The information contained in this quarter report on Form 10-Q is intended to
update the information contained in our Annual Report on Form 10-K for the year
ended
The following discussion contains certain statements that may be deemed
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements appear in a number of places in
this Report, including, without limitation, "Management's Discussion and
Analysis of Financial Condition and Results of Operations." These statements are
not guarantees of future performance and involve risks, uncertainties and
requirements that are difficult to predict or are beyond our control.
Forward-looking statements speak only as of the date of this quarterly report.
You should not put undue reliance on any forward-looking statements. We strongly
encourage investors to carefully read the factors described in our Form S-1
Amendment No.5, dated
Company Overview Advertising Industry
At present,
Advertising Industry Worldwide and In China
Since 2011, the global advertising market has grown steadily, with the growth
rate remaining between 4% and 5%. It is expected that the advertising market
will maintain this growth rate until 2018. Spending on advertising worldwide has
been increasing steadily and is expected to reach almost
In China, the advertising industry has experienced tremendous growth and
profitability. Currently, China is the second largest advertising market in the
world. In terms of e-commerce advertisement, China has ranked first in search
advertising. In 2012, China's digital advertising market was about 77.31 billion
Chinese Yuan and by 2016 it had nearly quadrupled in size. From 2015 to 2021,
the digital video adverting revenue in
Results of Operation
For the Three and Nine Months Ended
For the three ended
For the nine ended
Result of operation for the three months ended
Result of operation for the nine months ended
The overall gross profit for the Company was
The overall gross profit for the Company was
Our net loss for the three months ended
And the net profit for the nine months ended
Liquidity and Capital Resources
As of
2 Operating Activities
For the nine months ended
Investing Activities
For the nine months ended
Financing Activities
For the nine months periods ended
Credit Facilities
We do not have any credit facilities or other access to bank credit.
Contractual Obligations, Commitments and Contingencies
We currently have a lease agreement in place with respect to office premises in
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our
stockholders as of
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
Additional Information
VIE STRUCTURE AND ARRANGEMENTS
Foreign ownership in companies providing media advertising services is subject
to certain restrictions under PRC laws and regulations. To comply with the PRC
laws and regulations, we, through our wholly-owned subsidiary,
1. exercise effective control over BEZL whereby having the power to direct BEZL's
activities that most significantly drive the economic results of BEZL
2. receive substantially all of the economic benefits and residual returns, and
absorb substantially all the risks and expected losses from BEZL as if it was
their sole shareholder; and
3. have an exclusive option to purchase all of the equity interests in BEZL.
Our consolidated financial statements include the financial statements of our company, our subsidiaries and our consolidated VIE for which we are the primary beneficiary. All transactions and balances among our company, our subsidiaries and our consolidated VIE have been eliminated upon consolidation.
A subsidiary is an entity in which we, directly or indirectly, control more than one half of the voting powers; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
A consolidated VIE is an entity in which we, or our subsidiaries, through contractual agreements, bears the risks of, and enjoys the rewards normally associated with ownership of the entity. In determining whether we or our subsidiaries are the primary beneficiary, we considered whether it has the power to direct activities that are significant to the consolidated VIE's economic performance, and also our obligation to absorb losses of the consolidated VIE that could potentially be significant to the consolidated VIE or the right to receive benefits from the consolidated VIE that could potentially be significant to the consolidated VIE. We hold all the variable interests of the consolidated VIE and its subsidiaries, and has been determined to be the primary beneficiary of the consolidated VIE.
3
In accordance with the contractual agreements among between CETL, BEZL and shareholders of BEZL allow us to:
1. exercise effective control over BEZL whereby having the power to direct BEZL's
activities that most significantly drive the economic results of BEZL;
2. receive substantially all of the economic benefits and residual returns, and
absorb substantially all the risks and expected losses from BEZL as if it was
their sole shareholder;
3. and have an exclusive option to purchase all of the equity interests in BEZL.
We believe that the contractual arrangements among CETL, BEZL and the shareholders of BEZL are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements and if the shareholders of our consolidated VIE were to reduce their interest in us, their interests may diverge from ours and that may potentially increase the risk that they would seek to act contrary to the contractual terms.
Our ability to control the consolidated VIE also depends on the voting rights proxy agreement and our company, through CETL, has to vote on all matters requiring shareholder approval in the consolidated VIE. As noted above, we believe this voting rights proxy agreement is legally enforceable but may not be as effective as direct equity ownership.
On
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