Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document Information Line Items | |
Entity Registrant Name | WiMi Hologram Cloud Inc. |
Document Type | 20-F |
Current Fiscal Year End Date | --12-31 |
Amendment Flag | false |
Entity Central Index Key | 0001770088 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
Entity File Number | 001-39257 |
Document Annual Report | true |
Document Shell Company Report | false |
Document Transition Report | false |
Entity Incorporation, State or Country Code | E9 |
Entity Interactive Data Current | Yes |
Common Class A [Member] | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 20,115,570 |
Common Class B [Member] | |
Document Information Line Items | |
Entity Common Stock, Shares Outstanding | 79,884,430 |
Consolidated Balance Sheets
Consolidated Balance Sheets | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
CURRENT ASSETS | |||
Cash and cash equivalents | ¥ 129,048,978 | $ 18,498,463 | ¥ 151,947,942 |
Accounts receivable, net | 36,122,170 | 5,177,915 | 46,762,067 |
Prepaid expenses and other current assets | 6,076,474 | 871,029 | 2,981,436 |
Contract costs | 6,263,818 | 897,884 | 11,603,985 |
Total current assets | 177,511,440 | 25,445,291 | 213,295,430 |
PROPERTY AND EQUIPMENT, NET | 769,468 | 110,299 | 1,263,869 |
OTHER ASSETS | |||
Cost method investments | 4,350,000 | 623,549 | 500,000 |
Prepaid expenses and deposits | 1,248,473 | 178,962 | 844,961 |
Intangible assets, net | 27,539,298 | 3,947,607 | 40,245,145 |
Goodwill | 352,079,834 | 50,468,713 | 351,334,021 |
Total non-current assets | 385,217,605 | 55,218,831 | 392,924,127 |
Total assets | 563,498,513 | 80,774,421 | 607,483,426 |
CURRENT LIABILITIES | |||
Accounts payable | 38,695,724 | 5,546,821 | 33,033,855 |
Deferred revenues | 503,576 | 72,185 | 586,923 |
Other payables and accrued liabilities | 2,280,346 | 326,875 | 1,428,770 |
Other payables - related party | 1,065 | ||
Current portion of business acquisition payable - related parties | 34,086 | ||
Current portion of shareholder loans | 70,987,603 | 10,175,683 | |
Taxes payable | 9,660,882 | 1,384,834 | 10,733,539 |
Total current liabilities | 122,128,131 | 17,506,398 | 45,818,238 |
OTHER LIABILITIES | |||
Business acquisition payable - related parties | 110,855,328 | ||
Non-current shareholder loans | 16,038,186 | 2,298,986 | 127,755,993 |
Deferred tax liabilities, net | 2,617,179 | 375,158 | 4,132,398 |
Total other liabilities | 18,655,365 | 2,674,144 | 242,743,719 |
Total liabilities | 140,783,496 | 20,180,542 | 288,561,957 |
COMMITMENTS AND CONTINGENCIES | |||
SHAREHOLDERS’ EQUITY | |||
Series A convertible preferred shares, USD 0.0001 par value, 12,916,700 shares authorized, 8,611,133 shares issued and outstanding as of December 31, 2018 and 2019 | 5,910 | 861 | 5,910 |
Additional paid-in capital | 168,166,990 | 24,105,815 | 168,166,990 |
Retained earnings | 229,177,894 | 32,851,394 | 129,526,973 |
Statutory reserves | 22,201,382 | 3,182,446 | 19,647,831 |
Accumulated other comprehensive income | 3,097,741 | 443,364 | 1,508,665 |
Total shareholders’ equity | 422,715,017 | 60,593,879 | 318,921,469 |
Total liabilities and shareholders’ equity | 563,498,513 | 80,774,421 | 607,483,426 |
Common Class A [Member] | |||
SHAREHOLDERS’ EQUITY | |||
Ordinary shares | 13,095 | 2,011 | 13,095 |
Common Class B [Member] | |||
SHAREHOLDERS’ EQUITY | |||
Ordinary shares | ¥ 52,005 | $ 7,988 | ¥ 52,005 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Series A convertible preferred shares, par value (in Dollars per share) | $ 0.0001 | |
Series A convertible preferred shares, Authorized | 12,916,700 | 12,916,700 |
Series A convertible preferred shares, issued | 8,611,133 | 8,611,133 |
Series A convertible preferred shares, outstanding | 8,611,133 | 8,611,133 |
Common Class A [Member] | ||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |
Ordinary shares, authorized | 20,115,570 | 20,115,570 |
Ordinary shares, issued | 20,115,570 | 20,115,570 |
Ordinary shares, outstanding | 20,115,570 | 20,115,570 |
Common Class B [Member] | ||
Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |
Ordinary shares, authorized | 466,967,730 | 466,967,730 |
Ordinary shares, issued | 79,884,430 | 79,884,430 |
Ordinary shares, outstanding | 79,884,430 | 79,884,430 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income | 12 Months Ended | |||
Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
OPERATING REVENUES | ¥ 319,181,424 | $ 45,752,906 | ¥ 225,271,564 | ¥ 192,029,524 |
COST OF REVENUES | (146,167,843) | (20,952,358) | (85,414,061) | (79,180,187) |
GROSS PROFIT | 173,013,581 | 24,800,548 | 139,857,503 | 112,849,337 |
OPERATING EXPENSES | ||||
Selling expenses | (1,924,784) | (275,907) | (1,212,400) | (1,235,773) |
General and administrative expenses | (39,881,854) | (5,716,845) | (29,822,426) | (24,618,898) |
Research and development expenses | (18,355,403) | (2,631,147) | (8,020,082) | (9,696,322) |
Total operating expenses | (60,162,041) | (8,623,899) | (39,054,908) | (35,550,993) |
INCOME FROM OPERATIONS | 112,851,540 | 16,176,649 | 100,802,595 | 77,298,344 |
OTHER INCOME (EXPENSE) | ||||
Investment income | 300,000 | 195,874 | ||
Interest income | 1,231,833 | 176,577 | 24,535 | 34,499 |
Finance expenses, net | (11,140,346) | (1,596,907) | (5,171,453) | (4,228,995) |
Other income, net | 2,390,525 | 342,667 | 1,337,711 | 566,260 |
Total other expenses, net | (7,517,988) | (1,077,663) | (3,509,207) | (3,432,362) |
INCOME BEFORE INCOME TAXES | 105,333,552 | 15,098,986 | 97,293,388 | 73,865,982 |
BENEFIT OF (PROVISION FOR) INCOME TAX | ||||
Current | (4,644,300) | (665,734) | (9,618,606) | (1,994,837) |
Deferred | 1,515,220 | 217,198 | 1,543,010 | 1,466,826 |
Total provision for income tax | (3,129,080) | (448,536) | (8,075,596) | (528,011) |
NET INCOME | 102,204,472 | 14,650,450 | 89,217,792 | 73,337,971 |
OTHER COMPREHENSIVE INCOME | ||||
Foreign currency translation adjustment | 1,589,076 | 227,785 | 1,759,288 | (250,623) |
COMPREHENSIVE INCOME | ¥ 103,793,548 | $ 14,878,235 | ¥ 90,977,080 | ¥ 73,087,348 |
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES | ||||
Basic (in Shares) | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 |
Diluted (in Shares) | 108,611,133 | 108,611,133 | 100,922,621 | 100,000,000 |
EARNINGS PER SHARE | ||||
Basic (in Dollars per share and Yuan Renminbi per share) | (per share) | ¥ 1.02 | $ 0.15 | ¥ 0.89 | ¥ 0.73 |
Diluted (in Dollars per share and Yuan Renminbi per share) | (per share) | ¥ 0.94 | $ 0.13 | ¥ 0.88 | ¥ 0.73 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity | Convertible Preferred Shares [Member]CNY (¥)shares | Common Class A [Member]CNY (¥)shares | Common Class B [Member]CNY (¥)shares | Additional Paid-in Capital [Member]CNY (¥) | Retained earnings Statutory reservesCNY (¥) | Retained earnings UnrestrictedCNY (¥) | AOCI Attributable to Parent [Member]CNY (¥) | CNY (¥) | USD ($) |
BALANCE at Dec. 31, 2016 | ¥ 13,095 | ¥ 52,005 | ¥ 434,900 | ¥ 8,230,646 | ¥ (21,611,605) | ¥ (12,880,959) | $ (1,876,815) | ||
BALANCE (in Shares) at Dec. 31, 2016 | 20,115,570 | 79,884,430 | |||||||
Capital contribution | 30,000,000 | 30,000,000 | 4,371,139 | ||||||
Capital contribution (in Shares) | |||||||||
Net income | 73,337,971 | 73,337,971 | 10,685,682 | ||||||
Statutory reserves | 6,093,165 | (6,093,165) | |||||||
Foreign currency translation | (250,623) | (250,623) | (36,517) | ||||||
BALANCE at Dec. 31, 2017 | ¥ 13,095 | ¥ 52,005 | 30,434,900 | 14,323,811 | 45,633,201 | (250,623) | 90,206,389 | 13,143,489 | |
BALANCE (in Shares) at Dec. 31, 2017 | 20,115,570 | 79,884,430 | |||||||
Capital contribution | ¥ 5,910 | 137,732,090 | 137,738,000 | 20,069,064 | |||||
Capital contribution (in Shares) | 8,611,133 | ||||||||
Net income | 89,217,792 | 89,217,792 | 12,999,445 | ||||||
Statutory reserves | 5,324,020 | (5,324,020) | |||||||
Foreign currency translation | 1,759,288 | 1,759,288 | 256,336 | ||||||
BALANCE at Dec. 31, 2018 | ¥ 5,910 | ¥ 13,095 | ¥ 52,005 | 168,166,990 | 19,647,831 | 129,526,973 | 1,508,665 | 318,921,469 | 46,468,334 |
BALANCE (in Shares) at Dec. 31, 2018 | 8,611,133 | 20,115,570 | 79,884,430 | ||||||
Net income | 102,204,472 | 102,204,472 | 14,650,450 | ||||||
Statutory reserves | 2,553,551 | (2,553,551) | |||||||
Foreign currency translation | 1,589,076 | 1,589,076 | (524,905) | ||||||
BALANCE at Dec. 31, 2019 | ¥ 5,910 | ¥ 13,095 | ¥ 52,005 | ¥ 168,166,990 | ¥ 22,201,382 | ¥ 229,177,894 | ¥ 3,097,741 | ¥ 422,715,017 | $ 60,593,879 |
BALANCE (in Shares) at Dec. 31, 2019 | 8,611,133 | 20,115,570 | 79,884,430 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net income | ¥ 102,204,472 | $ 14,650,450 | ¥ 89,217,792 | ¥ 73,337,971 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||
Depreciation and amortization | 13,883,919 | 1,990,184 | 13,538,853 | 12,781,971 |
Provision for doubtful accounts | 1,574,896 | 225,753 | 2,591 | (121,413) |
Deferred tax benefit | (1,515,220) | (217,198) | (1,543,010) | (1,466,826) |
Gain from disposal of cost-method investment | (300,000) | (61,100) | ||
Gain from disposal of subsidiary | (134,774) | |||
Amortization of debt discount | 11,544,479 | 1,654,838 | 5,124,715 | 4,191,002 |
Change in operating assets and liabilities: | ||||
Accounts receivables | 9,065,001 | 1,299,418 | (11,291,877) | (2,179,079) |
Prepaid expenses and other current assets | (3,095,037) | (443,657) | (2,302,103) | 4,998,724 |
Contract costs | 5,340,167 | 765,484 | (8,387,698) | (3,216,287) |
Prepaid expenses and deposits | (403,511) | (57,841) | 31,386 | (876,346) |
Accounts payable | 5,661,871 | 811,598 | 7,714,017 | 17,134,885 |
Deferred revenues | 323,430 | 46,362 | (155,018) | 146,060 |
Other payables and accrued liabilities | 444,799 | 63,759 | 11,924 | 371,373 |
Other payable - related parties | (1,065) | (153) | (312,308) | 274,573 |
Taxes payable | (1,072,657) | (153,759) | 8,102,941 | 2,877,207 |
Net cash provided by operating activities | 143,955,544 | 20,635,238 | 99,452,205 | 108,057,941 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
Proceed from sale of cost method investment | 350,000 | 111,100 | ||
Payments of cost method investments | (3,850,000) | (551,876) | ||
Proceed from sale of subsidiary | 156,225 | |||
Acquisition of Skystar, net of cash received | (17,967,355) | |||
Payments of business acquisition payable - related parties | (122,433,894) | (17,550,227) | (98,900,784) | (98,700,000) |
Purchases of property and equipment | (195,998) | (28,095) | (46,572) | (1,964,233) |
Net cash used in investing activities | (126,479,892) | (18,130,198) | (98,597,356) | (118,364,263) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Capital contribution | 30,000,000 | |||
Proceeds from issuance of Series A convertible preferred shares | 137,738,000 | |||
Proceeds from shareholder loans | 88,500,000 | 12,685,990 | 14,581,993 | |
Repayment of shareholder loans | (129,474,000) | (18,559,388) | (14,826,000) | (33,800,000) |
Net cash (used in) provided by financing activities | (40,974,000) | (5,873,398) | 137,493,993 | (3,800,000) |
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS | 599,384 | 85,917 | 937,466 | (234,124) |
CHANGE IN CASH AND CASH EQUIVALENTS | (22,898,964) | (3,282,441) | 139,286,308 | (14,340,446) |
CASH AND CASH EQUIVALENTS, beginning of year | 151,947,942 | 21,780,904 | 12,661,634 | 27,002,080 |
CASH AND CASH EQUIVALENTS, end of year | 129,048,978 | 18,498,463 | 151,947,942 | 12,661,634 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||
Cash paid for income tax | 4,579,482 | 656,444 | 2,304,503 | 2,134,902 |
Cash paid for interest expense | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Acquisition of Skystar with acquisition payables | ¥ 35,222,954 |
Nature of Business and Organiza
Nature of Business and Organization | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1—Nature of business and organization Wimi Hologram Cloud Inc. (“Wimi Cayman” or the “Company”) is a holding company incorporated on August 16, 2018, under the laws of the Cayman Islands. The Company has no substantive operations other than holding all of the outstanding share capital of Wimi Hologram Cloud Limited (“Wimi HK”) which was established in Hong Kong on September 4, 2018. Wimi HK is also a holding company holding all of the outstanding equity of Beijing Hologram Wimi Cloud Network Technology Co., Ltd. (“Wimi WFOE”) which was established on September 20, 2018 under the law of the People’s Republic of China (“PRC” or “China”). The Company, through its variable interest entity (“VIE”), Beijing Wimi Cloud Software Co., Ltd. (“Beijing WiMi”) and its subsidiaries, mainly engaged in two operating segments: (1) Augmented reality (AR) advertising services; and (2) AR entertainment. The majority of Company’s business activities are carried out in Shenzhen and Hong Kong. The Company’s headquarters are located in the city of Beijing, China. As of December 31, 2019, there are fifteen subsidiaries under the consolidation of the VIE company, Beijing WiMi. On August 20, 2015, Beijing WiMi acquired Shenzhen Yitian Internet Technology Co., Ltd. (“Shenzhen Yitian”) and Shenzhen Yitian’s subsidiary Shenzhen Quntian Technology Co., Ltd. (“Shenzhen Qunitan”). Shenzhen Quntian was subsequently sold in 2017. Shenzhen Yitian established wholly owned subsidiaries Shenzhen Qianhai Wangxin Technology Co., Ltd. in 2015, Korgas 233 Technology Co., Ltd. Shenzhen in 2017 and Shenzhen Yiyou Online Technology Co., Ltd in 2019. Shenzhen Yitian and subsidiaries mainly engage in AR entertainment. On August 26, 2015, Beijing WiMi acquired Shenzhen Kuxuanyou Technology Co., Ltd. (“Shenzhen Kuxuan”), Shenzhen Kuxuan established wholly owned subsidiary Shenzhen Yiruan Tianxia Technology Co., Ltd. in 2016 and wholly owned subsidiaries Shenzhen Yiyun Technology Co., Ltd. and Korgas Shengyou Information Technology Co., Ltd. in 2017. Shenzhen Kuxuan and subsidiaries mainly engage in AR entertainment. On October 21, 2015, Beijing WiMi acquired Shenzhen Yidian Network Technology Co., Ltd. (“Shenzhen Yidian”), Shenzhen Yidian established Korgas Duodian Network Technology Co., Ltd. in 2016, Shenzhen Duodian Cloud Technology Co., Ltd. in 2017, and Kashi Duodian Internet Technology Co., Ltd and Shenzhen Zhiyun Image Technology Co., Ltd. in 2019. Shenzhen Yidian and subsidiaries engaged in AR advertising services. In 2016, Beijing WiMi established wholly owned subsidiaries Korgas Wimi Xinghe Network Technologies Co., Ltd. (“Korgas Wimi”) and Micro Beauty Lightspeed Investment Management HK Limited. On March 7, 2017, Micro Beauty Lightspeed Investment Management HK Limited acquired 100% equity interest of Skystar Development Co., Ltd. Skystar engages in AR entertainment. On November 6, 2018, Wimi Cayman completed a reorganization of entities under common control of its shareholders, who collectively owned all of the equity interests of Wimi Cayman prior to the reorganization. Wimi Cayman, and Wimi HK were established as the holding companies of Wimi WFOE. Wimi WFOE is the primary beneficiary of Beijing WiMi and its subsidiaries, and all of these entities included in Wimi Cayman are under common control which results in the consolidation of Beijing WiMi and subsidiaries which have been accounted for as a reorganization of entities under common control at carrying value. The consolidated financial statements are prepared on the basis as if the reorganization became effective as of the beginning of the first period presented in the accompanying consolidated financial statements of Wimi Cayman. The accompanying consolidated financial statements reflect the activities of Wimi Cayman and each of the following entities as of December 31, 2019: Name Background Ownership Wimi HK ● A Hong Kong company ● Incorporated on September 4, 2018 ● A holding company 100% owned by Wimi Cayman Wimi WFOE ● PRC limited liability company and deemed a wholly foreign owned enterprise (“WFOE”) ● Incorporated on September 20, 2018 ● Registered capital of RMB 325,500,000 (USD 50,000,000) ● A holding company 100% owned by Wimi HK Beijing WiMi ● A PRC limited liability company ● Incorporated on May 27, 2015 ● Registered capital of RMB 5,154,639 (USD 751,055) VIE of Wimi WFOE Shenzhen Kuxuanyou Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on June 18, 2012 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Beijing WiMi Shenzhen Yiruan Tianxia Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on January 06, 2016 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd. Shenzhen Yiyun Technology Co., Ltd. (“Shenzhen Yiyun”) ● A PRC limited liability company ● Incorporated on November 15, 2017 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd Korgas Shengyou Information Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on February 13, 2017 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd Korgas Wimi Xinghe Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on October 18, 2016 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Beijing WiMi Dissolved in Shenzhen Yitian Internet Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on March 08, 2011 ● Registered capital of RMB 20,000,000 (USD 2,914,093) 100% owned by Beijing WiMi Acquired in 2015 Shenzhen Quntian Technology Co., Ltd. (“Shenzhen Qunitan”) ● A PRC limited liability company ● Incorporated on May 22, 2014 ● Registered capital of RMB 20,000,000 (USD 2,914,093) No operations 100% owned by Shenzhen Yitian Internet Technology Co., Ltd Disposed in November 2017** Korgas 233 Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on September 15, 2017 ● Registered capital of RMB 1,000,000 (USD 145,705) 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. Shenzhen Qianhai Wangxin Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on October 16, 2015 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. Shenzhen Yiyou Online Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on January 14, 2019 ● Registered capital of RMB 100,000 (USD 14,334) 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. Shenzhen Yidian Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on May 20, 2014 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Beijing WiMi Acquired in 2015 Shenzhen Duodian Cloud Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on August 24, 2017 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Korgas Duodian Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on November 25, 2016 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Kashi Duodian Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on January 31, 2019 ● Registered capital of RMB 5,000,000 (USD 716,723) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Shenzhen Zhiyun Image Technology Co., Ltd. (“Shenzhen Zhiyun”) ● A PRC limited liability company ● Incorporated on December 3, 2019 ● Registered capital of RMB 5,000,000 (USD 716,723) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Micro Beauty Lightspeed Investment Management HK Limited ● A Hong Kong company ● Incorporated on February 22, 2016 ● Registered capital of HKD 100,000 (USD 12,771) 100% owned by Beijing WiMi Skystar Development Co.,Ltd ● A Republic of Seychelles Company ● Incorporated on March 30, 2016 ● Registered capital of USD 50,000 100% owned by Micro Beauty Lightspeed * Korgas Wimi which had no operations since inception, was dissolved in February 2019, no gain or loss was recognized in the dissolution. ** Shenzhen Yitian sold Shenzhen Quntian for RMB 156,225 to a third party in November 2017, net assets of Shenzhen Quntian was RMB 21,451, resulting in RMB 134,774 of gain from disposal of subsidiary. Contractual Arrangements Due to legal restrictions on foreign ownership and investment in, among other areas, value-added telecommunications services, which include the operations of internet content providers, the Company operates its internet and other businesses in which foreign investment is restricted or prohibited in the PRC through certain PRC domestic companies. As such, Beijing WiMi is controlled through contractual agreements in lieu of direct equity ownership by the Company or any of its subsidiaries. Such contractual arrangements consist of a series of four agreements, a shareholder power of attorney and an irrevocable commitment letter (collectively the “Contractual Arrangements”, which were signed on November 6, 2018). The significant terms of the Contractual Agreements are as follows: Exclusive Business Cooperation Agreement Under the exclusive business cooperation agreement between Wimi WFOE and Beijing WiMi, dated November 6, 2018, Wimi WFOE has the exclusive right to provide to Beijing WiMi consulting and services related to, among other things, use of software, operation maintenance, product development, and management and marketing consulting. Wimi WFOE has the exclusive ownership of intellectual property rights created as a result of the performance of this agreement. Beijing WiMi agrees to pay Wimi WFOE service fee at an amount equal to the consolidated net income after offsetting previous year’s loss (if any). This agreement will remain effective until the date when it is terminated by Wimi WFOE. Exclusive Share Purchase Option Agreements Pursuant to the exclusive share purchase option agreement dated November 6, 2018, by and among Wimi WFOE, Beijing WiMi and each of the shareholders of Beijing WiMi, each of the shareholders of Beijing WiMi irrevocably granted Wimi WFOE an exclusive call option to purchase, or have its designated person(s) to purchase, at its discretion, all or part of their equity interests in Beijing WiMi, and the purchase price shall be the lowest price permitted by applicable PRC law. Each of the shareholders of Beijing WiMi undertakes that, without the prior written consent of Wimi WFOE or us, they may not increase or decrease the registered capital, amend its articles of association or change registered capital structure. This agreement will remain effective for ten years and can be renewed at Wimi WFOE’s sole discretion. Any transfer of shares pursuant to this agreement would be subject to PRC regulations and to any changes required thereunder. Exclusive Assets Purchase Agreements Pursuant to the exclusive asset purchase agreement dated November 6, 2018 by Wimi WFOE and Beijing WiMi, Beijing WiMi irrevocably granted Wimi WFOE an exclusive call option to purchase, or have its designated person(s) to purchase, at its discretion, all or part of Beijing WiMi’s current or future assets (including intellectual property rights), and the purchase price shall be the lowest price permitted by applicable PRC law. Beijing WiMi undertakes that, without the prior written consent of Wimi WFOE, it may not sell, transfer, pledge, dispose of its assets, incur any debts or guarantee liabilities. It will notify Wimi WFOE any potential litigation, arbitration or administrative procedures regarding the assets, and defend the assets if necessary. This agreement will remain effective for ten years and can be renewed at Wimi WFOE’s sole discretion. Any transfer of assets pursuant to this agreement would be subject to PRC regulations and to any changes required thereunder. Equity Interest Pledge Agreements Pursuant to the equity interest pledge agreement dated November 6, 2018, by and among Wimi WFOE, Beijing WiMi and the shareholders of Beijing WiMi, the shareholders of Beijing WiMi pledged all of their equity interests in Beijing WiMi to Wimi WFOE to guarantee their and Beijing WiMi’s obligations under the contractual arrangements including the exclusive consulting and services agreement, the exclusive option agreement, the exclusive asset purchase agreement and the power of attorney and this equity interest pledge agreement, as well as any loss incurred due to events of default defined therein and all expenses incurred by Wimi WFOE in enforcing such obligations of Beijing WiMi or its shareholders. The shareholders of Beijing WiMi agree that, without Wimi WFOE’s prior written approval, during the term of the equity interest pledge agreement, they will not dispose of the pledged equity interests or create or allow any other encumbrance on the pledged equity interests. We have completed the registration of the equity pledges with the relevant office of SAIC in accordance with the PRC Property Rights Law. Power of Attorney Pursuant to the power of attorney dated November 6, 2018, by Wimi WFOE and each shareholder of Beijing WiMi, respectively, each shareholder of Beijing WiMi irrevocably authorized Wimi WFOE or any person(s) designated by Wimi WFOE to exercise such shareholder’s voting rights in Beijing WiMi, including, without limitation, the power to participate in and vote at shareholder’s meetings, the power to nominate directors and appoint senior management, the power to sell or transfer such shareholder’s equity interest in Beijing WiMi, and other shareholders’ voting rights permitted by PRC law and the Articles of Association of Beijing WiMi. The power of attorney remains irrevocable and continuously valid from the date of execution so long as each shareholder remains as a shareholder of Beijing WiMi. Spousal Consent Letters Pursuant to these letters, the spouses of the applicable shareholders of Beijing WiMi unconditionally and irrevocably agreed that the equity interest in Beijing WiMi held by them and registered in their names will be disposed of pursuant to the equity interest pledge agreement, the exclusive option agreement, the exclusive asset purchase agreement and the power of attorney. Each of their spouses agreed not to assert any rights over the equity interest in Beijing WiMi held by their respective spouses. In addition, in the event that any spouse obtains any equity interest in Beijing WiMi held by his or her spouse for any reason, he or she agreed to be bound by the contractual arrangements. Based on the foregoing contractual arrangements, which grant Wimi WFOE effective control of Beijing WiMi and enable Wimi WFOE to receive all of their expected residual returns, the Company accounts for Beijing WiMi as a VIE. Accordingly, the Company consolidates the accounts of Beijing WiMi for the periods presented herein, in accordance with Regulation S-X-3A-02 promulgated by the Securities Exchange Commission (“SEC”), and Accounting Standards Codification (“ASC”) 810-10, Consolidation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 2—Summary of significant accounting policies Liquidity In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Cash flow from operations and capital contribution and loan from shareholders have been utilized to finance the working capital requirements of the Company. As of December 31, 2019, the Company has cash flow from operating activities of RMB 144.0 million and had cash of RMB 129.0 million. The Company’s working capital was approximately RMB 55.4 million as of December 31, 2019. The Company believes its revenues and operations will continue to grow and the current working capital is sufficient to support its operations and debt obligations as they become due one year through report date. Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the wholly-foreign owned enterprise (“WFOE”) and variable interest entities (“VIEs”) over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. Use of estimates and assumptions The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include the useful lives of property and equipment and intangible assets, impairment of long-lived assets and goodwill, allowance for doubtful accounts, provision for contingent liabilities, revenue recognition, and deferred taxes and uncertain tax position. Actual results could differ from these estimates. Foreign currency translation and other comprehensive income (loss) The Company uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its subsidiary in Seychelles is U.S. dollar, and its subsidiaries which are incorporated in Hong Kong and PRC are Hong Kong Dollar and RMB, respectively, which are their respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”. In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC has been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments included in accumulated other comprehensive income amounted to RMB 1,508,665 and RMB 3,097,741 (USD 443,364) as of December 31, 2018 and 2019, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi HK at December 31, 2018 and 2019 were translated at RMB1.00 to HKD 1.1413 and to HKD 1.1163, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to HKD 1.1530, HKD 1.1815 and to HKD 1.1363, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi Cayman and Skystar at December 31, 2018 and 2019 were translated at RMB 1.00 to USD 0.1457 and to USD 0.1433, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to USD 0.1489, USD 0.1451 and to USD 0.1450, respectively. The shareholders’ equity accounts were stated at their historical rate. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. Convenience translation Translations of balances in the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD as of and for the year ended December 31, 2019 are solely for the convenience of the reader and were calculated at the rate of RMB 1.00 to USD 0.1433, representing the mid-point reference rate set by Peoples’ Bank of China on December 31, 2019. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate, or at any other rate. Cash and cash equivalents Cash and cash equivalents primarily consists of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents also consist of funds earned from the Company’s operating revenues which were held at third party platform fund accounts which are unrestricted as to immediate use or withdraw. The Company maintains most of its bank accounts in the PRC, HK and US. Accounts receivable, net Accounts receivable include trade accounts due from customers. Accounts are considered overdue after 90 days. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and provides allowance when necessary. The allowance is based on management’s best estimates of specific losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. As of December 31, 2018 and 2019, the Company made RMB 2,591 and RMB 1,577,486 (USD 226,124) allowance for doubtful accounts for accounts receivable, respectively. Prepaid expenses and other current assets Prepaid expenses and other current assets are mainly payments made to vendors or services providers for future services, prepaid rent, deposits for rent and utilities and employee advances. These amounts are refundable and bear no interest. Prepaid expenses also includes money deposited with certain channel providers to ensure the contents of the advertisement do not violate the terms of the channel providers. The deposits usually have one year term and are refundable upon contract termination. Management reviews its prepaid expenses and other current assets on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. As of December 31, 2018 and 2019, no allowance was deemed necessary. Property and equipment, net Property and equipment are stated at cost less accumulated depreciation and impairment if applicable. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with 5% residual value. The estimated useful lives are as follows: Useful Life Office equipment 3 years Office furniture and fixtures 3 - 5 years Leasehold improvements lesser of lease term or expected useful life The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of income and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives. Intangible assets, net The Company’s intangible assets with definite useful lives primarily consist of copyrights, non-compete agreements, and technology know-hows. Identifiable intangible assets resulting from the acquisitions of subsidiaries accounted for using the purchase method of accounting are estimated by management based on the fair value of assets received. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its intangible assets with definite useful lives on a straight-line basis over the shorter of the contractual terms or the estimated useful lives of five to ten years. Goodwill Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. The Company has the opinion to access qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the two-step quantities impairment test described below is required. The first step compares the fair values of each reporting unit to its carrying amount, including good will. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow. Impairment for long-lived assets Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the years ended December 31, 2017, 2018 and 2019, no impairment of long-lived assets was recognized. Cost method investments The Company accounts for investments with less than 20% of the voting shares and does not have the ability to exercise significant influence over operating and financial policies of the investee using the cost method. The Company records cost method investments at the historical cost in its consolidated financial statements and subsequently records any dividends received from the net accumulated earrings of the investee as income. Dividends received in excess of earnings are considered a return of investment and are recorded as reduction in the cost of the investments. Cost method investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investments is less than its carrying value. An impairment is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. No event had occurred and indicated that other-than-temporary impairment existed and therefore the Company did not record any impairment charges for its investments for the years ended December 31, 2017, 2018 and 2019. Business Combination The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company’s operating results from the date of acquisition. Fair value measurement The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company. The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Financial instruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Revenue recognition The Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (ASC Topic 606) for the fiscal year ended December 31, 2019 using the modified retrospective method for contracts that were not completed as of December 31, 2018. The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identifies the contract with the customer, (ii) identifies the performance obligations in the contract, (iii) determines the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocates the transaction price to the respective performance obligations in the contract, and (v) recognizes revenue when (or as) the Company satisfies the performance obligation. Prior to fiscal year 2019, the Company recognizes revenue when all of the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price or fees are fixed or determinable, and (iv) the ability to collect is reasonably assured. Revenue is presented in the consolidated statements of income and comprehensive income net of sales taxes. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, rights of return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has the right to bill its’ customers. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition. (i) AR Advertising Services AR advertisements are the use holographic materials integrated into advertisement on the online media platforms or offline display. The Company’s performance obligation is to identify advertising spaces, embed holographic AR images or videos into films, shows and short form videos that are hosted by leading online streaming platforms in China. Revenue is recognized at a point in time when the related services have been delivered based on the specific terms of the contract, which are commonly based on specific action (i.e. cost per impression (“CPM”) or cost per action (“CPA”) for on line display and service period for offline display contracts. The Company enters into advertising contracts with advertisers where the amounts charged per specific action are fixed and determinable, the specific terms of the contracts were agreed on by the Company, the advertisers and channel providers, and collectability is probable. Revenue is recognized on a CPM basis as impressions or clicks are delivered while revenue on a CPA basis is recognized once agreed actions are performed or service period is completed. The Company considers itself as provider of the services as it has control of the specified services and products at any time before it is transferred to the customers which is evidenced by (1) the Company is primarily responsible to its customers for products and services offered where the products were designed in house and the Company has customer services team to directly service the customers; and (2) having latitude in establish pricing. Therefore the Company acts as the principal of these arrangements and reports revenue earned and costs incurred related to these transactions on a gross basis. (ii) AR Entertainment The Company’s AR entertainment includes mainly three sub categories: SDK payment channel services, software development and mobile games operations and technology developments. a. SDK Payment Channel Services The Company’s SDK payment channel services enable game players/app users to make online payments through Alipay, Unipay or Wechat pay etc. to various online content providers. When game players/app users make payments in the game or app, the SDK payment channel will automatically populate payment services for the users to fulfill payments. The Company charges a fee for the payment channel services, the pricing of which is based on the predetermined rates specified in the contract. The Company’s performance obligation is to facilitate payment services and recognizes SDK payment channel service revenue at a point in time when a user completes a payment transaction via a payment channel and is entitled to payment. Related fees are generally billed monthly, based on a per transaction basis. The Company assessed that its promise to customer is to facilitate the service of third party instead of providing the payment services itself as the Company does not have control of the services provided as the Company do not service the users directly and does not have the latitude to establish the price, and therefore, revenue from SDK payment service is recorded on a net basis. b. MR software development services The Company’s MR software development service contracts are primarily on a fixed price basis, which require the Company to perform services for MR application design, content development and integrating based on customers’ specific needs. These services also require significant production and customization. The required customization work period is generally less than one year. The Company currently does not have any modification of contract and the contracts currently do not have any variable consideration. The software customization, application design, upgrades and integration are considered as one performance obligation. The promises to transfer software, customization and upgrades are not separately identifiable as the customers do not obtain benefits from these services on its own. The Company’s MR software development service contracts are generally recognized over time during the contract period as the Company has no alternative use of the customized software and application without incurring significant additional costs. Revenue is recognized based on the Company’s measurement of progress towards completion based on input or output methods. Input methods are used only when there is a direct correlation between hours incurred and the end product delivered and output method is used when the Company could appropriately measure the customization progress towards completion. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. The Company has a long history of developing various MR software resulting in its ability to reasonably estimate the progress toward completion on each fixed price customized contracts. c. Mobile Games Services The Company generates revenue from jointly operated mobile game publishing services and the licensed out games. In accordance with ASC 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates agreements with the game developers, distribution channels and payment channels in order to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenues gross or net is based on whether the Company’s promise to its customers is to provide the products or services or to facilitate a sale by a third party. The nature of the promise depends on whether the Company controls the products or services prior to transferring it. Control is evidenced by if the Company is primarily responsible for fulling the provision of services and has discretion in establishing the selling price. When the Company controls the products or services, its promise is to provide and deliver the products and revenue is presented gross. When the Company does not control the products, the promise is to facilitate the sale and revenue is presented net. —Jointly operated mobile game publishing services The Company is offering publishing services for mobile games developed by third party game developers. The Company acted as a distribution channel that it will publish the games on their own app or a third party owned app or website, named game portals. Through these game portals, game players can download the mobile games to their mobile devices and purchase coins, the virtual currency, for in game premium features to enhance their game playing experience. The Company contracts with third party payment platforms for collection services offered to game players who have purchased coins. The third party game developers, third party payment platforms and the co publishers are entitled to profit sharing based on a prescribed percentage of the gross amount charged to the game players. The Company’s obligation in the publishing services is completed at a point in time when the game players made a payment to purchase coins. With respect to the publishing services arrangements between the Company and the game developer, the Company considered that the Company does not control the services as evidenced by (i) developers are responsible for providing the game product desired by the game players; (ii) the hosting and maintenance of game servers for running the online mobile games is the responsibility of the third party platforms; (iii) the developers or third party platforms have the right to change the pricing of in game virtual items. The Company’s responsibilities are publishing, providing payment solution and market promotion service, and thus the Company views the game developers to be its customers and considers itself as the facilitator of the game developers in the arrangements with game players. Accordingly, the Company records the game publishing service revenue from these games, net of amounts paid to the game developers. —Licensed out mobile games The Company also licenses third parties to operate its mobile games developed internally through mobile portal and receives revenue from the third party licensee operators on a monthly basis. The Company’s performance obligation is to provide mobile games to game operators which enable players of the mobile games to make in game purchases and the Company recognized revenue at a point in time when game players completed the purchases. The Company records revenues on a net basis, as the Company does not have the control of the services provided as it does not have the primary responsibility for fulfillment nor does not have the right to change the pricing of the game services. d. Technology developments The Company’s technology development contract requires the Company to design applications based on customers’ specific needs. The duration of the design period is short, usually approximately 3 months or less. Revenues are generally recognized at a point in time where the Company has transferred control of the asset upon completion of the design and after the acceptance by its customer with no more future obligation of the design project. Contract balances: The Company records receivable related to revenue when it has an unconditional right to invoice and receive payment. Payments received from customers before all of the relevant criteria for revenue recognition met are recorded as deferred revenue. Contract costs: Contract costs represent costs incurred in advance of revenue recognition arising from direct costs in respect of the revenue contracts according to the customer’s requirements prior to the delivery of services, and such deferred costs will be recognized upon the recognition of the related revenue. Estimated contract costs are based on the budgeted service hours, which are updated based on the progress toward completion on a monthly basis. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. The Company reviewed impairment of contract costs at December 31, 2019 and determined all contract costs are recoverable. The Company’s disaggregate revenue streams are summarized and disclosed in Note 16. Cost of revenues For AR advertising services, the cost of revenue comprised of costs paid to channel distributors based on the sales agreements. For AR entertainment segment, the costs of revenue consist of the shared costs with content providers based on the profit sharing arrangements, third party consulting services expenses and compensation expenses for our professionals. Advertising costs Advertising costs amounted to RMB 740,065, nil and RMB 59,091 (USD 8,470) for the years ended December 31, 2017, 2018 and 2019, respectively. Advertising costs are expensed as incurred and included in selling expenses. Operating leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Company are currently classified as operating leases. The Company records the total expenses on a straight-line basis over the lease term. Research and development Research and development expenses include salaries and other compensation-related expenses to the Company’s research and product development personnel, outsourced subcontractors, as well as office rental, depreciation and related expenses for the Company’s research and product development team. Value added taxes (“VAT”) Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 6%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company’s subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing. Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred taxes is accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. No penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. PRC tax returns filed in 2017 to 2019 are subject to examination by any applicable tax authorities. Other Income, net Other Income includes government subsidies which are amounts granted by local government authorities as an incentive for companies to promote development of the local technology industry. The Company receives government subsidies related to government sponsored projects, and records such government subsidies as a liability when it is received. The Company records government subsidies as other income when there is no further performance obligation. Total government subsidies amounted to RMB 650,025, RMB 1,236,593 and RMB 1,356,800 (USD 194,490) for the years ended December 31, 2017, 2018 and 2019, respectively. Other inco |
Variable Interest Entity
