Core Viewpoint - Pop Culture Group Co., Ltd has received a notification from Nasdaq regarding non-compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market [1][2]. Group 1: Compliance Notification - The notification letter indicates that the company is not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of US$1.00 per share [1][2]. - The company has been given 180 calendar days, until September 15, 2025, to regain compliance by maintaining a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days [3]. Group 2: Business Operations - The receipt of the notification letter does not impact the company's business operations [4]. - The company plans to monitor its Class A ordinary shares' closing bid price and may consider options such as a reverse share split to regain compliance [4]. Group 3: Company Overview - Pop Culture Group Co., Ltd is a hip-hop culture company based in Xiamen, China, focusing on promoting hip-hop culture and facilitating cultural exchanges between the U.S. and China [5]. - The company targets the younger generation and engages in hosting entertainment events, operating hip-hop-related online programs, and providing event planning and brand promotion services [5].

XIAMEN, China, Nov. 19, 2024 /PRNewswire/ -- In the fiscal year ended June 30, 2024, POP CULTURE GROUP CO., LTD. ("Pop Culture," or the "Company,"Nasdaq: CPOP) continued to focus on its three business lines ——brand promotion, event hosting, event planning and execution, actively made efforts in the goal of comprehensive digitalization, and achieved strong operating results. According to the Company's annual report for the fiscal year ended June 30, 2024, the Company achieved consolidated total revenue of ov ...

VIE Structure and Legal Risks - The company operates as a holding entity incorporated in the Cayman Islands, conducting most operations through a Variable Interest Entity (VIE) and its subsidiaries in China[24]. - The VIE structure allows the company to consolidate financial results under U.S. GAAP, despite not holding direct equity interests in the VIE or its subsidiaries[29]. - The company faces risks associated with the VIE structure, including potential changes in PRC laws that could affect the validity and enforcement of the VIE Agreements[44]. - The VIE Agreements have not been tested in a court of law in the PRC, raising uncertainties regarding their effectiveness in providing operational control[45]. - The company may face material disruption to its business if the VIE Agreements are deemed illegal or invalid by PRC authorities, affecting its ability to consolidate financial results under U.S. GAAP[80]. - If the VIE Agreements are found to violate PRC laws, the company could lose rights to direct activities and receive economic benefits from Xiamen Pop Culture, leading to a significant decline in the value of its securities[81]. - The company relies on VIE Agreements to consolidate financial results of Xiamen Pop Culture, but these agreements may not provide effective control, risking adverse impacts on operations[82]. - The VIE Agreements are governed by PRC law, which may limit the company's ability to enforce rights and could affect its control over Xiamen Pop Culture for accounting purposes[86]. Financial Performance - For the fiscal year ended June 30, 2024, consolidated total revenue was $47,381,918, a decrease from $18,543,243 in the previous year, representing a decline of approximately 255.5%[10]. - The net income for the fiscal year ended June 30, 2024, was $(12,632,115), compared to $(25,257,696) for the fiscal year ended June 30, 2023, indicating an improvement of approximately 50%[10]. - The company reported a gross profit of $2,880,720 for the fiscal year ended June 30, 2024, compared to a gross loss of $(3,662,815) in the previous year, marking a turnaround of approximately 178.6%[10]. - The company’s comprehensive income for the fiscal year ended June 30, 2024, was $(12,695,799), compared to $(26,932,336) for the fiscal year ended June 30, 2023, reflecting an improvement of approximately 53.2%[10]. - The cash balance as of June 30, 2024, was $230,563, a significant increase from $2,751,309 as of June 30, 2023, indicating a growth of approximately 8.4%[73]. - The company reported net cash provided by financing activities of $3,373,609 for the fiscal year ended June 30, 2024, compared to $683,277 in the previous year, marking an increase of approximately 394%[76]. Regulatory Environment - The company is not currently required to complete filing procedures under the Trial Measures, as its initial public offering was completed on July 2, 2021[49]. - The company may face fines ranging from RMB1 million to RMB10 million for failing to complete filing procedures for new offerings or fundraising activities in the future[49]. - The company has successfully obtained all