Cover
Cover | 6 Months Ended |
Jun. 30, 2020 | |
Cover [Abstract] | |
Entity Registrant Name | China VTV Ltd |
Entity Central Index Key | 0001639234 |
Document Type | S-1 |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Current Assets | |||
Cash | $ 91,177 | $ 51,551 | $ 17,548 |
Accounts receivable | 652,283 | 79,020 | 0 |
Advances to suppliers | 5,066,081 | 8,648,546 | 0 |
Inventories | 7,422,951 | 4,310,519 | 0 |
Copyrights, net | 8,295,865 | 6,609,260 | 0 |
Other receivables and current assets | 3,580,081 | 3,400,963 | 0 |
Total current assets | 25,108,438 | 23,099,859 | 17,548 |
Investment in equity investees, net | 3,255,252 | 3,275,929 | 0 |
Contingent receivable | 608,914 | 608,914 | 0 |
Capital assets, net | 678,489 | 693,192 | 0 |
Intangible assets, net | 1,417,548 | 1,530,000 | 0 |
Goodwill | 21,552,596 | 21,552,596 | 0 |
Right-of-use assets, net | 63,180 | 78,638 | 0 |
Total Assets | 52,684,417 | 50,839,128 | 17,548 |
Current Liabilities | |||
Accounts payable | 611,677 | 601,671 | 0 |
Wages payable | 361,385 | 304,509 | 23,163 |
Short-term debt | 2,201,140 | 2,218,050 | 0 |
Interest payable | 120,603 | 106,268 | 0 |
Due to related parties | 2,470,867 | 3,819,200 | 592,739 |
Deferred revenue | 4,346,200 | 2,547,180 | 0 |
Acquisition liabilities | 36,931,000 | 36,931,000 | 0 |
Taxes payable | 1,459,420 | 222,766 | 0 |
Lease liabilities | 69,320 | 84,663 | 0 |
Other payables | 545,347 | 4,331,023 | 0 |
Total current liabilities | 49,116,959 | 51,166,330 | 615,902 |
Total liabilities | 49,116,959 | 51,166,330 | 615,902 |
Stockholders' Equity (Deficit) | |||
Common stock, par value $0.001, 600,000,000 shares authorized, 284,280,000 and 284,280,000 shares issued and outstanding as of May 31, 2020 and February 29, 2020, respectively | 284,280 | 284,280 | 105,000 |
Additional paid-in capital | 6,896,216 | 3,681,379 | 1,634,576 |
Subscription receivables and shares issuable, net | (311,345) | (446,025) | 0 |
Accumulated deficit | (2,924,933) | (3,844,738) | (2,337,167) |
Accumulated other comprehensive loss | (236,173) | (2,098) | (763) |
Total stockholders' equity (deficit) attributable to the Company | 3,708,045 | (327,202) | (598,354) |
Noncontrolling interests | (140,587) | 0 | 0 |
Total shareholders' equity (deficit) | 3,567,458 | (327,202) | (598,354) |
Total Liabilities and Stockholders' Equity | $ 52,684,417 | $ 50,839,128 | $ 17,548 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Stockholders' Deficit | |||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 600,000,000 | 600,000,000 | 600,000,000 |
Common stock, shares issued | 284,280,000 | 284,280,000 | 105,000,000 |
Common stock, shares outstanding | 284,280,000 | 284,280,000 | 105,000,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) (Unaudited) | ||||
Net revenue | $ 3,721,618 | $ 0 | $ 3,834 | $ 0 |
Cost of revenue | 1,581,567 | 0 | 1,278 | 0 |
Gross profit | 2,140,051 | 0 | 2,556 | 0 |
General and administrative expenses | 1,326,517 | 103,039 | 1,271,630 | 13,426 |
Income (Loss) from operations | 813,534 | (103,039) | (1,507,255) | (875,007) |
Sales and marketing expenses | 6,390 | 0 | ||
Interest expense | (15,542) | 0 | (316) | 0 |
Research and development expenses | 231,791 | 861,581 | ||
Investment impairment | (19,200) | 0 | 0 | 0 |
Other income | 426 | 0 | 0 | 0 |
Interest expense | 15,542 | 0 | 316 | 0 |
Income (Loss) | 779,218 | (103,039) | (1,507,571) | (875,007) |
Investment impairment | 19,200 | 0 | 0 | 0 |
Provision for income tax | 0 | 0 | 0 | 0 |
Net income (loss) | 779,218 | (103,039) | (1,507,571) | (875,007) |
Net income (loss) attributable to noncontrolling interests | (140,587) | 0 | 0 | 0 |
Net income (loss) attributable to the company | 919,805 | (103,039) | 0 | 0 |
Other comprehensive income (loss): | ||||
Foreign currency translation loss | (234,075) | (227) | 1,335 | 763 |
Comprehensive income (loss) | 685,730 | (103,266) | (1,508,906) | (875,770) |
Net income (loss) per common share: | ||||
Foreign currency translation loss | $ 234,075 | $ 227 | $ (1,335) | $ (763) |
Basic and diluted | $ 0 | $ 0 | $ (0.01) | $ (0.01) |
Weighted average number of common shares outstanding: | ||||
Basic and diluted | 284,280,000 | 137,655,435 | 205,071,288 | 105,000,000 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-in Capital | Subscription Receivables Shares Issuable | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income Loss [Member] | Noncontrolling Interest |
Balance, shares at Feb. 28, 2018 | 75,000,000 | ||||||
Balance, amount at Feb. 28, 2018 | $ 247,416 | $ 75,000 | $ 1,634,576 | $ 0 | $ (1,462,160) | ||
Net loss for the period | (875,007) | ||||||
Net income for the period | (875,007) | (875,007) | |||||
Issuance of common stock for cash, shares | 30,000,000 | ||||||
Issuance of common stock for cash, amount | 30,000 | $ 30,000 | |||||
Balance, shares at Feb. 28, 2019 | 75,000,000 | ||||||
Balance, amount at Feb. 28, 2019 | (598,354) | $ 105,000 | 1,634,576 | 0 | (2,337,167) | $ (763) | $ 0 |
Issuance of common stock for the acquisition of China VTV Ltd., shares | 115,550,000 | ||||||
Issuance of common stock for the acquisition of China VTV Ltd., amount | 0 | $ 115,550 | (115,550) | ||||
Net loss for the period | (103,039) | (103,039) | 0 | ||||
Net income for the period | (103,039) | ||||||
Foreign currency translation | (227) | (227) | 0 | ||||
Balance, shares at May. 31, 2019 | 190,550,000 | ||||||
Balance, amount at May. 31, 2019 | (701,620) | $ 220,550 | 1,519,026 | 0 | (2,440,206) | (990) | 0 |
Balance, shares at Feb. 28, 2019 | 75,000,000 | ||||||
Balance, amount at Feb. 28, 2019 | (598,354) | $ 105,000 | 1,634,576 | 0 | (2,337,167) | (763) | 0 |
Issuance of common stock for the acquisition of China VTV Ltd., shares | 115,550,000 | ||||||
Issuance of common stock for the acquisition of China VTV Ltd., amount | 1,762 | $ 115,550 | (113,788) | ||||
Proceed received from subscriber | 114,678 | $ 25,100 | 707,863 | (618,285) | |||
Net loss for the period | (1,507,571) | ||||||
Net income for the period | (1,507,571) | (1,507,571) | |||||
Foreign currency translation | (1,335) | ||||||
Compensation cost for common stock issued, shares | 14,630,000 | ||||||
Compensation cost for common stock issued, amount | 872,914 | $ 14,630 | 858,284 | ||||
Compensation cost for stock options granted | 9,530 | 9,530 | |||||
Stock issued for cash, shares | 25,100,000 | ||||||
Issuance of common stock for the acquisition of Butterfly Effect Culture Media (Beijing) Co., Ltd., shares | 24,000,000 | ||||||
Issuance of common stock for the acquisition of Butterfly Effect Culture Media (Beijing) Co., Ltd., amount | 608,914 | $ 24,000 | 584,914 | ||||
Shares issuable for services | 172,260 | 172,260 | |||||
Balance, shares at Feb. 29, 2020 | 284,280,000 | ||||||
Balance, amount at Feb. 29, 2020 | (327,202) | $ 284,280 | 3,681,379 | (446,025) | (3,844,738) | (2,098) | 0 |
Proceed received from subscriber | 134,680 | 134,680 | |||||
Proceed received from sale of 15% interest in subsidiary | 3,214,837 | 3,214,837 | |||||
Net loss for the period | 779,218 | ||||||
Net income for the period | 779,218 | 919,805 | (140,587) | ||||
Foreign currency translation | (234,075) | (234,075) | |||||
Balance, shares at May. 31, 2020 | 284,280,000 | ||||||
Balance, amount at May. 31, 2020 | $ 3,567,458 | $ 284,280 | $ 6,896,216 | $ (311,345) | $ (2,924,933) | $ (236,173) | $ (140,587) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Cash Flows from Operating Activities | ||||
Net income (loss) | $ 779,218 | $ (103,039) | $ (1,507,571) | $ (875,007) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||
Depreciation and amortization | 871,239 | 0 | 23,680 | 0 |
Depreciation and amortization | 183,180 | 0 | ||
Changes in assets and liabilities: | ||||
Stock-based compensation | 945,206 | 343,522 | ||
Accounts receivable | (573,263) | 0 | 0 | 0 |
In advances to suppliers | 3,582,465 | 0 | 0 | 0 |
Inventories | (3,112,432) | 0 | 0 | 0 |
Other receivables and current assets | (176,203) | 0 | 0 | 0 |
Accounts payable | 10,006 | 0 | 20,890 | 0 |
Wages payable | 56,876 | 0 | 191,977 | 0 |
Interest payable | 14,335 | 0 | 0 | 0 |
Deferred revenue | 1,799,020 | 0 | 0 | 0 |
Taxes payable | 1,236,654 | 0 | 0 | 0 |
Accrued expenses and other payable | (3,801,019) | 16,020 | 0 | 0 |
Net cash provided by (used in) operating activities | 686,896 | (87,019) | (471,808) | (508,322) |
Cash Flows from Investing Activities | ||||
Acquisition of copyrights and intangible assets | (2,414,308) | 0 | 0 | 0 |
Proceeds from sale of ownership interest in subsidiary | 3,214,837 | 0 | 0 | 0 |
Purchase of equipment | (111,779) | 0 | ||
Net cash provided by investing activities | 800,529 | 0 | (78,466) | 0 |
Cash Flows from Financing Activities | ||||
(Decrease) increase in due to related parties | (1,348,333) | 79,522 | ||
Cash acquired from business acquisition | 33,313 | 0 | ||
Decrease in short-term debt | (16,910) | 0 | 0 | 0 |
Net cash provided by (used in) financing activities | (1,365,243) | 79,522 | 506,476 | 60,918 |
Effect of exchange rate changes on cash and cash equivalents | (82,556) | 0 | 77,801 | 413,501 |
(Decrease) increase in due to related parties | 391,797 | 30,918 | ||
Net decrease in cash and cash equivalents | 39,626 | (7,497) | 34,003 | (33,903) |
Decrease in short-term debt | 16,910 | 0 | 0 | 0 |
Cash and Cash Equivalents | ||||
Proceeds from issuance of ordinary shares | 114,679 | 30,000 | ||
Beginning | 51,551 | 17,548 | 17,548 | 51,451 |
Ending | 91,177 | 10,051 | 51,551 | 17,548 |
Cash paid during the year for: | ||||
Interest expenses | 2,202 | 0 | 0 | 0 |
Income taxes | $ 0 | $ 0 | 0 | 0 |
Noncash Financing and Investment Activities: | ||||
Issuance of common stock for equity acquisition | 0 | 0 | ||
Issuance of common stock for subscription receivables | $ 0 | $ 0 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
ORGANIZATION AND BUSINESS | ||
NOTE 1. ORGANIZATION AND BUSINESS | China VTV Limited, 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”) was incorporated on January 9, 2015 under the laws of Hong Kong. China VTV has developed its own blockchain-operated and cloud-based application platform (the “APP Platform”) that distributes streaming media as a standalone product directly to viewers over the internet, bypassing telecommunications, multichannel televisions, and broadcast television platforms that traditionally act as a controller or distributor of such content. On May 6, 2019, pursuant to a Share Exchange Agreement among China VTV Limited, China VTV and its shareholders, China VTV Limited issued an aggregate of 115,550,000 shares of its common stock to the shareholders of China VTV in exchange for all of the issued and outstanding equity interests of China VTV and five individuals who provided prior services to China VTV. As a result, China VTV has become a wholly-owned subsidiary of China VTV Limited. The acquisition of China VTV has been accounted for as a reverse acquisition (the “Reverse Merger”), and the business of China VTV became the business of China VTV Limited. At the time of the Reverse Merger, China VTV Limited was not engaged in any active business. Butterfly Effect Culture Media (Beijing) Co., Ltd. (the “Butterfly Effect”) was formed under the laws of the People’s Republic of China (the “PRC”) on February 23, 2016.Butterfly Effect is primarily engaged in literary adaptation business and centers its operations on internet Chinese literary and literary adaptation for TV shows, movies, audible books and mobile phone video games that are primarily distributed through online platforms. On February 24, 2020 (the “Closing Date”), China VTV Limited, VTV Global Culture Media (Beijing) Co., Ltd., a Chinese wholly-foreign-owned entity and a wholly-owned subsidiary of China VTV Limited (the “WFOE”), Butterfly Effect, and each and all of the Equity Holders of the Butterfly Effect closed the transactions contemplated under an Acquisition Agreement. Pursuant to this Acquisition Agreement, China VTV Limited effectively controls Butterfly Effect Culture Media (Beijing) Co., Ltd. via a series of VIE Agreements, which have been executed by the WFOE, Butterfly Effect Culture Media (Beijing) Co., Ltd. and each Butterfly Effect’s Equity Holder on the Closing Date. On February 25, 2020, in accordance with the terms of the Acquisition Agreement, the Company issued a total of 24,000,000 restricted shares of its common stock to the Butterfly Effect’s Equity Holders. The Acquisition is accounted for as a regular acquisition pursuant to which China VTV Limited is considered the acquiring entity for accounting purposes in accordance with generally accepted accounting principles in the United States of America. Following the acquisition, China VTV Limited and its consolidated subsidiaries and variable interest entities (“VIE”) are referred to collectively herein as the “Company”. The Company plans to focus on the business of building and operating of LED advertising billboards in South Asia, Australia, the United States (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 the PRC through the internet. The Company is currently exploring a model to distribute contents, such as TV show episodes, produced by the Company on its online streaming platform. | China VTV Limited (formerly known as “T-Bamm”, the “Company”) was incorporated in the State of Nevada on February 19, 2015 and established a fiscal year end of February 28. The Company is a holding company and has not carried out substantive business operations of its own. China VTV Ltd. (“China VTV”) was incorporated on January 9, 2015 under the laws of Hong Kong. China VTV is developing an Over-The-Top (the “OTT”) platform that distributes streaming media as a standalone product directly to viewers over the internet, bypassing telecommunications, multichannel televisions, and broadcast television platforms that traditionally act as a controller or distributor of such content. On March 15, 2019, the Company, China VTV and its shareholders entered into a share purchase/exchange agreement (the “Share Exchange Agreement”), pursuant to which the Company issued an aggregate of 110,550,000 shares of its common stock to all of the shareholders of China VTV in prorated amounts in exchange for all of the issued and outstanding equity interests of China VTV on May 6, 2019 (the “Closing Date”). Effective on the Closing Date, pursuant to the Share Exchange Agreement, the Company issued an aggregate of 115,550,000 shares of common stock of the Company to the shareholders of China VTV in exchange for all of the issued and outstanding equity interests of China VTV and five individuals who provided prior services to China VTV. As a result, China VTV has become a wholly-owned subsidiary of the Company. The acquisition of China VTV has been accounted for as a reverse acquisition (the “Reverse Merger”), and the business of China VTV became the business of the Company. At the time of the Reverse Merger, the Company was not engaged in any active 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 (the “WFOE”), Butterfly Effect Culture Media (Beijing) Co., Ltd. (the “Target”), a corporation formed under the laws of the People’s Republic of China (the “PRC”), and each and all of the equity holders of the Target (each, a “Target Equityholders”, and collectively, “Target Shareholders”) entered into a business acquisition agreement (the “Acquisition Agreement”), pursuant to which the Company through its WFOE agreed to acquire the Target through a series of management agreements (the “VIE Agreements”) to effectively control the Target (the “Acquisition”). In accordance with the Acquisition Agreement, and in consideration for the effective control over the Target, the Company agreed to issue an aggregate of 24,000,000 shares of its common stock (the “Common Stock”) (the “Stock Consideration”) to the Target Equityholders pro rata in accordance with the Target equity holder equity percentage. 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 Target Equityholders pro rata with the Target equity holder’s equity percentage over a period as set forth therein and in the first amended acquisition agreement (“Amendment No. 1”) dated December 28, 2019. On February 24, 2020 (the “Closing Date”), the Company and the Target closed the transactions contemplated under the Acquisition Agreement, as amended (the “Closing”), pursuant to which the Company effectively controls Butterfly Effect Culture Media (Beijing) Co., Ltd. via the VIE Agreements, which have been executed by the WFOE, Butterfly Effect Culture Media (Beijing) Co., Ltd. and each Target Equityholder on the Closing Date. On February 25, 2020, in accordance with the terms of the Acquisition Agreement, the Company issued a total of 24,000,000 restricted shares of its common stock to the Target Equityholders. The Acquisition is accounted for as a regular acquisition pursuant to which the Company is considered the acquiring entity for accounting purposes in accordance with generally accepted accounting principles in the United States of America. (See NOTE 2 and NOTE 3) Butterfly Effect Culture Media (Beijing) Co., Ltd. is primarily engaged in literary adaptation business and centers its business on internet Chinese literary and literary adaptation for TV shows, movies, audible books and mobile phone video games that are primarily distributed through online platforms. Following the acquisition, the Company operates as a single entity in one integrated business unit which are 1) the e-media online streaming platform operated by the Company’s Hong Kong subsidiary and 2) the literary adaptation business whereby the Target adapts original stories or books into TV shows, movies and mobile video games to be distributed in and outside the People’s Republic of China (the “PRC”) through the internet. In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 caused interruption of operation in the Company’s China facilities from February to early March 2020. The breakout of COVID-19 around the world in the first and second quarters of 2020 has caused significant volatility in China, U.S., and the rest of the world markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the global economies and, as such, the Company is unable to determine if it will have a material impact on financial result of fiscal 2021. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying unaudited interim consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States of America, and the SEC's regulations for interim financial information and the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows, and stockholders’ equity for the periods presented. The results for the three months ended May 31, 2020 are not necessarily indicative of the results to be expected for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended February 29, 2020 filed with the Securities and Exchange Commission on July 29, 2020. Consolidation These unaudited interim consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and include the accounts of the Company, its subsidiaries and entities controlled through VIE agreements. All intercompany balances and transactions have been eliminated. 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. 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. 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. Prepayments for sales of product is recorded as deferred revenue from customers 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. 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 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. 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. 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: May 31, May 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. Risks and Uncertainties The major operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 caused interruption of operation in the Company’s China facilities from February to early March 2020. The breakout of COVID-19 around the world in the first and second quarters of 2020 has caused significant market volatility in China, U.S., and the rest of the world. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the global economies and, as such, the Company is unable to determine if it will have a material impact on its financial result of the fiscal year of 2021. | Basis of Presentation and Use of Estimates The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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. Consolidation The accompanying consolidated financial statements, including the accounts of the Company and its wholly-owned subsidiaries, China VTV, the WFOE, and its controlled variable interest entity (“VIE”) Butterfly Effect Culture Media (Beijing) Co., Ltd. and it’s four subsidiaries (collectively “Butterfly Effect Media”) for which the Company is the primary beneficiary. All transactions and balances among the Company, its subsidiaries and Butterfly Effect Media have been eliminated upon consolidation. The results of subsidiaries and Butterfly Effect Media acquired during the year are recorded in the consolidated income statements from the effective date of acquisition. A VIE is required to be consolidated by the primary beneficiary of the VIE if the nominee equity holders in the VIE do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. PRC laws and regulations restrict foreign ownership and investment in the e-media, culture, and entertainment industry. As the Company is deemed a foreign legal person under PRC laws, accordingly the Company and its subsidiaries are not eligible to engage in the provision of literary adaptation business. To comply with these restrictions on foreign ownership, the Company will operate substantially all of its literary adaptation business through its Butterfly Effect Media. Butterfly Effect Media holds licenses and other approvals necessary to operate literary adaptation business and generate revenues. To provide the Company's effective control over and the ability to receive substantially all of the economic benefits of Butterfly Effect Media, the Acquisition Agreement and the VIE Agreements were entered into amongst the Company, China VTV, the WOFE, Butterfly Effect Media and the shareholders of Butterfly Effect Media on December 18, 2019. (i) Agreements that give the Company power to effectively control the activities of Butterfly Effect Media that fully impact the its economic performance: Business Acquisition Agreement On December 18, 2019 and amended on December 28, 2019, the Company, the WFOE, Butterfly Effect Media and the equity holders of Butterfly Effect Media entered into the Acquisition Agreement to acquire effective control of Butterfly Effect Media through the VIE Agreements (the “Acquisition”) for Stock Consideration of 24,000,000 Common Stock and Cash Consideration of RMB 288,000,000 (see Note 1). For payment of the Cash Consideration, the Company will dedicate 40% of the net proceeds received in any future public or private equity offerings for gross proceeds of at least $20,000,000 (before deducting any underwriter or placement agent’s discount and commissions and any offering expenses) to pay to Butterfly Effect Media’s equity holders, until the total amount of the Cash Consideration is paid in full without the obligation to pay any interest thereon. Due to the fact that the Company obtained control of Butterfly Effect Media as a result of the Acquisition, the Acquisition is accounted for as a regular acquisition pursuant to which the Company is considered the acquiring entity for accounting purposes in accordance with generally accepted accounting principles in the United States of America. (See NOTE 3 BUSINESS ACQUISITIONS) Equity Disposal Agreements The nominee equity holders of Butterfly Effect Media have granted the WFOE exclusive call options to purchase their equity interest in Butterfly Effect Media at an exercise price equal to the lowest price allowed by the laws of China. If appraisal is required by the laws of China at the time when the WFOE exercises the equity interest purchase option, the parties shall negotiate in good faith and based on the appraisal result make necessary adjustment to the equity interest purchase price so that it complies with any and all then applicable laws of China. The WFOE may nominate another entity or individual to purchase the equity interest, if applicable, under the call options. Each call option is exercisable subject to the condition that applicable PRC laws, rules and regulations do not prohibit completion of the transfer of the equity interest pursuant to the call option. The WFOE is entitled to all dividends and other distributions declared by Butterfly Effect Media, and the nominee equity holders have agreed to give up their rights to receive any distributions or proceeds from the disposal of their equity interests in Butterfly Effect Media which are in excess of the original registered capital that they contributed to Butterfly Effect Media, and to pay any such distributions or premium to the WFOE. The exclusive call option agreements remain in effect until the equity interest or assets that are the subject of such agreements are transferred to the WFOE. Voting Rights Proxy Agreements Pursuant to the relevant proxy agreements, each of the nominee equity holders of Butterfly Effect Media irrevocably authorizes any person designated by the WFOE to exercise his/her rights as an equity holder of Butterfly Effect Media, including the right to attend and vote at equity holder meetings and appoint directors. Equity pledge Agreements To ensure that Butterfly Effect Media and its equity holders fully perform their obligations under the VIE Agreements, and pay the consulting and service fees thereunder to the WFOE when they become due, the Butterfly Effect Media hereby pledges to the WFOE to hold all of the equity holders’ interest in Butterfly Effect Media as security for payment of the consulting and service fees by the equity holders under the VIE Agreements. These equity pledge agreements remain in force for the duration of the relevant VIE Agreements and other structure contracts. These equity pledges have been registered with the relevant office of the Administrations for Industry and Commerce in the PRC. (ii) Agreement that transfers economic benefits to the Company: Business Cooperation Agreement The WFOE and Butterfly Effect Media entered into a business cooperation agreement pursuant to which the WFOE will provide exclusive technical support, consulting services, and other commercial services to Butterfly Effect Media. In exchange, Butterfly Effect Media will pay a service fee to the WFOE which constitutes a 100% of Butterfly Effect Media’s after-tax income, resulting in a transfer of 100% of the net profits from Butterfly Effect Media to the WFOE. The service fees shall be due and payable on a monthly basis, within 30 days after the end of each month. The rate of service fees may be adjusted based on the services rendered by the WFOE in any particular month and the operational needs of Butterfly Effect Media with prior written consent by both parties. Unless terminated by the WFOE or compelled to be terminated under applicable PRC laws and regulations, this agreement will remain effective for twenty years and may be extended by written notice from the WFOE during the last twelve months of the term. Based on these contractual agreements, the WFOE has: 1) The power to direct the activities that most significantly affected the economic performance of Butterfly Effect Media, and 2) Receives the economic benefits of Butterfly Effect Media. In making the conclusion that the WFOE, a wholly owned subsidiary of the Company, is the primary beneficiary of Butterfly Effect Media, the Company believes the Company's rights under the terms of the equity disposal agreement has provided it with a substantive kick-out rights. More specifically, the Company believes the terms of the share disposal agreement are valid, binding and enforceable under PRC laws and regulations currently in effect. The Company also believes that the minimum amount of consideration permitted by the applicable PRC law to exercise the option has not represented a financial barrier or disincentive for the Company to currently exercise its rights under the equity disposal agreement. Consequently, the Company's rights under the business cooperation agreement and other agreements have reinforced the Company's abilities to direct activities most significantly impacting Butterfly Effect Media’s economic performance. The Company also believes that this ability to exercise control ensured that Butterfly Effect Media would execute service agreements and pay service fees to the Company. By charging service fees, and by ensuring that service agreements are executed, the Company has the rights to receive substantially all of the economic benefits from Butterfly Effect Media. In conclusion, the Company determines that Butterfly Effect Media as described above is a VIE because the nominee equity holders do not have significant equity at risk nor do they have the characteristics of a controlling financial interest and the Company is the primary beneficiary of Butterfly Effect Media. Accordingly, the Company has consolidated the accounts of Butterfly Effect Media from the date of acquisition on February 24, 2020. Risks in relation to VIE structure The Company believes that the contractual arrangements with Butterfly Effect Media and its equity holders are in compliance with existing PRC laws and regulations and are legally enforceable. However, the contractual arrangements are subject to risks and uncertainties, including: · Butterfly Effect Media and its equity holders may have or develop interests that conflict with the Company's interests, which may lead them to pursue opportunities in violation of the aforementioned contractual agreements. If the Company cannot resolve any conflicts of interest or disputes between the Company and the equity holders of Butterfly Effect Media, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. · Butterfly Effect Media and its equity holders could fail to obtain the proper operating licenses or fail to comply with other regulatory requirements. As a result, the PRC government could impose fines, new requirements or other penalties, mandate a change in ownership structure or operations, restrict the use of financing sources or ability to conduct business on Butterfly Effect Media or the Company. · The PRC government may declare the aforementioned contractual arrangements invalid. They may modify the relevant regulations, have a different interpretation of such regulations, or otherwise determine that the Company or Butterfly Effect Media have failed to comply with the legal obligations required to effectuate such contractual arrangements. · If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government may restrict or prohibit the Company's business and operations in China. · The Company's ability to conduct its business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate Butterfly Effect Media in the consolidated financial statements as the Company may lose the ability to exert effective control over Butterfly Effect Media, and the Company may lose the ability to receive economic benefits from Butterfly Effect Media. The Company's business has been directly operated by Butterfly Effect Media. For the year ended February 29, 2020, Butterfly Effect Media accounted for an aggregate of 99.8% of the Company's consolidated total assets, and 20.7% of the Company's consolidated total liabilities. The following consolidated financial information of Butterfly Effect Media, after the elimination of inter-company transactions and balances, as of February 29, 2020 and for the period from February 24, 2020 to February 29, 2020 was included in the accompanying consolidated financial statements: As of February 29, 2020 Cash and cash equivalents $ 33,313 Accounts receivable 79,020 Advance to suppliers 8,648,378 Inventories 12,636,719 Other receivables and current assets 3,400,963 Total current assets 24,798,393 Long-term investment, net 3,275,929 Capital assets, net 605,093 Intangible assets 2,472,000 Right-of-use assets 78,638 Total assets 31,230,053 Accounts payable 587,620 Wages payable 156,268 Interest payable 106,268 Tax payable 222,766 Deferred revenue 2,547,180 Short-term loans 2,218,050 Due to related parties 2,967,894 Other current liabilities 4,331,023 Lease liabilities 84,663 Total liabilities $ 13,221,732 For the Period Ended February 29, 2020 Net revenues $ - Net loss (29,163 ) Net cash provided by operating activities 29,022 Net cash used in investing activities - Net cash provided by financing activities - Effects of exchange rate changes $ (141 ) There are no assets of Butterfly Effect Media that are collateral for its obligations and which can only be used to settle its obligations. No creditors (or beneficial interest holders) of Butterfly Effect Media have recourse to the general credit of the Company or any of its consolidated subsidiaries. No terms in any arrangements, considering both explicit arrangements and implicit variable interests, require the Company or its subsidiaries to provide financial support to Butterfly Effect Media. Cash and Cash Equivalents The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. As of February 28, 2019 and 2018, the Company had $51,551 and $17,548 in cash and cash equivalents, respectively. Accounts Receivable Accounts receivable are stated at net realizable value. The Company usually grants credit to customers with a maximum of 60 days. An allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. As at February 29, 2020, there were no accounts receivable allowance required. Advances to Suppliers The Company advances funds to certain authors or publishers for the purchase of literature copyrights and productions. Based on management’s evaluation, no allowance for advances to suppliers is required at the balance sheet date. Inventories Inventories are stated at the lower of cost or net realizable value. Costs include the purchase cost of literature copyright, direct production cost of audiobooks and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. Share Subscription Receivables The Company issued common stock to five individual investors for cash under stock subscription agreements and the cash has not been received. For accounting purposes, the outstanding receivables with respect to the share subscription are recorded as subscription receivables in equity. Capital Assets Capital assets are stated at cost less accumulated depreciation and any provision required for impairment in value. Repairs and maintenance are expensed as incurred. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Depreciation is computed using the straight-line method with no residual value based on the estimated useful lives of the various classes of assets, which range as follows: Furniture and office equipment 3-5 years Software 3 years Leasehold improvements shorter of remaining lease period or estimated useful life Intangible Assets Intangible assets acquired through business acquisitions are recognized as assets separated from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Purchased intangible assets and intangible assets arising from the acquisitions of subsidiaries and VIE subsidiaries are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows: Copyrights 2 - 5 years Licenses 10-20 years Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the asset. Impairment of Goodwill Goodwill represents the excess of the purchase 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 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 is performed. Application of a goodwill impairment test requires significant management judgment. Impairment of Long-Lived Assets 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. Reclassification Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss nor accumulated deficit. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to a customer. Topic 606 requires the Company to recognize revenues when control of the promised goods or services and receipt of payment is probable. The Company recognizes revenue based on the five criteria for revenue recognition 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 adopted Topic 606 effective March 1, 2019 and began to generate revenue during the nine months ended November 30, 2019. The Company sells advertising services to third-party advertising agencies and advertisers. Advertising contracts are signed to establish the price and advertising services to be provided. Pursuant to the advertising contracts, the Company provides advertisement placements on its OTT 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 contract price 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. The Company’s VIE and its subsidiaries sell copyrights of scripts and original stories to third parties, and sell 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 providing customers with a right to use the intellectual properties as they exist when made available to customers are recognized at the point in time when the intellectual property is made available to customers. Prepayments for sales of product is recorded as deferred revenue from customers 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. For revenue from licensing of literal copyrights where the Company continue 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, royalty as revenue is recognized as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, revenue is based on historical data, industry information and other relevant trends. Deferred Revenue Deferred revenue, mainly 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. Research and Development Expenses Research and development costs are generally expensed as incurred. Research and development expenses mainly consist of the costs incurred in the development and improvement of the Company’s OTT Platform. Research and development expenses were $231,791 and $863,528 for the years ended February 29, 2020 and February 28, 2019, respectively. Stock-Based Payments The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation 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 life 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 similar companies due to limited history of our stock price. The expected life assumption for stock options grants was based upon the simplified method provided for 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 and presently has no intention of paying cash dividends in the future. The risk-free interest rate used for each grant was based upon prevailing short-term interest rates over the expected life of the options. Business Combinations and Noncontrolling Interests The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations” (“ASC 805”). The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred. Noncontrolling Interests For the Company’s VIE, a noncontrolling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Consolidated net income (loss) on the consolidated income statements includes the net income (loss) attributable to noncontrolling interests. The cumulative results of operations attributable to noncontrolling interests are recorded as noncontrolling interests in the Company’s consolidated balance sheets. Cash flows related to transactions with noncontrolling interests are presented under financing activities in the consolidated statements of cash flows. Translation Adjustment The accounts of China VTV were maintained, and its financial statements were expressed, in Hong Kong Dollar (“HKD”) and Chinese Yuan (RMB). 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). Comprehensive Income (Loss) Comprehensive income (loss) includes accumulated foreign currency translation gains and losses. The Company has reported the components of comprehensive income (loss) on its consolidated statements of stockholders’ equity (deficit) and consolidated statements of operations and comprehensive income (loss). Leases The Company’s lease portfolio consists operating real estate leases for its corporate offices. Under ASC 842, a contract is or contains a lease when (1) an explicitly or implicitly identified asset has been deployed in the contract and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company determines if an arrangement is or contains a lease at inception of the contract. For all leases (finance and operating), other than those that qualify for the short-term recognition exemption, the Company will recognize on the balance sheet a lease liability for its obligation to make lease payments arising from the lease and a corresponding right of use (“ROU”) asset representing its right to use the underlying asset over the period of use based on the present value of lease payments over the lease term as of the lease commencement date. ROU assets are adjusted for initial direct costs, lease payments made and incentives. As the rates implicit in our leases are not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The lease term used to calculate the lease liability will include options to extend or terminate the lease when the option to extend or terminate is at the Company’s discretion and it is reasonably certain that the Company will exercise the option. Fixed payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of one year or less (“short-term leases”), the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term. Fair Value Measurements FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows: ☐ Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regular |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 12 Months Ended |
Feb. 29, 2020 | |
BUSINESS ACQUISITIONS | |
NOTE 3. BUSINESS ACQUISITIONS | Acquisition of China VTV Ltd. On March 15, 2019, the Company entered into a share purchase/ exchange agreement (the “Share Exchange Agreement”) with China VTV, pursuant to which the Company agreed to issue an aggregate of 110,550,000 shares of its common stock to all of the shareholders of China VTV in prorated amounts in exchange for all of the issued and outstanding equity interests in China VTV. Pursuant to the Share Exchange Agreement, on May 6, 2019, the Company issued 115,550,000 shares of common stock of the Company to the shareholders of China VTV in exchange for all of the issued and outstanding equity interests of China VTV and five individuals who provided prior services to China VTV. As a result, China VTV became a wholly-owned subsidiary of the Company. The acquisition of China VTV is accounted for as a reverse acquisition (the “Reverse Merger”), and the business of China VTV became the business of the Company. At the time of the Reverse Merger, the Company was not engaged in any active business. The Company did not recognize any goodwill from the acquisition as the transaction was accounted for as a reverse recapitalization. Acquisition of Butterfly Effect Media Pursuant to the Acquisition Agreement, as amended, and the VIE Agreements (as described in the NOTES 1. and 2.), on February 24, 2020, the Company acquired and effectively is in control of Butterfly Effect Media. As consideration, the Company issued 24,000,000 shares of its common stock on February 25, 2020 as payment of the Stock Consideration to the equity holders of Butterfly Effect Media in pro rata to their equity percentage. 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 Cash Consideration to the equity holders, pro rata to their equity percentage, over a period as set forth therein and in the first amended acquisition agreement (“Amendment No. 1”) dated December 28, 2019. The Acquisition Agreement also provides that in the event that Butterfly Effect Media fails to meet the aggregate net profit milestones of RMB215,000,000 for the 3 years ending February 28, 2022, each equity holder is to return the common stock or equivalent amount of cash (the “Claw-back”) according to the calculation formula specified in the Acquisition Agreement. The formula for calculation of number of shares to be returned by the equity holders is as follow: Number of shares of the Company’s Common Stock to be returned by each equity holder equals to 3.8 multiplied by the difference of Accumulated Net Income Milestone - Actual Accumulated Net Income for the First, Second and Third Fiscal Years, divided by the closing Common Stock Price at one day prior to the return date, multiplied by the equity holder’s equity percentage.Based on the net income of Butterfly Effect Media’s first fiscal year and the projected net incomes for the second and third fiscal year, the Company estimated that all of the 24,000,000 shares of common stock will be returned at the end of the third fiscal year. The fair value of the 24,000,000 shares of common stock issued to the equity holders on February 24, 2020 and February 29, 2020 is determined to be $608,914. Based on management expectation that the shares will be fully returned by the equity holders, a contingent receivable of $608,914 is recorded. 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 equity holders within 1 year commencing on the first trading day (excluding the first trading day) of the Company’s common stock on a national stock exchange, Butterfly Effect Media will: i) have the right to appoint the majority of the Company’s Board, manage and operate the Company and its subsidiaries operations and; ii) each of the equity holders will have the right to receive additional number of common stock of the Company calculated as the difference of the Cash Consideration minus the sum of cash already received by the equity holders, divided by $2.00, then multiply the resulting quotient with equity holder’s equity percentage. As the Company obtained control of Butterfly Effect Media upon closing on February 24, 2020, the Acquisition is accounted for as a regular acquisition pursuant to which the Company is considered the acquiring entity for accounting purposes in accordance with the Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations” (“ASC 805”). The Company assessed the fair value of the Stock and Cash Considerations, the purchase price, to be $36,931,000. The allocation of the fair value of the purchase price and goodwill as a result of the acquisition of Butterfly Effect Culture Media are calculated as follows: Purchase Considerations Cash Considerations $ 36,931,000 Stock Considerations 608,914 Contingent receivable (608,914 ) Total Purchase Price at Fair Value: $ 36,931,000 Estimated Fair Value of Assets Acquired: Cash 33,313 Accounts receivable 79,020 Advances to suppliers 8,648,378 Other receivable 3,088,659 Copyrights and development costs, net 10,919,780 Other current assets 312,304 Investments 3,275,929 Capital assets 605,093 Intangibles - copy rights 1,530,000 Right-of-use assets 78,638 Estimated Fair Value of Liabilities Assumed: Short term debt (2,218,050 ) Accounts payable (580,781 ) Deferred revenue (2,547,180 ) Wages payable (134,400 ) Taxes payable (222,766 ) Interest payable (105,953 ) Due to related parties (2,967,894 ) Other payables (4,331,023 ) Lease liabilities (84,663 ) Net Assets Acquired 15,378,401 Goodwill, being excess of Purchase Price Over Net Identifiable Assets Acquired $ 21,552,596 As a result, the Company recognized a goodwill of $21,552,596 at the date of acquisition. |
INVENTORIES
INVENTORIES | 3 Months Ended |
May 31, 2020 | |
BUSINESS ACQUISITIONS | |
NOTE 3. INVENTORIES | Inventories consist of the following: As of May 31, 2020 February 29, 2020 Script development $ 4,155,008 $ 2,235,979 Mobile audio games 2,905,270 1,215,000 Artwork 362,673 859,540 Total inventories 7,422,951 4,310,519 |
COPYRIGHTS, NET
COPYRIGHTS, NET | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
COPYRIGHTS, NET | ||
NOTE 4. COPYRIGHTS, NET | As of May 31, February 29, 2020 Licensed copyrights at cost $ 10,477,657 $ 8,326,199 Less: amortization (2,181,792 ) (1,716,939 ) Copyrights, net 8,295,865 6,609,260 | Inventories consist of the following: As of February 29, 2020 February 28, 2019 Script development $ 2,235,979 $ - Mobile audio games 1,215,000 - Artwork 859,540 - 4,310,519 - Licensed copyrights at cost 8,326,199 - Less: amortization (1,716,939 ) - 6,609,260 - Total $ 10,919,779 $ - |
ADVANCES TO SUPPLIERS, NET
ADVANCES TO SUPPLIERS, NET | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
ADVANCES TO SUPPLIERS, NET | ||
NOTE 5. ADVANCES TO SUPPLIERS, NET | Advances to suppliers, net, consist of the following: As of May 31, February Deposits $ 6,367,678 $ 10,223,973 Prepaid expenses 667,820 168 Total advance to suppliers 7,035,498 10,224,141 Less: allowance for doubtful accounts (1,969,417 ) (1,575,595 ) Advance to suppliers, net $ 5,066,081 $ 8,648,546 | Advances to suppliers, net, consist of the following: As of February 29, 2020 February 28, 2019 Deposits $ 10,223,973 $ - Prepaid expenses 168 - Total advance to suppliers 10,224,141 - Less: allowance for doubtful accounts (1,575,595 ) - Advance to suppliers, net $ 8,648,546 $ - |
OTHER RECEIVABLES AND CURRENT A
OTHER RECEIVABLES AND CURRENT ASSETS | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
OTHER RECEIVABLES AND CURRENT ASSETS | ||
NOTE 6. OTHER RECEIVABLES AND CURRENT ASSETS | Other receivables and current assets consist of the following: As of May 31, February 29, Other receivables $ 3,057,833 $ 3,088,659 Other current assets 522,248 312,304 Total $ 3,580,081 $ 3,400,963 | Other receivables and current assets consist of the following: As of February 29, 2020 February 28, 2019 Other receivables $ 3,088,659 $ - Other current assets 312,304 - Total $ 3,400,963 $ - |
INVESTMENT IN EQUITY INVESTEES
INVESTMENT IN EQUITY INVESTEES | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
INVESTMENT IN EQUITY INVESTEES | ||
NOTE 7. INVESTMENT IN EQUITY INVESTEES | Investments are in equity of companies which shares are not publicly traded, and that the Company does not have control or significant influence. The investments are recorded at cost less impairment, as the fair value of the share prices are not readily determinable. As of May 31, February 29, Investment in equity investees $ 3,820,258 $ 3,852,622 Less: impairment (565,006 ) (576,693 ) Total $ 3,255,252 $ 3,275,929 | Investments are in equity of companies which shares are not publicly traded, and that the Company does not have control or significant influence. The investments are recorded at cost less impairment, as the fair value of the share prices are not readily determinable. As of February 29, 2020 February 28, 2019 Investment in equity investees $ 3,852,622 $ - Less: impairment (576,693 ) - Total $ 3,275,929 $ 0 |
CAPITAL ASSETS, NET
CAPITAL ASSETS, NET | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
CAPITAL ASSETS, NET | ||
NOTE 8. CAPITAL ASSETS, NET | Capital assets, net, consist of the following: As of May 31, February 29, Furniture and office equipment $ 169,620 $ 168,641 Software 530,374 541,345 Leasehold improvements 304,773 295,231 Total capital assets 1,004,767 1,005,217 Less: accumulated depreciation (326,278 ) (312,025 ) Capital assets, net $ 678,489 $ 693,192 Depreciation expense was $14,407 and $0 for the three months ended May 31, 2020 and May 31, 2019, respectively. | Capital assets, net, consist of the following: As of February 29, 2020 February 28, 2019 Furniture and office equipment $ 168,641 $ - Software 541,345 - Leasehold improvements 295,231 - Total capital assets 1,005,217 Less: accumulated depreciation (312,025 ) - Capital assets, net $ 693,192 $ - Depreciation expense was $23,680 and $Nil for the years ended February 29, 2020 and February 28, 2019, respectively. |
INTANGIBLES, NET
INTANGIBLES, NET | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
INTANGIBLES, NET | ||
NOTE 9. INTANGIBLES, NET | Intangible assets consist of the followings: As of May 31, February 29, 2020 Copyrights $ 2,574,687 $ 2,311,837 Less: accumulated amortization (1,157,139 ) (781,837 ) Copyrights, net $ 1,417,548 $ 1,530,000 Amortization expense was $379,317 and $0 for the three months ended May 31, 2020 and May 31, 2019, respectively. | Intangible assets consist of the followings: As of February 29, 2020 February 28, 2019 Copyrights $ 2,311,837 $ - Less: accumulated amortization (781,837 ) - $ 1,530,000 $ - The company acquired the copyrights on acquisition of Butterfly Effect Media (see NOTE.3). There were no amortization expense recorded for the years ended February 29, 2020 and February 28, 2019, respectively. |
SHORT-TERM DEBT
SHORT-TERM DEBT | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
SHORT-TERM DEBT | ||