Variable Interest Entity | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Variable Interest Entity Disclosure [Text Block] | Note 3—Variable interest entity (“VIE”) On November 6, 2018, Wimi WFOE entered into Contractual Arrangements with Beijing WiMi. The significant terms of these Contractual Arrangements are summarized in “Note 1—Nature of business and organization” above. As a result, the Company classifies Beijing WiMi as a VIE which should be consolidated based on the structure as described in Note 1. A VIE is an entity that has either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support, or whose equity investors lack the characteristics of a controlling financial interest, such as through voting rights, right to receive the expected residual returns of the entity or obligation to absorb the expected losses of the entity. The variable interest holder, if any, that has a controlling financial interest in a VIE is deemed to be the primary beneficiary and must consolidate the VIE. Wimi WFOE is deemed to have a controlling financial interest and be the primary beneficiary of Beijing WiMi because it has both of the following characteristics: (1) The power to direct activities at Beijing WiMi that most significantly impact such entity’s economic performance, and (2) The right to receive benefits from Beijing WiMi that could potentially be significant to such entity. Pursuant to the Contractual Arrangements, Beijing WiMi pays service fees equal to all of its net income to Wimi WFOE. The Contractual Arrangements are designed so that Beijing WiMi operate for the benefit of Wimi WFOE and ultimately, the Company. Accordingly, the accounts of Beijing WiMi is consolidated in the accompanying financial statements. In addition, its financial positions and results of operations are included in the Company’s financial statements. Under the VIE Arrangements, the Company has the power to direct activities of Beijing WiMi and can have assets transferred out of Beijing WiMi. Therefore, the Company considers that there is no asset in Beijing WiMi that can be used only to settle obligations of Beijing WiMi, except for registered capital and PRC statutory reserves, if any. As Beijing WiMi is incorporated as limited liability company under the Company Law of the PRC, creditors of the Beijing WiMi do not have recourse to the general credit of the Company for any of the liabilities of Beijing WiMi. The carrying amount of the VIE’s consolidated assets and liabilities are as follows: December 31, December 31, December 31, RMB RMB USD Current assets 75,442,911 88,858,539 12,737,384 Property and equipment, net 1,263,869 740,226 106,107 Other noncurrent assets 392,924,127 385,207,213 55,217,341 Total assets 469,630,907 474,805,978 68,060,832 Total liabilities (286,142,679 ) (180,276,255 ) (25,841,611 ) Net assets 183,488,228 294,529,723 42,219,221 December 31, December 31, December 31, RMB RMB USD Current liabilities: Accounts payable 33,033,855 38,695,727 5,546,820 Deferred revenues 586,923 503,576 72,185 Other payables and accrued liabilities 1,428,770 1,963,068 281,395 Other payables—related party 1,065 — — Current portion of business acquisition payable—related parties 34,086 — — Current portion of shareholder loans — 69,592,363 9,975,683 Taxes payable 10,733,539 9,659,932 1,384,698 Intercompany payable* — 42,270,095 6,059,186 Total current liabilities 45,818,238 162,684,761 23,319,967 Business acquisition payable—related parties 110,855,328 — — Non-current shareholder loan 125,336,715 14,974,315 2,146,486 Deferred tax liabilities, net 4,132,398 2,617,179 375,158 Total liabilities 286,142,679 180,276,255 25,841,611 * Intercompany balances will be eliminated upon consolidation. The summarized operating results of the VIE’s are as follows: For the year ended December 31, 2017 For the year ended December 31, 2018 For the year ended December 31, For the year ended December 31, RMB RMB RMB USD Operating revenues 192,029,524 225,271,564 319,181,424 45,752,906 Gross profit 113,849,337 139,857,503 173,013,581 24,800,548 Income from operations 77,298,344 102,641,091 122,754,439 17,596,175 Net income 73,337,971 91,056,633 110,135,996 15,787,391 The summarized statements of cash flow of the VIE’s are as follows: For the year ended December 31, For the year ended December 31, For the year ended December 31, For the year ended December 31, RMB RMB RMB USD Net cash provided by operating activities 108,057,941 101,291,046 193,845,889 27,786,745 Net cash used in investing activities (118,364,263 ) (98,597,356 ) (126,445,437 ) (18,125,260 ) Net cash used in financing activities (3,800,000 ) (2,663,285 ) (40,770,037 ) (5,844,161 ) Effect of exchange rate on cash and cash equivalents - - (327,988 ) (47,015 ) Net (decrease) increase in cash and cash equivalents (14,340,446 ) 1,433,789 26,302,427 3,770,309 Cash and cash equivalents, beginning of year 27,002,080 12,661,634 14,095,423 2,020,502 Cash and cash equivalents, end of year 12,661,634 14,095,423 40,397,850 5,790,811 |
Business Acquisition
Business Acquisition | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Note 4—Business acquisition Acquisition of Skystar On March 7, 2017, Micro Beauty entered into a share purchase agreement (the “Agreement”) with Gao Zhixia, former shareholder of Skystar Development Co., Ltd (the “Seller”). Neither the Company nor its affiliates have any relationship with the Sellers other than with respect to the Agreement. The purpose of acquiring of Skystar is to acquire MR technology know-hows which has a good practicability and protection for data safeness. The Company’s acquisition of Skystar was accounted for as a business combination in accordance with ASC 805. Pursuant to the Agreement, Micro Beauty agreed to acquire 100% of the capital stock of Skystar (the “Acquisition”), for an aggregate consideration of RMB 58,450,000 (USD 8,680,478) which will be paid in 5 years starting from the acquisition date. The consideration was funded from the capital contribution and the Company’s operations. The Company paid RMB 17,967,355 (USD 2,690,000), RMB 12,710,784 (USD 1,920,000) and RMB 26,805,592 (USD 3,842,435) during the years ended December 31, 2017, 2018 and 2019, respectively. As of December 31, 2018, acquisition payable amounted to RMB 24,436,304, net of discount of RMB 435,857. As of December 31, 2019, the total business acquisition payable was paid off. The Company has allocated the purchase price of Skystar based upon the fair value of the identifiable assets acquired and liabilities assumed on the acquisition date. The Company estimated the fair values of the assets acquired and liabilities assumed at the acquisition date in accordance with the business combination standard issued by FASB with the valuation methodologies using level 3 inputs, except for cash was valued using Level 1 inputs. Management of the Company is responsible for determining the fair value of assets acquired, liabilities assumed and intangible assets identified as of the acquisition date and considered a number of factors including valuations from an independent appraiser firm. Acquisition-related costs incurred for the acquisitions are not material and have been expensed as incurred in general and administrative expense. The following table summarizes the fair value of the identifiable assets acquired at the acquisition date, which represents the net purchase price allocation at the date of the acquisition of Skystar based on a valuation performed by an independent valuation firm engaged by the Company and translated the fair value from RMB to USD using the exchange rate on March 31, 2017 at the rate of USD 1.00 to RMB 6.90. March 31, 2017 Fair Value Fair Value RMB USD Cash 144,953 21,000 Intangible—non-compete agreement 9,663,553 1,400,000 Intangible—technology know-how 12,424,568 1,800,000 Goodwill 33,554,007 4,862,900 Net assets acquired 55,787,081 8,083,900 The Company signed a 6 year non-compete agreements with former investors of companies acquired. Technology know-hows, including video, audio integration, advertising serving platform, media assets management platform, data management platform and visual element tagging/identify/tracking technologies which enables the Company to develop software with AR features with estimated average finite useful lives of 5.8 years. Approximately RMB 33.6 million of goodwill arising from the acquisition is mainly attributable to the excess of the consideration paid over the fair value of the net assets acquired that cannot be recognized separately as identifiable assets under U.S. GAAP, and comprise (a) the assembled work force and (b) the expected but unidentifiable business growth as a result of the synergy resulting from the acquisition. The amount of sales what resulted from the acquisition and included in the consolidated statements of income and comprehensive income during the twelve months ended December 31, 2017, 2018 and 2019 were RMB 26,018,977, and RMB 12,515,694 and RMB 15,823,955 (USD 2,268,277), respectively. Pro forma results of operations for the acquisition described above have not been presented because it is not material to the consolidated income statements. |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Financing Receivables [Text Block] | Note 5—Accounts receivable, net Accounts receivable, net consisted of the following: December 31, December 31, December 31, RMB RMB USD Accounts receivable 46,764,658 37,699,656 5,404,039 Less: allowance for doubtful accounts (2,591 ) (1,577,486 ) (226,124 ) Accounts receivable, net 46,762,067 36,122,170 5,177,915 The following table summarizes the changes in allowance for doubtful accounts: December 31, December 31, December 31, RMB RMB USD Beginning balance — 2,591 371 Addition 2,591 1,575,690 225,867 Write-off — (795 ) (114 ) Ending balance 2,591 1,577,486 226,124 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment Disclosure [Text Block] | Note 6—Property and equipment, net Property and equipment consist of the following: December 31, December 31, December 31, RMB RMB USD Office electronic equipment 1,496,516 1,677,900 240,518 Office fixtures and furniture 70,753 85,368 12,237 Leasehold improvements 1,153,205 1,153,205 165,305 Subtotal 2,720,474 2,916,473 418,060 Less: accumulated depreciation (1,456,605 ) (2,147,005 ) (307,761 ) Total 1,263,869 769,468 110,299 Depreciation expense for the years ended December 31, 2017, 2018 and 2019 amounted to RMB 575,728, RMB 742,956 and RMB 690,400 (USD 98,965), respectively. |
Cost Method Investments
Cost Method Investments | 12 Months Ended |
Dec. 31, 2019 | |
ASU 2016-01 Transition [Abstract] | |
Cost and Equity Method Investments Disclosure [Text Block] | Note 7—Cost method investments Cost method investments consist of the following: December 31, December 31, December 31, RMB RMB USD 8% Investment 500,000 500,000 71,672 5% Investment — 2,000,000 286,689 4% Investment — 1,000,000 143,345 2% Investment — 300,000 43,003 1% Investment — 550,000 78,840 Total 500,000 4,350,000 623,549 As of December 31, 2018, Beijing WiMi invested RMB 500,000 in a company in the AR and 3D animation areas for 8%. During the year ended December 31, 2019, Beijing WiMi invested RMB 2,000,000 (USD 286,689), RMB 1,000,000 (USD 143,345), RMB 300,000 (USD 43,003), RMB 350,000 (USD 50,171) and RMB 200,000 (USD 28,669) in five companies in the AR and virtual reality areas for 5%, 4%, 2%, 1% and 1% of total equity interest, respectively. As the Company did not have significant influence over the investees, the investments were accounted for using the cost method. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | Note 8—Intangible assets, net The Company’s intangible assets with definite useful lives primarily consist of copyrights, non-compete agreements and technology know-hows. The following table summarizes acquired intangible asset balances as of: December 31, December 31, December 31, RMB RMB USD Copyrights 579,722 579,722 83,100 Non-compete agreements* 64,747,645 64,961,002 9,311,803 Technology know-hows* 12,275,544 12,549,859 1,798,953 Subtotal 77,602,911 78,090,583 11,193,856 Less: accumulated amortization (37,357,766 ) (50,551,285 ) (7,246,249 ) Intangible assets, net 40,245,145 27,539,298 3,947,607 * There is no change in carrying value of non-compete agreements and technology know-hows except for the foreign exchange translation difference from Skystar. Amortization expense for the years ended December 31, 2017, 2018 and 2019 amounted to RMB 12,206,243, RMB 12,795,897 and RMB 13,193,519 (USD 1,891,219), respectively. The estimated amortization is as follows: Twelve months ending December 31, Estimated Estimated RMB USD 2020 13,036,210 1,868,669 2021 9,891,766 1,417,930 2022 3,731,612 534,906 2023 716,975 102,774 2024 57,972 8,310 Thereafter 104,763 15,018 Total 27,539,298 3,947,607 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Goodwill Disclosure [Text Block] | Note 9—Goodwill Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. The following table summarizes the components of acquired goodwill balances as of: December 31, December 31, December 31, RMB RMB USD Goodwill from Shenzhen Kuxuanyou acquisition (a) 87,908,370 87,908,370 12,601,183 Goodwill from Shenzhen Yidian acquisition (b) 137,060,340 137,060,340 19,646,848 Goodwill from Shenzhen Yitian acquisition (c) 92,990,256 92,990,256 13,329,643 Goodwill from Skystar acquisition*(Note 4) 33,375,055 34,120,868 4,891,039 Goodwill 351,334,021 352,079,834 50,468,713 * There was no change in carrying value of goodwill except for the foreign exchange translation difference from Skystar. (a) Beijing WiMi acquired Shenzhen Kuxuanyou in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113.0 million (approximately USD 16.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 87,908,370 (USD 12,601,183) was allocated to goodwill. (b) Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 137,060,340 (USD 19,646,848) was allocated to goodwill. (c) Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28.0 million). The excess fair value of consideration over the identifiable assets acquired of RMB 160,990,256 (USD 23,077,070) was allocated to goodwill. Impairment loss of RMB 68,000,000 (USD 9,747,427) was recognized for the year ended December 31, 2016. The changes in the carrying amount of goodwill allocated to reportable segments as of December 31, 2018 and 2019 are as follows: AR advertising AR services entertainment Total Total RMB RMB RMB USD As of January 1, 2017 137,060,340 180,898,626 317,958,966 45,795,617 Add : Acquisition of Skystar — 33,554,007 33,554,007 5,154,225 Translation difference — (1,489,503 ) (1,489,503 ) 50,198 As of January 1, 2018 137,060,340 212,963,130 350,023,470 51,000,040 Translation difference — 1,310,551 1,310,551 190,953 As of December 31, 2018 137,060,340 214,273,681 351,334,021 51,190,993 Translation difference — 745,813 745,813 (722,280 ) As of December 31, 2019 137,060,340 215,019,494 352,079,834 50,468,713 |
Other Payables and Accrued Liab
Other Payables and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] | Note 10—Other payables and accrued liabilities Other payables and accrued liabilities consist of the following: December 31, December 31, December 31, RMB RMB USD Salary payables 1,302,123 1,931,636 276,889 Other payables 91,599 22,670 3,250 Accrued expenses 35,048 326,040 46,736 Total other payables and accrued liabilities 1,428,770 2,280,346 326,875 |
Related Party Balances and Tran
Related Party Balances and Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | Note 11—Related party balances and transactions a) Loans—related party The Company borrowed RMB 161,800,000 from Jie Zhao, the Company’s major shareholder in 2016, borrowed additional RMB 3,950,000 in 2018 and RMB 13,000,000 (USD 1,863,479) in 2019. The Company repaid RMB 33,800,000 in 2017, RMB 14,826,000 in 2018 and RMB 125,274,000 (USD 17,957,341) in 2019. The Company also borrowed USD 952,500 (RMB 6,431,993) in 2018. The Company borrowed RMB 4,200,000 from Enweiliangzi Investment Co. (which is under common control of Jie Zhao) in 2018 and repaid the full balance in 2019. The loans are interest free, no collateral and are due in 2020 and 2021.The Company also borrowed RMB 75,500,000 (USD 10,822,510) from Shanghai Junei Internet Co. (which is under common control of Jie Zhao) in 2019 for cash flow purpose. The loan has an annual interest rate of 7% and is due in 2020 and 2021. During the year ended December 31, 2019, interest expense related to this loan, included in finance expense, amounted to RMB 290,208 (USD 41,600). Name of Related Party Relationship Nature December 31, December 31, December 31, RMB RMB USD Jie Zhao Chairman of Wimi Cayman Loan 117,124,000 4,850,000 695,221 Jie Zhao* Chairman of Wimi Cayman Loan 6,431,993 6,675,789 956,938 Shanghai Junei Internet Co. Under common control of Jie Zhao Loan — 75,500,000 10,822,510 Enweiliangzi Investment Co. Under common control of Jie Zhao Loan 4,200,000 — — Total: 127,755,993 87,025,789 12,474,669 Current portion of shareholder loan — 70,987,603 10,175,683 Shareholder loan—non-current 127,755,993 16,038,186 2,298,986 * There has been no change in the balance of the loan, change was due to exchange difference. The maturities schedule is as follows: Twelve months ending December 31, RMB USD 2020 70,987,603 10,175,683 2021 16,038,186 2,298,986 Total 87,025,789 12,474,669 b) Other payables—related party Name of Related Party Relationship Nature December 31, December 31, December 31, RMB RMB USD Beijing Tianhoudide Investment Management, LLP Under the common control of Jie Zhao Business expense payable 1,065 — — c) Business acquisition payables—related parties Business acquisition payables resulted from the Beijing WiMi’s acquisitions of Shenzhen Kuxuanyou Technology Co., Ltd., Shenzhen Yitian Internet Technology Co., Ltd., Shenzhen Yidian Network Technology Co., Ltd., in 2015 and Micro Beauty’s acquisition of Skystar in 2017. Name of related party Relationship December 31, December 31, December 31, RMB RMB USD Xie Jinlong Former shareholder of Shenzhen Kuxuanyou (a) 20,139,056 — — Yi Chengwei Former shareholder Shenshen Yitian and (b) 50,828,374 — — Meng Xiaojuan Former shareholder and legal representative of Shenzhen Yidian (c) 15,485,681 — — Gao Zhixia Former shareholder and legal representative of Skystar (d) 24,436,303 — — Total: 110,889,414 — — Current portion of business acquisition payable (34,086 ) — — Business acquisition payable non-current 110,855,328 — — (a) Beijing WiMi acquired Shenzhen Kuxuanyou, in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113 million (approximately USD 17.2 million) to be made over six years. Jinlong Xie became a related party to the Company after the acquisition. Beijing WiMi paid RMB 23,000,000 in 2017, RMB 23,120,000 in 2018 and RMB 22,480,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. (b) Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28 million) to be made over six years. Yi Chengwei became a related party to the Company after the acquisition. Beijing WiMi paid RMB 25,700,000 in 2017, RMB 33,720,000 in 2018 and RMB 56,680,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. (c) Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million) to be made over six years. Meng Xiaojuan became a related party to the Company after the acquisition. Beijing WiMi paid RMB 50,000,000 in 2017, RMB 29,350,000 in 2018 and RMB 17,050,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. (d) Gao Zhixia became a related party to the Company after the acquisition of Skystar in 2017. The Company paid RMB 17,967,355 in 2017, RMB 12,710,784 in 2018 and RMB 26,805,592 (USD 3,842,435) in 2019. As of December 31, 2019, the total business acquisition payable was paid off. The amount of business acquisition payable reported in the consolidated balance sheets at carrying value, which approximates fair value as the rate of amortization of investment payment discount used were similar to interest rate charged by the bank in the PRC. Debt discount, net of accumulated amortization, totaled RMB 11,995,672 and nil as of December 31, 2018 and 2019, respectively, are recognized as a reduction of business acquisition payable. Amortization expense related to the debt discount, included in finance expenses, was RMB 4,191,002, RMB 5,124,715 and RMB 11,544,479 (USD 1,654,838) for the years ended December 31, 2017, 2018 and 2019, respectively. |
Taxes
Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | Note 12—Taxes Income tax Cayman Islands Under the current laws of the Cayman Islands, Wimi Cayman is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed. Hong Kong Wimi HK and Micro Beauty are incorporated in Hong Kong and are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate is 16.5% in Hong Kong. The Company did not make any provisions for Hong Kong profit tax as there were no assessable profits derived from or earned in Hong Kong since inception. Under Hong Kong tax law, Wimi HK is exempted from income tax on its foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends. Seychelles Skystar is incorporated in Seychelles and is not subject to tax on income generated outside of Seychelles under the current law. In addition, upon payments of dividends by these entities to their shareholders, no withholding tax will be imposed. PRC The subsidiaries and VIE incorporated in the PRC are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under the Enterprise Income Tax Laws of the PRC (the “EIT Laws”), domestic enterprises and Foreign Investment Enterprises (the “FIE”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. Shenzhen KXY obtained the “high-tech enterprise” tax status in October 2015, which reduced its statutory income tax rate to 15% from November 2016 to November 2019. Shenzhen Yiruan, Shenzhen Yiyun, Shenzhen Yidian and Shenzhen Duodian are qualified as software companies by local taxing authority, and obtained two years of tax exempt status and three years at reduced income tax rate of 12.5%. After the initial 5 years, the Company can apply for the reduced rate in a yearly basis. In addition, 75% of R&D expenses of Shenzhen Kuxuan and Shenzhen Yiruan are subject to additional deduction from pre-tax income. Korgas Shengyou, Korgas Wimi, and Korgas 233 were formed and registered in Korgas in Xinjiang Provence, China from 2016 to 2017, and Kashi Duodian was formed and registered in Kashi in Xinjiang Provence, China in 2019. These companies are not subject to income tax for 5 years and can obtain another two years of tax exempt status and three years at reduced income tax rate of 12.5% after the 5 years due to the local tax policies to attract companies in various industries. Shenzhen Qianhai and Shenzhen Zhiyun were formed and registered in Qianhai District in Guangdong Provence, China in 2015 and 2019, respectively. These companies are subject to income tax at a reduced rate of 15% due to the local tax policies to attract companies in various industries. Tax savings for the years ended December 31, 2017, 2018 and 2019 amounted to RMB 22,769,752, RMB 20,619,510 and RMB 23,679,290 (USD 3,394,296), respectively. The Company’s basic and diluted earnings per shares would have been each lower by RMB 0.24 and RMB 0.21 per share for the years ended December 31, 2017 and 2018 without the preferential tax rate reduction, respectively. The Company’s basic and diluted earnings per shares would have been lower by RMB 0.24 (USD 0.03) and RMB 0.22 (USD 0.03) per share for the year ended December 31, 2019 without the preferential tax rate reduction, respectively. Significant components of the benefit of (provision for) income taxes are as follows: For the For the For the For the RMB RMB RMB USD Current (1,994,837 ) (9,618,606 ) (4,644,300 ) (665,734 ) Deferred 1,466,826 1,543,010 1,515,220 217,198 Provision for income taxes (528,011 ) (8,075,596 ) (3,129,080 ) (448,536 ) The following table reconciles China statutory rates to the Company’s effective tax rate: For the For the For the China statutory income tax rate 25.0 % 25.0 % 25.0 % Preferential tax rate reduction (30.8 )% (21.2 )% (22.5 )% Change in valuation allowance - — 0.4 % Permanent difference* 6.5 % 4.0 % 0.1 % Effective tax rate 0.7 % 7.8 % 3.0 % * Permanent difference is mainly related to the tax losses carried forward due to the uncertainty surrounding their realization. Deferred tax assets and liabilities—China Significant components of deferred tax assets and liabilities were as follows: December 31, December 31, December 31, RMB RMB USD Deferred tax assets: Allowance for doubtful accounts — 130,321 18,681 Net operating loss carryforwards 2,379,050 2,762,833 396,037 Less :valuation allowance (2,379,050 ) (2,762,833 ) (396,037 ) Deferred tax assets, net — 130,321 18,681 Deferred tax liabilities: Recognition of intangible assets arising from business combination 4,132,398 2,747,500 393,839 Total deferred tax liabilities, net 4,132,398 2,617,179 375,158 The Company evaluated the recoverable amounts of deferred tax assets, and provided a valuation allowance to the extent that future taxable profits will be available against which the net operating loss and temporary difference can be utilized. The Company considers both positive and negative factors when assessing the future realization of the deferred tax assets and applied weigh to the relative impact of the evidences to the extent it could be objectively verified. The Company’s NOL was mainly from Beijing WiMi (VIE of WiMi WFOE)’s cumulative net operating loss (“NOL”) of approximately 13,025,860 (USD 1,867,186) as of December 31, 2019. Beijing WiMi has incurred losses since 2015 and its NOL is set to expire in 2020. Management considers projected future losses outweighs other factors and made a full allowance of related deferred tax assets. The Company recognized deferred tax liabilities related to the excess of the intangible assets reporting basis over its income tax basis as a result of fair value adjustment from acquisitions in 2015. The deferred tax liabilities will reverse as the intangible assets are amortized for financial statement reporting purposes. Uncertain tax positions The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2018 and 2019, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2017, 2018 and 2019 and also does not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from December 31, 2019. Value added tax All of the Company’s service revenues that are earned and received in the PRC are subject to a Chinese VAT at a rate of 6% of the gross proceed or at a rate approved by the Chinese local government. Taxes payable consisted of the following: December 31, December 31, December 31, RMB RMB USD VAT taxes payable 1,692,874 494,964 70,950 Income taxes payable 8,912,365 9,093,481 1,303,501 Other taxes payable 128,300 72,437 10,383 Totals 10,733,539 9,660,882 1,384,834 |
Concentration of Risk
Concentration of Risk | 12 Months Ended |