requisite licenses and approvals needed to engage in its current business operations in the PRC[50]. - The company is not subject to cybersecurity review under the Cybersecurity Review Measures, as it does not possess personal information of over one million users[49]. - The Chinese government has strengthened anti-monopoly supervision, but this has not impacted the company's ability to conduct business or accept foreign investments[49]. - The revised Provisions on Strengthening Confidentiality and Archives Administration require domestic companies to obtain approval for disclosing documents containing state secrets[54]. - The company is not required to obtain additional permissions from PRC authorities to maintain its listing status on U.S. exchanges[51]. - There are uncertainties regarding the interpretation and implementation of new regulatory requirements that may affect the company's future capital-raising activities[55]. - Recent regulations require domestic companies to complete filing procedures with the CSRC within three working days for overseas listings[129]. - The Chinese government has indicated an intent to increase oversight over overseas public offerings, potentially affecting the ability to offer securities[127]. - The PRC operating entities may face penalties for failing to comply with new filing requirements, including warnings and fines[129]. - The company has not received permission from Chinese authorities to list on U.S. exchanges, and future permission is uncertain[108]. Operational Risks - The company must maintain various approvals, licenses, and permits to operate its business, and failure to do so could adversely affect its operations[151]. - The PRC operating entities face risks related to the retention of existing clients in their Event Planning and Execution and Brand Promotion businesses[200]. - Revenue from sponsorship in the Event Hosting business is crucial, and failure to attract sponsors could adversely affect revenue[205]. - The PRC operating entities' success is tied to the popularity of hip-hop events, which may fluctuate due to competition and changing consumer preferences[208]. - The PRC operating entities face potential risks from public live events, including security threats and logistical challenges, which could affect profitability and event success[214]. - Poor execution and adverse conditions during events could lead to declining popularity and brand reputation for the PRC operating entities[215]. - Relationships with local authorities and third-party providers are crucial for the successful execution of events, particularly hip-hop events[221]. - The PRC operating entities' business could suffer if third-party service providers increase prices or fail to deliver services effectively[218]. Tax and Currency Risks - The PRC Enterprise Income Tax Law classifies offshore enterprises with "de facto management bodies" in the PRC as "resident enterprises," subjecting them to a 25% enterprise income tax rate on worldwide income[170]. - Fluctuations in exchange rates could materially affect the company's results of operations and the value of investments[165]. - The RMB appreciated over 20% against the U.S. dollar from July 2005 to July 2008, but has since fluctuated unpredictably[166]. - Limited hedging options are available in China to mitigate exposure to exchange rate fluctuations, and the company has not entered into hedging transactions to date[168]. - Changes in the conversion rate between the U.S. dollar and RMB will affect the amount of proceeds available for the PRC operating entities' business[167]. - Dividends payable to investors may be subject to a withholding tax of 10% for non-PRC enterprises or 20% for non-PRC individuals if deemed from PRC sources[171]. - The PRC government imposes controls on currency conversion, which may affect the ability to pay dividends in foreign currencies[180]. - Under the EIT Law, profits distributed to holding companies outside the PRC are subject to a withholding tax rate of 10%, which may be reduced to 5% under certain conditions[186]. Client and Supplier Dependency - Two major customers accounted for approximately 34% and 10% of total revenue for the fiscal year ended June 30, 2024[203]. - The top five customers represented approximately 75% of accounts receivable as of June 30, 2024, compared to 68% in 2023 and 72% in 2022[203]. - The PRC operating entities' revenue is increasingly dependent on a small number of customers, raising risks if any experience disruptions[202]. - For the fiscal year ended June 30, 2024, the PRC operating entities purchased 27.00% of their services from two major suppliers, down from 40.08% in the previous year[217]. - The PRC operating entities' reliance on third-party services poses risks, as disruptions could negatively impact business operations and customer growth[216].