NOTE 10. SHORT-TERM DEBT | Short-term debt represents amounts due to a bank and other lenders, and are generally due on demand or within one year. As of May 31, 2020, short-term debts consist of the following: As of May 31, February 29, 2020 Interest at 0% per annum, unsecured, due on demand $ 795,471 $ 787,050 Interest at 4.35% per annum, unsecured, due on demand 289,262 286,200 Interest at 5.22% per annum, unsecured, due on demand 433,893 429,300 Interest at 10% per annum, unsecured, due on demand 682,514 715,500 $ 2,201,140 $ 2,218,050 In June 2019, Butterfly Effect entered into a line of credit agreement with Bank of Beijing, Beijing, PRC to borrow up to $708,500 (RMB5 million). As of May 31, 2020, Butterfly Effect had borrowed $433,893 (RMB3 million) from Bank of Beijing with an annual interest rate of 5.22%. The line of credit is unsecured and due on demand. | Short-term debt represents amounts due to a bank and other lenders, and are generally due on demand or within one year. As at February 29, 2020, short-term debts consist of the following: As of February 29, 2020 February 28, 2019 Interest at 0% per annum, unsecured, due on demand $ 787,050 $ - Interest at 4.35% per annum, unsecured, due on demand 286,200 - Interest at 5.22% per annum, unsecured, due on demand 429,300 - Interest at 10% per annum, unsecured, due on demand 715,500 - $ 2,218,050 $ - In June 2019, Butterfly Effect Media entered into a line of credit agreement with Bank of Beijing, Beijing, PRC to borrow up to $715,500 (RMB5 million). As of February 29, 2020, Butterfly Effect Media had borrowed $715,500 (RMB5 million) from Bank of Beijing with an annual interest rate of 5.22%. The line of credit is unsecured and due on demand. |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND BALANCES | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
RELATED PARTY TRANSACTIONS AND BALANCES | ||
NOTE 11. RELATED PARTY TRANSACTIONS AND BALANCES | The related parties of the Company with whom transactions are reported in these consolidated financial statements are as follows: Name of entity or individual Relationship with the Company and its subsidiary Mr. Tijing Song Shareholder, Chairman of the Board, CEO and President Mr. Guoping Chen Shareholder, Director, interim CFO, Secretary and Treasurer Ms. Qiongfang Shi Shareholder and Director Due to related parties: As of May 31, February 29, 2020 Mr. Tijing Song $ 440,755 $ 448,151 Mr. Guoping Chen 412,204 403,155 Ms. Qiongfang Shi 1,617,908 2,967,894 Total due to related parties $ 2,470,867 $ 3,819,200 The Company has received advances from its related parties for working capital purposes. The advances are unsecured, bear no interest, and are due on demand. | The related parties of the Company with whom transactions are reported in these consolidated financial statements are as follows: Name of entity or individual Relationship with the Company and its subsidiary Mr. Tijing Song Shareholder, Chairman of the Board, CEO and President Mr. Guoping Chen Shareholder, Director, interim CFO, Secretary and Treasurer Ms. Qiongfang Shi Shareholder and Director Due to related parties: As of February 29, 2020 February 28, 2019 Mr. Tijing Song $ 448,151 $ 136,265 Mr. Guoping Chen 403,155 456,474 Ms. Qiongfang Shi 2,967,894 - Total due to related parties $ 3,819,200 $ 592,739 The Company has received advances from its related parties for working capital purposes. The advances are unsecured, bear no interest, and are due on demand. |
OTHER PAYABLES
OTHER PAYABLES | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
OTHER PAYABLES | ||
NOTE 12. OTHER PAYABLES | In accordance with the initial acquisition agreement dated on December 18, 2019 and the first amended acquisition agreement (“Amendment No. 1”) dated December 28, 2019, which were entered by the Company, the WOFE, and Butterfly Effect Media and each of Butterfly Effect Media’s equity holders (“Equity Holders”), China VTV Limited and its subsidiaries agreed to pay a total of RMB 288,000,000 (the “Cash Consideration”) to the Equity Holders pro rata with the their equity percentage over a period as set forth in the Amendment NO. 1. Per the Amendment No. 1, the Company agreed to pay the Equity Holders at least RMB 45 million (approximately $6.39 million) pro rata from the proceeds of its first public or private offering of its shares after the Acquisition, make payments to the Equity Holders pro rata of an additional RMB 99 million (approximately $14.07 million) by December 31, 2020, and a further payment of RMB 144 million (approximately $20.46 million) on or before December 31, 2021. In accordance with Amendment No. 1, after the Company makes the cash payments of at least RMB 144 million (approximately $20.46 million), which is a half of the total Cash Consideration, to the Equity Holders, the Company may choose to pay the half of the remaining Cash Consideration, equivalent to RMB 72 million (approximately $10.23 million), in the form of its common stock at a price of $2.00 per share to the Equity Holders as opposed to making such cash payment in the amount of RMB 72 million. The total Cash Consideration is RMB 288 million. The above arrangements allow the Company to settle RMB 72 million by the Company’s common stock, if certain specified conditions are met. The Company recognized the RMB 288 million as acquisition liability as of the acquisition date. As it is the Company’s decision to settle the remaining RMB 72 million either by cash or by shares of its common stock, the settlement by shares is not an obligation for the Company when this is not beneficial to the Company. Therefore, the settlement by shares of the Company is not considered as a contingent liability at the acquisition date. The total fair value of the considerations was determined to be $36,931,000 (RMB 288 million), which has been fully recognized as a liability, as a result of the business acquisition. | As of February 29, 2020 February 28, 2019 Advance received $ 4,293,000 $ - Other 38,023 - Total $ 4,331,023 $ - |
ACQUISITION LIABILITY
ACQUISITION LIABILITY | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
ACQUISITION LIABILITY | ||
NOTE 12. ACQUISITION LIABILITY | In accordance with the initial acquisition agreement dated on December 18, 2019 and the first amended acquisition agreement (“Amendment No. 1”) dated December 28, 2019, which were entered by the Company, the WOFE, and Butterfly Effect Media and each of Butterfly Effect Media’s equity holders (“Equity Holders”), China VTV Limited and its subsidiaries agreed to pay a total of RMB 288,000,000 (the “Cash Consideration”) to the Equity Holders pro rata with the their equity percentage over a period as set forth in the Amendment NO. 1. Per the Amendment No. 1, the Company agreed to pay the Equity Holders at least RMB 45 million (approximately $6.39 million) pro rata from the proceeds of its first public or private offering of its shares after the Acquisition, make payments to the Equity Holders pro rata of an additional RMB 99 million (approximately $14.07 million) by December 31, 2020, and a further payment of RMB 144 million (approximately $20.46 million) on or before December 31, 2021. In accordance with Amendment No. 1, after the Company makes the cash payments of at least RMB 144 million (approximately $20.46 million), which is a half of the total Cash Consideration, to the Equity Holders, the Company may choose to pay the half of the remaining Cash Consideration, equivalent to RMB 72 million (approximately $10.23 million), in the form of its common stock at a price of $2.00 per share to the Equity Holders as opposed to making such cash payment in the amount of RMB 72 million. The total Cash Consideration is RMB 288 million. The above arrangements allow the Company to settle RMB 72 million by the Company’s common stock, if certain specified conditions are met. The Company recognized the RMB 288 million as acquisition liability as of the acquisition date. As it is the Company’s decision to settle the remaining RMB 72 million either by cash or by shares of its common stock, the settlement by shares is not an obligation for the Company when this is not beneficial to the Company. Therefore, the settlement by shares of the Company is not considered as a contingent liability at the acquisition date. The total fair value of the considerations was determined to be $36,931,000 (RMB 288 million), which has been fully recognized as a liability, as a result of the business acquisition. | As of February 29, 2020 February 28, 2019 Advance received $ 4,293,000 $ - Other 38,023 - Total $ 4,331,023 $ - |
OTHER CONTINGENT LIABILITY
OTHER CONTINGENT LIABILITY | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
OTHER CONTINGENT LIABILITY | ||
NOTE 13. OTHER CONTINGENT LIABILITY | On September 30, 2019, the Company entered into a strategic development agreement (the “Strategic Development Agreement”) with CybEye Image, Inc. (“CybEye”). CybEye agreed to develop and provide technical support and maintenance to the Company’s online streaming OTT Platform and incorporate blockchain technologies to enhance security of the Company’s OTT Platform. The Strategic Development Agreement will continue in full force and effect until September 29, 2022. Concurring to this agreement, the Company also entered into a non-exclusive licensing agreement, and amended on December 13, 2019, with CybEye, pursuant to which CybEye agreed to grant the Company a non-exclusive right and license to certain technologies for 20 years, expiring on September 30, 2029. Pursuant to the Strategic Development Agreement, the Company agreed to issue 2,500,000 shares of its common stock to CybEye for the technical services to develop the OTT Platform. CybEye may sell and dispose any or all of the 2,500,000 shares at any time at a per share price of no less than $5.00. In the event that the Company issues and sells its common stock in a public offering facilitated by a broker-dealer or investment bank at a price less than $4.00 per share (the “Better Price”) within the following twelve (12) months from the agreement date, the Company agreed to grant CybEye options to purchase a number of shares of the Company’s common stock which is calculated by multiplying the difference of $4.00 and the Better Price by 2,500,000, then dividing the product by the Better Price, at an exercise price equaling to the Better Price. As compensation for the license and services provided to maintain the APP Platform, the Company agreed to issue 40,000 shares of its common stock monthly to CybEye until the Company’s shares are trading on a national stock exchange market, and thereafter a monthly payment of $150,000 until September 2022. In addition, during the term of the Strategic Development Agreement, the Company agreed to grant stock options of up to 500,000 shares of the common stock each year to the owner of CybEye and stock options of up to 200,000 shares of the common stock each year to 2 technicians of CybEye for their services to the Company. The granting of the options is subject to the approval of the Board of Directors. The 500,000 stock options to the owner of CybEye were approved and granted for the year ended February 29, 2020. The Company has not issued the 2,500,000 shares and 200,000 shares agreed to be issued to CybEye, and has not approved the granting of the 200,000 stock options to the 2 technicians as described above. During the year ended February 29, 2020, CybEye completed the development of the OTT Platform. As of May 31, 2020, the Company estimated the fair value of the 2,700,000 shares issuable at a fair value of $172,260 and recognized the corresponding amount as shares issuable on the consolidated balance sheets. For the year ended February 29, 2020, the Company estimated the fair value of the 500,000 stock option at $9,531, based on the Black Scholes Model using the following assumptions: share price - $0.068, exercise price - $12.00, expected lifetime of the option – 7 years, volatility – 150%, dividend yield - $0, interest rate – 1.61%. As of February 29, 2020, the Company recognized the fair value of $9,530 as additional paid in capital. | On September 30, 2019, the Company entered into a strategic development agreement (the “Strategic Development Agreement”) with CybEye Image, Inc. (“CybEye”). CybEye agreed to develop and provide technical support and maintenance to the Company’s online streaming OTT Platform and incorporate blockchain technologies to enhance security of the Company’s OTT Platform. The Strategic Development Agreement will continue in full force and effect until September 29, 2022. Concurring to this agreement, the Company also entered into a non-exclusive licensing agreement , and ameded on December 13, 2019, with CybEye pursuant to which CybEye agreed to grant the Company a non-exclusive right and license to certain technology for 20 years, expiring September 30, 2029. Pursuant to the Strategic Development Agreement, the Company agreed to issue 2,500,000 shares of its common stock to CybEye for the technical services to develop the OTT Platform. CybEye may sell and dispose any or all of the 2,500,000 shares at any time at a per share price of not less than $5.00. In the event that the Company issues and sells its common stock in a public offering facilitated by a broker-dealer or investment bank at a price less than $4.00 per share (the “Better Price”) within the next twelve (12) months from the agreement date, the Company agreed to grant CybEye options to purchase a number of shares of the Company’s common stock which is calculated by multiplying the difference of $4.00 and the Better Price by 2,500,000, then divide the product by the Better Price, at an exercise price equals to the Better Price. As compensation for the license and services provided to maintain the OTT Platform, the Company agreed to issue 40,000 shares of its common stock monthly to CybEye until the Company’s shares are trading on a national stock exchange market, and thereafter a monthly payment of $150,000 until September 2022. In addition, during the term of the Strategic Development Agreement, the Company agreed to grant stock options of up to 500,000 shares of the common stock each year to the owner of CybEye and stock options of up to 200,000 shares of the common stock each year to 2 technicians of CybEye for their services to the Company. The granting of the options is subject to the approval of the Board of Directors. As at February 29, 2020, only the 500,000 stock options to the owner of CybEye were approved and granted. The Company has not issued the 2,500,000 shares and 200,000 shares agreed to be issued to CybEye, and has not approved the granting of the 200,000 stock options to the 2 technicians as described above. During the year ended February 29, 2020, CybEye completed the development of the OTT Platform. As February 29, 2020, the Company estimated the fair value of the 2,700,000 shares issuable at a fair value of $172,260 and recognized the amount as development expenses on the consolidated statement of operations, and a corresponding amount as shares issuable on the consolidated balance sheets. The Company estimated the fair value of the 500,000 stock option at $9,531, based on the Black Scholes Model using the following assumptions: share price - $0.068, exercise price - $12.00, expected life of the option – 7 years, volatility – 150%, dividend yield - $Nil, interest rate – 1.61%. The Company recognized $9,531 as development expenses and a corresponding amount in the additional paid-in capital. |
EQUITY
EQUITY | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
EQUITY | ||