Dec. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentration Risk Disclosure [Text Block] | Note 13—Concentration of risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. In China, the insurance coverage of each bank is RMB 500,000. As of December 31, 2019, cash balance of RMB 54,506,161 (USD 7,813,159) was deposited with financial institutions located in China, of which RMB 49,353,466 (USD 7,074,549) was subject to credit risk. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 500,000 (approximately USD 64,000) if the bank with which an individual/a company hold its eligible deposit fails. As of December 31, 2019, cash balance of HKD 83,189,734, approximately RMB 74,519,699 (USD 10,681,990) was maintained at financial institutions in Hong Kong, of which HKD 81,614,681 approximately RMB 73,108,799 (USD 10,479,745) was subject to credit risk. In the US, the insurance coverage of each bank is USD 250,000. As of December 31, 2019, cash balance of USD 3,314 (RMB 23,117) was deposited with a financial institution located in US and was not subject to credit risk. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. A majority of the Company’s expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance. To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company. Customer concentration risk For the years ended December 31, 2017, 2018 and 2019, no customer accounted for more than 10% of the Company’s total revenues. As of December 31, 2018, no customer accounted for more than 10% of the Company’s accounts receivable. As of December 31, 2019, two customers accounted for 13.4% and 12.0% of the Company’s accounts receivable. Vendor concentration risk For the year ended December 31, 2017, one vendor accounted for 12.0% of the Company’s total purchases. For the year ended December 31, 2018, three vendors accounted for 13.2%, 12.8% and 12.4% of the Company’s total purchases. For the year ended December 31, 2019, one vendor accounted for 26.6% of the Company’s total purchases. As of December 31, 2018, two vendors accounted for 42.4% and 10.2% of the Company’s accounts payable. As of December 31, 2019, three vendors accounted for 32.8%, 27.9% and 11.9% of the Company’s accounts payable, respectively. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | Note 14—Shareholders’ equity Ordinary shares Wimi Cayman was established under the laws of Cayman Islands on August 16, 2018 with authorized share of 20,115,570 Class A Ordinary Shares of par value US$0.0001 each, 466,967,730 Class B Ordinary Shares of par value US$0.0001 each and 12,916,700 Series A Preferred Shares of par value USD0.0001 each. Each Class A Ordinary Share shall be entitled to ten (10) votes on all matters subject to vote at general meetings of the Company, and each Class B Ordinary Share shall be entitled to one (1) vote on all matters subject to vote at general meetings of the Company. Each Class A Ordinary Share is convertible into one (1) Class B Ordinary Share at any time by the holder. Except for the voting right and conversion right, the Class A ordinary shares and Class B ordinary shares shall carry equal rights and rank pari passu with one another, including but not limited to the rights to dividends and other capital distributions. During the fourth quarter of 2018, Wimi Cayman issued 20,115,570 of Class A Ordinary Shares and 79,884,430 shares of Class B Ordinary shares, and the shares were accounted as if they were issued and outstanding at the beginning of the period presented pursuant to the reorganization as stated in Note 1. Preferred shares On November 22, 2018, the Company entered into share purchase agreement with two institutional investors pursuant to which the investors purchased 8,611,133 shares of the Company’s Series A convertible Preferred Shares for total proceeds of USD 20,000,000. The Preferred Shares holders could convert the Class B Ordinary Shares at any time at the Preferred Shares issue prices. Each Preferred Share shall automatically be converted into Class B Ordinary Shares, at the then applicable Preferred Share Conversion Price upon the closing of a Qualified Initial Public Offering (IPO). If the Company fails to complete the IPO, the preferred shares holders have no redemption rights on the preferred shares nor is the Company required to buy back any shares. Accordingly, the Company accounted for the convertible preferred shares as equity. Restricted assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws and regulations permit payments of dividends by Wimi WFOE and Beijing WiMi (collectively “Wimi PRC entities”) only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Wimi PRC entities. Wimi PRC entities are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, Wimi PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. Wimi PRC entities may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by State Administration of Foreign Exchange. As a result of the foregoing restrictions, Wimi PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulation in the PRC may further restrict Wimi PRC entities from transferring funds to the Company in the form of dividends, loans and advances. As of December 31, 2019, amounts restricted are the paid-in-capital and statutory reserve of Wimi PRC entities, which amounted to RMB 114,161,660 (USD 16,364,448). Statutory reserve As of December 31, 2018 and 2019, Wimi PRC entities collectively attributed RMB 19,647,831 and RMB 22,201,382 (USD 3,182,446), of retained earnings for their statutory reserves, respectively. Capital contributions During the year ended December 31, 2017, the Company’s shareholders contributed RMB 30,000,000 to the Company. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Note 15—Commitments and contingencies Lease commitments The Company has entered into twenty non-cancellable operating lease agreements for office spaces. The Company’s commitment for minimum lease payments under these operating leases as of December 31, 2019, for the next five years is as follow: Minimum lease payment Twelve months ending December 31, RMB USD 2020 2,478,329 355,255 2021 1,639,356 234,993 Thereafter — — Total minimum payments 4,117,685 590,248 Rent expense for the years ended December 31, 2017, 2018 and 2019 was RMB 2,933,035, RMB 3,359,469 and RMB 3,707,039 (USD 531,384), respectively. Contingencies From time to time, the Company is party to certain legal proceedings, as well as certain asserted and un-asserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements. Variable interest entity structure In the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the Contractual Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii) the business operations of Wimi WFOE and the VIE are in compliance with existing PRC laws and regulations in all material respects. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly, the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its management. If the current corporate structure of the Company or the Contractual Arrangements is found to be in violation of any existing or future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s current corporate structure or the Contractual Arrangements is remote based on current facts and circumstances. |
Segments
Segments | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | Note 16—Segments ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments. The Company’s chief operating decision maker is the Chief Executive Officer, who reviews the financial information of the separate operating segments when making decisions about allocating resources and assessing the performance of the group. The Company has determined that it has two operating segments: (1) AR advertising services, and (2) AR entertainment. The following tables present summary information by segment for the years ended December 31, 2017, 2018 and 2019: AR AR Total RMB RMB RMB Revenues 133,078,464 58,951,060 192,029,524 Cost of revenues 66,148,464 13,031,723 79,180,187 Gross profit 66,930,000 45,919,337 112,849,337 Depreciation and amortization 4,338,510 8,443,461 12,781,971 Total capital expenditures 171,364 1,792,869 1,964,233 AR AR Total RMB RMB RMB Revenues 181,241,346 44,030,218 225,271,564 Cost of revenues 81,437,761 3,976,300 85,414,061 Gross profit 99,803,585 40,053,918 139,857,503 Depreciation and amortization 4,360,632 9,178,221 13,538,853 Total capital expenditures 26,380 20,192 46,572 AR AR Total Total RMB RMB RMB USD Revenues 267,514,061 51,667,363 319,181,424 45,752,906 Cost of revenues 140,716,036 5,451,807 146,167,843 20,952,358 Gross profit 126,798,025 46,215,556 173,013,581 24,800,548 Depreciation and amortization 9,455,226 4,428,693 13,883,919 1,990,184 Total capital expenditures 161,505 34,493 195,998 28,095 Total assets as of: December 31, December 31, December 31, RMB RMB USD AR advertising services 410,506,084 379,286,036 54,368,572 AR entertainment 196,977,342 184,212,477 26,405,849 Total Assets 607,483,426 563,498,513 80,774,421 The Company’s operations are primarily based in the PRC, where the Company derives a substantial portion of their revenues. Management also review consolidated financial results by business locations. Disaggregated information of revenues by geographic locations are as follows: For the year For the year For the year For the year RMB RMB RMB USD Domestic PRC revenues 166,010,547 209,495,553 303,357,469 43,484,629 International revenues 26,018,977 15,776,011 15,823,955 2,268,277 Total revenues 192,029,524 225,271,564 319,181,424 45,752,906 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 17—Subsequent events The spread of a novel strain of coronavirus (COVID-19) around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to determine if it will have a material impact to its operations. On March 31, 2020, the Company completed its initial public offering (“IPO”) of 4,750,000 American Depository Shares (“ADS”) at a public offering price of $5.50 per ADS, each ADS represents two of the Company’s Class B ordinary shares, par value US$0.0001 per share, resulting in net proceeds to the Company of approximately $23.1 million after deducting underwriting commission and other expenses. In connection with the IPO, the Company’s ADS began trading on The Nasdaq Global Market on April 1, 2020 under the symbol “WIMI”. |
Condensed Financial Information
Condensed Financial Information of the Parent Company | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Condensed Financial Information of Parent Company Only Disclosure [Text Block] | Note 18—Condensed financial information of the parent company The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements for the parent company. The subsidiary did not pay any dividend to the Company for the periods presented. For the purpose of presenting parent only financial information, the Company records its investment in its subsidiary under the equity method of accounting. Such investment is presented on the separate condensed balance sheets of the Company as “Investment in subsidiary” and the income of the subsidiary is presented as “share of income of subsidiary”. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2018 and 2019. PARENT COMPANY BALANCE SHEETS December 31, December 31, December 31, RMB RMB USD ASSETS CURRENT ASSETS Cash in bank 137,852,519 70,050,747 10,041,390 Other receivables—intercompany — 63,037,292 9,036,050 Total current assets 137,852,519 133,088,039 19,077,440 OTHER ASSETS Investment in subsidiaries 183,488,228 292,086,089 41,868,939 Total assets 321,340,747 425,174,128 60,946,379 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Current portion of shareholder loan — 1,395,240 200,000 OTHER LIABILITIES Non-current shareholder loan 2,419,278 1,063,871 152,500 Total liabilities 2,419,278 2,459,111 352,500 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Series A convertible preferred shares, $0.0001 par value, 12,916,700 shares authorized, 8,611,133 shares issued and outstanding of December 31, 2018 and 2019, respectively 5,910 5,910 861 Class A ordinary shares, $0.0001 par value, 20,115,570 shares authorized, 20,115,570 shares issued and outstanding of December 31, 2018 and 2019 13,095 13,095 2,011 Class B ordinary shares, $0.0001 par value, 466,967,730 shares authorized, 79,884,430 shares issued and outstanding of December 31, 2018 and 2019 52,005 52,005 7,988 Additional paid-in capital 168,166,990 168,166,990 24,105,815 Retained earnings 129,526,973 229,177,894 32,851,394 Statutory reserves 19,647,831 22,201,382 3,182,446 Accumulated other comprehensive income 1,508,665 3,097,741 443,364 Total shareholders’ equity 318,921,469 422,715,017 60,593,879 Total liabilities and shareholders’ equity 321,340,747 425,174,128 60,946,379 PARENT COMPANY STATEMENTS OF INCOME For the Years Ended December 31, 2017 2018 2019 2019 RMB RMB RMB USD OPERATING EXPENSES General and administrative — (1,838,494 ) (7,972,189 ) (1,142,770 ) Total operating expenses — (1,838,494 ) (7,972,189 ) (1,142,770 ) LOSS FROM OPERATIONS (1,838,494 ) (7,972,189 ) (1,142,770 ) OTHER INCOME (EXPENSE) Interest income — — 1,025,954 147,065 Finance expense — (345 ) (5,456 ) (782 ) Equity income of subsidiaries and VIE 73,337,971 91,056,631 109,156,163 15,646,937 Total other income, net 73,337,971 91,056,286 110,176,661 15,793,220 NET INCOME 73,337,971 89,217,792 102,204,472 14,650,450 FOREIGN CURRENCY TRANSLATION ADJUSTMENT (250,623 ) 1,759,288 1,589,076 227,785 COMPREHENSIVE INCOME 73,087,348 90,977,080 103,793,548 14,878,235 PARENT COMPANY STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2017 2018 2019 2019 RMB RMB RMB USD CASH FLOWS FROM OPERATING ACTIVITIES: Net income 73,337,971 89,217,792 102,204,472 14,650,450 Adjustments to reconcile net income to cash used in operating activities: Equity income of subsidiaries and VIEs (73,337,971 ) (91,056,631 ) (109,156,163 ) (15,646,937 ) Change in operating assets and liabilities Other receivables - intercompany — — (62,298,143 ) (8,930,097 ) Net cash used in operating activities — (1,838,839 ) (69,249,834 ) (9,926,584 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of Series A convertible preferred shares — 137,738,000 — — Proceeds from related party loans — 2,419,278 — — Net cash provided by financing activities — 140,157,278 — — EFFECT OF EXCHANGE RATE ON CASH — (465,920 ) 1,448,063 207,572 CHANGES IN CASH AND CASH EQUIVALENTS — 137,852,519 (67,801,771 ) (9,719,012 ) CASH AND CASH EQUIVALENTS, beginning of year — — 137,852,519 19,760,402 CASH AND CASH EQUIVALENTS, end of year — 137,852,519 70,050,748 10,041,390 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Liquidity | Liquidity In assessing the Company’s liquidity, the Company monitors and analyzes its cash on-hand and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Cash flow from operations and capital contribution and loan from shareholders have been utilized to finance the working capital requirements of the Company. As of December 31, 2019, the Company has cash flow from operating activities of RMB 144.0 million and had cash of RMB 129.0 million. The Company’s working capital was approximately RMB 55.4 million as of December 31, 2019. The Company believes its revenues and operations will continue to grow and the current working capital is sufficient to support its operations and debt obligations as they become due one year through report date. |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for information pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the wholly-foreign owned enterprise (“WFOE”) and variable interest entities (“VIEs”) over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. |
Use of estimates and assumptions | Use of estimates and assumptions The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated financial statements include the useful lives of property and equipment and intangible assets, impairment of long-lived assets and goodwill, allowance for doubtful accounts, provision for contingent liabilities, revenue recognition, and deferred taxes and uncertain tax position. Actual results could differ from these estimates. |
Foreign currency translation and other comprehensive income (loss) | Foreign currency translation and other comprehensive income (loss) The Company uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its subsidiary in Seychelles is U.S. dollar, and its subsidiaries which are incorporated in Hong Kong and PRC are Hong Kong Dollar and RMB, respectively, which are their respective local currencies based on the criteria of ASC 830, “Foreign Currency Matters”. In the consolidated financial statements, the financial information of the Company and other entities located outside of the PRC has been translated into RMB. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments included in accumulated other comprehensive income amounted to RMB 1,508,665 and RMB 3,097,741 (USD 443,364) as of December 31, 2018 and 2019, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi HK at December 31, 2018 and 2019 were translated at RMB1.00 to HKD 1.1413 and to HKD 1.1163, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to HKD 1.1530, HKD 1.1815 and to HKD 1.1363, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi Cayman and Skystar at December 31, 2018 and 2019 were translated at RMB 1.00 to USD 0.1457 and to USD 0.1433, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to USD 0.1489, USD 0.1451 and to USD 0.1450, respectively. The shareholders’ equity accounts were stated at their historical rate. Cash flows are also translated at average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheet. |
Convenience translation | Convenience translation Translations of balances in the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD as of and for the year ended December 31, 2019 are solely for the convenience of the reader and were calculated at the rate of RMB 1.00 to USD 0.1433, representing the mid-point reference rate set by Peoples’ Bank of China on December 31, 2019. No representation is made that the RMB amounts represent or could have been, or could be, converted, realized or settled into USD at that rate, or at any other rate. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents primarily consists of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use. Cash and cash equivalents also consist of funds earned from the Company’s operating revenues which were held at third party platform fund accounts which are unrestricted as to immediate use or withdraw. The Company maintains most of its bank accounts in the PRC, HK and US. |
Accounts receivable, net | Accounts receivable, net Accounts receivable include trade accounts due from customers. Accounts are considered overdue after 90 days. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and provides allowance when necessary. The allowance is based on management’s best estimates of specific losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. As of December 31, 2018 and 2019, the Company made RMB 2,591 and RMB 1,577,486 (USD 226,124) allowance for doubtful accounts for accounts receivable, respectively. |
Prepaid expenses and other current assets | Prepaid expenses and other current assets Prepaid expenses and other current assets are mainly payments made to vendors or services providers for future services, prepaid rent, deposits for rent and utilities and employee advances. These amounts are refundable and bear no interest. Prepaid expenses also includes money deposited with certain channel providers to ensure the contents of the advertisement do not violate the terms of the channel providers. The deposits usually have one year term and are refundable upon contract termination. Management reviews its prepaid expenses and other current assets on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. As of December 31, 2018 and 2019, no allowance was deemed necessary. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at cost less accumulated depreciation and impairment if applicable. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with 5% residual value. The estimated useful lives are as follows: Useful Life Office equipment 3 years Office furniture and fixtures 3 - 5 years Leasehold improvements lesser of lease term or expected useful life The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of income and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives. |
Intangible assets, net | Intangible assets, net The Company’s intangible assets with definite useful lives primarily consist of copyrights, non-compete agreements, and technology know-hows. Identifiable intangible assets resulting from the acquisitions of subsidiaries accounted for using the purchase method of accounting are estimated by management based on the fair value of assets received. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its intangible assets with definite useful lives on a straight-line basis over the shorter of the contractual terms or the estimated useful lives of five to ten years. |
Goodwill | Goodwill Goodwill represents the excess of the consideration paid of an acquisition over the fair value of the net identifiable assets of the acquired subsidiaries at the date of acquisition. Goodwill is not amortized and is tested for impairment at least annually, more often when circumstances indicate impairment may have occurred. Goodwill is carried at cost less accumulated impairment losses. If impairment exists, goodwill is immediately written off to its fair value and the loss is recognized in the consolidated statements of operations and comprehensive loss. Impairment losses on goodwill are not reversed. The Company reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist annually or more frequently if events and circumstances indicate that it is more likely than not that an impairment has occurred. The Company has the opinion to access qualitative factors to determine whether it is necessary to perform the two-step in accordance with ASC 350-20. If the Company believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the two-step quantities impairment test described below is required. The first step compares the fair values of each reporting unit to its carrying amount, including good will. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business acquisition with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. Estimating fair value is performed by utilizing various valuation techniques, with the primary technique being a discounted cash flow. |
Impairment for long-lived assets | Impairment for long-lived assets Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the years ended December 31, 2017, 2018 and 2019, no impairment of long-lived assets was recognized. |
Cost method investments | Cost method investments The Company accounts for investments with less than 20% of the voting shares and does not have the ability to exercise significant influence over operating and financial policies of the investee using the cost method. The Company records cost method investments at the historical cost in its consolidated financial statements and subsequently records any dividends received from the net accumulated earrings of the investee as income. Dividends received in excess of earnings are considered a return of investment and are recorded as reduction in the cost of the investments. Cost method investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investments is less than its carrying value. An impairment is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investments; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. No event had occurred and indicated that other-than-temporary impairment existed and therefore the Company did not record any impairment charges for its investments for the years ended December 31, 2017, 2018 and 2019. |
Business Combination | Business Combination The purchase price of an acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company’s operating results from the date of acquisition. |
Fair value measurement | Fair value measurement The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company. The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Financial instruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. |
