Through our VIE, Leaping Media Group Co., Ltd. (“LMG”), we are a multimedia service provider based in Shenyang, China, with business relationships with national advertising clients. We are currently engaged in four major businesses, multi-channel advertising (the “Multi-Channel Advertising Business”), event planning and execution (the “Event Planning and Execution Business”), film and TV program production (the “Film Production Business”), and movie theater operation (the “Movie Theater Operating Business”). Currently, our primary market is the two provinces of Heilongjiang and Liaoning.
Use of proceeds:We estimate that we will receive net proceeds from this offering, after deducting the estimated underwriting discounts and commissions and the estimated offering expenses payable by us and based upon an assumed initial public offering price of US$5 per Ordinary Share, of approximately US$3,304,502 if we sell the minimum number of Ordinary Shares and approximately US$16,544,502 if we sell the maximum number of Ordinary Shares.We plan to use the net proceeds we receive from this offering for the following purposes: Use of Net Proceeds 2,000,000 3,000,000 1,200,000 shares shares 4,000,000 shares 50% of 75% of shares Minimum maximum maximum Maximum offering offering offering offering amount amount amount amount Expand advertising network US$991,351 US$2,113,351 US$3,538,351 US$4,963,351 Invest in films and movie theaters US$991,351 US$2,113,351 US$3,538,351 US$4,963,351 Recruit senior-level employees US$330,450 US$ 704,450 US$1,179,450 US$1,654,450 Mergers and acquisitions within the industry US$991,351 US$2,113,351 US$3,538,351 US$4,963,351 Total Net Proceeds US$3,304,502 US$7,044,502 US$11,794,502 US$16,544,502 The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering.Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering.If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.As an offshore holding company, we are permitted under PRC laws and regulations to provide funding to our PRC subsidiary through loans or capital contributions, subject to applicable regulatory approvals.We currently cannot make loans or capital contributions to our PRC subsidiary without first obtaining regulatory approvals, and if we decide to use the proceeds from this offering within the PRC, we cannot assure you that we will be able to obtain these regulatory approvals on a timely basis, if at all.We do not, however, plan to use the proceeds from this offering to provide a direct funding to WFOE or to our VIE.The uses specified above can generally be accomplished without transferring funds into the PRC since we plan for a great majority of these activities to be conducted offshore, including (1) expanding our advertising network to movie theaters outside the PRC, (2) investing in films and movie theaters outside the PRC, (3) conducting recruitment in Hong Kong or overseas, and (4) conducing any merger and acquisition using an offshore investment structure.Moreover, we believe the current cash reserves held by WFOE and our VIE, combined with the cash generated from their operating activities, will be sufficient for our operating and expansion needs within the PRC over the foreseeable future.
Competition:Our Multi-Channel Advertising Business and Event Planning and Execution Business compete primarily with several different groups of competitors: • advertising companies that operate pre-movie advertising networks, and out-of-home digital advertising networks beyond the film sector; • in-house advertising companies of cinemas that may operate their own advertising networks; and • other advertising media companies, such as Internet, street furniture displays, billboards and public transport advertising companies, and with traditional advertising media, such as newspapers, TV, magazines and radio, some of which may advertise near the cinemas in which we have exclusive contract rights to operate pre-movie advertising.We compete for advertising clients primarily on the basis of network size and coverage, location, price, quality of our programs, and the range of services that we offer and our brand recognition.In the advertising market, our main competitors include Focus Media Holding Ltd., JCDecaux, and VisionChina Media Inc., all of which operate in multiple cities in China.In addition, we compete with local advertising providers in each geographic market where we have a presence.Our major competitor in the Heilongjiang market is Harbin Zhuri Media Co., Ltd.Our major competitors in the Liaoning market are Shenyang Focus Media Co., Ltd. and Shenyang Xinliaoguang Advertisement Co., Ltd.Inside the pre-movie advertising market of Heilongjiang and Liaoning, we believe that we currently do not have any credible competitors because as of September 30, 2019, we occupied 82% of the market share in the pre-movie advertising market in Heilongjiang and Liaoning.Companies that offer Multi-Channel Advertising Services in Northeast China include Harbin Zhuri Media Co., Ltd. and Jilin Xinzhan Media Co., Ltd.Although we currently do not operate our Multi-Channel Advertising Business outside Heilongjiang and Liaoning, we plan to expand it to cover major cities in eight provinces on the eastern seaboard and in the central area of China.In the pre-movie advertising markets outside Heilongjiang and Liaoning, our potential competitors include Shanghai Jingmao Culture Communication Co., Ltd., and Wanda Media Co., Ltd.Many competitors have a longer history than us in the pre-movie advertising industry and may have a more extensive network that extends beyond the film sector and offers a more diversified portfolio.This may make their networks more attractive to advertising clients and less reliant on a particular advertising sector.In addition, we may also face competition from new entrants into the pre-movie advertising sector in the future.Our Film Production Business competes with other investors and distributors of films and TV programs, internet media and entertainment services, as well as major TV stations.