Company Overview - Pop Culture Group (CPOP) experienced a stock price increase of 5.04%, trading at $1.25 per share with a volume of 38,635 shares and a turnover rate of 0.26% [1] - The stock's amplitude reached 5.88% [1] - The company generated $24.01 million in revenue, with a net loss of $2.37 million and an earnings per share (EPS) of -$0.97 [1] - The gross profit was reported at $1.78 million, and the price-to-earnings (P/E) ratio stands at -0.13 [1] - Currently, there are no institutional ratings available for Pop Culture Group [1] Industry Context - The overall entertainment sector experienced a 0.78% increase [2] - Notable active stocks in the sector include iQIYI, Sphere Entertainment Co., and Color Star Technology, with turnover rates of 4.79%, 3.22%, and 3.03% respectively [2] - Stocks with significant amplitude in the sector included Color Star Technology (19.63%), Alliance Entertainment Holding Corp (14.51%), and Liveone Inc. (12.73%) [2] - Pop Culture Group is known for organizing entertainment events and hip-hop-related online programs, offering event planning, execution, and marketing services to corporate clients [2] - The company generates revenue through sponsorship packages and ticket sales for hosted events [2]

Core Insights - Pop Culture Group (NASDAQ:CPOP) reported a significant revenue increase of 113% year-over-year, reaching $24 million for the last six months of 2023 compared to $11.25 million in the same period of 2022 [1] - The company achieved a consolidated gross profit of $1.78 million, a notable recovery from a loss of $2.34 million during the same timeframe in 2022 [1] - The online brand marketing and promotion business of Pop Culture Group experienced a remarkable growth of over 280% compared to the previous fiscal year [2] Stock Performance - CPOP stock saw a substantial increase of 84% on Thursday morning and has risen 177.7% since the beginning of the year [3] - The trading volume for CPOP stock exceeded 63 million shares, significantly higher than the average daily trading volume of approximately 2.6 million shares [3]

Revenue Performance - Total revenue for the six months ended December 31, 2023 was $24.0 million, representing an increase of $12.75 million, or 113%, compared to the same period in the prior year[18]. - Revenue for brand promotion increased by 280% from $5.56 million for the six months ended December 31, 2022 to $21.14 million for the same period in 2023, primarily due to cooperation with key opinion leaders (KOLs) and increased online promotion budgets[21]. - Revenue for event hosting decreased by 8% from $2.18 million in 2022 to $2.01 million in 2023, while revenue for event planning and execution decreased by 88% from $3.14 million to $0.38 million during the same period[20]. - Other revenue for the six months ended December 31, 2023 was $0.48 million, representing an increase of $0.12 million, or 33%, compared to the same period in 2022[22]. - Total revenue for the six months ended December 31, 2023, was $24,008,463, a significant increase from $11,255,771 for the same period in 2022, representing a growth of approximately 113%[51]. - For the six months ended December 31, 2023, total revenue reached $24,008,463, compared to $8,727,933 for the same period in 2022, indicating a significant increase[69]. Cost and Expenses - Cost of revenue for the six months ended December 31, 2023 increased by 63% to $22.23 million from $13.63 million in the previous period[23]. - Cost of brand promotion revenue increased by 318% from $4.74 million in 2022 to $19.83 million in 2023, in line with the growth in revenue for brand promotion[24]. - Total cost of revenue for the six months ended December 31, 2023, was $22,228,049, an increase of 63% compared to $13,627,203 for the same period in 2022[26]. - Operating expenses decreased by 26% to $4,171,201 for the six months ended December 31, 2023, compared to $2,248,683 in the same period of 2022[29]. - General and administrative expenses increased by 119% to $3,934,301 for the six months ended December 31, 2023, primarily due to bad debt allowance and increased R&D expenses[31]. - The company incurred total operating lease expenses of $43,390 for the six months ended December 31, 2023, a decrease from $91,984 in the same period of 2022[108]. Profitability and Loss - Gross profit improved to $1,780,414 in the six months ended December 31, 2023, from a loss of $2,371,432 in the same period of 2022, marking a change of $4,151,846[28]. - The operating loss narrowed to $2,390,000 in the six months ended December 31, 2023, from $4,650,000 in the same period of 2022[33]. - Net loss attributable to equity holders was $2,370,000 for the six months ended December 31, 2023, compared to a net loss of $4,710,000 in the same period of 2022[35]. - The net loss for the six months ended December 31, 2023, was $(648,451), a reduction from $(4,118,522) in the prior year[69]. - For the six months ended December 31, 2023, the company reported a net loss of $2,365,249, compared to