NOTE 14. EQUITY | The Company’s authorized common stock is comprised of 600,000,000 shares with a par value of $0.001 per share. No preferred shares have been authorized or issued. Pursuant to the Share Exchange Agreement (See Note 1), the Company issued an aggregate of 115,550,000 shares of common stock to the shareholders of China VTV and five individuals who provided prior services to China VTV on May 6, 2019. In December 2019, the Company granted 12,400,000 shares to its eight executives and directors and 550,000 shares to employees for their services. The total fair value of the shares, in the amount of $791,120 and $35,090 respectively, was recorded as stock-based compensation expense for the year ended February 29, 2020. On December 31, 2019 and January 21, 2020, the Company issued 2,500,000 shares and 22,600,000 shares, respectively, to four individual subscribers for $732,963. As of May 31, 2020, $474,184 of the proceeds has not been received and is recorded as subscription receivables, a contra equity account. On February 25, 2020, in accordance with the Acquisition Agreement with Butterfly Effect, the Company issued a total of 24,000,000 restricted shares of its common stock at nominal value as Stock Consideration (see NOTE 3.). In addition, the Company also issued 1,680,000 restricted shares of common stock to the broker of this acquisition as finder’s fee for the introduction and services provided in completing the acquisition. The fair value of 1,680,000 shares was determined to be $46,704 and was recognized as stock-based compensation for the year ended February 29, 2020. In March 2020, the Company sold its 15% interest in its 86.5% owned VIE subsidiary, Khorgas Goldfish Culture Media Co., Ltd. (the “Subsidiary”), to Shanghai Qinggua Network Technologies, Ltd., an unrelated Chinese company. After the sale of its 15% ownership in the Subsidiary, the Company still owns 71.1% interest in the Subsidiary. The sale of the 15% ownership interest was approved by the Company’s Board and is the one of the steps to reshape and expand the Company’s core business.The sale was accounted for as an equity transaction and the net proceeds of $3.2 million received from the sale was recognized as additional paid in capital in our balance sheet. 2019 Stock Plan On November 29, 2019, the board of directors (the “Board”) of the Company adopted an incentive stock plan (the “2019 Stock Plan”) under which the Company may issue up to an aggregate of 22,000,000 shares of stock awards, options, or performance shares, subject to certain adjustments set forth therein. The Board of the Company has the sole authority to implement and administer the 2019 Stock Plan and may delegate a committee or one or more officers to grant awards under the 2019 Stock Plan. This 2019 Stock Plan became effective upon the Board approval on November 29, 2019 and will terminate ten years thereafter. Pursuant to the 2019 stock plan, the Company issued 12,950,000 shares of common stock to directors and employees, vested immediately on the date of award. The fair value of the 12,950,000 shares is determined to be $826,210 which is recognized as stock-based compensation expense for the year ended February 29, 2020 (see above). Stock Options On September 30, 2019, the Company granted 500,000 stock options in pursuant to the Strategic Development Agreement (see NOTE 14.). The options vest 25% each on every quarter end from the grant date. The options are exercisable at $12.00 per share until September 29, 2026. There were no stock options issued during the three months ended May 31, 2020 and May 31, 2019, respectively. As of May 31, 2020, 250,000 of the outstanding 500,000 options are exercisable. The 500,000 options are expected to vest one year from the grant date, with the weighted-average exercise price of $12.00 per share. The weighted-average contractual remaining life is 6.6 years, and the aggregate intrinsic value is $0. There were no stock options outstanding as of May 31, 2019. | The Company’s authorized common stock is comprised of 600,000,000 shares with a par value of $0.001 per share. No preferred shares have been authorized or issued. Pursuant to the Share Exchange Agreement (See Note 1), the Company issued an aggregate of 115,550,000 shares of common stock to the shareholders of China VTV and five individuals who provided prior services to China VTV on May 6, 2019. In December, 2019, the Company granted 12,400,000 shares to its eight executives and directors and 550,000 shares to employees for their services. The total fair value of the shares, in the amount of $791,120 and $35,090 respectively, was recorded as stock-based compensation expense. On December 31, 2019 and January 21, 2020, the Company issued 2,500,000 shares and 22,600,000 shares, respectively, to four individual subscribers for $732,963. As at February 29, 2020, $618,284 of the proceeds has not been received and is recorded as subscription receivables, a contra equity account. On February 25, 2020, in accordance with the Acquisition Agreement with Butterfly Effect Media, the Company issued a total of 24,000,000 restricted shares of its common stock at nominal value as Stock Consideration (see NOTE 3.). In addition, the Company also issued 1,680,000 restricted shares of common stock to the broker of this acquisition as finder’s fee for the introduction and services provided in completing the acquisition. The fair value of 1,680,000 shares was determined to be 46,704 and was recognized as stock-based compensation for the year ended February 29, 2020. 2019 Stock Plan On November 29, 2019, the board of directors (the “Board”) of the Company adopted an incentive stock plan (the “2019 Stock Plan”) under which the Company may issue up to an aggregate of 22,000,000 shares of stock awards, options, or performance shares, subject to certain adjustments set forth therein. The Board of the Company has the sole authority to implement and administer the 2019 Stock Plan and may delegate a committee or one or more officers to grant awards under the 2019 Stock Plan. This 2019 Stock Plan became effective upon the Board approval on November 29, 2019 and will terminate ten years thereafter. Pursuant to the 2019 stock plan, the Company issued 12,950,000 shares of common stock to directors and employees, vested immediately on the date of award. The fair value of the 12,950,000 shares is determined to be $826,210 which is recognized as stock-based compensation expense for the year ended February 29, 2020 (see above). Stock Options On September 30, 2019, the Company granted 500,000 stock options in pursuant to the Strategic Development Agreement (see NOTE 14.). The options vest 25% each on every quarter end from the grant date. The options are exercisable at $12.00 per share until September 29, 2026. Compensation costs associated with the Company’s stock options are recognized, based on the grant-date fair value of these options, over the vesting period. Accordingly, the Company recognized stock-based compensation expense of $ 9,530 for the year ended February 29, 2020. The fair value of the stock options granted for the year ended February 29, 2020 was calculated using the Black-Scholes option-pricing model applying the following assumptions: For the Year Ended February 29, 2020 Risk free interest rate 1.61 % Expected term 7 Dividend yield $ 0.00 Expected volatility 150 % As at February 29, 2020, 125,000 of the outstanding 500,000 options are exercisable. The 500,000 options are expected to vest one year from the grant date, with the weighted-average exercise price of $12.00 per share, the weighted-average contractual life remaining is 6.6 years, and the aggregate intrinsic value is $Nil. There were no stock options issued and outstanding during the year ended February 28, 2019. |
INCOME TAXES
INCOME TAXES | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
INCOME TAXES | ||
NOTE 15. INCOME TAXES | United States The Company files income tax returns in the U.S. federal jurisdiction and local jurisdictions. The Company is not currently under examination by the Internal Revenue Service or any state income tax authorities. The 2015 through 2017 tax years remain subject to examination by the Internal Revenue Service. On December 22, 2017, H.R. 1 , . Hong Kong China VTV was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. No provision for Hong Kong income or profit tax has been made as the China VTV has no assessable profit for the period from January 9, 2015 (date of inception) to May 31, 2020. China VTV has provided a full valuation allowance on the deferred tax assets for the net operating loss carry-forward because of the uncertainty regarding its realizability. China The Company's subsidiary, the WFOE, and the VIE subsidiaries, Butterfly Effect Media, are entities incorporated in the PRC (the "PRC entities") and are subject to PRC Enterprise Income Tax (EIT), on the taxable income in accordance with the relevant PRC income tax laws, which have adopted a unified income tax rate of 25% since January 1, 2008. Provision for income tax expense (benefit) consisted of the following: For the Three Months Ended May 31, 2020 May 31, 2019 Current $ - $ - Deferred - - Total provision for income tax expense (benefit) - - The following is a reconciliation of the statutory tax rate to the effective tax rate: For the Three Months Ended May 31, 2020 May 31, 2019 PRC statutory rate 25.0 % - % Temporary difference between US GAAP and PRC tax accounting (25.0 )% - % Effective income tax rate - % - % The significant component of deferred income tax assets as of May 31, 2020 and February 29, 2020 are as follows: As of May 31, February Net operating loss carry-forward $ 879,671 $ 867,187 Other receivable 488,130 482,963 Deferred revenue 11,683 11,559 Valuation allowance (1,379,483 ) (1,361,709 ) Net deferred income tax assets $ - $ - | United States The Company files income tax returns in the U.S. federal jurisdiction and local jurisdictions. The Company is not currently under examination by the Internal Revenue Service or any state income tax authorities. The 2015 through 2017 tax years remain subject to examination by the Internal Revenue Service. On December 22, 2017, H.R. 1 , . Hong Kong China VTV was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. No provision for Hong Kong income or profit tax has been made as the China VTV has no assessable profit for the period from January 9, 2015 (date of inception) to February 29, 2020. China VTV has provided a full valuation allowance on the deferred tax assets for the net operating loss carry-forward because of the uncertainty regarding its realizability. China The Company's subsidiary the WFOE and the VIE subsidiaries Butterfly Effect Media were entities incorporated in the PRC (the "PRC entities") are subject to PRC Enterprise Income Tax (EIT), on the taxable income in accordance with the relevant PRC income tax laws, which have adopted a unified income tax rate of 25% since January 1, 2008. Provision for income tax expense (benefit) consists of the following: For the Years Ended February 29, 2020 February 28, 2019 Current USA $ - $ - Hong Kong - - China - - Subtotal - - Deferred USA Deferred tax assets for NOL carryforwards 389,598 -- Valuation allowance (389,598 ) - Net changes in deferred income tax expense (benefit) - - Hong Kong Deferred tax assets for NOL carryforwards - - Valuation allowance - - Net changes in deferred income tax expense (benefit) - China Deferred tax assets for NOL carryforwards 477,589 - Valuation allowance (477,589 ) - Net changes in deferred income tax expense (benefit) - - Total provision for income tax expense (benefit) $ - $ - The following is a reconciliation of the statutory tax rate to the effective tax rate: For the Years Ended February 29, 2020 February 28, 2019 U.S. statutory tax benefit (21.0 )% - % Permanent difference 20.0 % - % Change in deferred tax asset valuation allowance 1.0 % - % Hong Kong statutory tax benefit (16.5 )% (16.5 )% Change in deferred tax asset valuation allowance 16.5 % 16.5 % China statutory tax benefit (25.0 )% - % Permanent difference - % - % Change in deferred tax asset valuation allowance 25.0 % - % Effective income tax rate - % - % The significant component of deferred income tax assets at February 29, 2020 and February 28, 2019 are as follows: For the Years Ended February 29, 2020 February 28, 2019 Net operating loss carry-forward $ 867,187 $ - Other receivable 482,963 - Deferred revenue 11559 - Valuation allowance (1,361,709 ) - Net deferred income tax assets $ - $ - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
SUBSEQUENT EVENTS | ||
NOTE 16. SUBSEQUENT EVENTS | The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these financial statements and determined that no subsequent event requires recognition or disclosure to the financial statements in accordance with FASB ASC Topic 855, “Subsequent Events.” | The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these financial statements and determined that no subsequent event requires recognition or disclosure to the financial statements in accordance with FASB ASC Topic 855, “Subsequent Events.” |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | The accompanying unaudited interim consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States of America, and the SEC's regulations for interim financial information and the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows, and stockholders’ equity for the periods presented. The results for the three months ended May 31, 2020 are not necessarily indicative of the results to be expected for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended February 29, 2020 filed with the Securities and Exchange Commission on July 29, 2020. | The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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. |
Consolidations | These unaudited interim consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and include the accounts of the Company, its subsidiaries and entities controlled through VIE agreements. All intercompany balances and transactions have been eliminated. | The accompanying consolidated financial statements, including the accounts of the Company and its wholly-owned subsidiaries, China VTV, the WFOE, and its controlled variable interest entity (“VIE”) Butterfly Effect Culture Media (Beijing) Co., Ltd. and it’s four subsidiaries (collectively “Butterfly Effect Media”) for which the Company is the primary beneficiary. All transactions and balances among the Company, its subsidiaries and Butterfly Effect Media have been eliminated upon consolidation. The results of subsidiaries and Butterfly Effect Media acquired during the year are recorded in the consolidated income statements from the effective date of acquisition. A VIE is required to be consolidated by the primary beneficiary of the VIE if the nominee equity holders in the VIE do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. PRC laws and regulations restrict foreign ownership and investment in the e-media, culture, and entertainment industry. As the Company is deemed a foreign legal person under PRC laws, accordingly the Company and its subsidiaries are not eligible to engage in the provision of literary adaptation business. To comply with these restrictions on foreign ownership, the Company will operate substantially all of its literary adaptation business through its Butterfly Effect Media. Butterfly Effect Media holds licenses and other approvals necessary to operate literary adaptation business and generate revenues. To provide the Company's effective control over and the ability to receive substantially all of the economic benefits of Butterfly Effect Media, the Acquisition Agreement and the VIE Agreements were entered into amongst the Company, China VTV, the WOFE, Butterfly Effect Media and the shareholders of Butterfly Effect Media on December 18, 2019. (i) Agreements that give the Company power to effectively control the activities of Butterfly Effect Media that fully impact the its economic performance: Business Acquisition Agreement On December 18, 2019 and amended on December 28, 2019, the Company, the WFOE, Butterfly Effect Media and the equity holders of Butterfly Effect Media entered into the Acquisition Agreement to acquire effective control of Butterfly Effect Media through the VIE Agreements (the “Acquisition”) for Stock Consideration of 24,000,000 Common Stock and Cash Consideration of RMB 288,000,000 (see Note 1). For payment of the Cash Consideration, the Company will dedicate 40% of the net proceeds received in any future public or private equity offerings for gross proceeds of at least $20,000,000 (before deducting any underwriter or placement agent’s discount and commissions and any offering expenses) to pay to Butterfly Effect Media’s equity holders, until the total amount of the Cash Consideration is paid in full without the obligation to pay any interest thereon. Due to the fact that the Company obtained control of Butterfly Effect Media as a result of the Acquisition, the Acquisition is accounted for as a regular acquisition pursuant to which the Company is considered the acquiring entity for accounting purposes in accordance with generally accepted accounting principles in the United States of America. (See NOTE 3 BUSINESS ACQUISITIONS) Equity Disposal Agreements The nominee equity holders of Butterfly Effect Media have granted the WFOE exclusive call options to purchase their equity interest in Butterfly Effect Media at an exercise price equal to the lowest price allowed by the laws of China. If appraisal is required by the laws of China at the time when the WFOE exercises the equity interest purchase option, the parties shall negotiate in good faith and based on the appraisal result make necessary adjustment to the equity interest purchase price so that it complies with any and all then applicable laws of China. The WFOE may nominate another entity or individual to purchase the equity interest, if applicable, under the call options. Each call option is exercisable subject to the condition that applicable PRC laws, rules and regulations do not prohibit completion of the transfer of the equity interest pursuant to the call option. The WFOE is entitled to all dividends and other distributions declared by Butterfly Effect Media, and the nominee equity holders have agreed to give up their rights to receive any distributions or proceeds from the disposal of their equity interests in Butterfly Effect Media which are in excess of the original registered capital that they contributed to Butterfly Effect Media, and to pay any such distributions or premium to the WFOE. The exclusive call option agreements remain in effect until the equity interest or assets that are the subject of such agreements are transferred to the WFOE. Voting Rights Proxy Agreements Pursuant to the relevant proxy agreements, each of the nominee equity holders of Butterfly Effect Media irrevocably authorizes any person designated by the WFOE to exercise his/her rights as an equity holder of Butterfly Effect Media, including the right to attend and vote at equity holder meetings and appoint directors. Equity pledge Agreements To ensure that Butterfly Effect Media and its equity holders fully perform their obligations under the VIE Agreements, and pay the consulting and service fees thereunder to the WFOE when they become due, the Butterfly Effect Media hereby pledges to the WFOE to hold all of the equity holders’ interest in Butterfly Effect Media as security for payment of the consulting and service fees by the equity holders under the VIE Agreements. These equity pledge agreements remain in force for the duration of the relevant VIE Agreements and other structure contracts. These equity pledges have been registered with the relevant office of the Administrations for Industry and Commerce in the PRC. (ii) Agreement that transfers economic benefits to the Company: Business Cooperation