in deferred revenue, and the decrease in advances to suppliers, other receivables and tax payable, partly offset by the increase in accrued expenses and inventories, compared to the six months ended August 31, 2019.

Net Cash Provided by and Used in Investing Activities

Net cash provided by investing activities was $2,963,314 during the six months ended August 31, 2020, compared to net cash used in investing activities of $111,166 for the six months ended August 31, 2019. The increase in cash used in investing activities in the amount of $3,074,480 was primarily due to acquisition of new copyrights in amount of $1,336,005, offset by the receipt of $4,300,336 net cash proceeds from the sale of 15% interest in a Company's 86.5% owned subsidiary.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities was $925,919 during the six months ended August 31, 2020, compared to the net cash provided by financing activities of $233,727 for the six months ended August 31, 2019. The increase in the cash used in financing activities in the amount of $1,159,646 was primarily due to the decrease in the balance of due to related parties and short-term debt during the six ended months ended August 31, 2020, offset by the proceeds of $102,060 received from shareholders, compared to the six months ended August 31, 2019.

Net increase in cash was $109,644 for the six months ended August 31, 2020, compared to net decrease in cash and cash equivalents of $10,847 for the six months ended August 31, 2019.



Sources of Liquidity


The principal sources of liquidity are derived from cash flows from operations, available borrowings including the related parties' advances under our existing financing arrangements, proceeds from private placements, and existing cash on hand.




Uses of Liquidity



The Company's requirements for liquidity and capital resources are generally for the purposes of operating activities and capital expenditures.



Critical Accounting Policies



Use of Estimates


The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management 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 consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.




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Reclassification


Certain reclassifications have been made to the prior year's financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss nor accumulated deficit.



Advances to Suppliers


The Company advances funds to certain authors or publishers for the purchase of literature copyrights and productions. Based on management's assessment, no allowance for advances to suppliers is required at the balance sheet date.



Inventories


Inventories comprises work-in-progress which are stated at the lower of cost or net realizable value. Costs include direct production cost of audiobooks and related production overhead. The cost of inventories is calculated on a title-by-title basis. Any excess of the cost over the net realizable value of each item of inventories is recognized as a loss in the statement of operations.

Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.



Copyrights


Copyrights consist of payments made to holders for use of the copyrights during the licensed term. Amortization of capitalized copyrights commences when the copyrights is available for use by the Company and is recorded on a title-by-title basis in statement of operations over the licensed term, ranging from 3 to 10 years. Copyrights are stated at the lower of amortized cost or net realizable value. The valuation of copyrights is reviewed on a title-by-title basis when an event or change in circumstances indicated that the fair value of a copyright is less than its unamortized cost.



Revenue Recognition


The Company adopted Topic 606 effective March 1, 2019 and recognizes revenue based on the five criteria for revenue recognition that are established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.

The Company began to generate revenue during the year ended February 29, 2020. The Company sells advertising services to third-party advertising agencies and advertisers. Advertising contracts are signed to establish the price and specify the advertising services to be provided. Pursuant to the advertising contracts, the Company provides advertisement placements on its APP Platform in different formats, including but not limited to video, banners, links, logos, brand placement and buttons. The Company performs a credit assessment of the customers to assess the collectability of the revenue prior to entering into contracts. For contracts where the Company provides customers with multiple performance obligations, primarily for advertisements to be displayed in different spots, placed under different forms and occurred at different times, the Company would evaluate all the performance obligations in the arrangement to determine whether each performance obligation is distinct. Consideration is allocated to each performance obligation based on its standalone selling price and revenue is recognized as each performance obligation is satisfied by displaying the advertisements in accordance with the advertising contracts.




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The Company sells copyrights of scripts and original stories to third parties, and sells the video and audio products to internet content platforms for broad distribution, upon the finishing of the production of TV shows, movies, audible books or video games. Revenue from the sales of copyrights, original stories, and finished products are recognized when the Company delivers products and passes its contractual rights or copyrights to the customers in accordance with the sales contracts. Prepayments for sales of product is recorded as deferred revenue and is generally recognized as revenue when the production is completed, and the product is transferred, or copyrights have been passed to customers and collectability is reasonably assured.

The Company also grants licenses to third parties for using its literary copyrights. Revenue derived from licenses of the Company's literal copyrights and original stories, which provide customers with a right to use the intellectual properties as they exist and are available to customers, are recognized at the point of time when the intellectual property is made available to customers.