a net loss of $4,714,381 for the same period in 2022, indicating a 49.8% improvement in net loss year-over-year[128]. Cash Flow and Liquidity - Cash and cash equivalents as of December 31, 2023, totaled $1,690,000, down from $3,630,000 as of June 30, 2023[36]. - Net cash used in operating activities was $586,093 for the six months ended December 31, 2023, significantly reduced from $5,787,201 in the same period of 2022[40]. - The company experienced a cash outflow of $586,093 from operating activities in 2023, a significant improvement from the outflow of $5,787,201 in 2022[55]. - The company’s cash balance at the end of the period was $192,894, down from $1,095,007 at the beginning of the period, indicating a decrease of approximately 82.4%[130]. Assets and Liabilities - Total current assets increased to $34,978,042 from $32,253,714, reflecting a growth of about 8.4%[47]. - Total current liabilities rose to $16,528,512, up from $12,827,546, marking an increase of approximately 28%[47]. - Total assets reached $41,191,052, compared to $39,045,328, showing an increase of about 5.5%[48]. - As of December 31, 2023, total assets amounted to $31,026,866, while total liabilities were $27,308,942[68]. - Accounts payable increased significantly to $5,556,663 from $2,697,089, representing a growth of about 106%[47]. - The total shareholders' equity decreased to $23,909,742 from $26,178,148, indicating a decline of approximately 8.6%[48]. Shareholder Information - The company conducted a share consolidation on October 27, 2023, converting every 10 Class A and Class B ordinary shares into one ordinary share, impacting all share numbers retrospectively[113]. - The company issued 1,500,000 Class A ordinary shares at a price of $2.86 per share, raising a total of $4,290,000 through subscription agreements on March 19, 2024[118]. - The company’s total shareholders' equity decreased from $26,735,296 as of June 30, 2023, to $24,603,915 as of December 31, 2023, a decline of approximately 8.0%[125]. Future Outlook - The company expects the adverse effects of the COVID-19 pandemic on its business operations to gradually phase out in the following years[15]. - The company expects to obtain a new credit line of not less than RMB8 million (approximately $1.1 million) in 2024[37].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of even ...

Revenue Performance - Total revenue for the six months ended December 31, 2022, was $11.26 million, a decrease of $8.89 million, or 44%, year-over-year[15]. - Revenue from event hosting decreased by 82% to $2.18 million, while revenue from event planning and execution decreased by 53% to $3.14 million[16]. - Brand promotion revenue increased by 282% to $5.56 million, driven by a growth in the number of advertisers[16]. - Total revenue for the six months ended December 31, 2022, was $8,727,933, a decline of 35.5% compared to $13,479,761 for the same period in 2021[58]. Profitability - Gross profit decreased by 158% to negative $2.34 million, with a gross margin of negative 21% compared to 20% in the previous period[20]. - Operating profit for the first six months of fiscal 2023 was $4.65 million, compared to $0.96 million in the same period of fiscal 2022[25]. - Net loss attributable to the Company's equity holders for the first six months of fiscal 2023 was $4.71 million, compared to a net profit of $0.45 million in the same period of fiscal 2022[28]. - Net income for the six months ended December 31, 2022, was $(4,118,522), compared to a net income of $1,090,050 for the same period in 2021, indicating a significant loss[58]. - The company reported a net income loss of $4,714,381 for the six months ended December 31, 2022, compared to a net income of $446,635 for the same period in 2021[119]. Expenses - Total operating expenses decreased by 26% to $2.25 million, but as a percentage of total revenue, it increased to 20.0% from 15.1%[22]. - Selling and marketing expenses for the six months ended December 31, 2022 were $448,371, representing a 131% increase year-over-year from $193,720 in the same period of the previous fiscal year[23]. - General and administrative expenses for the six months ended December 31, 2022 were $1.80 million, a decrease of 37% year-over-year from $2.84 million in the previous period[24]. - The company recorded bad debt expenses of $290,138 for the six months ended December 31, 2022, compared to $1,063,983 for the same period in 2021, showing a decrease of approximately 72.7%[64]. Cash Flow and Liquidity - As of December 31, 2022, the combined balance of cash, cash equivalents, term deposits, and short-term investments amounted to $3.86 million, down from $14.4 million as of June 30, 2022[29]. - Net cash used in operating activities was $5.79 million for the six months ended December 31, 2022, compared to $5.5 million for the same period of the last fiscal year[31]. - The net cash used in investing activities was $7.46 million for the six months ended December 31, 2022, an increase of $7.38 million compared