Agreement The WFOE and Butterfly Effect Media entered into a business cooperation agreement pursuant to which the WFOE will provide exclusive technical support, consulting services, and other commercial services to Butterfly Effect Media. In exchange, Butterfly Effect Media will pay a service fee to the WFOE which constitutes a 100% of Butterfly Effect Media’s after-tax income, resulting in a transfer of 100% of the net profits from Butterfly Effect Media to the WFOE. The service fees shall be due and payable on a monthly basis, within 30 days after the end of each month. The rate of service fees may be adjusted based on the services rendered by the WFOE in any particular month and the operational needs of Butterfly Effect Media with prior written consent by both parties. Unless terminated by the WFOE or compelled to be terminated under applicable PRC laws and regulations, this agreement will remain effective for twenty years and may be extended by written notice from the WFOE during the last twelve months of the term. Based on these contractual agreements, the WFOE has: 1) The power to direct the activities that most significantly affected the economic performance of Butterfly Effect Media, and 2) Receives the economic benefits of Butterfly Effect Media. In making the conclusion that the WFOE, a wholly owned subsidiary of the Company, is the primary beneficiary of Butterfly Effect Media, the Company believes the Company's rights under the terms of the equity disposal agreement has provided it with a substantive kick-out rights. More specifically, the Company believes the terms of the share disposal agreement are valid, binding and enforceable under PRC laws and regulations currently in effect. The Company also believes that the minimum amount of consideration permitted by the applicable PRC law to exercise the option has not represented a financial barrier or disincentive for the Company to currently exercise its rights under the equity disposal agreement. Consequently, the Company's rights under the business cooperation agreement and other agreements have reinforced the Company's abilities to direct activities most significantly impacting Butterfly Effect Media’s economic performance. The Company also believes that this ability to exercise control ensured that Butterfly Effect Media would execute service agreements and pay service fees to the Company. By charging service fees, and by ensuring that service agreements are executed, the Company has the rights to receive substantially all of the economic benefits from Butterfly Effect Media. In conclusion, the Company determines that Butterfly Effect Media as described above is a VIE because the nominee equity holders do not have significant equity at risk nor do they have the characteristics of a controlling financial interest and the Company is the primary beneficiary of Butterfly Effect Media. Accordingly, the Company has consolidated the accounts of Butterfly Effect Media from the date of acquisition on February 24, 2020. Risks in relation to VIE structure The Company believes that the contractual arrangements with Butterfly Effect Media and its equity holders are in compliance with existing PRC laws and regulations and are legally enforceable. However, the contractual arrangements are subject to risks and uncertainties, including: · Butterfly Effect Media and its equity holders may have or develop interests that conflict with the Company's interests, which may lead them to pursue opportunities in violation of the aforementioned contractual agreements. If the Company cannot resolve any conflicts of interest or disputes between the Company and the equity holders of Butterfly Effect Media, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. · Butterfly Effect Media and its equity holders could fail to obtain the proper operating licenses or fail to comply with other regulatory requirements. As a result, the PRC government could impose fines, new requirements or other penalties, mandate a change in ownership structure or operations, restrict the use of financing sources or ability to conduct business on Butterfly Effect Media or the Company. · The PRC government may declare the aforementioned contractual arrangements invalid. They may modify the relevant regulations, have a different interpretation of such regulations, or otherwise determine that the Company or Butterfly Effect Media have failed to comply with the legal obligations required to effectuate such contractual arrangements. · If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government may restrict or prohibit the Company's business and operations in China. · The Company's ability to conduct its business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate Butterfly Effect Media in the consolidated financial statements as the Company may lose the ability to exert effective control over Butterfly Effect Media, and the Company may lose the ability to receive economic benefits from Butterfly Effect Media. The Company's business has been directly operated by Butterfly Effect Media. For the year ended February 29, 2020, Butterfly Effect Media accounted for an aggregate of 99.8% of the Company's consolidated total assets, and 20.7% of the Company's consolidated total liabilities. The following consolidated financial information of Butterfly Effect Media, after the elimination of inter-company transactions and balances, as of February 29, 2020 and for the period from February 24, 2020 to February 29, 2020 was included in the accompanying consolidated financial statements: As of Cash and cash equivalents $ 33,313 Accounts receivable 79,020 Advance to suppliers 8,648,378 Inventories 12,636,719 Other receivables and current assets 3,400,963 Total current assets 24,798,393 Long-term investment, net 3,275,929 Capital assets, net 605,093 Intangible assets 2,472,000 Right-of-use assets 78,638 Total assets 31,230,053 Accounts payable 587,620 Wages payable 156,268 Interest payable 106,268 Tax payable 222,766 Deferred revenue 2,547,180 Short-term loans 2,218,050 Due to related parties 2,967,894 Other current liabilities 4,331,023 Lease liabilities 84,663 Total liabilities $ 13,221,732 For the Period Ended Net revenues $ - Net loss (29,163 ) Net cash provided by operating activities 29,022 Net cash used in investing activities - Net cash provided by financing activities - Effects of exchange rate changes $ (141 ) There are no assets of Butterfly Effect Media that are collateral for its obligations and which can only be used to settle its obligations. No creditors (or beneficial interest holders) of Butterfly Effect Media have recourse to the general credit of the Company or any of its consolidated subsidiaries. No terms in any arrangements, considering both explicit arrangements and implicit variable interests, require the Company or its subsidiaries to provide financial support to Butterfly Effect Media. |
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. | |
Reclassifications | 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. | Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss nor accumulated deficit. |
Advance 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. | The Company advances funds to certain authors or publishers for the purchase of literature copyrights and productions. Based on management’s evaluation, 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. | Inventories are stated at the lower of cost or net realizable value. Costs include the purchase cost of literature copyright, direct production cost of audiobooks and related production overhead. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories. Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products. |
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. 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. Prepayments for sales of product is recorded as deferred revenue from customers 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. 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. | In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to a customer. Topic 606 requires the Company to recognize revenues when control of the promised goods or services and receipt of payment is probable. The Company recognizes revenue based on the five criteria for revenue recognition 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 adopted Topic 606 effective March 1, 2019 and began to generate revenue during the nine months ended November 30, 2019. The Company sells advertising services to third-party advertising agencies and advertisers. Advertising contracts are signed to establish the price and advertising services to be provided. Pursuant to the advertising contracts, the Company provides advertisement placements on its OTT 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 contract price 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. The Company’s VIE and its subsidiaries sell copyrights of scripts and original stories to third parties, and sell 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 providing customers with a right to use the intellectual properties as they exist when made available to customers are recognized at the point in time when the intellectual property is made available to customers. Prepayments for sales of product is recorded as deferred revenue from customers 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. For revenue from licensing of literal copyrights where the Company continue 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, royalty as revenue is recognized as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, revenue is based on historical data, industry information and other relevant trends. |
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. | Intangible assets acquired through business acquisitions are recognized as assets separated from goodwill if they satisfy either the “contractual-legal” or “separability” criterion. Purchased intangible assets and intangible assets arising from the acquisitions of subsidiaries and VIE subsidiaries are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows: Copyrights 2 - 5 years Licenses 10-20 years Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the asset. |
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. | Deferred revenue, mainly 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 Payement | The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation 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. | The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation 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 life 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 similar companies due to limited history of our stock price. The expected life assumption for stock options grants was based upon the simplified method provided for 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 and presently has no intention of paying cash dividends in the future. The risk-free interest rate used for each grant was based upon prevailing short-term interest rates over the expected life of the options. |
Translation Adjustments | 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 (“$” or “USD”) in accordance ASC 830, “Foreign Currency Matters”, with the HKD and RMB as the functional currencies. Pursuant to the ASC 830, all assets and liabilities are translated at the current exchange rate, stockholders’ equity (deficit) are translated at the historical rates, and income statement items are translated at an average exchange rate for the period. The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit). | The accounts of China VTV were maintained, and its financial statements were expressed, in Hong Kong Dollar (“HKD”) and Chinese Yuan (RMB). Such financial statements were translated into U.S. Dollars (“$” 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. | 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. |
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. | FASB ASC 820, “Fair Value Measurements” defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. It requires that an entity measure its financial instruments to base fair value on exit price, maximize the use of observable units and minimize the use of unobservable inputs to determine the exit price. It establishes a hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy increases the consistency and comparability of fair value measurements and related disclosures by maximizing the use of observable inputs and minimizing the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the assets or liabilities based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy prioritizes the inputs into three broad levels based on the reliability of the inputs as follows: ☐ Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Valuation of these instruments does not require a high degree of judgment as the valuations are based on quoted prices in active markets that are readily and regularly available. ☐ Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable as of the measurement date, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ☐ Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data. The fair value for such assets and liabilities is generally determined using pricing models, discounted cash flow methodologies, or similar techniques that incorporate the assumptions a market participant would use in pricing the asset or liability. The Company’s financial instruments include cash, accounts receivable, advances to suppliers, other receivables, accounts payable, wages payable, short-term debt, interest payable, due to related parties, acquisition liability and other payables. The carrying values of these financial instruments approximate their fair value due to their relatively short maturities. The Company’s cash and cash equivalents are classified as Level assets. |
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. | For the Company’s VIE, a noncontrolling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Consolidated net income (loss) on the consolidated income statements includes the net income (loss) attributable to noncontrolling interests. The cumulative results of operations attributable to noncontrolling interests are recorded as noncontrolling interests in the Company’s consolidated balance sheets. Cash flows related to transactions with noncontrolling interests are presented under financing activities in the consolidated statements of cash flows. |
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. | 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. |
Recent 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. | In March 2020, the FASB issued ASU 2020-04, " Reference Rate Reform (Topic 848) In December 2019, the FASB issued ASU 2019-12, Income Taxes In June 2016, the FASB issued ASU 2016-13, " Financial Instruments - Credit Losses Revenue from Contracts with Customers |
Basic and Diluted Earning (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: May 31, May 31, 2020 2019 Stock options 500,000 - 500,000 - | |
Risks and Uncertainties | The major operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 caused interruption of operation in the Company’s China facilities from February to early March 2020. The breakout of COVID-19 around the world in the first and second quarters of 2020 has caused significant market volatility in China, U.S., and the rest of the world. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the global economies and, as such, the Company is unable to determine if it will have a material impact on its financial result of the fiscal year of 2021. | The major operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
Cash and Cash Equivalents | The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. As of February 28, 2019 and 2018, the Company had $51,551 and $17,548 in cash and cash equivalents, respectively. | |
Accounts Receivables | Accounts receivable are stated at net realizable value. The Company usually grants credit to customers with a maximum of 60 days. An allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. As at February 29, 2020, there were no accounts receivable allowance required. | |
Share Subscription Receivables | The Company issued common stock to five individual investors for cash under stock subscription agreements and the cash has not been received. For accounting purposes, the outstanding receivables with respect to the share subscription are recorded as subscription receivables in equity. | |
Capital Assests | Capital assets are stated at cost less accumulated depreciation and any provision required for impairment in value. Repairs and maintenance are expensed as incurred. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are depreciated on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset. Depreciation is computed using the straight-line method with no residual value based on the estimated useful lives of the various classes of assets, which range as follows: Furniture and office equipment 3-5 years Software 3 years Leasehold improvements shorter of remaining lease period or estimated useful life | |
Impairement of Goodwill | Goodwill represents the excess of the purchase 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 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 is performed. Application of a goodwill impairment test requires significant management judgment. | |
Research and Development Expenses | Research and development costs are generally expensed as incurred. Research and development expenses mainly consist of the costs incurred in the development and improvement of the Company’s OTT Platform. Research and development expenses were $231,791 and $863,528 for the years ended February 29, 2020 and February 28, 2019, respectively. | |