Revenue recognition | Revenue recognition The Company adopted Accounting Standards Update (“ASU”) 2014-09 Revenue from Contracts with Customers (ASC Topic 606) for the fiscal year ended December 31, 2019 using the modified retrospective method for contracts that were not completed as of December 31, 2018. The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identifies the contract with the customer, (ii) identifies the performance obligations in the contract, (iii) determines the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocates the transaction price to the respective performance obligations in the contract, and (v) recognizes revenue when (or as) the Company satisfies the performance obligation. Prior to fiscal year 2019, the Company recognizes revenue when all of the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price or fees are fixed or determinable, and (iv) the ability to collect is reasonably assured. Revenue is presented in the consolidated statements of income and comprehensive income net of sales taxes. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, rights of return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has the right to bill its’ customers. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASU under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition. (i) AR Advertising Services AR advertisements are the use holographic materials integrated into advertisement on the online media platforms or offline display. The Company’s performance obligation is to identify advertising spaces, embed holographic AR images or videos into films, shows and short form videos that are hosted by leading online streaming platforms in China. Revenue is recognized at a point in time when the related services have been delivered based on the specific terms of the contract, which are commonly based on specific action (i.e. cost per impression (“CPM”) or cost per action (“CPA”) for on line display and service period for offline display contracts. The Company enters into advertising contracts with advertisers where the amounts charged per specific action are fixed and determinable, the specific terms of the contracts were agreed on by the Company, the advertisers and channel providers, and collectability is probable. Revenue is recognized on a CPM basis as impressions or clicks are delivered while revenue on a CPA basis is recognized once agreed actions are performed or service period is completed. The Company considers itself as provider of the services as it has control of the specified services and products at any time before it is transferred to the customers which is evidenced by (1) the Company is primarily responsible to its customers for products and services offered where the products were designed in house and the Company has customer services team to directly service the customers; and (2) having latitude in establish pricing. Therefore the Company acts as the principal of these arrangements and reports revenue earned and costs incurred related to these transactions on a gross basis. (ii) AR Entertainment The Company’s AR entertainment includes mainly three sub categories: SDK payment channel services, software development and mobile games operations and technology developments. a. SDK Payment Channel Services The Company’s SDK payment channel services enable game players/app users to make online payments through Alipay, Unipay or Wechat pay etc. to various online content providers. When game players/app users make payments in the game or app, the SDK payment channel will automatically populate payment services for the users to fulfill payments. The Company charges a fee for the payment channel services, the pricing of which is based on the predetermined rates specified in the contract. The Company’s performance obligation is to facilitate payment services and recognizes SDK payment channel service revenue at a point in time when a user completes a payment transaction via a payment channel and is entitled to payment. Related fees are generally billed monthly, based on a per transaction basis. The Company assessed that its promise to customer is to facilitate the service of third party instead of providing the payment services itself as the Company does not have control of the services provided as the Company do not service the users directly and does not have the latitude to establish the price, and therefore, revenue from SDK payment service is recorded on a net basis. b. MR software development services The Company’s MR software development service contracts are primarily on a fixed price basis, which require the Company to perform services for MR application design, content development and integrating based on customers’ specific needs. These services also require significant production and customization. The required customization work period is generally less than one year. The Company currently does not have any modification of contract and the contracts currently do not have any variable consideration. The software customization, application design, upgrades and integration are considered as one performance obligation. The promises to transfer software, customization and upgrades are not separately identifiable as the customers do not obtain benefits from these services on its own. The Company’s MR software development service contracts are generally recognized over time during the contract period as the Company has no alternative use of the customized software and application without incurring significant additional costs. Revenue is recognized based on the Company’s measurement of progress towards completion based on input or output methods. Input methods are used only when there is a direct correlation between hours incurred and the end product delivered and output method is used when the Company could appropriately measure the customization progress towards completion. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. The Company has a long history of developing various MR software resulting in its ability to reasonably estimate the progress toward completion on each fixed price customized contracts. c. Mobile Games Services The Company generates revenue from jointly operated mobile game publishing services and the licensed out games. In accordance with ASC 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates agreements with the game developers, distribution channels and payment channels in order to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenues gross or net is based on whether the Company’s promise to its customers is to provide the products or services or to facilitate a sale by a third party. The nature of the promise depends on whether the Company controls the products or services prior to transferring it. Control is evidenced by if the Company is primarily responsible for fulling the provision of services and has discretion in establishing the selling price. When the Company controls the products or services, its promise is to provide and deliver the products and revenue is presented gross. When the Company does not control the products, the promise is to facilitate the sale and revenue is presented net. —Jointly operated mobile game publishing services The Company is offering publishing services for mobile games developed by third party game developers. The Company acted as a distribution channel that it will publish the games on their own app or a third party owned app or website, named game portals. Through these game portals, game players can download the mobile games to their mobile devices and purchase coins, the virtual currency, for in game premium features to enhance their game playing experience. The Company contracts with third party payment platforms for collection services offered to game players who have purchased coins. The third party game developers, third party payment platforms and the co publishers are entitled to profit sharing based on a prescribed percentage of the gross amount charged to the game players. The Company’s obligation in the publishing services is completed at a point in time when the game players made a payment to purchase coins. With respect to the publishing services arrangements between the Company and the game developer, the Company considered that the Company does not control the services as evidenced by (i) developers are responsible for providing the game product desired by the game players; (ii) the hosting and maintenance of game servers for running the online mobile games is the responsibility of the third party platforms; (iii) the developers or third party platforms have the right to change the pricing of in game virtual items. The Company’s responsibilities are publishing, providing payment solution and market promotion service, and thus the Company views the game developers to be its customers and considers itself as the facilitator of the game developers in the arrangements with game players. Accordingly, the Company records the game publishing service revenue from these games, net of amounts paid to the game developers. —Licensed out mobile games The Company also licenses third parties to operate its mobile games developed internally through mobile portal and receives revenue from the third party licensee operators on a monthly basis. The Company’s performance obligation is to provide mobile games to game operators which enable players of the mobile games to make in game purchases and the Company recognized revenue at a point in time when game players completed the purchases. The Company records revenues on a net basis, as the Company does not have the control of the services provided as it does not have the primary responsibility for fulfillment nor does not have the right to change the pricing of the game services. d. Technology developments The Company’s technology development contract requires the Company to design applications based on customers’ specific needs. The duration of the design period is short, usually approximately 3 months or less. Revenues are generally recognized at a point in time where the Company has transferred control of the asset upon completion of the design and after the acceptance by its customer with no more future obligation of the design project. Contract balances: The Company records receivable related to revenue when it has an unconditional right to invoice and receive payment. Payments received from customers before all of the relevant criteria for revenue recognition met are recorded as deferred revenue. Contract costs: Contract costs represent costs incurred in advance of revenue recognition arising from direct costs in respect of the revenue contracts according to the customer’s requirements prior to the delivery of services, and such deferred costs will be recognized upon the recognition of the related revenue. Estimated contract costs are based on the budgeted service hours, which are updated based on the progress toward completion on a monthly basis. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. The Company reviewed impairment of contract costs at December 31, 2019 and determined all contract costs are recoverable. The Company’s disaggregate revenue streams are summarized and disclosed in Note 16. |
Cost of revenues | Cost of revenues For AR advertising services, the cost of revenue comprised of costs paid to channel distributors based on the sales agreements. For AR entertainment segment, the costs of revenue consist of the shared costs with content providers based on the profit sharing arrangements, third party consulting services expenses and compensation expenses for our professionals. |
Advertising costs | Advertising costs Advertising costs amounted to RMB 740,065, nil and RMB 59,091 (USD 8,470) for the years ended December 31, 2017, 2018 and 2019, respectively. Advertising costs are expensed as incurred and included in selling expenses. |
Operating leases | Operating leases A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Company are currently classified as operating leases. The Company records the total expenses on a straight-line basis over the lease term. |
Research and development | Research and development Research and development expenses include salaries and other compensation-related expenses to the Company’s research and product development personnel, outsourced subcontractors, as well as office rental, depreciation and related expenses for the Company’s research and product development team. |
Value added taxes (“VAT”) | Value added taxes (“VAT”) Revenue represents the invoiced value of service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 6%, depending on the type of service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in tax payable. All of the VAT returns filed by the Company’s subsidiaries in China, have been and remain subject to examination by the tax authorities for five years from the date of filing. |
Income taxes | Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred taxes is accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. No penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. PRC tax returns filed in 2017 to 2019 are subject to examination by any applicable tax authorities. |
Other Income, net | Other Income, net Other Income includes government subsidies which are amounts granted by local government authorities as an incentive for companies to promote development of the local technology industry. The Company receives government subsidies related to government sponsored projects, and records such government subsidies as a liability when it is received. The Company records government subsidies as other income when there is no further performance obligation. Total government subsidies amounted to RMB 650,025, RMB 1,236,593 and RMB 1,356,800 (USD 194,490) for the years ended December 31, 2017, 2018 and 2019, respectively. Other income also includes RMB 851,583(USD 122,070) of input VAT credit the Company redeemed during the year ended December 31, 2019. As part of VAT reform in 2019, from April 1, 2019 to December 31, 2021, a taxpayer in certain service industries could claim additional 10% of input VAT credit based on total input VAT paid to suppliers, the credit was applied to offset with the Company’s VAT payable. |
Earnings per share | Earnings per share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2018 and 2019, there were 8,611,133 dilutive shares. |
Employee benefit | Employee benefit The full-time employees of the Company are entitled to staff welfare benefits including medical care, housing fund, pension benefits, unemployment insurance and other welfare, which are government mandated defined contribution plans. The Company is required to accrue for these benefits based on certain percentages of the employees’ respective salaries, subject to certain ceilings, in accordance with the relevant PRC regulations, and make cash contributions to the state-sponsored plans out of the amounts accrued. Total expenses for the plans were RMB 947,723, RMB 1,057,537 and RMB 1,451,938 (USD 208,127) for the years ended December 31, 2017, 2018 and 2019, respectively. |
Statutory reserves | Statutory reserves Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss. |
Segment reporting | Segment reporting ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption assuming the Company will remain an emerging growth company at that date. Early adoption is permitted. In September 2017, the FASB issued ASU No. 2017-13, which to clarify effective dates that public business entities and other entities were required to adopt ASC Topic 842 for annual reporting. A public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC adopting ASC Topic 842 for annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. ASU No. 2017-13 also amended that all components of a leveraged lease be recalculated from inception of the lease based on the revised after tax cash flows arising from the change in the tax law, including revised tax rates. The difference between the amounts originally recorded and the recalculated amounts must be included in income of the year in which the tax law is enacted. ASU 2019-10 further amended the effective date for non-public Companies to be effective for fiscal years beginning after December 15, 2020. As the Company is an emerging growth company under Title I of the JOBS Act, the Company could elect to defer the effective date of the ASU as non-public Companies. The Company plans to adopt the ASU for the fiscal year ended 2020 and is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step two of the goodwill impairment test and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. The Company plans to adopt ASU 2017-04 fiscal in year 2020 and believes that the adoption of ASU 2017-04 will not have a material impact on our financial statements. In July 2017, the FASB Issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815). The amendments in Part I of the Update change the reclassification analysis of certain equity-lined financial instruments (or embedded features) with down round features. The amendments in Part II of this Update re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any transition guidance because those amendments do not have an accounting effect. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement—Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The adoption of this ASU did not have a material effect on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU 2018-13 is effective for the Company for annual and interim reporting periods beginning January 1, 2020. The Company does not expect the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments—Credit Losses—Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning January 1, 2020. The Company does not expect the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 to clarify the interaction of the accounting for equity securities under ASC 321 and investments accounted for under the equity method of accounting in ASC 323 and the accounting for certain forward contracts and purchased options accounted for under ASC 815. With respect to the interactions between ASC 321 and ASC 323, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting when applying the measurement alternative in ASC 321, immediately before applying or upon discontinuing the equity method of accounting. With respect to forward contracts or purchased options to purchase securities, the amendments clarify that when applying the guidance in ASC 815-10-15-141(a), an entity should not consider whether upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in ASC 323 or the fair value option in accordance with ASC 825. The ASU is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of income and comprehensive income and statements of cash flows. |
Nature of Business and Organi_2
Nature of Business and Organization (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of investment in significant subsidiaries [Table Text Block] | Name Background Ownership Wimi HK ● A Hong Kong company ● Incorporated on September 4, 2018 ● A holding company 100% owned by Wimi Cayman Wimi WFOE ● PRC limited liability company and deemed a wholly foreign owned enterprise (“WFOE”) ● Incorporated on September 20, 2018 ● Registered capital of RMB 325,500,000 (USD 50,000,000) ● A holding company 100% owned by Wimi HK Beijing WiMi ● A PRC limited liability company ● Incorporated on May 27, 2015 ● Registered capital of RMB 5,154,639 (USD 751,055) VIE of Wimi WFOE Shenzhen Kuxuanyou Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on June 18, 2012 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Beijing WiMi Shenzhen Yiruan Tianxia Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on January 06, 2016 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd. Shenzhen Yiyun Technology Co., Ltd. (“Shenzhen Yiyun”) ● A PRC limited liability company ● Incorporated on November 15, 2017 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd Korgas Shengyou Information Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on February 13, 2017 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd Korgas Wimi Xinghe Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on October 18, 2016 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Beijing WiMi Dissolved in Shenzhen Yitian Internet Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on March 08, 2011 ● Registered capital of RMB 20,000,000 (USD 2,914,093) 100% owned by Beijing WiMi Acquired in 2015 Shenzhen Quntian Technology Co., Ltd. (“Shenzhen Qunitan”) ● A PRC limited liability company ● Incorporated on May 22, 2014 ● Registered capital of RMB 20,000,000 (USD 2,914,093) No operations 100% owned by Shenzhen Yitian Internet Technology Co., Ltd Disposed in November 2017** Korgas 233 Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on September 15, 2017 ● Registered capital of RMB 1,000,000 (USD 145,705) 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. Shenzhen Qianhai Wangxin Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on October 16, 2015 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. Shenzhen Yiyou Online Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on January 14, 2019 ● Registered capital of RMB 100,000 (USD 14,334) 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. Shenzhen Yidian Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on May 20, 2014 ● Registered capital of RMB 10,000,000 (USD 1,457,046) 100% owned by Beijing WiMi Acquired in 2015 Shenzhen Duodian Cloud Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on August 24, 2017 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Korgas Duodian Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on November 25, 2016 ● Registered capital of RMB 5,000,000 (USD 728,523) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Kashi Duodian Network Technology Co., Ltd. ● A PRC limited liability company ● Incorporated on January 31, 2019 ● Registered capital of RMB 5,000,000 (USD 716,723) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Shenzhen Zhiyun Image Technology Co., Ltd. (“Shenzhen Zhiyun”) ● A PRC limited liability company ● Incorporated on December 3, 2019 ● Registered capital of RMB 5,000,000 (USD 716,723) 100% owned by Shenzhen Yidian Network Technology Co., Ltd. Micro Beauty Lightspeed Investment Management HK Limited ● A Hong Kong company ● Incorporated on February 22, 2016 ● Registered capital of HKD 100,000 (USD 12,771) 100% owned by Beijing WiMi Skystar Development Co.,Ltd ● A Republic of Seychelles Company ● Incorporated on March 30, 2016 ● Registered capital of USD 50,000 100% owned by Micro Beauty Lightspeed * Korgas Wimi which had no operations since inception, was dissolved in February 2019, no gain or loss was recognized in the dissolution. ** Shenzhen Yitian sold Shenzhen Quntian for RMB 156,225 to a third party in November 2017, net assets of Shenzhen Quntian was RMB 21,451, resulting in RMB 134,774 of gain from disposal of subsidiary. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Public Utility Property, Plant, and Equipment [Table Text Block] | Useful Life Office equipment 3 years Office furniture and fixtures 3 - 5 years Leasehold improvements lesser of lease term or expected useful life |
Variable Interest Entity (Table
Variable Interest Entity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Condensed Balance Sheet [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Current assets 75,442,911 88,858,539 12,737,384 Property and equipment, net 1,263,869 740,226 106,107 Other noncurrent assets 392,924,127 385,207,213 55,217,341 Total assets 469,630,907 474,805,978 68,060,832 Total liabilities (286,142,679 ) (180,276,255 ) (25,841,611 ) Net assets 183,488,228 294,529,723 42,219,221 December 31, December 31, December 31, RMB RMB USD Current liabilities: Accounts payable 33,033,855 38,695,727 5,546,820 Deferred revenues 586,923 503,576 72,185 Other payables and accrued liabilities 1,428,770 1,963,068 281,395 Other payables—related party 1,065 — — Current portion of business acquisition payable—related parties 34,086 — — Current portion of shareholder loans — 69,592,363 9,975,683 Taxes payable 10,733,539 9,659,932 1,384,698 Intercompany payable* — 42,270,095 6,059,186 Total current liabilities 45,818,238 162,684,761 23,319,967 Business acquisition payable—related parties 110,855,328 — — Non-current shareholder loan 125,336,715 14,974,315 2,146,486 Deferred tax liabilities, net 4,132,398 2,617,179 375,158 Total liabilities 286,142,679 180,276,255 25,841,611 * Intercompany balances will be eliminated upon consolidation. |
Condensed Income Statement [Table Text Block] | For the year ended December 31, 2017 For the year ended December 31, 2018 For the year ended December 31, For the year ended December 31, RMB RMB RMB USD Operating revenues 192,029,524 225,271,564 319,181,424 45,752,906 Gross profit 113,849,337 139,857,503 173,013,581 24,800,548 Income from operations 77,298,344 102,641,091 122,754,439 17,596,175 Net income 73,337,971 91,056,633 110,135,996 15,787,391 |
Condensed Cash Flow Statement [Table Text Block] | For the year ended December 31, For the year ended December 31, For the year ended December 31, For the year ended December 31, RMB RMB RMB USD Net cash provided by operating activities 108,057,941 101,291,046 193,845,889 27,786,745 Net cash used in investing activities (118,364,263 ) (98,597,356 ) (126,445,437 ) (18,125,260 ) Net cash used in financing activities (3,800,000 ) (2,663,285 ) (40,770,037 ) (5,844,161 ) Effect of exchange rate on cash and cash equivalents - - (327,988 ) (47,015 ) Net (decrease) increase in cash and cash equivalents (14,340,446 ) 1,433,789 26,302,427 3,770,309 Cash and cash equivalents, beginning of year 27,002,080 12,661,634 14,095,423 2,020,502 Cash and cash equivalents, end of year 12,661,634 14,095,423 40,397,850 5,790,811 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | March 31, 2017 Fair Value Fair Value RMB USD Cash 144,953 21,000 Intangible—non-compete agreement 9,663,553 1,400,000 Intangible—technology know-how 12,424,568 1,800,000 Goodwill 33,554,007 4,862,900 Net assets acquired 55,787,081 8,083,900 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Accounts receivable 46,764,658 37,699,656 5,404,039 Less: allowance for doubtful accounts (2,591 ) (1,577,486 ) (226,124 ) Accounts receivable, net 46,762,067 36,122,170 5,177,915 |