to $0.07 million in the same period of fiscal 2022[32]. - The net cash generated from financing activities was $0.80 million for the six months ended December 31, 2022, a decrease of $32.4 million compared to the same period of the last fiscal year[33]. - The company reported a cash balance of $1,159,147 at the end of 2022, down from $28,510,993 at the end of 2021[45]. - Cash at the end of the period was $241,839, a significant decrease from $25,256,901 at the end of 2021[123]. Assets and Liabilities - Total assets as of December 31, 2022 were $61.17 million, down from $64.37 million as of June 30, 2022[39]. - Total liabilities as of December 31, 2022, were $13,229,412, an increase from $11,110,127 as of June 30, 2022, representing an increase of approximately 19.0%[58]. - Total current assets decreased from $13,335,153 as of June 30, 2022, to $7,991,911 as of December 31, 2022[114]. - The balance of restricted net assets was $16,665,441 as of December 31, 2022, compared to $16,557,042 as of June 30, 2022[109]. Shareholder Equity - As of June 30, 2022, total shareholders' equity was $52,772,352, with ordinary shares amounting to $24,050,000[43]. - The statutory reserve balance increased from $1,391,770 on December 31, 2021, to $1,608,689 on December 31, 2022[107]. - The company’s retained earnings increased from $7,813,333 as of December 31, 2021, to $12,527,714 as of December 31, 2022[116]. - The balance of retained earnings as of December 31, 2022, was $7,813,333, down from $12,527,714 in June 2022[121]. Foreign Currency and Other Adjustments - The company experienced a foreign currency translation loss of $(893,208) as of December 31, 2022[43]. - The company had a foreign currency translation adjustment of $(893,208) for the period ending December 31, 2022[121]. Acquisitions and Interests - The company has a 60% controlling interest in Shenzhen Jam box Technology Co., Ltd., and a 51% controlling interest in both Fujian Shuzhi Fuxin Exhibition Co., Ltd. and Zhongpu Shuyuan (Xiamen) Digital Technology Co., Ltd.[49]. - The company completed the acquisition of non-controlling interests in Pop Culture on February 9, 2021, gaining 100% control over Pop Culture[53].

VIE Structure and Regulatory Risks - The company operates as a holding entity incorporated in the Cayman Islands, controlling its operations through a Variable Interest Entity (VIE) structure in China, which poses unique risks to investors [10]. - The VIE Agreements allow the company to consolidate the financial results of the VIE and its subsidiaries under U.S. GAAP, despite not holding direct equity interests [15]. - The company faces risks related to the interpretation and application of PRC laws, which could impact the validity and enforcement of the VIE Agreements [29]. - The VIE Agreements may not provide the same level of operational control as direct ownership, leading to potential breaches by Xiamen Pop Culture or its shareholders [31]. - The VIE Agreements are governed by PRC laws, which may limit the company's ability to enforce rights and consolidate financial results of Xiamen Pop Culture [70]. - If Xiamen Pop Culture is no longer considered a VIE, the company may not be able to consolidate its financial results, adversely affecting operating results and financial condition [72]. - The company operates through a Variable Interest Entity (VIE) structure, which is subject to regulatory risks in China, potentially impacting its ability to consolidate financial results [62]. - The VIE Agreements may not provide effective control over the operations of Xiamen Pop Culture, posing risks to the company's operational stability [67]. Financial Performance - Total consolidated revenue for the fiscal year ended June 30, 2022, was $32,281,543, an increase from $25,526,557 in 2021 [52]. - Net income for the fiscal year ended June 30, 2022, was $687,888, compared to a net loss of $330,734 in 2021 [52]. - Gross profit for the fiscal year ended June 30, 2022, was $6,245,532, up from $7,224,063 in 2021 [52]. - The company incurred a net loss of $1,583,761 for the fiscal year ended June 30, 2022, compared to a loss of $318,634 in 2020 [52]. - Total current assets increased to $50,831,524, up from $32,410,117, representing a growth of approximately 56.9% year-over-year [56]. - Total assets reached $64,367,968, compared to $34,429,335, indicating a significant increase of about 87.1% [56]. - Total liabilities amounted to $11,595,616, a slight increase from $15,101,230, reflecting a decrease of approximately 23.5% [56]. - Total shareholders' equity rose to $52,772,352, up from $19,328,105, marking an increase of around 173.5% [56]. Cash Flow and Dividends - Cash transfers between the company and its subsidiaries included approximately $7.08 million transferred in July 2021 from the company to Pop Culture HK, which then transferred approximately $7.05 million to Heliheng [41]. - No dividends or distributions have been made to shareholders, and the company intends to retain future earnings for business