Business Combinations | The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations” (“ASC 805”). The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred. | |
Comprehensive Income (Loss) | Comprehensive income (loss) includes accumulated foreign currency translation gains and losses. The Company has reported the components of comprehensive income (loss) on its consolidated statements of stockholders’ equity (deficit) and consolidated statements of operations and comprehensive income (loss). | |
Leases | The Company’s lease portfolio consists operating real estate leases for its corporate offices. Under ASC 842, a contract is or contains a lease when (1) an explicitly or implicitly identified asset has been deployed in the contract and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company determines if an arrangement is or contains a lease at inception of the contract. For all leases (finance and operating), other than those that qualify for the short-term recognition exemption, the Company will recognize on the balance sheet a lease liability for its obligation to make lease payments arising from the lease and a corresponding right of use (“ROU”) asset representing its right to use the underlying asset over the period of use based on the present value of lease payments over the lease term as of the lease commencement date. ROU assets are adjusted for initial direct costs, lease payments made and incentives. As the rates implicit in our leases are not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The lease term used to calculate the lease liability will include options to extend or terminate the lease when the option to extend or terminate is at the Company’s discretion and it is reasonably certain that the Company will exercise the option. Fixed payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of one year or less (“short-term leases”), the lease payments are recognized in the consolidated statement of operations on a straight-line basis over the lease term. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Schedule of diluted common shares | May 31, May 31, 2020 2019 Stock options 500,000 - 500,000 - | |
Schedule of Property, Plant, and Equipment | As of Cash and cash equivalents $ 33,313 Accounts receivable 79,020 Advance to suppliers 8,648,378 Inventories 12,636,719 Other receivables and current assets 3,400,963 Total current assets 24,798,393 Long-term investment, net 3,275,929 Capital assets, net 605,093 Intangible assets 2,472,000 Right-of-use assets 78,638 Total assets 31,230,053 Accounts payable 587,620 Wages payable 156,268 Interest payable 106,268 Tax payable 222,766 Deferred revenue 2,547,180 Short-term loans 2,218,050 Due to related parties 2,967,894 Other current liabilities 4,331,023 Lease liabilities 84,663 Total liabilities $ 13,221,732 For the Period Ended Net revenues $ - Net loss (29,163 ) Net cash provided by operating activities 29,022 Net cash used in investing activities - Net cash provided by financing activities - Effects of exchange rate changes $ (141 ) | |
Schedule of Various Class of Assest | Furniture and office equipment 3-5 years Software 3 years Leasehold improvements shorter of remaining lease period or estimated useful life | |
Schedule of Intangible Assests | Copyrights 2 - 5 years Licenses 10-20 years |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
BUSINESS ACQUISITIONS | |
Schedule of Business Acquisitions | Purchase Considerations Cash Considerations $ 36,931,000 Stock Considerations 608,914 Contingent receivable (608,914 ) Total Purchase Price at Fair Value: $ 36,931,000 Estimated Fair Value of Assets Acquired: Cash 33,313 Accounts receivable 79,020 Advances to suppliers 8,648,378 Other receivable 3,088,659 Copyrights and development costs, net 10,919,780 Other current assets 312,304 Investments 3,275,929 Capital assets 605,093 Intangibles - copy rights 1,530,000 Right-of-use assets 78,638 Estimated Fair Value of Liabilities Assumed: Short term debt (2,218,050 ) Accounts payable (580,781 ) Deferred revenue (2,547,180 ) Wages payable (134,400 ) Taxes payable (222,766 ) Interest payable (105,953 ) Due to related parties (2,967,894 ) Other payables (4,331,023 ) Lease liabilities (84,663 ) Net Assets Acquired 15,378,401 Goodwill, being excess of Purchase Price Over Net Identifiable Assets Acquired $ 21,552,596 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
BUSINESS ACQUISITIONS | ||
Schedule of Inventory | As of May 31, 2020 February 29, 2020 Script development $ 4,155,008 $ 2,235,979 Mobile audio games 2,905,270 1,215,000 Artwork 362,673 859,540 Total inventories 7,422,951 4,310,519 | As of February 29, 2020 February 28, 2019 Script development $ 2,235,979 $ - Mobile audio games 1,215,000 - Artwork 859,540 - 4,310,519 - Licensed copyrights at cost 8,326,199 - Less: amortization (1,716,939 ) - 6,609,260 - Total $ 10,919,779 $ - |
COPYRIGHTS, NET (Tables)
COPYRIGHTS, NET (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
COPYRIGHTS, NET | ||
Schedule of Copyrights | As of May 31, February 29, 2020 Licensed copyrights at cost $ 10,477,657 $ 8,326,199 Less: amortization (2,181,792 ) (1,716,939 ) Copyrights, net 8,295,865 6,609,260 | |
Schedule of Inventories | As of May 31, 2020 February 29, 2020 Script development $ 4,155,008 $ 2,235,979 Mobile audio games 2,905,270 1,215,000 Artwork 362,673 859,540 Total inventories 7,422,951 4,310,519 | As of February 29, 2020 February 28, 2019 Script development $ 2,235,979 $ - Mobile audio games 1,215,000 - Artwork 859,540 - 4,310,519 - Licensed copyrights at cost 8,326,199 - Less: amortization (1,716,939 ) - 6,609,260 - Total $ 10,919,779 $ - |
ADVANCES TO SUPPLIERS NET (Tabl
ADVANCES TO SUPPLIERS NET (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
ADVANCES TO SUPPLIERS, NET | ||
Schedule of Advance to Supplier | As of May 31, February Deposits $ 6,367,678 $ 10,223,973 Prepaid expenses 667,820 168 Total advance to suppliers 7,035,498 10,224,141 Less: allowance for doubtful accounts (1,969,417 ) (1,575,595 ) Advance to suppliers, net $ 5,066,081 $ 8,648,546 | As of February 29, 2020 February 28, 2019 Deposits $ 10,223,973 $ - Prepaid expenses 168 - Total advance to suppliers 10,224,141 - Less: allowance for doubtful accounts (1,575,595 ) - Advance to suppliers, net $ 8,648,546 $ - |
OTHER RECEIVABLES AND CURRENT_2
OTHER RECEIVABLES AND CURRENT ASSETS (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
OTHER RECEIVABLES AND CURRENT ASSETS | ||
Schedule of Other Receivables and Current Assests | As of May 31, February 29, Other receivables $ 3,057,833 $ 3,088,659 Other current assets 522,248 312,304 Total $ 3,580,081 $ 3,400,963 | As of February 29, 2020 February 28, 2019 Other receivables $ 3,088,659 $ - Other current assets 312,304 - Total $ 3,400,963 $ - |
INVESTMENT IN EQUITY INVESTEES
INVESTMENT IN EQUITY INVESTEES (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
INVESTMENT IN EQUITY INVESTEES | ||
Schedule of investement in equity | As of May 31, February 29, Investment in equity investees $ 3,820,258 $ 3,852,622 Less: impairment (565,006 ) (576,693 ) Total $ 3,255,252 $ 3,275,929 | As of February 29, 2020 February 28, 2019 Investment in equity investees $ 3,852,622 $ - Less: impairment (576,693 ) - Total $ 3,275,929 $ 0 |
CAPITAL ASSETS NET (Tables)
CAPITAL ASSETS NET (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
CAPITAL ASSETS, NET | ||
Schedule of Capital Assets | As of May 31, February 29, Furniture and office equipment $ 169,620 $ 168,641 Software 530,374 541,345 Leasehold improvements 304,773 295,231 Total capital assets 1,004,767 1,005,217 Less: accumulated depreciation (326,278 ) (312,025 ) Capital assets, net $ 678,489 $ 693,192 | As of February 29, 2020 February 28, 2019 Investment in equity investees $ 3,852,622 $ - Less: impairment (576,693 ) - Total $ 3,275,929 $ 0 |
INTANGIBLES NET (Tables)
INTANGIBLES NET (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
INTANGIBLES, NET | ||
Schedule of Intangible Assests | As of May 31, February 29, 2020 Copyrights $ 2,574,687 $ 2,311,837 Less: accumulated amortization (1,157,139 ) (781,837 ) Copyrights, net $ 1,417,548 $ 1,530,000 | As of February 29, 2020 February 28, 2019 Copyrights $ 2,311,837 $ - Less: accumulated amortization (781,837 ) - $ 1,530,000 $ - |
SHORT-TERM DEBT (Tables)
SHORT-TERM DEBT (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
SHORT-TERM DEBT | ||
Schedule of Short Term Debt | As of May 31, February 29, 2020 Interest at 0% per annum, unsecured, due on demand $ 795,471 $ 787,050 Interest at 4.35% per annum, unsecured, due on demand 289,262 286,200 Interest at 5.22% per annum, unsecured, due on demand 433,893 429,300 Interest at 10% per annum, unsecured, due on demand 682,514 715,500 $ 2,201,140 $ 2,218,050 | As of February 29, 2020 February 28, 2019 Interest at 0% per annum, unsecured, due on demand $ 787,050 $ - Interest at 4.35% per annum, unsecured, due on demand 286,200 - Interest at 5.22% per annum, unsecured, due on demand 429,300 - Interest at 10% per annum, unsecured, due on demand 715,500 - $ 2,218,050 $ - |
RELATED PARTY TRANSACTIONS AN_2
RELATED PARTY TRANSACTIONS AND BALANCES (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
RELATED PARTY TRANSACTIONS AND BALANCES | ||
Schedule of Related Party | Name of entity or individual Relationship with the Company and its subsidiary Mr. Tijing Song Shareholder, Chairman of the Board, CEO and President Mr. Guoping Chen Shareholder, Director, interim CFO, Secretary and Treasurer Ms. Qiongfang Shi Shareholder and Director | Name of entity or individual Relationship with the Company and its subsidiary Mr. Tijing Song Shareholder, Chairman of the Board, CEO and President Mr. Guoping Chen Shareholder, Director, interim CFO, Secretary and Treasurer Ms. Qiongfang Shi Shareholder and Director |
Schedule of Due to related parties | As of May 31, February 29, 2020 Mr. Tijing Song $ 440,755 $ 448,151 Mr. Guoping Chen 412,204 403,155 Ms. Qiongfang Shi 1,617,908 2,967,894 Total due to related parties $ 2,470,867 $ 3,819,200 | As of February 29, 2020 February 28, 2019 Mr. Tijing Song $ 448,151 $ 136,265 Mr. Guoping Chen 403,155 456,474 Ms. Qiongfang Shi 2,967,894 - Total due to related parties $ 3,819,200 $ 592,739 |
OTHER PAYABLES (Tables)
OTHER PAYABLES (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
OTHER PAYABLES | |
Schedule of Other Payables | As of February 29, 2020 February 28, 2019 Advance received $ 4,293,000 $ - Other 38,023 - Total $ 4,331,023 $ - |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Feb. 29, 2020 | |
EQUITY | |
Schedule of fair value of the stock options granted | For the Year Ended February 29, 2020 Risk free interest rate 1.61 % Expected term 7 Dividend yield $ 0.00 Expected volatility 150 % |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
INCOME TAXES | ||
Provision for income taxes | For the Three Months Ended May 31, 2020 May 31, 2019 Current $ - $ - Deferred - - Total provision for income tax expense (benefit) - - | For the Years Ended February 29, 2020 February 28, 2019 Current USA $ - $ - Hong Kong - - China - - Subtotal - - Deferred USA Deferred tax assets for NOL carryforwards 389,598 -- Valuation allowance (389,598 ) - Net changes in deferred income tax expense (benefit) - - Hong Kong Deferred tax assets for NOL carryforwards - - Valuation allowance - - Net changes in deferred income tax expense (benefit) - China Deferred tax assets for NOL carryforwards 477,589 - Valuation allowance (477,589 ) - Net changes in deferred income tax expense (benefit) - - Total provision for income tax expense (benefit) $ - $ - |
Reconciliation of the statutory tax rate | For the Three Months Ended May 31, 2020 May 31, 2019 PRC statutory rate 25.0 % - % Temporary difference between US GAAP and PRC tax accounting (25.0 )% - % Effective income tax rate - % - % | For the Years Ended February 29, 2020 February 28, 2019 U.S. statutory tax benefit (21.0 )% - % Permanent difference 20.0 % - % Change in deferred tax asset valuation allowance 1.0 % - % Hong Kong statutory tax benefit (16.5 )% (16.5 )% Change in deferred tax asset valuation allowance 16.5 % 16.5 % China statutory tax benefit (25.0 )% - % Permanent difference - % - % Change in deferred tax asset valuation allowance 25.0 % - % Effective income tax rate - % - % |
Component of deferred income tax assets | As of May 31, February Net operating loss carry-forward $ 879,671 $ 867,187 Other receivable 488,130 482,963 Deferred revenue 11,683 11,559 Valuation allowance (1,379,483 ) (1,361,709 ) Net deferred income tax assets $ - $ - | For the Years Ended February 29, 2020 February 28, 2019 Net operating loss carry-forward $ 867,187 $ - Other receivable 482,963 - Deferred revenue 11559 - Valuation allowance (1,361,709 ) - Net deferred income tax assets $ - $ - |
ORGANIZATION AND BUSINESS BACKG
ORGANIZATION AND BUSINESS BACKGROUND (Details Narrative) - USD ($) | 1 Months Ended | ||||||
Feb. 25, 2020 | Dec. 18, 2019 | Dec. 18, 2018 | May 31, 2020 | Feb. 29, 2020 | May 06, 2019 | Feb. 28, 2019 | |
Common stock, shares issued | 284,280,000 | 284,280,000 | 105,000,000 | ||||
Share Exchange Agreement [Member] | |||||||
Common stock, shares issued | 115,550,000 | ||||||
Acquisition Agreement [Member] | |||||||
Restricted common shares issued | 24,000,000 | ||||||
Stock consideration, issuable | 24,000,000 | ||||||
Cash consideration | $ 288,000,000 | $ 288,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | May 31, 2019 | Feb. 28, 2019 |
Stock options | 500,000 | |||
Total | 500,000 | |||
Advance to suppliers | $ 5,066,081 | $ 8,648,546 | $ 0 | |
Inventories | 4,310,519 | 0 | ||
Cash and cash equivalents | 91,177 | 51,551 | 17,548 | |
Total current assets | 25,108,438 | 23,099,859 | 17,548 | |
Capital assets, net | 693,192 | 0 | ||
Intangible assets | 1,417,548 | 1,530,000 | 0 | |
Total assets | 52,684,417 | 50,839,128 | 17,548 | |
Accounts payable | 611,677 | 601,671 | 0 | |
Wages payable | 361,385 | 304,509 | 23,163 | |
Interest payable | 120,603 | 106,268 | 0 | |
Tax payable | 1,459,420 | 222,766 | 0 | |
Short-term loans | 2,201,140 | 2,218,050 | 0 | |
Due to related parties | 2,470,867 | 3,819,200 | 592,739 | |
Total liabilities | $ 49,116,959 | 51,166,330 | $ 615,902 | |
Butterfly Effect Media [Member] | ||||
Accounts receivable | 79,020 | |||
Advance to suppliers | 8,648,378 | |||
Inventories | 12,636,719 | |||
Cash and cash equivalents | 33,313 | |||
Other receivables and current assets | 3,400,963 | |||
Total current assets | 24,798,393 | |||
Long-term investment, net | 3,275,929 | |||
Capital assets, net | 605,093 | |||
Intangible assets | 2,472,000 | |||
Right-of-use assets | 78,638 | |||
Total assets | 31,230,053 | |||
Accounts payable | 587,620 | |||
Wages payable | 156,268 | |||
Interest payable | 106,268 | |||
Tax payable | 222,766 | |||
Deferred revenue | 2,547,180 | |||
Short-term loans | 2,218,050 | |||
Due to related parties | 2,967,894 | |||
Other current liabilities | 4,331,023 | |||
Lease liabilities | 84,663 | |||
Total liabilities | $ 13,221,732 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Net revenues | $ 3,721,618 | $ 0 | $ 3,834 | $ 0 |
Net loss | 779,218 | (103,039) | (1,507,571) | (875,007) |
Net cash provided by operating activities | 686,896 | (87,019) | (471,808) | (508,322) |
Net cash used in investing activities | 800,529 | 0 | (78,466) | 0 |
Net cash provided by financing activities | $ (1,365,243) | $ 79,522 | 506,476 | $ 60,918 |
Butterfly Effect Media [Member] | ||||
Net revenues | 0 | |||
Net loss | (29,163) | |||
Net cash provided by operating activities | 29,022 | |||
Net cash used in investing activities | 0 | |||
Net cash provided by financing activities | 0 | |||
Effects of exchange rate changes | $ (141) |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 12 Months Ended |
Feb. 29, 2020 | |
Leasehold Improvements [Member] | |
Estimated useful lives | shorter of remaining lease period or estimated useful life |
Furniture And Office Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Furniture And Office Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Software [Member] | |
Estimated useful lives | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) | 12 Months Ended |
Feb. 29, 2020 | |
Copyrights [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Copyrights [Member] | Minimum [Member] | |
Estimated useful lives | 2 years |
Licenses [Member] | Maximum [Member] | |
Estimated useful lives | 20 years |
Licenses [Member] | Minimum[Member] | |
Estimated useful lives | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Dec. 18, 2019 | Dec. 18, 2018 | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 | May 31, 2019 | Feb. 28, 2018 | |
Research and development expense | $ 231,791 | $ 861,581 | |||||
Cash and Cash Equivalents | $ 91,177 | $ 51,551 | $ 17,548 | $ 10,051 | $ 51,451 | ||
Acquisition Agreement [Member] | |||||||
Stock consideration, issuable | 24,000,000 | ||||||
Cash consideration | $ 288,000,000 | $ 288,000,000 | |||||
Cash consideration desription | For payment of the Cash Consideration, the Company will dedicate 40% of the net proceeds received in any future public or private equity offerings for gross proceeds of at least $20,000,000 (before deducting any underwriter or placement agent’s discount and commissions and any offering expenses) to pay to Butterfly Effect Media’s equity holders, until the total amount of the Cash Consideration is paid in full without the obligation to pay any interest thereon. | ||||||
Copyrights [Member] | Maximum [Member] | |||||||