Financing Receivable, Allowance for Credit Loss [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Beginning balance — 2,591 371 Addition 2,591 1,575,690 225,867 Write-off — (795 ) (114 ) Ending balance 2,591 1,577,486 226,124 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Other Assets [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Office electronic equipment 1,496,516 1,677,900 240,518 Office fixtures and furniture 70,753 85,368 12,237 Leasehold improvements 1,153,205 1,153,205 165,305 Subtotal 2,720,474 2,916,473 418,060 Less: accumulated depreciation (1,456,605 ) (2,147,005 ) (307,761 ) Total 1,263,869 769,468 110,299 |
Cost Method Investments (Tables
Cost Method Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ASU 2016-01 Transition [Abstract] | |
Schedule of Cost Method Investments [Table Text Block] | December 31, December 31, December 31, RMB RMB USD 8% Investment 500,000 500,000 71,672 5% Investment — 2,000,000 286,689 4% Investment — 1,000,000 143,345 2% Investment — 300,000 43,003 1% Investment — 550,000 78,840 Total 500,000 4,350,000 623,549 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Copyrights 579,722 579,722 83,100 Non-compete agreements* 64,747,645 64,961,002 9,311,803 Technology know-hows* 12,275,544 12,549,859 1,798,953 Subtotal 77,602,911 78,090,583 11,193,856 Less: accumulated amortization (37,357,766 ) (50,551,285 ) (7,246,249 ) Intangible assets, net 40,245,145 27,539,298 3,947,607 * There is no change in carrying value of non-compete agreements and technology know-hows except for the foreign exchange translation difference from Skystar. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Twelve months ending December 31, Estimated Estimated RMB USD 2020 13,036,210 1,868,669 2021 9,891,766 1,417,930 2022 3,731,612 534,906 2023 716,975 102,774 2024 57,972 8,310 Thereafter 104,763 15,018 Total 27,539,298 3,947,607 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Goodwill from Shenzhen Kuxuanyou acquisition (a) 87,908,370 87,908,370 12,601,183 Goodwill from Shenzhen Yidian acquisition (b) 137,060,340 137,060,340 19,646,848 Goodwill from Shenzhen Yitian acquisition (c) 92,990,256 92,990,256 13,329,643 Goodwill from Skystar acquisition*(Note 4) 33,375,055 34,120,868 4,891,039 Goodwill 351,334,021 352,079,834 50,468,713 * There was no change in carrying value of goodwill except for the foreign exchange translation difference from Skystar. (a) Beijing WiMi acquired Shenzhen Kuxuanyou in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113.0 million (approximately USD 16.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 87,908,370 (USD 12,601,183) was allocated to goodwill. (b) Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 137,060,340 (USD 19,646,848) was allocated to goodwill. (c) Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28.0 million). The excess fair value of consideration over the identifiable assets acquired of RMB 160,990,256 (USD 23,077,070) was allocated to goodwill. Impairment loss of RMB 68,000,000 (USD 9,747,427) was recognized for the year ended December 31, 2016. |
Schedule of Goodwill [Table Text Block] | AR advertising AR services entertainment Total Total RMB RMB RMB USD As of January 1, 2017 137,060,340 180,898,626 317,958,966 45,795,617 Add : Acquisition of Skystar — 33,554,007 33,554,007 5,154,225 Translation difference — (1,489,503 ) (1,489,503 ) 50,198 As of January 1, 2018 137,060,340 212,963,130 350,023,470 51,000,040 Translation difference — 1,310,551 1,310,551 190,953 As of December 31, 2018 137,060,340 214,273,681 351,334,021 51,190,993 Translation difference — 745,813 745,813 (722,280 ) As of December 31, 2019 137,060,340 215,019,494 352,079,834 50,468,713 |
Other Payables and Accrued Li_2
Other Payables and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Salary payables 1,302,123 1,931,636 276,889 Other payables 91,599 22,670 3,250 Accrued expenses 35,048 326,040 46,736 Total other payables and accrued liabilities 1,428,770 2,280,346 326,875 |
Related Party Balances and Tr_2
Related Party Balances and Transactions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Balances and Transactions (Tables) [Line Items] | |
Schedule of Maturities of Long-term Debt [Table Text Block] | Twelve months ending December 31, RMB USD 2020 70,987,603 10,175,683 2021 16,038,186 2,298,986 Total 87,025,789 12,474,669 |
Loans [Member] | |
Related Party Balances and Transactions (Tables) [Line Items] | |
Schedule of Related Party Transactions [Table Text Block] | Name of Related Party Relationship Nature December 31, December 31, December 31, RMB RMB USD Jie Zhao Chairman of Wimi Cayman Loan 117,124,000 4,850,000 695,221 Jie Zhao* Chairman of Wimi Cayman Loan 6,431,993 6,675,789 956,938 Shanghai Junei Internet Co. Under common control of Jie Zhao Loan — 75,500,000 10,822,510 Enweiliangzi Investment Co. Under common control of Jie Zhao Loan 4,200,000 — — Total: 127,755,993 87,025,789 12,474,669 Current portion of shareholder loan — 70,987,603 10,175,683 Shareholder loan—non-current 127,755,993 16,038,186 2,298,986 * There has been no change in the balance of the loan, change was due to exchange difference. |
Other Payables [Member] | |
Related Party Balances and Transactions (Tables) [Line Items] | |
Schedule of Related Party Transactions [Table Text Block] | Name of Related Party Relationship Nature December 31, December 31, December 31, RMB RMB USD Beijing Tianhoudide Investment Management, LLP Under the common control of Jie Zhao Business expense payable 1,065 — — |
Business Acquisition Payables [Member] | |
Related Party Balances and Transactions (Tables) [Line Items] | |
Schedule of Related Party Transactions [Table Text Block] | Name of related party Relationship December 31, December 31, December 31, RMB RMB USD Xie Jinlong Former shareholder of Shenzhen Kuxuanyou (a) 20,139,056 — — Yi Chengwei Former shareholder Shenshen Yitian and (b) 50,828,374 — — Meng Xiaojuan Former shareholder and legal representative of Shenzhen Yidian (c) 15,485,681 — — Gao Zhixia Former shareholder and legal representative of Skystar (d) 24,436,303 — — Total: 110,889,414 — — Current portion of business acquisition payable (34,086 ) — — Business acquisition payable non-current 110,855,328 — — (a) Beijing WiMi acquired Shenzhen Kuxuanyou, in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113 million (approximately USD 17.2 million) to be made over six years. Jinlong Xie became a related party to the Company after the acquisition. Beijing WiMi paid RMB 23,000,000 in 2017, RMB 23,120,000 in 2018 and RMB 22,480,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. (b) Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28 million) to be made over six years. Yi Chengwei became a related party to the Company after the acquisition. Beijing WiMi paid RMB 25,700,000 in 2017, RMB 33,720,000 in 2018 and RMB 56,680,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. (c) Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million) to be made over six years. Meng Xiaojuan became a related party to the Company after the acquisition. Beijing WiMi paid RMB 50,000,000 in 2017, RMB 29,350,000 in 2018 and RMB 17,050,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. (d) Gao Zhixia became a related party to the Company after the acquisition of Skystar in 2017. The Company paid RMB 17,967,355 in 2017, RMB 12,710,784 in 2018 and RMB 26,805,592 (USD 3,842,435) in 2019. As of December 31, 2019, the total business acquisition payable was paid off. |
Taxes (Tables)
Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | For the For the For the For the RMB RMB RMB USD Current (1,994,837 ) (9,618,606 ) (4,644,300 ) (665,734 ) Deferred 1,466,826 1,543,010 1,515,220 217,198 Provision for income taxes (528,011 ) (8,075,596 ) (3,129,080 ) (448,536 ) |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | For the For the For the China statutory income tax rate 25.0 % 25.0 % 25.0 % Preferential tax rate reduction (30.8 )% (21.2 )% (22.5 )% Change in valuation allowance - — 0.4 % Permanent difference* 6.5 % 4.0 % 0.1 % Effective tax rate 0.7 % 7.8 % 3.0 % * Permanent difference is mainly related to the tax losses carried forward due to the uncertainty surrounding their realization. |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | December 31, December 31, December 31, RMB RMB USD Deferred tax assets: Allowance for doubtful accounts — 130,321 18,681 Net operating loss carryforwards 2,379,050 2,762,833 396,037 Less :valuation allowance (2,379,050 ) (2,762,833 ) (396,037 ) Deferred tax assets, net — 130,321 18,681 Deferred tax liabilities: Recognition of intangible assets arising from business combination 4,132,398 2,747,500 393,839 Total deferred tax liabilities, net 4,132,398 2,617,179 375,158 |
Schedule of value added tax payables [Table Text Block] | December 31, December 31, December 31, RMB RMB USD VAT taxes payable 1,692,874 494,964 70,950 Income taxes payable 8,912,365 9,093,481 1,303,501 Other taxes payable 128,300 72,437 10,383 Totals 10,733,539 9,660,882 1,384,834 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases [Table Text Block] | Minimum lease payment Twelve months ending December 31, RMB USD 2020 2,478,329 355,255 2021 1,639,356 234,993 Thereafter — — Total minimum payments 4,117,685 590,248 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segments commencing from the date of acquisitions [Table Text Block] | AR AR Total RMB RMB RMB Revenues 133,078,464 58,951,060 192,029,524 Cost of revenues 66,148,464 13,031,723 79,180,187 Gross profit 66,930,000 45,919,337 112,849,337 Depreciation and amortization 4,338,510 8,443,461 12,781,971 Total capital expenditures 171,364 1,792,869 1,964,233 AR AR Total RMB RMB RMB Revenues 181,241,346 44,030,218 225,271,564 Cost of revenues 81,437,761 3,976,300 85,414,061 Gross profit 99,803,585 40,053,918 139,857,503 Depreciation and amortization 4,360,632 9,178,221 13,538,853 Total capital expenditures 26,380 20,192 46,572 AR AR Total Total RMB RMB RMB USD Revenues 267,514,061 51,667,363 319,181,424 45,752,906 Cost of revenues 140,716,036 5,451,807 146,167,843 20,952,358 Gross profit 126,798,025 46,215,556 173,013,581 24,800,548 Depreciation and amortization 9,455,226 4,428,693 13,883,919 1,990,184 Total capital expenditures 161,505 34,493 195,998 28,095 |
Schedule of Amounts Recognized in Balance Sheet [Table Text Block] | December 31, December 31, December 31, RMB RMB USD AR advertising services 410,506,084 379,286,036 54,368,572 AR entertainment 196,977,342 184,212,477 26,405,849 Total Assets 607,483,426 563,498,513 80,774,421 |
Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block] | For the year For the year For the year For the year RMB RMB RMB USD Domestic PRC revenues 166,010,547 209,495,553 303,357,469 43,484,629 International revenues 26,018,977 15,776,011 15,823,955 2,268,277 Total revenues 192,029,524 225,271,564 319,181,424 45,752,906 |
Condensed Financial Informati_2
Condensed Financial Information of the Parent Company (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of parent company balance sheets [Table Text Block] | December 31, December 31, December 31, RMB RMB USD ASSETS CURRENT ASSETS Cash in bank 137,852,519 70,050,747 10,041,390 Other receivables—intercompany — 63,037,292 9,036,050 Total current assets 137,852,519 133,088,039 19,077,440 OTHER ASSETS Investment in subsidiaries 183,488,228 292,086,089 41,868,939 Total assets 321,340,747 425,174,128 60,946,379 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Current portion of shareholder loan — 1,395,240 200,000 OTHER LIABILITIES Non-current shareholder loan 2,419,278 1,063,871 152,500 Total liabilities 2,419,278 2,459,111 352,500 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY Series A convertible preferred shares, $0.0001 par value, 12,916,700 shares authorized, 8,611,133 shares issued and outstanding of December 31, 2018 and 2019, respectively 5,910 5,910 861 Class A ordinary shares, $0.0001 par value, 20,115,570 shares authorized, 20,115,570 shares issued and outstanding of December 31, 2018 and 2019 13,095 13,095 2,011 Class B ordinary shares, $0.0001 par value, 466,967,730 shares authorized, 79,884,430 shares issued and outstanding of December 31, 2018 and 2019 52,005 52,005 7,988 Additional paid-in capital 168,166,990 168,166,990 24,105,815 Retained earnings 129,526,973 229,177,894 32,851,394 Statutory reserves 19,647,831 22,201,382 3,182,446 Accumulated other comprehensive income 1,508,665 3,097,741 443,364 Total shareholders’ equity 318,921,469 422,715,017 60,593,879 Total liabilities and shareholders’ equity 321,340,747 425,174,128 60,946,379 |
Schedule of parent company statements of income [Table Text Block] | For the Years Ended December 31, 2017 2018 2019 2019 RMB RMB RMB USD OPERATING EXPENSES General and administrative — (1,838,494 ) (7,972,189 ) (1,142,770 ) Total operating expenses — (1,838,494 ) (7,972,189 ) (1,142,770 ) LOSS FROM OPERATIONS (1,838,494 ) (7,972,189 ) (1,142,770 ) OTHER INCOME (EXPENSE) Interest income — — 1,025,954 147,065 Finance expense — (345 ) (5,456 ) (782 ) Equity income of subsidiaries and VIE 73,337,971 91,056,631 109,156,163 15,646,937 Total other income, net 73,337,971 91,056,286 110,176,661 15,793,220 NET INCOME 73,337,971 89,217,792 102,204,472 14,650,450 FOREIGN CURRENCY TRANSLATION ADJUSTMENT (250,623 ) 1,759,288 1,589,076 227,785 COMPREHENSIVE INCOME 73,087,348 90,977,080 103,793,548 14,878,235 |
Schedule of parent company cash flows [Table Text Block] | For the Years Ended December 31, 2017 2018 2019 2019 RMB RMB RMB USD CASH FLOWS FROM OPERATING ACTIVITIES: Net income 73,337,971 89,217,792 102,204,472 14,650,450 Adjustments to reconcile net income to cash used in operating activities: Equity income of subsidiaries and VIEs (73,337,971 ) (91,056,631 ) (109,156,163 ) (15,646,937 ) Change in operating assets and liabilities Other receivables - intercompany — — (62,298,143 ) (8,930,097 ) Net cash used in operating activities — (1,838,839 ) (69,249,834 ) (9,926,584 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of Series A convertible preferred shares — 137,738,000 — — Proceeds from related party loans — 2,419,278 — — Net cash provided by financing activities — 140,157,278 — — EFFECT OF EXCHANGE RATE ON CASH — (465,920 ) 1,448,063 207,572 CHANGES IN CASH AND CASH EQUIVALENTS — 137,852,519 (67,801,771 ) (9,719,012 ) CASH AND CASH EQUIVALENTS, beginning of year — — 137,852,519 19,760,402 CASH AND CASH EQUIVALENTS, end of year — 137,852,519 70,050,748 10,041,390 |
Nature of Business and Organi_3
Nature of Business and Organization (Details) | 1 Months Ended | 12 Months Ended | |
Nov. 30, 2017CNY (¥) | Dec. 31, 2019 | Mar. 07, 2017 | |
Nature of Business and Organization (Details) [Line Items] | |||
Number of Operating Segments | 2 | ||
Variable Interest Entity, Commitments by Third Parties, Liquidity and Other Arrangements | four | ||
Micro Beauty Lightspeed Investment Management HK Limited [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Equity Method Investment, Ownership Percentage | 100.00% | ||
Shenzhen Quntian Technology Co., Ltd. [Member] | |||
Nature of Business and Organization (Details) [Line Items] | |||
Related Party Transaction, Amounts of Transaction | ¥ 156,225 | ||
Disposal group, including discontinued operation, assets | 21,451 | ||
Gain (Loss) on Disposition of Assets | ¥ 134,774 |
Nature of Business and Organi_4
Nature of Business and Organization (Details) - Schedule of consolidated financial statements | 12 Months Ended | |
Dec. 31, 2019 | ||
Wimi HK [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A Hong Kong company Incorporated on September 4, 2018 A holding company | |
Ownership | 100% owned by Wimi Cayman | |
Wimi WFOE [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | PRC limited liability company and deemed a wholly foreign owned enterprise ("WFOE") Incorporated on September 20, 2018 Registered capital of RMB 325,500,000 (USD 50,000,000) A holding company | |
Ownership | 100% owned by Wimi HK | |
Beijing WiMi [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on May 27, 2015 Registered capital of RMB 5,154,639 (USD 751,055) Primarily engages in Hologram advertising services | |
Ownership | VIE of Wimi WFOE | |
Shenzhen Kuxuanyou Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on June 18, 2012 Registered capital of RMB 10,000,000 (USD 1,457,046) Primarily engages in SDK payment channel services | |
Ownership | 100% owned by Beijing WiMi Acquired in 2015 | |
Shenzhen Yiruan Tianxia Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on January 06, 2016 Registered capital of RMB 10,000,000 (USD 1,457,046) Primarily engages in SDK payment channel services | |
Ownership | 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd. | |
Shenzhen Yiyun Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on November 15, 2017 Registered capital of RMB 10,000,000 (USD 1,457,046) Primarily engages in SDK payment channel services | |
Ownership | 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd | |
Korgas Shengyou Information Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on February 13, 2017 Registered capital of RMB 5,000,000 (USD 728,523) Primarily engages in SDK payment channel services | |
Ownership | 100% owned by Shenzhen Kuxuanyou Technology Co., Ltd | |
Korgas Wimi Xinghe Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on October 18, 2016 Registered capital of RMB 5,000,000 (USD 728,523) Primarily engages in Hologram advertising services | |
Ownership | 100% owned by Beijing WiMi Dissolved in February 2019* | [1] |
Shenzhen Yitian Internet Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on March 08, 2011 Registered capital of RMB 20,000,000 (USD 2,914,093) Primarily engages in mobile games development | |
Ownership | 100% owned by Beijing WiMi Acquired in 2015 | |
Shenzhen Quntian Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on May 22, 2014 Registered capital of RMB 20,000,000 (USD 2,914,093) No operations | |
Ownership | 100% owned by Shenzhen Yitian Internet Technology Co., Ltd Disposed in November 2017** | [2] |
Korgas 233 Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on September 15, 2017 Registered capital of RMB 1,000,000 (USD 145,705) Primarily engages in mobile games development | |
Ownership | 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. | |
Shenzhen Qianhai Wangxin Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on October 16, 2015 Registered capital of RMB 5,000,000 (USD 728,523) Primarily engages in AR advertising services | |
Ownership | 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. | |
Shenzhen Yiyou Online Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on January 14, 2019 Registered capital of RMB 100,000 (USD 14,334) Primarily engages in AR advertising services | |
Ownership | 100% owned by Shenzhen Yitian Internet Technology Co., Ltd. | |
Shenzhen Yidian Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on May 20, 2014 Registered capital of RMB 10,000,000 (USD 1,457,046) Primarily engages in AR advertising services | |
Ownership | 100% owned by Beijing WiMi Acquired in 2015 | |
Shenzhen Duodian Cloud Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on August 24, 2017 Registered capital of RMB 5,000,000 (USD 728,523) Primarily engages in AR advertising services | |
Ownership | 100% owned by Shenzhen Yidian Network Technology Co., Ltd. | |
Korgas Duodian Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on November 25, 2016 Registered capital of RMB 5,000,000 (USD 728,523) Primarily engages in AR advertising services | |
Ownership | 100% owned by Shenzhen Yidian Network Technology Co., Ltd. | |
Kashi Duodian Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on January 31, 2019 Registered capital of RMB 5,000,000 (USD 716,723) Primarily engages in AR advertising services | |
Ownership | 100% owned by Shenzhen Yidian Network Technology Co., Ltd. | |
Shenzhen Zhiyun Image Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A PRC limited liability company Incorporated on December 3, 2019 Registered capital of RMB 5,000,000 (USD 716,723) Primarily engages in AR advertising services | |
Ownership | 100% owned by Shenzhen Yidian Network Technology Co., Ltd. | |
Micro Beauty Lightspeed Investment Management HK Limited [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A Hong Kong company Incorporated on February 22, 2016 Registered capital of HKD 100,000 (USD 12,771) Primarily engages in MR software development and licensing | |
Ownership | 100% owned by Beijing WiMi | |
Skystar Development Co.,Ltd [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements [Line Items] | ||
Background | A Republic of Seychelles Company Incorporated on March 30, 2016 Registered capital of USD 50,000 Primarily engages in MR software development and licensing | |
Ownership | 100% owned by Micro Beauty Lightspeed Investment Management HK Limited Acquired on March 7, 2017 | |
[1] | Korgas Wimi which had no operations since inception, was dissolved in February 2019, no gain or loss was recognized in the dissolution. | |
[2] | Shenzhen Yitian sold Shenzhen Quntian for RMB 156,225 to a third party in November 2017, net assets of Shenzhen Quntian was RMB 21,451, resulting in RMB 134,774 of gain from disposal of subsidiary. |
Nature of Business and Organi_5
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) $ in Millions | 12 Months Ended | |
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | |
Wimi HK [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Sep. 4, 2018 | |
Ownership percentage | 100.00% | 100.00% |
Wimi WFOE [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Sep. 20, 2018 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 325,500,000 | $ 50,000,000 |
Beijing WiMi [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | May 27, 2015 | |
Registered capital | ¥ 5,154,639 | $ 751,055 |
Shenzhen Kuxuanyou Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Jun. 18, 2012 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 10,000,000 | $ 1,457,046 |
Shenzhen Yiruan Tianxia Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Jan. 6, 2016 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 10,000,000 | $ 1,457,046 |
Shenzhen Yiyun Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Nov. 15, 2017 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 10,000,000 | $ 1,457,046 |
Korgas Shengyou Information Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Feb. 13, 2017 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 728,523 |
Korgas Wimi Xinghe Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Oct. 18, 2016 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 728,523 |
Shenzhen Yitian Internet Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Mar. 8, 2011 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 20,000,000 | $ 2,914,093 |
Shenzhen Quntian Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | May 22, 2014 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 20,000,000 | $ 2,914,093 |
Korgas 233 Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Sep. 15, 2017 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 1,000,000 | $ 145,705 |
Shenzhen Qianhai Wangxin Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Oct. 16, 2015 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 728,523 |
Shenzhen Yiyou Online Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Jan. 14, 2019 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 100,000 | $ 14,334 |
Shenzhen Yidian Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | May 20, 2014 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 10,000,000 | $ 1,457,046 |
Shenzhen Duodian Cloud Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Aug. 24, 2017 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 728,523 |
Korgas Duodian Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Nov. 25, 2016 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 728,523 |
Kashi Duodian Network Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Jan. 31, 2019 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 716,723 |
Shenzhen Zhiyun Image Technology Co., Ltd. [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Dec. 3, 2019 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 5,000,000 | $ 716,723 |
Micro Beauty Lightspeed Investment Management HK Limited [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Feb. 22, 2016 | |
Ownership percentage | 100.00% | 100.00% |
Registered capital | ¥ 100,000 | $ 12,771 |
Skystar Development Co.,Ltd [Member] | ||
Nature of Business and Organization (Details) - Schedule of consolidated financial statements (Parentheticals) [Line Items] | ||