expansion [42]. - The company has not distributed any earnings or settled amounts owed under the VIE Agreements as of the date of the annual report [38]. - The company’s ability to distribute dividends may be limited by debt instruments governing its PRC subsidiaries [46]. - The company’s cash dividends, if any, will be paid in U.S. dollars and may be subject to PRC withholding tax [45]. Regulatory Environment - The Chinese government has strengthened anti-monopoly supervision, establishing the National Anti-Monopoly Bureau and revising the Anti-Monopoly Law effective August 1, 2022 [34]. - The company has successfully obtained all requisite licenses and approvals to operate in the PRC, including business licenses and Internet Content Provider Licenses [35]. - The company has not received any permissions or approvals denied by Chinese authorities for issuing securities to foreign investors [35]. - The company has not engaged in monopolistic behaviors that would be subject to recent anti-monopoly regulatory actions [34]. - The company is required to maintain various approvals, licenses, and permits to operate its business in China, and failure to do so could adversely affect operations [132]. Tax and Currency Risks - The PRC government imposes controls on the convertibility of Renminbi into foreign currencies, which may restrict the company's ability to pay dividends [45]. - The company may be classified as a PRC "resident enterprise," subjecting it to a 25% enterprise income tax on worldwide income, which could reduce net income [150]. - Indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies are subject to specific tax regulations, potentially leading to tax liabilities [154]. - Non-resident enterprises must declare tax payable on indirect transfers, with penalties for non-compliance, impacting financial planning [156]. - The withholding tax rate for profits distributed to offshore subsidiaries is generally 10%, but may be reduced to 5% under certain conditions related to the Double Tax Avoidance Arrangement [162]. - Fluctuations in the RMB against the U.S. dollar could materially impact the company's financial results and cash flows [146]. Operational Challenges - The company faces uncertainties regarding the interpretation and application of current or future PRC laws and regulations, which could affect its business operations [64]. - Changes in China's economic, political, or social conditions could materially affect the business and operations of the PRC operating entities [86]. - The PRC operating entities face risks related to live events, including logistical challenges and potential disruptions from external factors, which could impact profitability and event success [191]. - The PRC operating entities' business is highly dependent on the popularity of hip-hop events, and any decline in this popularity could adversely affect sponsorship revenue and overall business performance [186]. - The PRC operating entities face significant challenges in attracting new sponsors, clients, and fans, which are influenced by their marketing effectiveness and brand recognition [199]. Customer and Revenue Concentration - For the fiscal year ended June 30, 2022, three major customers accounted for approximately 48% of the PRC operating entities' total revenue, with Fujian Maibo Culture Communication Co., Ltd. at 29%, Guangzhou Taiji Advertising Co., Ltd. at 12%, and Heng'an (China) Paper Industry Co., Ltd. at 7% [179]. - As of June 30, 2022, the top five customers represented approximately 72% of the net accounts receivable balance, indicating a high concentration of revenue dependency [179]. Compliance and Legal Risks - The company may face substantial costs and resource diversion due to administrative and court proceedings in the PRC, which may be protracted and unpredictable [92]. - The legal environment in the PRC is less developed than in the U.S., which may complicate the enforcement of legal rights and increase operational risks [89]. - The company must navigate complex procedures for mergers and acquisitions, which could hinder its ability to expand through strategic acquisitions [173]. - The approval of the CSRC may be required for offerings, and failure to obtain such approval could result in sanctions and operational limitations [169]. Brand and Market Competition - Maintaining brand recognition is critical for the PRC operating entities to expand their network of sponsors and clients, as brand awareness significantly contributes to business success [198]. - The PRC operating entities operate in a highly competitive market, facing competition from major companies like Alibaba, Tencent, and Baidu, which are investing in similar services [209]. - The inability to maintain or acquire clients could limit business growth and lead to reduced profitability due to competitive pricing pressures [209]. - Negative publicity can adversely affect brand recognition and may stem from various issues, including alleged misconduct and security breaches [200].