Licensed term | 10 years | ||||||
Copyrights [Member] | Minimum [Member] | |||||||
Licensed term | 3 years |
BUSINESS ACQUISITIONS (Details)
BUSINESS ACQUISITIONS (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Purchase Considerations | |||
Cash Considerations | $ 36,931,000 | ||
Stock Considerations | 608,914 | ||
Contingent receivable | $ 608,914 | 608,914 | $ 0 |
Total Purchase Price at Fair Value: | $ 36,931,000 |
BUSINESS ACQUISITIONS (Details
BUSINESS ACQUISITIONS (Details 1) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Cash | $ 91,177 | $ 51,551 | $ 17,548 |
Advance to suppliers | 5,066,081 | 8,648,546 | 0 |
Short term debt | 2,201,140 | 2,218,050 | 0 |
Accounts payable | 611,677 | 601,671 | 0 |
Deferred revenue | 4,346,200 | 2,547,180 | 0 |
Wages payable | 361,385 | 304,509 | 23,163 |
Interest payable | 120,603 | 106,268 | 0 |
Due to related parties | 2,470,867 | 3,819,200 | 592,739 |
Other payables | 38,023 | 0 | |
Goodwill, being excess of Purchase Price Over Net Identifiable Assets Acquired | $ 21,552,596 | 21,552,596 | $ 0 |
Estimated Fair Value of Assets $ Liabilities[member] | |||
Cash | 33,313 | ||
Accounts receivable | 79,020 | ||
Advance to suppliers | 8,648,378 | ||
Other receivable | 3,088,659 | ||
Copyrights and development costs, net | 10,919,780 | ||
Other current assets | 312,304 | ||
Investments | 3,275,929 | ||
Capital assets | 605,093 | ||
Intangibles - copy rights | 1,530,000 | ||
Right-of-use assets | 78,638 | ||
Short term debt | (2,218,050) | ||
Accounts payable | (580,781) | ||
Deferred revenue | (2,547,180) | ||
Wages payable | (134,400) | ||
Taxes payable | (222,766) | ||
Interest payable | (105,953) | ||
Due to related parties | (2,967,894) | ||
Other payables | (4,331,023) | ||
Lease liabilities | (84,663) | ||
Net Assets Acquired | 15,378,401 | ||
Goodwill, being excess of Purchase Price Over Net Identifiable Assets Acquired | $ 21,552,596 |
BUSINESS ACQUISITIONS (Detail_2
BUSINESS ACQUISITIONS (Details Narraive) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Feb. 25, 2020 | Dec. 18, 2019 | Dec. 18, 2018 | Feb. 29, 2020 | May 31, 2020 | May 06, 2019 | Feb. 28, 2019 | |
Total Purchase Price at Fair Value | $ 36,931,000 | ||||||
Goodwill | $ 21,552,596 | $ 21,552,596 | $ 0 | ||||
Estimated treasury stock | 24,000,000 | ||||||
Aggregate net profit description | The Acquisition Agreement also provides that in the event that Butterfly Effect Media fails to meet the aggregate net profit milestones of RMB215,000,000 for the 3 years ending February 28, 2022, | ||||||
Contingent receivable | $ 608,914 | $ 608,914 | $ 0 | ||||
Common stock, shares issued | 284,280,000 | 284,280,000 | 105,000,000 | ||||
Share Exchange Agreement [Member] | |||||||
Common stock, shares issued | 115,550,000 | ||||||
Acquisition Agreement [Member] | |||||||
Restricted common shares issued | 24,000,000 | ||||||
Description of profit after acquisation | The Acquisition Agreement also provides that in the event that Butterfly Effect Media fails to meet the aggregate net profit milestones of RMB215,000,000 for the 3 years ending February 28, 2022, each equity holder is to return the common stock or equivalent amount of cash (the “Claw-back”) according to the calculation formula specified in the Acquisition Agreement. | ||||||
Cash consideration | $ 288,000,000 | $ 288,000,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Inventory | $ 7,422,951 | $ 4,310,519 | $ 0 |
Artwork [Member] | |||
Inventory | 362,673 | 859,540 | |
Script Development [Member] | |||
Inventory | 4,155,008 | 2,235,979 | |
Mobile Audio Games [Member] | |||
Inventory | $ 2,905,270 | $ 1,215,000 |
COPYRIGHTS, NET (Details)
COPYRIGHTS, NET (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Licensed copyrights at cost | $ 10,477,657 | $ 8,326,199 | $ 0 |
Inverntory | 4,310,519 | 0 | |
Less: amortization | (2,181,792) | (1,716,939) | 0 |
Licensed copyrights at cost, net | $ 8,295,865 | 6,609,260 | 0 |
Artwork [Member] | |||
Inverntory | 859,540 | 0 | |
Script Development [Member] | |||
Inverntory | 2,235,979 | 0 | |
Mobile Audio Games [Member] | |||
Inverntory | $ 1,215,000 | $ 0 |
ADVANCES TO SUPPLIERS, NET (Det
ADVANCES TO SUPPLIERS, NET (Details) - Advance To Suppliers [Member] - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Deposits | $ 6,367,678 | $ 10,223,973 | $ 0 |
Prepaid expenses | 667,820 | 168 | 0 |
Total advance to suppliers | 7,035,498 | 10,224,141 | 0 |
Less: allowance for doubtful accounts | (1,969,417) | (1,575,595) | 0 |
Advance to suppliers, net | $ 5,066,081 | $ 8,648,546 | $ 0 |
OTHER RECEIVABLES AND CURRENT_3
OTHER RECEIVABLES AND CURRENT ASSETS (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Total | $ 25,108,438 | $ 23,099,859 | $ 17,548 |
Other Receivables And Current Assets [Member] | |||
Other receivables | 3,057,833 | 3,088,659 | 0 |
Other current assets | 522,248 | 312,304 | 0 |
Total | $ 3,580,081 | $ 3,400,963 | $ 0 |
INVESTMENT IN EQUITY INVESTEE_2
INVESTMENT IN EQUITY INVESTEES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Investment in equity investees | $ 3,255,252 | $ 3,275,929 | $ 0 | |
Less: impairment | 19,200 | $ 0 | 0 | 0 |
Investment In Equity Investees (Member) | ||||
Investment in equity investees | 3,820,258 | 3,852,622 | 0 | |
Less: impairment | (565,006) | (576,693) | ||
Total | $ 3,255,252 | $ 3,275,929 | $ 0 |
CAPITAL ASSETS, NET (Details)
CAPITAL ASSETS, NET (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Furniture and office equipment | $ 168,641 | $ 0 | |
Software | 541,345 | 0 | |
Leasehold improvements | 295,231 | 0 | |
Total capital assets | 1,005,217 | ||
Less: accumulated depreciation | (312,025) | 0 | |
Capital assets, net | 693,192 | 0 | |
Total capital assets | $ 52,684,417 | 50,839,128 | $ 17,548 |
Capital Assets, Net [Member] | |||
Furniture and office equipment | 169,620 | 168,641 | |
Software | 530,374 | 541,345 | |
Leasehold improvements | 304,773 | 295,231 | |
Less: accumulated depreciation | (326,278) | (312,025) | |
Capital assets, net | 678,489 | 693,192 | |
Total capital assets | $ 1,004,767 | $ 1,005,217 |
CAPITAL ASSETS, NET (Details Na
CAPITAL ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
Depreciation expense | $ 871,239 | $ 0 | $ 23,680 | $ 0 |
Capital Assets, Net [Member] | ||||
Depreciation expense | $ 14,407 | $ 0 |
INTANGIBLES, NET (Details)
INTANGIBLES, NET (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Copyrights | $ 2,311,837 | $ 0 | |
Less: accumulated amortization | (781,837) | 0 | |
Total intangible assets | 1,530,000 | 0 | |
Copyrights | $ 8,295,865 | 6,609,260 | $ 0 |
Intangibles, Net [Member] | |||
Less: accumulated amortization | (1,157,139) | (781,837) | |
Total intangible assets | 1,417,548 | 1,530,000 | |
Copyrights | $ 2,574,687 | $ 2,311,837 |
INTANGIBLES, NET (Details Narra
INTANGIBLES, NET (Details Narrative) - USD ($) | 3 Months Ended | |
May 31, 2020 | May 31, 2019 | |
INTANGIBLES, NET | ||
Amortization expense | $ 379,317 | $ 0 |
SHORT-TERM DEBT (Details)
SHORT-TERM DEBT (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Short term debt | $ 2,201,140 | $ 2,218,050 | $ 0 |
Interest at 10% per annum, unsecured, due on demand [Member] | |||
Short term debt | 682,514 | 715,500 | 0 |
Interest at 0% per annum, unsecured, due on demand [Member] | |||
Short term debt | 795,471 | 787,050 | 0 |
Interest at 4.35% per annum, unsecured, due on demand [Member] | |||
Short term debt | 289,262 | 286,200 | 0 |
Interest at 5.22% per annum, unsecured, due on demand [Member] | |||
Short term debt | $ 433,893 | $ 429,300 | $ 0 |
SHORT-TERM DEBT (Details Narrat
SHORT-TERM DEBT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 29, 2020 | May 31, 2020 | Jun. 30, 2019 | Feb. 28, 2019 | |
Short term debt | $ 2,218,050 | $ 2,201,140 | $ 0 | |
Line of credit agreement (Member) | ||||
Short term debt | $ 715,500 | $ 433,893 | $ 708,500 | |
Interest rate | 522.00% | 522.00% |
RELATED PARTY TRANSACTIONS AN_3
RELATED PARTY TRANSACTIONS AND BALANCES (Details) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
Due to related parties | $ 2,470,867 | $ 3,819,200 | $ 592,739 |
Qiongfang Shi (Member) | |||
Due to related parties | 1,617,908 | 2,967,894 | 0 |
Tijing Song [Member] | |||
Due to related parties | 440,755 | 448,151 | 136,265 |
Guoping Chen [Member] | |||
Due to related parties | $ 412,204 | $ 403,155 | $ 456,474 |
ACQUISITION LIABILITY (Details
ACQUISITION LIABILITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Dec. 28, 2019 | May 31, 2020 | Feb. 29, 2020 | |
ACQUISITION LIABILITY | |||
Description of stock considration payable | In accordance with Amendment No. 1, after the Company makes the cash payments of at least RMB 144 million (approximately $20.46 million), which is a half of the total Cash Consideration, to the Equity Holders, the Company may choose to pay the half of the remaining Cash Consideration, equivalent to RMB 72 million (approximately $10.23 million), in the form of its common stock at a price of $2.00 per share to the Equity Holders as opposed to making such cash payment in the amount of RMB 72 million. | In accordance with Amendment No. 1, after the Company makes the cash payments of at least RMB 144 million (approximately $20.46 million), which is half of the total Cash Consideration, to the Equity Holders, the Company may choose to pay the half of the remaining Cash Consideration, equivalent to RMB 72 million (approximately $10.23 million), in the form of its common stock at a price of $2.00 per share to the Equity Holders as opposed to making such cash payment in the amount of RMB 72 million. | |
Cash consideration | $ 288,000,000 | ||
Description of cash considration payable | The Company agreed to pay the Equity Holders at least RMB 45 million (approximately $6.39 million) pro rata from the proceeds of its first public or private offering of its shares after the Acquisition, make payments to the Equity Holders pro rata of an additional RMB 99 million (approximately $14.07 million) by December 31, 2020, and a further payment of RMB 144 million (approximately $20.46 million) on or before December 31, 2021 | The Company shall pay the Equity Holders at least RMB 45 million (approximately $6.39 million) pro rata from the proceeds of its first public or private offering of its shares after the Acquisition, make payments to the Equity Holders pro rata of an additional RMB 99 million (approximately $14.07 million) by December 31, 2020, and a further payment of RMB 144 million (approximately $20.46 million) on or before December 31, 2021 | |
Fair value of consideration | $ 36,931,000 | $ 36,931,000 |
OTHER CONTINGENT LIABILITY (Det
OTHER CONTINGENT LIABILITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 | |
Development expense | $ 231,791 | $ 861,581 | ||
Licensing Agreement [Member] | ||||
Common stock issuable | 40,000 | 2,700,000 | 2,700,000 | |
Payment as compensation | $ 150,000 | |||
Fair value of stock issuable | $ 172,260 | $ 172,260 | ||
Paytment period | Monthly | |||
Stock options description | The 500,000 stock options to the owner of CybEye were approved and granted for the year ended February 29, 2020. The Company has not issued the 2,500,000 shares and 200,000 shares agreed to be issued to CybEye, and has not approved the granting of the 200,000 stock options to the 2 technicians as described above. | |||
CybEye [Member] | ||||
Stock options | 500,000 | |||
Fair value of stock options | $ 9,530 | |||
Development expense | $ 9,531 | |||
Share price | $ 0.068 | |||
Exercise price | $ 12 | |||
Expected life of the option | 7 years | |||
Volatility | 15000.00% | |||
Interest rate | 161.00% | |||
CybEye [Member] | Strategic Development Agreement [Member] | ||||
Common stock issuable | 2,500,000 | |||
licensing agreement description | License to certain technologies for 20 years, expiring on September 30, 2029. | |||
Description of shares sell and dispose | CybEye may sell and dispose any or all of the 2,500,000 shares at any time at a per share price of no less than $5.00. In the event that the Company issues and sells its common stock in a public offering facilitated by a broker-dealer or investment bank at a price less than $4.00 per share (the “Better Price”) within the following twelve (12) months from the agreement date, the Company agreed to grant CybEye options to purchase a number of shares of the Company’s common stock which is calculated by multiplying the difference of $4.00 and the Better Price by 2,500,000, then dividing the product by the Better Price, at an exercise price equaling to the Better Price. |
OTHER PAYABLES (Details)
OTHER PAYABLES (Details) - USD ($) | Feb. 29, 2020 | Feb. 28, 2019 |
OTHER PAYABLES | ||
Advance received | $ 4,293,000 | $ 0 |
Other | 38,023 | 0 |
Total | $ 4,331,023 | $ 0 |
EQUITY (Details)
EQUITY (Details) | 12 Months Ended |
Feb. 29, 2020USD ($) | |
EQUITY | |
Risk free interest rate | 161.00% |
Expected term | 7 years |
Dividend yield | $ 0 |
Expected volatility | 15000.00% |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2020 | Feb. 25, 2020 | Jan. 21, 2020 | Dec. 31, 2019 | Nov. 29, 2019 | Sep. 30, 2019 | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 | May 06, 2019 | |
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Common stock, shares authorized | 600,000,000 | 600,000,000 | 600,000,000 | |||||||
Stock based compensation expense | $ 945,206 | $ 343,522 | ||||||||
Subscription receivables | $ (311,345) | $ (446,025) | $ 0 | |||||||
Common stock, shares issued | 284,280,000 | 284,280,000 | 105,000,000 | |||||||
Share Exchange Agreement [Member] | ||||||||||
Common stock, shares issued | 115,550,000 | |||||||||
2019 Stock Plan [Member] | ||||||||||
Common stock, amount | $ 826,210 | |||||||||
Stock option vested | 500,000 | 500,000 | ||||||||
Weighted average exercise price | $ 12 | $ 12 | ||||||||
Weighted-average contractual life remaining | 676 years | 6 years | ||||||||
Shares outstanding | 250,000 | |||||||||
Aggregate intrinsic value | $ 0 | $ 0 | ||||||||
Stock option issued | $ 22,000,000 | |||||||||
common shares, issued | 12,950,000 | |||||||||
four individual subscribers [Member] | ||||||||||
Common stock, shares issued | 22,600,000 | 2,500,000 | ||||||||
Subscription receivables | $ 732,963 | $ 474,184 | $ 618,284 | |||||||
Employee [Member] | ||||||||||
Common stock, shares issued | 550,000 | |||||||||
Common stock, amount | $ 35,090 | 35,090 | ||||||||
Executives And Directors [Member] | ||||||||||
Common stock, shares issued | 12,400,000 | |||||||||
Common stock, amount | $ 791,120 | 791,120 | ||||||||
Owned subsidiary | 8650.00% | 1500.00% | ||||||||
Interest rate | 1500.00% | 7110.00% | ||||||||
Equity transaction net proceeds | $ 3,200,000 | |||||||||
Ownership interest | 1500.00% | |||||||||
Stock Option Agreement [Member] | ||||||||||
Expiry date | Sep. 29, 2026 | |||||||||
Option issued to purchase shares of common stock | $ 500,000 | |||||||||
Stock based compensation expense | 9,530 | |||||||||
Exercise price | $ 12 | |||||||||
Acquisition Agreement with Butterfly Effect Media [Member] | ||||||||||
Stock based compensation expense | 46,704 | |||||||||
Fair value ofrestricted shares | $ 1,680,000 | |||||||||
Restricted Common stock issued | 24,000,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
USA | $ 0 | $ 0 | ||
Hong Kong | 0 | 0 | ||
Subtotal | 0 | 0 | ||
China [Member] | ||||
Current | ||||
Current | $ 0 | $ 0 | ||
Deferred | 0 | 0 | ||
Total provision for income tax expense (benefit) | $ 0 | $ 0 | ||
Deferred tax assets for NOL carryforwards | 477,589 | |||
Valuation allowance | (477,589) | |||
USA [Member] | ||||
Current | ||||
Deferred tax assets for NOL carryforwards | 389,598 | |||
Valuation allowance | (389,598) | |||
Net changes in deferred income tax expense (benefit) | 0 | 0 | ||
Hong Kong [Member] | ||||
Current | ||||
Net changes in deferred income tax expense (benefit) | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 3 Months Ended | 12 Months Ended | ||
May 31, 2020 | May 31, 2019 | Feb. 29, 2020 | Feb. 28, 2019 | |
China [Member] | ||||
PRC statutory rate | 2500.00% | 0.00% | ||
Temporary difference between US GAAP and PRC tax accounting | (2500.00%) | 0.00% | ||
Effective income tax rate | 0.00% | 0.00% | ||
Change in deferred tax asset valuation allowance | 2500.00% | |||
China statutory tax benefit | (2500.00%) | |||
USA [Member] | ||||
Change in deferred tax asset valuation allowance | 100.00% | |||
China statutory tax benefit | (2100.00%) | |||
Permanent difference | 2000.00% | |||
Hong Kong [Member] | ||||
Change in deferred tax asset valuation allowance | 1650.00% | 1650.00% | ||
Hong Kong statutory tax benefit | (1650.00%) | (1650.00%) |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | May 31, 2020 | Feb. 29, 2020 | Feb. 28, 2019 |
INCOME TAXES | |||
Net operating loss carry-forward | $ 879,671 | $ 867,187 | $ 0 |
Other receivable | 488,130 | 482,963 | 0 |
Deferred revenue | 11,683 | 11,559 | 0 |
Valuation allowance | (1,379,483) | (1,361,709) | 0 |
Net deferred income tax asset | $ 0 | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 3 Months Ended | 12 Months Ended |
May 31, 2020 | Feb. 29, 2020 | |
China [Member] | ||
Tax cuts and jobs act, description | The taxable income in accordance with the relevant PRC income tax laws, which have adopted a unified income tax rate of 25% since January 1, 2008. | The taxable income in accordance with the relevant PRC income tax laws, which have adopted a unified income tax rate of 25% since January 1, 2008. |
Hong Kong [Member] | ||
Tax cuts and jobs act, description | China VTV was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. | China VTV was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. |