Date of incorporation | Mar. 30, 2016 | |
Registered capital | $ 50,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2017 | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2016CNY (¥) | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||
Cash flow from operating activities | ¥ 143,955,544 | $ 20,635,238 | ¥ 99,452,205 | ¥ 108,057,941 | ||||
Cash | 129,048,978 | 151,947,942 | 12,661,634 | $ 18,498,463 | $ 21,780,904 | ¥ 27,002,080 | ||
Working capital | 55,400,000 | |||||||
Accumulated other comprehensive income | ¥ 3,097,741 | 1,508,665 | $ 443,364 | |||||
Translation adjustments, description | the fair value from RMB to USD using the exchange rate on March 31, 2017 at the rate of USD 1.00 to RMB 6.90. | The balance sheet amounts, with the exception of shareholders’ equity for Wimi HK at December 31, 2018 and 2019 were translated at RMB1.00 to HKD 1.1413 and to HKD 1.1163, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to HKD 1.1530, HKD 1.1815 and to HKD 1.1363, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi Cayman and Skystar at December 31, 2018 and 2019 were translated at RMB 1.00 to USD 0.1457 and to USD 0.1433, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to USD 0.1489, USD 0.1451 and to USD 0.1450, respectively. | The balance sheet amounts, with the exception of shareholders’ equity for Wimi HK at December 31, 2018 and 2019 were translated at RMB1.00 to HKD 1.1413 and to HKD 1.1163, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to HKD 1.1530, HKD 1.1815 and to HKD 1.1363, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi Cayman and Skystar at December 31, 2018 and 2019 were translated at RMB 1.00 to USD 0.1457 and to USD 0.1433, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to USD 0.1489, USD 0.1451 and to USD 0.1450, respectively. | |||||
Convenience translation, description | Translations of balances in the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD as of and for the year ended December 31, 2019 are solely for the convenience of the reader and were calculated at the rate of RMB 1.00 to USD 0.1433, representing the mid-point reference rate set by Peoples’ Bank of China on December 31, 2019. | Translations of balances in the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows from RMB into USD as of and for the year ended December 31, 2019 are solely for the convenience of the reader and were calculated at the rate of RMB 1.00 to USD 0.1433, representing the mid-point reference rate set by Peoples’ Bank of China on December 31, 2019. | ||||||
Provision for doubtful accounts | ¥ 1,574,896 | $ 225,753 | 2,591 | (121,413) | ||||
Estimated useful lives, percent | 5.00% | 5.00% | ||||||
Business Acquisition, Percentage of Voting Interests Acquired | 20.00% | 20.00% | ||||||
Advertising costs | ¥ 59,091 | $ 8,470 | 740,065 | |||||
VAT rate, percent | 6.00% | 6.00% | ||||||
Recognized tax benefit | 50.00% | 50.00% | ||||||
Government subsidies | ¥ 1,356,800 | $ 194,490 | 1,236,593 | 650,025 | ||||
Other income | ¥ 2,390,525 | $ 342,667 | ¥ 1,337,711 | 566,260 | ||||
Additional input on tax | As part of VAT reform in 2019, from April 1, 2019 to December 31, 2021, a taxpayer in certain service industries could claim additional 10% of input VAT credit based on total input VAT paid to suppliers, the credit was applied to offset with the Company’s VAT payable. | As part of VAT reform in 2019, from April 1, 2019 to December 31, 2021, a taxpayer in certain service industries could claim additional 10% of input VAT credit based on total input VAT paid to suppliers, the credit was applied to offset with the Company’s VAT payable. | ||||||
Dilutive shares (in Shares) | shares | 8,611,133 | 8,611,133 | 8,611,133 | |||||
Employee benefit plan | ¥ 1,451,938 | ¥ 1,057,537 | ¥ 947,723 | |||||
Statutory surplus reserve fund, description | Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss. | Pursuant to the laws applicable to the PRC, PRC entities must make appropriations from after-tax profit to the non-distributable “statutory surplus reserve fund”. Subject to certain cumulative limits, the “statutory surplus reserve fund” requires annual appropriations of 10% of after-tax profit until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). For foreign invested enterprises and joint ventures in the PRC, annual appropriations should be made to the “reserve fund”. For foreign invested enterprises, the annual appropriation for the “reserve fund” cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under PRC GAAP at each year-end). If the Company has accumulated loss from prior periods, the Company is able to use the current period net income after tax to offset against the accumulate loss. | ||||||
Minimum [Member] | ||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||
Estimated useful lives contractual terms | 5 years | 5 years | ||||||
Maximum [Member] | ||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||
Estimated useful lives contractual terms | 10 years | 10 years | ||||||
Accounts Receivable [Member] | ||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||
Provision for doubtful accounts | ¥ 1,577,486 | $ 226,124 | ¥ 2,591 | |||||
Other Income, net [Member] | ||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||||||
Other income | ¥ 851,583 | $ 122,070 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives | 12 Months Ended |
Dec. 31, 2019 | |
Office Equipment [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
Leasehold Improvements [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | lesser of lease term or expected useful life |
Minimum [Member] | Furniture and Fixtures [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 3 years |
Maximum [Member] | Furniture and Fixtures [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Property plant and equipment useful life | 5 years |
Variable Interest Entity (Detai
Variable Interest Entity (Details) - Schedule of consolidated assets and liabilities - Variable Interest Entity, Primary Beneficiary [Member] | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | |
Condensed Balance Sheet Statements, Captions [Line Items] | ||||
Current assets | ¥ 88,858,539 | $ 12,737,384 | ¥ 75,442,911 | |
Property and equipment, net | 740,226 | 106,107 | 1,263,869 | |
Other noncurrent assets | 385,207,213 | 55,217,341 | 392,924,127 | |
Total assets | 474,805,978 | 68,060,832 | 469,630,907 | |
Total liabilities | (180,276,255) | (25,841,611) | (286,142,679) | |
Net assets | 294,529,723 | 42,219,221 | 183,488,228 | |
Accounts payable | 38,695,727 | 5,546,820 | 33,033,855 | |
Deferred revenues | 503,576 | 72,185 | 586,923 | |
Other payables and accrued liabilities | 1,963,068 | 281,395 | 1,428,770 | |
Other payables—related party | 1,065 | |||
Current portion of business acquisition payable—related parties | 34,086 | |||
Current portion of shareholder loans | 69,592,363 | 9,975,683 | ||
Taxes payable | 9,659,932 | 1,384,698 | 10,733,539 | |
Intercompany payable | [1] | 42,270,095 | 6,059,186 | |
Total current liabilities | 162,684,761 | 23,319,967 | 45,818,238 | |
Business acquisition payable—related parties | 110,855,328 | |||
Non-current shareholder loan | 14,974,315 | 2,146,486 | 125,336,715 | |
Deferred tax liabilities, net | 2,617,179 | 375,158 | 4,132,398 | |
Total liabilities | ¥ 180,276,255 | $ 25,841,611 | ¥ 286,142,679 | |
[1] | Intercompany balances will be eliminated upon consolidation. |
Variable Interest Entity (Det_2
Variable Interest Entity (Details) - Schedule of operating results - Variable Interest Entity, Primary Beneficiary [Member] | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Condensed Income Statements, Captions [Line Items] | ||||
Operating revenues | ¥ 319,181,424 | $ 45,752,906 | ¥ 225,271,564 | ¥ 192,029,524 |
Gross profit | 173,013,581 | 24,800,548 | 139,857,503 | 113,849,337 |
Income from operations | 122,754,439 | 17,596,175 | 102,641,091 | 77,298,344 |
Net income | ¥ 110,135,996 | $ 15,787,391 | ¥ 91,056,633 | ¥ 73,337,971 |
Variable Interest Entity (Det_3
Variable Interest Entity (Details) - Schedule of statements of cash flow - Variable Interest Entity, Primary Beneficiary [Member] $ in Millions | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Condensed Cash Flow Statements, Captions [Line Items] | ||||
Net cash provided by operating activities | ¥ 193,845,889 | $ 27,786,745 | ¥ 101,291,046 | ¥ 108,057,941 |
Net cash used in investing activities | (126,445,437) | (18,125,260) | (98,597,356) | (118,364,263) |
Net cash used in financing activities | (40,770,037) | (5,844,161) | (2,663,285) | (3,800,000) |
Effect of exchange rate on cash and cash equivalents | (327,988) | (47,015) | ||
Net (decrease) increase in cash and cash equivalents | 26,302,427 | 3,770,309 | 1,433,789 | (14,340,446) |
CASH AND CASH EQUIVALENTS, beginning of year | 14,095,423 | 2,020,502 | 12,661,634 | 27,002,080 |
CASH AND CASH EQUIVALENTS, end of year | ¥ 40,397,850 | $ 5,790,811 | ¥ 14,095,423 | ¥ 12,661,634 |
Business Acquisition (Details)
Business Acquisition (Details) | Mar. 07, 2017CNY (¥) | Mar. 07, 2017USD ($) | Mar. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2016USD ($) |
Business Acquisition (Details) [Line Items] | |||||||||||||||
Percentage of agreed to acquire | 100.00% | 100.00% | |||||||||||||
Business Combination, Consideration Transferred | ¥ 58,450,000 | $ 8,680,478 | |||||||||||||
Acquisition term | 5 years | 5 years | |||||||||||||
Payments to Acquire Businesses, Gross | ¥ 26,805,592 | $ 3,842,435 | ¥ 12,710,784 | $ 1,920,000 | ¥ 17,967,355 | $ 2,690,000 | |||||||||
Payable acquisition | 24,436,304 | ||||||||||||||
Net of discount (in Dollars) | $ | $ 435,857 | ||||||||||||||
Foreign Currency Translation Adjustment, Description | the fair value from RMB to USD using the exchange rate on March 31, 2017 at the rate of USD 1.00 to RMB 6.90. | The balance sheet amounts, with the exception of shareholders’ equity for Wimi HK at December 31, 2018 and 2019 were translated at RMB1.00 to HKD 1.1413 and to HKD 1.1163, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to HKD 1.1530, HKD 1.1815 and to HKD 1.1363, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi Cayman and Skystar at December 31, 2018 and 2019 were translated at RMB 1.00 to USD 0.1457 and to USD 0.1433, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to USD 0.1489, USD 0.1451 and to USD 0.1450, respectively. | The balance sheet amounts, with the exception of shareholders’ equity for Wimi HK at December 31, 2018 and 2019 were translated at RMB1.00 to HKD 1.1413 and to HKD 1.1163, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to HKD 1.1530, HKD 1.1815 and to HKD 1.1363, respectively. The balance sheet amounts, with the exception of shareholders’ equity for Wimi Cayman and Skystar at December 31, 2018 and 2019 were translated at RMB 1.00 to USD 0.1457 and to USD 0.1433, respectively. The average translation rates applied to statement of income accounts for the years ended December 31, 2017, 2018 and 2019 were RMB 1.00 and to USD 0.1489, USD 0.1451 and to USD 0.1450, respectively. | ||||||||||||
Non compete agreements with former investors | 6 years | ||||||||||||||
Estimated average finite useful lives | 5 years 292 days | ||||||||||||||
Goodwill | ¥ 33,554,007 | ¥ 352,079,834 | 351,334,021 | 350,023,470 | $ 50,468,713 | $ 51,190,993 | $ 51,000,040 | $ 4,862,900 | ¥ 317,958,966 | $ 45,795,617 | |||||
Business Aquisation Comprehensive Income Loss | ¥ 15,823,955 | $ 2,268,277 | ¥ 12,515,694 | ¥ 26,018,977 | |||||||||||
Goodwill [Member] | |||||||||||||||
Business Acquisition (Details) [Line Items] | |||||||||||||||
Goodwill | ¥ 33,600,000 |
Business Acquisition (Details)
Business Acquisition (Details) - Schedule of fair value of the identifiable assets acquired at the acquisition | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2017USD ($) | Mar. 31, 2017CNY (¥) | Mar. 31, 2017USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2016USD ($) |
Schedule of fair value of the identifiable assets acquired at the acquisition [Abstract] | ||||||||||
Cash | ¥ 144,953 | $ 21,000 | ||||||||
Intangible—non-compete agreement | 9,663,553 | 1,400,000 | ||||||||
Intangible—technology know-how | 12,424,568 | 1,800,000 | ||||||||
Goodwill | ¥ 352,079,834 | $ 50,468,713 | ¥ 351,334,021 | $ 51,190,993 | ¥ 350,023,470 | $ 51,000,040 | 33,554,007 | 4,862,900 | ¥ 317,958,966 | $ 45,795,617 |
Net assets acquired | ¥ 55,787,081 | $ 8,083,900 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - Schedule of accounts receivable, net | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Schedule of accounts receivable, net [Abstract] | |||
Accounts receivable | ¥ 37,699,656 | $ 5,404,039 | ¥ 46,764,658 |
Less: allowance for doubtful accounts | (1,577,486) | (226,124) | (2,591) |
Accounts receivable, net | ¥ 36,122,170 | $ 5,177,915 | ¥ 46,762,067 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details) - Schedule of changes in allowance for doubtful accounts | 12 Months Ended | ||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | |
Schedule of changes in allowance for doubtful accounts [Abstract] | |||
Beginning balance | ¥ 2,591 | $ 371 | |
Addition | 1,575,690 | 225,867 | 2,591 |
Write-off | (795) | (114) | |
Ending balance | ¥ 1,577,486 | $ 226,124 | ¥ 2,591 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | ¥ 690,400 | $ 98,965 | ¥ 742,956 | ¥ 575,728 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Property and Equipment, Net (Details) - Schedule of property and equipment [Line Items] | |||
Property plant and equipment, subtotal | ¥ 2,916,473 | $ 418,060 | ¥ 2,720,474 |
Less: accumulated depreciation | (2,147,005) | (307,761) | (1,456,605) |
Total | 769,468 | 110,299 | 1,263,869 |
Office electronic equipment [Member] | |||
Property and Equipment, Net (Details) - Schedule of property and equipment [Line Items] | |||
Property plant and equipment, subtotal | 1,677,900 | 240,518 | 1,496,516 |
Office fixtures and furniture [Member] | |||
Property and Equipment, Net (Details) - Schedule of property and equipment [Line Items] | |||
Property plant and equipment, subtotal | 85,368 | 12,237 | 70,753 |
Leasehold Improvements [Member] | |||
Property and Equipment, Net (Details) - Schedule of property and equipment [Line Items] | |||
Property plant and equipment, subtotal | ¥ 1,153,205 | $ 165,305 | ¥ 1,153,205 |
Cost Method Investments (Detail
Cost Method Investments (Details) | 12 Months Ended | ||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2019USD ($) | |
Beijing WiMi invested [Member] | |||
Cost Method Investments (Details) [Line Items] | |||
Investment cost | ¥ | ¥ 500,000 | ||
Equity interest rate | 8.00% | ||
Company One [Member] | |||
Cost Method Investments (Details) [Line Items] | |||
Investment cost | ¥ 2,000,000 | $ 286,689 | |
Equity interest rate | 5.00% | ||
Company Two [Member] | |||
Cost Method Investments (Details) [Line Items] | |||
Investment cost | ¥ 1,000,000 | 143,345 | |
Equity interest rate | 4.00% | ||
Company Three [Member] | |||
Cost Method Investments (Details) [Line Items] | |||
Investment cost | ¥ 300,000 | 43,003 | |
Equity interest rate | 2.00% | ||
Company Four [Member] | |||
Cost Method Investments (Details) [Line Items] | |||
Investment cost | ¥ 350,000 | 50,171 | |
Equity interest rate | 1.00% | ||
Company Five [Member] | |||
Cost Method Investments (Details) [Line Items] | |||
Investment cost | $ | $ 200,000 | ||
Equity interest rate | 1.00% |
Cost Method Investments (Deta_2
Cost Method Investments (Details) - Schedule of cost method investments | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Cost Method Investments (Details) - Schedule of cost method investments [Line Items] | |||
Total | ¥ 4,350,000 | $ 623,549 | ¥ 500,000 |
8% Investment [Member] | |||
Cost Method Investments (Details) - Schedule of cost method investments [Line Items] | |||
Total | 500,000 | 71,672 | 500,000 |
5% Investment [Member] | |||
Cost Method Investments (Details) - Schedule of cost method investments [Line Items] | |||
Total | 2,000,000 | 286,689 | |
4% Investment [Member] | |||
Cost Method Investments (Details) - Schedule of cost method investments [Line Items] | |||
Total | 1,000,000 | 143,345 | |
2% Investment [Member] | |||
Cost Method Investments (Details) - Schedule of cost method investments [Line Items] | |||
Total | 300,000 | 43,003 | |
1% Investment [Member] | |||
Cost Method Investments (Details) - Schedule of cost method investments [Line Items] | |||
Total | ¥ 550,000 | $ 78,840 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of Intangible Assets | ¥ 13,193,519 | $ 1,891,219 | ¥ 12,795,897 | ¥ 12,206,243 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of acquired intangible asset balances | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | |
Schedule of acquired intangible asset balances [Abstract] | ||||
Copyrights | ¥ 579,722 | $ 83,100 | ¥ 579,722 | |
Non-compete agreements | [1] | 64,961,002 | 9,311,803 | 64,747,645 |
Technology know-hows | [1] | 12,549,859 | 1,798,953 | 12,275,544 |
Subtotal | 78,090,583 | 11,193,856 | 77,602,911 | |
Less: accumulated amortization | (50,551,285) | (7,246,249) | (37,357,766) | |
Intangible assets, net | ¥ 27,539,298 | $ 3,947,607 | ¥ 40,245,145 | |
[1] | There is no change in carrying value of non-compete agreements and technology know-hows except for the foreign exchange translation difference from Skystar. |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details) - Schedule of estimated amortization - Dec. 31, 2019 | CNY (¥) | USD ($) |
Schedule of estimated amortization [Abstract] | ||
2020 | ¥ 13,036,210 | $ 1,868,669 |
2021 | 9,891,766 | 1,417,930 |
2022 | 3,731,612 | 534,906 |
2023 | 716,975 | 102,774 |
2024 | 57,972 | 8,310 |
Thereafter | 104,763 | 15,018 |
Total | ¥ 27,539,298 | $ 3,947,607 |
Goodwill (Details)
Goodwill (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Shenzhen Kuxuanyou acquisition [Member] | |
Goodwill (Details) [Line Items] | |
Goodwill, description | (a)Beijing WiMi acquired Shenzhen Kuxuanyou in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113.0 million (approximately USD 16.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 87,908,370 (USD 12,601,183) was allocated to goodwill. |
Shenzhen Yidian acquisition [Member] | |
Goodwill (Details) [Line Items] | |
Goodwill, description | (b)Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 137,060,340 (USD 19,646,848) was allocated to goodwill. |
Shenzhen Yitian acquisition [Member] | |
Goodwill (Details) [Line Items] | |
Goodwill, description | (c)Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28.0 million). The excess fair value of consideration over the identifiable assets acquired of RMB 160,990,256 (USD 23,077,070) was allocated to goodwill. Impairment loss of RMB 68,000,000 (USD 9,747,427) was recognized for the year ended December 31, 2016. |
Goodwill (Details) - Schedule o
Goodwill (Details) - Schedule of components of acquired goodwill | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | ||
Goodwill (Details) - Schedule of components of acquired goodwill [Line Items] | ||||
Goodwill | ¥ 352,079,834 | $ 50,468,713 | ¥ 351,334,021 | |
Goodwill from Shenzhen Kuxuanyou acquisition [Member] | ||||
Goodwill (Details) - Schedule of components of acquired goodwill [Line Items] | ||||
Goodwill | 87,908,370 | 12,601,183 | 87,908,370 | [1] |
Goodwill from Shenzhen Yidian acquisition [Member] | ||||
Goodwill (Details) - Schedule of components of acquired goodwill [Line Items] | ||||
Goodwill | 137,060,340 | 19,646,848 | 137,060,340 | [2] |
Goodwill from Shenzhen Yitian acquisition [Member] | ||||
Goodwill (Details) - Schedule of components of acquired goodwill [Line Items] | ||||
Goodwill | 92,990,256 | 13,329,643 | 92,990,256 | [3] |
Goodwill from Skystar acquisition [Member] | ||||
Goodwill (Details) - Schedule of components of acquired goodwill [Line Items] | ||||
Goodwill | ¥ 34,120,868 | $ 4,891,039 | ¥ 33,375,055 | [4] |
[1] | Beijing WiMi acquired Shenzhen Kuxuanyou in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113.0 million (approximately USD 16.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 87,908,370 (USD 12,601,183) was allocated to goodwill. | |||
[2] | Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million). The excess fair value of consideration over the identifiable assets acquired of RMB 137,060,340 (USD 19,646,848) was allocated to goodwill. | |||
[3] | Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28.0 million). The excess fair value of consideration over the identifiable assets acquired of RMB 160,990,256 (USD 23,077,070) was allocated to goodwill. Impairment loss of RMB 68,000,000 (USD 9,747,427) was recognized for the year ended December 31, 2016. | |||
[4] | There was no change in carrying value of goodwill except for the foreign exchange translation difference from Skystar. |
Goodwill (Details) - Schedule_2
Goodwill (Details) - Schedule of changes in the carrying amount of goodwill allocated to reportable segments | 12 Months Ended | |||||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2017USD ($) | |
Goodwill [Line Items] | ||||||
Beginning balance | ¥ 351,334,021 | $ 51,190,993 | ¥ 350,023,470 | $ 51,000,040 | ¥ 317,958,966 | $ 45,795,617 |
Add : Acquisition of Skystar | 33,554,007 | 5,154,225 | ||||
Translation difference | 745,813 | (722,280) | 1,310,551 | 190,953 | (1,489,503) | 50,198 |
Ending balance | 352,079,834 | $ 50,468,713 | 351,334,021 | $ 51,190,993 | 350,023,470 | $ 51,000,040 |
Advertising [Member] | ||||||
Goodwill [Line Items] | ||||||
Beginning balance | 137,060,340 | 137,060,340 | 137,060,340 | |||
Add : Acquisition of Skystar | ||||||
Translation difference | ||||||
Ending balance | 137,060,340 | 137,060,340 | 137,060,340 | |||
Entertainment [Member] | ||||||
Goodwill [Line Items] | ||||||
Beginning balance | 214,273,681 | 212,963,130 | 180,898,626 | |||
Add : Acquisition of Skystar | 33,554,007 | |||||
Translation difference | 745,813 | 1,310,551 | (1,489,503) | |||
Ending balance | ¥ 215,019,494 | ¥ 214,273,681 | ¥ 212,963,130 |
Other Payables and Accrued Li_3
Other Payables and Accrued Liabilities (Details) - Schedule of other payables and accrued liabilities | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Schedule of other payables and accrued liabilities [Abstract] | |||
Salary payables | ¥ 1,931,636 | $ 276,889 | ¥ 1,302,123 |
Other payables | 22,670 | 3,250 | 91,599 |
Accrued expenses | 326,040 | 46,736 | 35,048 |
Total other payables and accrued liabilities | ¥ 2,280,346 | $ 326,875 | ¥ 1,428,770 |
Related Party Balances and Tr_3
Related Party Balances and Transactions (Details) | Mar. 07, 2017 | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Dec. 31, 2015USD ($) | Dec. 31, 2019USD ($) |
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Borrowed from related party | ¥ 13,000,000 | ¥ 6,431,993 | $ 952,500 | ||||||||
Repayment of debt | 129,474,000 | $ 18,559,388 | 14,826,000 | ¥ 33,800,000 | |||||||
Business acquisition, term | 5 years | ||||||||||
Payments to acquire business amount | 26,805,592 | 3,842,435 | 12,710,784 | $ 1,920,000 | 17,967,355 | $ 2,690,000 | |||||
Debt discount, net of accumulated amortization, totaled | 11,995,672 | ||||||||||
Amortization expense related to debt discount, included in finance expenses | 11,544,479 | 5,124,715 | 4,191,002 | $ 1,654,838 | |||||||
Jie Zhao [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Borrowed from related party | 1,863,479 | 3,950,000 | ¥ 161,800,000 | ||||||||
Repayment of debt | 125,274,000 | 14,826,000 | 33,800,000 | ||||||||
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party (in Dollars) | $ | 17,957,341 | ||||||||||
Enweiliangzi Investment Co. [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Borrowed from related party | 4,200,000 | ||||||||||
Shanghai Junei Internet Co. [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Borrowed from related party | ¥ 75,500,000 | 10,822,510 | |||||||||
Annual interest rate | 7.00% | 7.00% | |||||||||
Interest expense related to loan, included in finance expense | ¥ 290,208 | 41,600 | |||||||||
Shenzhen Kuxuanyou [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Acquire of capital stock, percentage | 100.00% | 100.00% | |||||||||
Aggregate consideration amount | ¥ 113,000,000 | $ 17,200,000 | |||||||||
Business acquisition, term | 6 years | 6 years | |||||||||
Shenzhen Yitian [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Acquire of capital stock, percentage | 100.00% | 100.00% | |||||||||
Aggregate consideration amount | ¥ 192,000,000 | $ 28,000,000 | |||||||||
Business acquisition, term | 6 years | 6 years | |||||||||
Shenzhen Yidian [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Acquire of capital stock, percentage | 100.00% | 100.00% | |||||||||
Aggregate consideration amount | ¥ 168,000,000 | $ 24,500,000 | |||||||||
Business acquisition, term | 6 years | 6 years | |||||||||
