UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May~~August 31, 2020

Commission File Number 333-203754

CHINA VTV LIMITED

(Exact name of registrant as specified in its charter)

Nevada

47-3176820

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

New Times Centre, 393 Jaffe Road, Suite 17A, Wan Chai, Hong Kong

(Address of principal executive offices)(Zip Code)

+85267353339

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐☒ Yes ☒ ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

As of ~~August~~October 1721, 2020, there were ~~284~~286,~~280~~360,000 shares of common stock issued and outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements.	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	1314
Item 4.	Controls and Procedures.	1314
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings.	1415
Item 1A.	Risk Factors.	1415
Item 2.	Unregistered Sales of Securities and Use of Proceeds.	1415
Item 3.	Defaults Upon Senior Securities.	1415
Item 4.	Mine Safety Disclosures.	1415
Item 5.	Other Information.	1415
Item 6.	Exhibits.	1516

CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” which discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” and negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K and its amendment filed with the Securities and Exchange Commission (the “SEC”); in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report, and information contained in other reports that we file with the SEC. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

There are important factors that could cause actual results to vary materially from those described in this report as anticipated, estimated or expected, including, but not limited to: competition in the industry in which we operate and the impact of such competition on pricing, revenues and margins, volatility in the securities market due to the general economic downturn; SEC regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward- looking statements, even if new information becomes available in the future. Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.

3 Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

CHINA VTV LIMITED.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	~~Page~~	Page
Consolidated Balance Sheets		F-2
Consolidated Statements of Operations and Comprehensive Income (Loss)		F-3
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)		F-4
Consolidated Statements of Cash Flows		F-5
Consolidated Statements of Stockholder’s Equity (Deficit)		F-4
Notes to Consolidated Financial Statements		F-6

F-1 Table of Contents

CHINA VTV LIMITED CONSOLIDATED BALANCE SHEETS

CHINA VTV LIMITED
CONSOLIDATED BALANCE SHEETS

	August 31,			February 29,
	2020			2020
Assets	Unaudited			Audited
Current Assets
Cash	$	158,675		$	51,551
Accounts receivable		164,986			79,020
Advances to suppliers		6,584,453			8,648,546
Inventories		7,414,860			4,310,519
Copyrights, net		8,107,621			6,609,260
Other receivables and current assets		1,460,833			3,400,963
Total current assets		23,891,428			23,099,859
Investment in equity investees, net		3,257,738			3,275,929
Contingent receivable		608,914			608,914
Capital assets, net		674,518			693,192
Intangible assets, net		2,661,172			1,530,000
Goodwill		21,552,596			21,552,596
Right-of-use assets, net		51,286			78,638
Total Assets	$	52,697,652		$	50,839,128

Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	330,783		$	601,671
Wages payable		457,321			304,509
Short-term debt		1,093,500			2,218,050
Interest payable		21,910			106,268
Due to related parties		860,945			3,819,200
Deferred revenue		6,571,206			2,547,180
Acquisition liabilities		36,931,000			36,931,000
Taxes payable		1,310,111			222,766
Lease liabilities		57,471			84,663
Other payables		579,282			4,331,023
Total current liabilities		48,213,529			51,166,330
Total liabilities		48,213,529			51,166,330

Stockholders’ Deficit
Common stock, par value $0.001, 600,000,000 shares authorized, 284,280,000 and 105,000,000 shares issued and outstanding as of August 31, 2020 and February 29, 2020, respectively		284,280			284,280
Additional paid-in capital		6,896,216			3,681,379
Subscription receivables and shares issuable, net		(209,285	)		(446,025	)
Accumulated income (deficit)		(2,789,979	)		(3,844,738	)
Accumulated other comprehensive loss		371,639			(2,098	)
Total stockholders’ equity (deficit) attributable to the Company		4,552,871			(327,202	)
Noncontrolling interests		(68,748	)		-
Total shareholders' equity (deficit)		4,484,123			(327,202	)
Total Liabilities and Stockholders’ Deficit	$	52,697,652		$	50,839,128

The accompanying notes are an integral part of these consolidated financial statements.