For revenue from licensing of literal copyrights where the Company continues to develop the product or provide maintenance services, the Company recognizes the fixed fee proportionately over the licensing term. For royalty derived from licensing of literature copyrights, as revenue, it is recognized when sales or usage occurs based upon the licensee's usage reports. When these reports are not available, revenue is recognized based on historical data, industry information and other relevant trends.



Deferred Revenue


Deferred revenue, primarily relating to licensing fees, is stated at the amount of licensing fees received less the amount previously recognized as revenue over the terms of the respective literary licensing contracts.



Stock-Based Payments


The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation ("ASC 718"), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, non-employee directors, and consultants, including employee stock options. Stock compensation expense, which is based on the grant date's fair value estimated in accordance with the provisions of ASC 718, is recognized as an expense over the requisite service period, and the Company made a policy election to recognize forfeitures when they occur.

The fair value of each option grant is estimated using the Black-Scholes option-pricing model, which requires assumptions regarding the expected volatility of the stock price, the expected lifetime of the options, an expectation regarding future dividends on the Company's common stock, and estimation of an appropriate risk-free interest rate. The Company's expected common stock price volatility assumption is based upon the historical volatility of the stock price of some similar companies due to limited history of our own stock price. The expected lifetime assumption for stock options grants was based upon the simplified method provided under ASC 718-10, which averages the contractual term of the options with the vesting term. The dividend yield assumption of zero is based upon the fact that the Company has never paid cash dividends in the past and has presently no intention of paying cash dividends in the future. The risk-free interest rate used for each grant was based upon the prevailing short-term interest rates over the expected lifetime of the options.




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Translation Adjustment


The accounts of China VTV and Butterfly Effect were maintained, and their financial statements were expressed, in Hong Kong Dollar ("HKD") and Chinese Yuan (RMB), respectively. Such financial statements were translated into U.S. Dollars ("$" or "USD") in accordance ASC 830, "Foreign Currency Matters", with the HKD and RMB as the functional currencies. Pursuant to the ASC 830, all assets and liabilities are translated at the current exchange rate, stockholders' equity (deficit) are translated at the historical rates, and income statement items are translated at an average exchange rate for the period.

The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders' equity (deficit).

Impairment of Long-Lived Assets and Goodwill

The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment ("ASC 360-10"). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed to be reported at the lower of the carrying amount or the fair value less costs to sell.

Goodwill represents the excess of the purchased consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company's acquisitions of interests in VIE and its subsidiaries. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company first assesses the qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test will be performed. Application of a goodwill impairment test requires significant management judgment.




Fair Value Measurements



The Company has adopted FASB Accounting Standard Codification Topic on Fair Value Measurements and Disclosures ("ASC 820"), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable input, which may be used to measure fair value and include the following:

Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2 - observable prices that are based on inputs not quoted on active markets but corroborated by market data; and

Level 3 - unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The carrying values of certain assets and liabilities of the Company approximate to fair value due to their relatively short maturities.




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Noncontrolling Interests


For the Company's non-wholly owned subsidiaries, a noncontrolling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company. Consolidated net income in the consolidated income statements includes net income (loss) attributable to noncontrolling interests.

Basic and Diluted Earnings (Loss) Per Share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and common shares issuable upon the conversion of convertible notes payable (using the as-if converted method). These common stock equivalents may be dilutive in the future.

All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company's net losses and consisted of the following:



                 August 31,      August 31,
                    2020            2019
Stock options        500,000               -
                     500,000               -




Income Taxes


The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Recently Issued Accounting Pronouncements

Management has considered all recent accounting pronouncements issued and their potential effect on the consolidated financial statements. The Company's management believes that these recent pronouncements will not have a material effect on its consolidated financial statements.




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Financials (USD)
Sales 2020 0,00  - -
Net income 2020 -1,51 M - -
Net Debt 2020 2,25 M - -
P/E ratio 2020 -442x
Yield 2020 -
Capitalization 1 312 M 1 312 M -
EV / Sales 2019 -
EV / Sales 2020 219 796 860 198x
Nbr of Employees 96
Free-Float 39,1%
Chart CHINA VTV LTD.
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China VTV Ltd. Technical Analysis Chart | MarketScreener
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Income Statement Evolution
Managers and Directors
Ti Jin Song Chairman, President & Chief Executive Officer
Jian Li Chief Financial Officer
Hong Bin Dong Chairman-Supervisory Board
Bing Liu Director & Chief Technology Officer
Guo Ping Chen Secretary & Director
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