Gao Zhixia [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Payments to acquire business amount | ¥ 26,805,592 | $ 3,842,435 | 12,710,784 | 17,967,355 | |||||||
Beijing WiMi [Member] | Shenzhen Kuxuanyou [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Payments to acquire business amount | 22,480,000 | 23,120,000 | 23,000,000 | ||||||||
Beijing WiMi [Member] | Shenzhen Yitian [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Payments to acquire business amount | 56,680,000 | 33,720,000 | 25,700,000 | ||||||||
Beijing WiMi [Member] | Shenzhen Yidian [Member] | |||||||||||
Related Party Balances and Transactions (Details) [Line Items] | |||||||||||
Payments to acquire business amount | ¥ 17,050,000 | ¥ 29,350,000 | ¥ 50,000,000 |
Related Party Balances and Tr_4
Related Party Balances and Transactions (Details) - Schedule of loans-related party | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | |
Related Party Transaction [Line Items] | ||||
Total | ¥ 87,025,789 | $ 12,474,669 | ¥ 127,755,993 | |
Current portion of shareholder loan | 70,987,603 | 10,175,683 | ||
Shareholder loan—non-current | 16,038,186 | 2,298,986 | 127,755,993 | |
Loan [Member] | Jie Zhao [Member] | Chairman of Wimi Cayman [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | 4,850,000 | 695,221 | 117,124,000 | |
Loan [Member] | Jie Zhao [Member] | Chairman of Wimi Cayman [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | [1] | 6,675,789 | 956,938 | 6,431,993 |
Loan [Member] | Shanghai Junei Internet Co. [Member] | Under common control of Jie Zhao [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | 75,500,000 | 10,822,510 | ||
Loan [Member] | Enweiliangzi Investment Co. [Member] | Under common control of Jie Zhao [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | ¥ 4,200,000 | |||
[1] | There has been no change in the balance of the loan, change was due to exchange difference. |
Related Party Balances and Tr_5
Related Party Balances and Transactions (Details) - Schedule of maturities - Dec. 31, 2008 $ in Millions | CNY (¥) | USD ($) |
Schedule of maturities [Abstract] | ||
2020 | ¥ 70,987,603 | $ 10,175,683 |
2021 | 16,038,186 | 2,298,986 |
Total | ¥ 87,025,789 | $ 12,474,669 |
Related Party Balances and Tr_6
Related Party Balances and Transactions (Details) - Schedule of other payables-related party - CNY (¥) | Dec. 31, 2019 | Dec. 31, 2018 |
Business expense payable [Member] | Beijing Tianhoudide Investment Management, LLP [Member] | Under the common control of Jie Zhao [Member] | ||
Related Party Transaction [Line Items] | ||
Other payables-related party | ¥ 1,065 |
Related Party Balances and Tr_7
Related Party Balances and Transactions (Details) - Schedule of business acquisition payables-related party | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | |
Related Party Transaction [Line Items] | ||||
Total | ¥ 110,889,414 | |||
Current portion of business acquisition payable | (34,086) | |||
Business acquisition payable non-current | 110,855,328 | |||
Xie Jinlong [Member] | Former shareholder of Shenzhen Kuxuanyou and COO of Wimi Cayman [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | [1] | 20,139,056 | ||
Yi Chengwei [Member] | Former shareholder Shenshen Yitian and CTO of Wimi Cayman [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | [2] | 50,828,374 | ||
Meng Xiaojuan [Member] | Former shareholder and legal representative of Shenzhen Yidian [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | [3] | 15,485,681 | ||
Gao Zhixia [Member] | Former shareholder and legal representative of Skystar [Member] | ||||
Related Party Transaction [Line Items] | ||||
Total | [4] | ¥ 24,436,303 | ||
[1] | Beijing WiMi acquired Shenzhen Kuxuanyou, in 2015 to acquire 100% of the capital stock of Shenzhen Kuxuanyou for an aggregate consideration of RMB 113 million (approximately USD 17.2 million) to be made over six years. Jinlong Xie became a related party to the Company after the acquisition. Beijing WiMi paid RMB 23,000,000 in 2017, RMB 23,120,000 in 2018 and RMB 22,480,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. | |||
[2] | Beijing WiMi acquired Shenzhen Yitian in 2015 to acquire 100% of the capital stock of Shenzhen Yitian for an aggregate consideration of RMB 192.0 million (approximately USD 28 million) to be made over six years. Yi Chengwei became a related party to the Company after the acquisition. Beijing WiMi paid RMB 25,700,000 in 2017, RMB 33,720,000 in 2018 and RMB 56,680,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. | |||
[3] | Beijing WiMi acquired Shenzhen Yidian in 2015 to acquire 100% of the capital stock of Shenzhen Yidian for an aggregate consideration of RMB 168.0 million (approximately USD 24.5 million) to be made over six years. Meng Xiaojuan became a related party to the Company after the acquisition. Beijing WiMi paid RMB 50,000,000 in 2017, RMB 29,350,000 in 2018 and RMB 17,050,000 in 2019. As of December 31, 2019, the total business acquisition payable was paid off. | |||
[4] | Gao Zhixia became a related party to the Company after the acquisition of Skystar in 2017. The Company paid RMB 17,967,355 in 2017, RMB 12,710,784 in 2018 and RMB 26,805,592 (USD 3,842,435) in 2019. As of December 31, 2019, the total business acquisition payable was paid off. |
Taxes (Details)
Taxes (Details) | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2015 | Dec. 31, 2019CNY (¥)¥ / shares | Dec. 31, 2019USD ($)$ / shares | Dec. 31, 2018CNY (¥)¥ / shares | Dec. 31, 2017CNY (¥)¥ / shares | |
Taxes (Details) [Line Items] | |||||
Statutory income tax rate | 25.00% | 25.00% | 25.00% | 25.00% | |
Taxes, description | Shenzhen Yiruan, Shenzhen Yiyun, Shenzhen Yidian and Shenzhen Duodian are qualified as software companies by local taxing authority, and obtained two years of tax exempt status and three years at reduced income tax rate of 12.5%. After the initial 5 years, the Company can apply for the reduced rate in a yearly basis. In addition, 75% of R&D expenses of Shenzhen Kuxuan and Shenzhen Yiruan are subject to additional deduction from pre-tax income. | Shenzhen Yiruan, Shenzhen Yiyun, Shenzhen Yidian and Shenzhen Duodian are qualified as software companies by local taxing authority, and obtained two years of tax exempt status and three years at reduced income tax rate of 12.5%. After the initial 5 years, the Company can apply for the reduced rate in a yearly basis. In addition, 75% of R&D expenses of Shenzhen Kuxuan and Shenzhen Yiruan are subject to additional deduction from pre-tax income. | |||
Tax exemption, description | Korgas Shengyou, Korgas Wimi, and Korgas 233 were formed and registered in Korgas in Xinjiang Provence, China from 2016 to 2017, and Kashi Duodian was formed and registered in Kashi in Xinjiang Provence, China in 2019. These companies are not subject to income tax for 5 years and can obtain another two years of tax exempt status and three years at reduced income tax rate of 12.5% after the 5 years due to the local tax policies to attract companies in various industries. | Korgas Shengyou, Korgas Wimi, and Korgas 233 were formed and registered in Korgas in Xinjiang Provence, China from 2016 to 2017, and Kashi Duodian was formed and registered in Kashi in Xinjiang Provence, China in 2019. These companies are not subject to income tax for 5 years and can obtain another two years of tax exempt status and three years at reduced income tax rate of 12.5% after the 5 years due to the local tax policies to attract companies in various industries. | |||
Income tax reduced rate | 15.00% | 15.00% | |||
Income tax saving amount | ¥ 23,679,290 | $ 3,394,296 | ¥ 20,619,510 | ¥ 22,769,752 | |
Basic | (per share) | ¥ 1.02 | $ 0.15 | ¥ 0.89 | ¥ 0.73 | |
Diluted | (per share) | ¥ 0.94 | $ 0.13 | ¥ 0.88 | ¥ 0.73 | |
Net operating loss carry forwards (in Dollars) | $ | $ 13,025,860 | ||||
Income tax rate | 3.00% | 3.00% | 7.80% | 0.70% | |
CHINA | |||||
Taxes (Details) [Line Items] | |||||
Basic and diluted earnings per shares (in Yuan Renminbi per share) | ¥ 0.21 | ¥ 0.24 | |||
Basic | ¥ 0.24 | ||||
Diluted | ¥ 0.22 | ||||
Income tax rate | 6.00% | 6.00% | |||
Enterprise Income Tax [Member] | |||||
Taxes (Details) [Line Items] | |||||
Enterprise income tax rate | 25.00% | 25.00% | |||
High and New Technology Enterprises [Member] | |||||
Taxes (Details) [Line Items] | |||||
Enterprise income tax rate | 15.00% | 15.00% | |||
Taxes, description | subject to a requirement that they re-apply for HNTE status every three years. Shenzhen KXY obtained the “high-tech enterprise” tax status in October 2015, which reduced its statutory income tax rate to 15% from November 2016 to November 2019. | ||||
Hong Kong, Dollars | |||||
Taxes (Details) [Line Items] | |||||
Statutory income tax rate | 16.50% | 16.50% |
Taxes (Details) - Schedule of s
Taxes (Details) - Schedule of significant components of the benefit of (provision for) income taxes | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Schedule of significant components of the benefit of (provision for) income taxes [Abstract] | ||||
Current | ¥ (4,644,300) | $ (665,734) | ¥ (9,618,606) | ¥ (1,994,837) |
Current (in Dollars) | (4,644,300) | (665,734) | (9,618,606) | (1,994,837) |
Deferred | 1,515,220 | 217,198 | 1,543,010 | 1,466,826 |
Deferred (in Dollars) | 1,515,220 | 217,198 | 1,543,010 | 1,466,826 |
Provision for income taxes | (3,129,080) | (448,536) | (8,075,596) | (528,011) |
Provision for income taxes (in Dollars) | ¥ (3,129,080) | $ (448,536) | ¥ (8,075,596) | ¥ (528,011) |
Taxes (Details) - Schedule of_2
Taxes (Details) - Schedule of statutory rates to the Company’s effective tax rate | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Schedule of statutory rates to the Company’s effective tax rate [Abstract] | ||||
China statutory income tax rate | 25.00% | 25.00% | 25.00% | |
Preferential tax rate reduction | (22.50%) | (21.20%) | (30.80%) | |
Change in valuation allowance | 0.40% | |||
Permanent difference | [1] | 0.10% | 4.00% | 6.50% |
Effective tax rate | 3.00% | 7.80% | 0.70% | |
[1] | Permanent difference is mainly related to the tax losses carried forward due to the uncertainty surrounding their realization. |
Taxes (Details) - Schedule of d
Taxes (Details) - Schedule of deferred tax assets and liabilities | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Deferred tax assets: | |||
Allowance for doubtful accounts | ¥ 130,321 | $ 18,681 | |
Allowance for doubtful accounts (in Dollars) | 130,321 | 18,681 | |
Net operating loss carryforwards | 2,762,833 | 396,037 | 2,379,050 |
Net operating loss carryforwards (in Dollars) | 2,762,833 | 396,037 | 2,379,050 |
Less :valuation allowance | 2,762,833 | 396,037 | (2,379,050) |
Less :valuation allowance | (2,762,833) | (396,037) | 2,379,050 |
Less :valuation allowance (in Dollars) | (2,762,833) | (396,037) | 2,379,050 |
Deferred tax assets, net | 130,321 | 18,681 | |
Deferred tax assets, net (in Dollars) | 130,321 | 18,681 | |
Deferred tax liabilities: | |||
Recognition of intangible assets arising from business combination | 2,747,500 | 393,839 | 4,132,398 |
Recognition of intangible assets arising from business combination (in Dollars) | 2,747,500 | 393,839 | 4,132,398 |
Total deferred tax liabilities, net | ¥ | ¥ 2,617,179 | ¥ 4,132,398 | |
Total deferred tax liabilities, net (in Dollars) | $ | $ 375,158 |
Taxes (Details) - Schedule of t
Taxes (Details) - Schedule of taxes payable | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Schedule of taxes payable [Abstract] | |||
VAT taxes payable | ¥ 494,964 | $ 70,950 | ¥ 1,692,874 |
Income taxes payable | 9,093,481 | 1,303,501 | 8,912,365 |
Other taxes payable | 72,437 | 10,383 | 128,300 |
Totals | ¥ 9,660,882 | $ 1,384,834 | ¥ 10,733,539 |
Concentration of Risk (Details)
Concentration of Risk (Details) | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019USD ($) | |
Total Revenue [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 10.00% | 10.00% | 10.00% | |
Accounts Receivable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 10.00% | |||
Number of customers | 2 | |||
Accounts Payable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Number of vendor | 3 | 2 | ||
One Customers [Member] | Accounts Receivable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 13.40% | |||
Two Customers [Member] | Accounts Receivable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 12.00% | |||
One Vendor [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 12.00% | |||
Number of vendor | 1 | |||
One Vendor [Member] | Total Purchase [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 26.60% | |||
Number of vendor | 1 | 3 | ||
One Vendor [Member] | Accounts Payable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 32.80% | 42.40% | ||
Three Vendor [Member] | Total Purchase [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 12.40% | |||
Three Vendor [Member] | Accounts Payable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 11.90% | |||
Two Vendor [Member] | Accounts Payable [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 27.90% | 10.20% | ||
One Vendor [Member] | Total Purchase [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 13.20% | |||
Two Vendor [Member] | Total Purchase [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Percentage of concentrations risk | 12.80% | |||
Credit Risk [Member] | ||||
Concentration of Risk (Details) [Line Items] | ||||
Insurance coverage of credit risk (in Yuan Renminbi) | ¥ 500,000 | |||
Description of credit risk | cash balance of RMB 54,506,161 (USD 7,813,159) was deposited with financial institutions located in China, of which RMB 49,353,466 (USD 7,074,549) was subject to credit risk. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 500,000 (approximately USD 64,000) if the bank with which an individual/a company hold its eligible deposit fails. As of December 31, 2019, cash balance of HKD 83,189,734, approximately RMB 74,519,699 (USD 10,681,990) was maintained at financial institutions in Hong Kong, of which HKD 81,614,681 approximately RMB 73,108,799 (USD 10,479,745) was subject to credit risk. In the US, the insurance coverage of each bank is USD 250,000. | |||
Cash balance of credit risk | ¥ 23,117 | $ 3,314 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) | 1 Months Ended | 12 Months Ended | ||||
Nov. 22, 2018USD ($)shares | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | Aug. 16, 2018$ / sharesshares | |
Shareholders' Equity (Details) [Line Items] | ||||||
Restricted cash | ¥ 114,161,660 | $ 16,364,448 | ||||
Statutory reserve | ¥ 22,201,382 | ¥ 19,647,831 | $ 3,182,446 | |||
Capital contribution (in Yuan Renminbi) | ¥ | ¥ 30,000,000 | |||||
Class A Ordinary Shares [Member] | ||||||
Shareholders' Equity (Details) [Line Items] | ||||||
Common stock authorized share | 20,115,570 | |||||
Common stock per value (in Dollars per share) | $ / shares | $ 0.0001 | |||||
Issuance of common stock | 20,115,570 | |||||
Class B Ordinary Shares [Member] | ||||||
Shareholders' Equity (Details) [Line Items] | ||||||
Common stock authorized share | 466,967,730 | |||||
Common stock per value (in Dollars per share) | $ / shares | $ 0.0001 | |||||
Issuance of common stock | 79,884,430 | |||||
Series A Preferred Stock [Member] | ||||||
Shareholders' Equity (Details) [Line Items] | ||||||
Common stock authorized share | 12,916,700 | |||||
Common stock per value (in Dollars per share) | $ / shares | $ 1 | |||||
Series A Convertible Preferred Stock [Member] | ||||||
Shareholders' Equity (Details) [Line Items] | ||||||
Convertible preferred stock, shares issued | 8,611,133 | |||||
Convertible preferred stock, values issued (in Dollars) | $ | $ 20,000,000 | |||||
Ordinary Shares [Member] | ||||||
Shareholders' Equity (Details) [Line Items] | ||||||
Voting shares, description | Each Class A Ordinary Share shall be entitled to ten (10) votes on all matters subject to vote at general meetings of the Company, and each Class B Ordinary Share shall be entitled to one (1) vote on all matters subject to vote at general meetings of the Company. Each Class A Ordinary Share is convertible into one (1) Class B Ordinary Share at any time by the holder. Except for the voting right and conversion right, the Class A ordinary shares and Class B ordinary shares shall carry equal rights and rank pari passu with one another, including but not limited to the rights to dividends and other capital distributions. |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating Leases, Rent Expense | ¥ 3,707,039 | $ 531,384 | ¥ 3,359,469 | ¥ 2,933,035 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of minimum lease payments under these operating leases - Dec. 31, 2019 | CNY (¥) | USD ($) |
Schedule of minimum lease payments under these operating leases [Abstract] | ||
2020 | ¥ 2,478,329 | $ 355,255 |
2021 | 1,639,356 | 234,993 |
Thereafter | ||
Total minimum payments | ¥ 4,117,685 | $ 590,248 |
Segments (Details) - Schedule o
Segments (Details) - Schedule of segments commencing from the date of acquisitions | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Segments (Details) - Schedule of segments commencing from the date of acquisitions [Line Items] | ||||
Revenues | ¥ 319,181,424 | $ 45,752,906 | ¥ 225,271,564 | ¥ 192,029,524 |
Cost of revenues | 146,167,843 | 20,952,358 | 85,414,061 | 79,180,187 |
Gross profit | 173,013,581 | 24,800,548 | 139,857,503 | 112,849,337 |
Depreciation and amortization | 13,883,919 | 1,990,184 | 13,538,853 | 12,781,971 |
Total capital expenditures | 195,998 | $ 28,095 | 46,572 | 1,964,233 |
Advertising [Member] | ||||
Segments (Details) - Schedule of segments commencing from the date of acquisitions [Line Items] | ||||
Revenues | 267,514,061 | 181,241,346 | 133,078,464 | |
Cost of revenues | 140,716,036 | 81,437,761 | 66,148,464 | |
Gross profit | 126,798,025 | 99,803,585 | 66,930,000 | |
Depreciation and amortization | 9,455,226 | 4,360,632 | 4,338,510 | |
Total capital expenditures | 161,505 | 26,380 | 171,364 | |
Entertainment [Member] | ||||
Segments (Details) - Schedule of segments commencing from the date of acquisitions [Line Items] | ||||
Revenues | 51,667,363 | 44,030,218 | 58,951,060 | |
Cost of revenues | 5,451,807 | 3,976,300 | 13,031,723 | |
Gross profit | 46,215,556 | 40,053,918 | 45,919,337 | |
Depreciation and amortization | 4,428,693 | 9,178,221 | 8,443,461 | |
Total capital expenditures | ¥ 34,493 | ¥ 20,192 | ¥ 1,792,869 |
Segments (Details) - Schedule_2
Segments (Details) - Schedule of total assets | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) |
Segments (Details) - Schedule of total assets [Line Items] | |||
Total Assets | ¥ 563,498,513 | $ 80,774,421 | ¥ 607,483,426 |
Advertising [Member] | |||
Segments (Details) - Schedule of total assets [Line Items] | |||
Total Assets | 379,286,036 | 54,368,572 | 410,506,084 |
Entertainment [Member] | |||
Segments (Details) - Schedule of total assets [Line Items] | |||
Total Assets | ¥ 184,212,477 | $ 26,405,849 | ¥ 196,977,342 |
Segments (Details) - Schedule_3
Segments (Details) - Schedule of information of revenues by geographic locations | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Revenue, Major Customer [Line Items] | ||||
Total revenues | ¥ 319,181,424 | $ 45,752,906 | ¥ 225,271,564 | ¥ 192,029,524 |
Domestic PRC revenues [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 303,357,469 | 43,484,629 | 209,495,553 | 166,010,547 |
International revenues [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | ¥ 15,823,955 | $ 2,268,277 | ¥ 15,776,011 | ¥ 26,018,977 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] $ / shares in Units, $ in Millions | Mar. 31, 2020USD ($)$ / sharesshares |
Class B Ordinary Shares [Member] | |
Subsequent Events (Details) [Line Items] | |
Ordinary shares | $ 0.0001 |
Net proceed (in Dollars) | $ | $ 23.1 |
IPO [Member] | |
Subsequent Events (Details) [Line Items] | |
Shares issued (in Shares) | shares | 4,750,000 |
Public offering price | $ 5.50 |
Condensed Financial Informati_3
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets - Parent Company [Member] | Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) |
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets [Line Items] | ||||||
Cash in bank | ¥ 70,050,747 | $ 10,041,390 | ¥ 137,852,519 | $ 19,760,402 | ||
Other receivables—intercompany | 63,037,292 | 9,036,050 | ||||
Total current assets | 133,088,039 | 19,077,440 | 137,852,519 | |||
Investment in subsidiaries | 292,086,089 | 41,868,939 | 183,488,228 | |||
Total assets | 425,174,128 | 60,946,379 | 321,340,747 | |||
Current portion of shareholder loan | 1,395,240 | 200,000 | ||||
Non-current shareholder loan | 1,063,871 | 152,500 | 2,419,278 | |||
Total liabilities | 2,459,111 | 352,500 | 2,419,278 | |||
Series A convertible preferred shares, $0.0001 par value, 12,916,700 shares authorized, 8,611,133 shares issued and outstanding of December 31, 2018 and 2019, respectively | 5,910 | 861 | 5,910 | |||
Additional paid-in capital | 168,166,990 | 24,105,815 | 168,166,990 | |||
Retained earnings | 229,177,894 | 32,851,394 | 129,526,973 | |||
Statutory reserves | 22,201,382 | 3,182,446 | 19,647,831 | |||
Accumulated other comprehensive income | 3,097,741 | 443,364 | 1,508,665 | |||
Total shareholders’ equity | 422,715,017 | 60,593,879 | 318,921,469 | |||
Total liabilities and shareholders’ equity | 425,174,128 | 60,946,379 | 321,340,747 | |||
Common Class A [Member] | ||||||
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets [Line Items] | ||||||
Class A ordinary shares, $0.0001 par value, 20,115,570 shares authorized, 20,115,570 shares issued and outstanding of December 31, 2018 and 2019 | 13,095 | 2,011 | 13,095 | |||
Common Class B [Member] | ||||||
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets [Line Items] | ||||||
Class A ordinary shares, $0.0001 par value, 20,115,570 shares authorized, 20,115,570 shares issued and outstanding of December 31, 2018 and 2019 | ¥ 52,005 | $ 7,988 | ¥ 52,005 |
Condensed Financial Informati_4
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) - Parent Company [Member] | Dec. 31, 2018¥ / sharesshares |
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) [Line Items] | |
Preferred shares issued | 8,611,133 |
Preferred shares outstanding | 8,611,133 |
Preferred shares authorized | 12,916,700 |
Preferred shares, par value (in Yuan Renminbi per share) | ¥ / shares | ¥ 0.0001 |
Common Class A [Member] | |
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) [Line Items] | |
Ordinary shares, par value (in Yuan Renminbi per share) | ¥ / shares | ¥ 0.0001 |
Ordinary shares authorized | 20,115,570 |
Ordinary shares issued | 20,115,570 |
Ordinary shares outstanding | 20,115,570 |
Common Class B [Member] | |
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) [Line Items] | |
Ordinary shares, par value (in Yuan Renminbi per share) | ¥ / shares | ¥ 0.0001 |
Ordinary shares authorized | 466,967,730 |
Ordinary shares issued | 79,884,430 |
Ordinary shares outstanding | 79,884,430 |
Condensed Financial Informati_5
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company statements of income - Parent Company [Member] | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
OPERATING EXPENSES | ||||
General and administrative | ¥ (7,972,189) | $ (1,142,770) | ¥ (1,838,494) | |
Total operating expenses | (7,972,189) | (1,142,770) | (1,838,494) | |
LOSS FROM OPERATIONS | (7,972,189) | (1,142,770) | (1,838,494) | |
OTHER INCOME (EXPENSE) | ||||
Interest income | 1,025,954 | 147,065 | ||
Finance expense | (5,456) | (782) | (345) | |
Equity income of subsidiaries and VIE | 109,156,163 | 15,646,937 | 91,056,631 | 73,337,971 |
Total other income, net | 110,176,661 | 15,793,220 | 91,056,286 | 73,337,971 |
NET INCOME | 102,204,472 | 14,650,450 | 89,217,792 | 73,337,971 |
FOREIGN CURRENCY TRANSLATION ADJUSTMENT | 1,589,076 | 227,785 | 1,759,288 | (250,623) |
COMPREHENSIVE INCOME | ¥ 103,793,548 | $ 14,878,235 | ¥ 90,977,080 | ¥ 73,087,348 |
Condensed Financial Informati_6
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company cash flows - Parent Company [Member] | 12 Months Ended | |||
Dec. 31, 2019CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company cash flows [Line Items] | ||||
Net income | ¥ 102,204,472 | $ 14,650,450 | ¥ 89,217,792 | ¥ 73,337,971 |
Equity income of subsidiaries and VIEs | (109,156,163) | (15,646,937) | (91,056,631) | (73,337,971) |
Other receivables - intercompany | (62,298,143) | (8,930,097) | ||
Net cash used in operating activities | (69,249,834) | (9,926,584) | (1,838,839) | |
Proceeds from issuance of Series A convertible preferred shares | 137,738,000 | |||
Proceeds from related party loans | 2,419,278 | |||
Net cash provided by financing activities | 140,157,278 | |||
EFFECT OF EXCHANGE RATE ON CASH | 1,448,063 | 207,572 | (465,920) | |
CHANGES IN CASH AND CASH EQUIVALENTS | (67,801,771) | (9,719,012) | 137,852,519 | |
CASH AND CASH EQUIVALENTS, beginning of year | 137,852,519 | 19,760,402 | ||
CASH AND CASH EQUIVALENTS, end of year | ¥ 70,050,747 | $ 10,041,390 | ¥ 137,852,519 |