Revenue Performance - Total revenue for fiscal year 2022 was $32.28 million, a 26% increase from $25.53 million in fiscal year 2021[1] - Revenue from brand promotion surged by 1,064% to $8.73 million, up from $0.75 million in fiscal year 2021[5] - Total revenue for 2022 was $32,281,543, representing a 26.8% increase from $25,526,557 in 2021[27] Profitability - Net income decreased to $0.69 million in fiscal year 2022, compared to $4.27 million in fiscal year 2021[2] - Gross profit fell by 14% to $6.25 million, with a gross margin of 19% compared to 28% in fiscal year 2021[11] - Gross profit decreased to $6,245,532 in 2022, down 13.5% from $7,224,063 in 2021[27] - Net income attributable to shareholders for 2022 was $787,958, a significant decline from $4,267,542 in 2021[27] - The company reported a comprehensive loss of $185,915 in 2022, contrasting with a comprehensive income of $5,603,299 in 2021[27] - Basic and diluted net income per share for 2022 was $0.04, down from $0.25 in 2021[27] - Net income for 2022 was $687,888, a significant decrease from $4,267,542 in 2021[30] Expenses - The cost of revenue increased by 42% to $26.04 million, up from $18.30 million in fiscal year 2021[8] - Operating expenses rose by 247% to $4.83 million, from $1.39 million in fiscal year 2021[13] - Operating expenses rose to $4,829,065 in 2022, up 3.5 times from $1,392,137 in 2021[27] - Total depreciation and amortization expenses increased to $310,343 in 2022 from $243,905 in 2021[30] - The company paid $398,370 in income tax for 2022, compared to $34,765 in 2021[30] - Interest expense paid was reported at $56,733, a decrease from $235,361 in the previous year[30] Cash and Assets - As of June 30, 2022, cash and cash equivalents were $14.40 million, significantly up from $1.32 million a year earlier[20] - Total current assets increased to $50,831,524 in 2022, up 56.9% from $32,410,117 in 2021[25] - Cash reserves surged to $14,396,032 in 2022, compared to $1,319,977 in 2021, marking a 1,087.5% increase[25] - The company reported a cash balance of $14,396,032 at the end of the year, up from $1,319,977 at the beginning of the year[30] Liabilities and Equity - Total liabilities decreased to $11,595,616 in 2022, down 23.3% from $15,101,230 in 2021[25] - Total shareholders' equity increased to $52,772,352 in 2022, up from $19,328,105 in 2021, reflecting a growth of 173.5%[25] Operational Highlights - The company served 21 clients in 56 events for event planning and execution during the fiscal year[2] - The company aims to enhance its SaaS platform, which had over 60,000 students using it as of June 30, 2022[3] - The company plans to invest in metaverse-related business to provide a comprehensive hip-hop experience to users[3] Cash Flow - Cash flows from operating activities showed a net cash outflow of $19,365,046 in 2022, compared to an outflow of $4,037,332 in 2021[30] - Cash used in investing activities totaled $802,733, with a significant purchase of intangible assets at $720,000[30] - The effect of exchange rate changes contributed an increase of $184,902 to cash flows[30] - Proceeds from the issuance of shares amounted to $33,630,162 in 2022, a notable increase compared to previous years[30] - The company incurred a loss from the disposal of property and equipment amounting to $1,237 in 2022[30]