	May 31,			February 29,
	2020			2020
	Unaudited			Audited
Assets
Current Assets
Cash	$	91,177		$	51,551
Accounts receivable		652,283			79,020
Advances to suppliers		5,066,081			8,648,546
Inventories		7,422,951			4,310,519
Copyrights, net		8,295,865			6,609,260
Other receivables and current assets		3,580,081			3,400,963
Total current assets		25,108,438			23,099,859
Investment in equity investees, net		3,255,252			3,275,929
Contingent receivable		608,914			608,914
Capital assets, net		678,489			693,192
Intangible assets, net		1,417,548			1,530,000
Goodwill		21,552,596			21,552,596
Right-of-use assets, net		63,180			78,638
Total Assets	$	52,684,417		$	50,839,128
Liabilities and Stockholders’ Equity (Deficit)
Current Liabilities
Accounts payable	$	611,677		$	601,671
Wages payable		361,385			304,509
Short-term debt		2,201,140			2,218,050
Interest payable		120,603			106,268
Due to related parties		2,470,867			3,819,200
Deferred revenue		4,346,200			2,547,180
Acquisition liabilities		36,931,000			36,931,000
Taxes payable		1,459,420			222,766
Lease liabilities		69,320			84,663
Other payables		545,347			4,331,023
Total current liabilities		49,116,959			51,166,330
Total liabilities		49,116,959			51,166,330
Stockholders’ Equity (Deficit)
Common stock, par value $0.001, 600,000,000 shares authorized, 284,280,000 and 284,280,000 shares issued and outstanding as of May 31, 2020 and February 29, 2020, respectively		284,280			284,280
Additional paid-in capital		6,896,216			3,681,379
Subscription receivables and shares issuable, net		(311,345	)		(446,025	)
Accumulated deficit		(2,924,933	)		(3,844,738	)
Accumulated other comprehensive loss		(236,173	)		(2,098	)
Total stockholders’ equity (deficit) attributable to the Company		3,708,045			(327,202	)
Noncontrolling interests		(140,587	)		-
Total shareholders' equity (deficit)		3,567,458			(327,202	)
Total Liabilities and Stockholders’ Equity	$	52,684,417		$	50,839,128

The accompanying notes are an integral part of these consolidated financial statements.

F-2

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CHINA VTV LIMITED

CHINA VTV LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Unaudited

	For The Three Months Ended						For The Six Months Ended
	August 31, 2020			August 31, 2019			August 31, 2020			August 31, 2019

Net revenue	$	3,024,268		$	3,828		$	6,745,886		$	3,828
Cost of revenue		1,261,904			1,276			2,843,471			1,276
Gross profit		1,762,364			2,552			3,902,415			2,552

General and administrative expenses		1,558,470			117,030			2,884,987			220,069
Income (Loss) from operations		203,894			(114,478	)		1,017,428			-217,517
Interest expense		(11,530	)		-			(27,072	)		-
Investment impairment		(68	)		-			(19,268	)		-
Other income (loss)		(240	)		-			186			-
Income (Loss) before income tax		192,056			(114,478	)		971,274			(217,517	)
Provision for income tax		-			-			-			-

Net Income (Loss)	$	192,056		$	(114,478	)	$	971,274		$	(217,517	)
Net Loss attributable to noncontrolling interests		57,102			-			(83,485	)		-
Net income (Loss) attributable to the Company		134,954			(114,478	)		1,054,759			(217,517	)

Other comprehensive income (loss):
Foreign currency translation income (loss)		607,812			112			373,737			(115	)
Comprehensive income (loss)		742,766			(114,366	)		1,428,496			(217,632	)

Net income (loss) per common share:
Basic and diluted	$	0.00		$	(0.00	)	$	(0.01	)	$	(0.00	)
Weighted average number of common shares outstanding:
Basic and diluted		284,280,000			220,550,000			284,280,000			179,102,717

The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Unaudited

	For The Three Months Ended
	May 31, 2020			May 31, 2019
Net revenue	$	3,721,618		$	-
Cost of revenue		1,581,567			-
Gross profit		2,140,051			-
General and administrative expenses		1,326,517			103,039
Income (Loss) from operations		813,534			(103,039	)
Interest expense		(15,542	)		-
Investment impairment		(19,200	)		-
Other income		426			-
Income (Loss)		779,218			(103,039	)
Provision for income tax		-			-
Net income (loss)	$	779,218		$	(103,039	)
Net income (loss) attributable to noncontrolling interests		(140,587	)		-
Net income (loss) attributable to the Company		919,805			(103,039	)
Other comprehensive income (loss):
Foreign currency translation loss		(234,075	)		(227	)
Comprehensive income (loss)		685,730			(103,266	)
Net income (loss) per common share:
Basic and diluted	$	0.00		$	(0.00	)
Weighted average number of common shares outstanding:
Basic and diluted		284,280,000			137,655,435

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Table of Contents

CHINA VTV LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

	Common Stock				Additional		Subscription Receivables/						Accumulated Other						Total Stockholders’
	Number of shares		Amounts		Paid-in Capital		Shares Issuable			Accumulated Deficit			Comprehensive Loss			Noncontrolling Interests			Equity (Deficit)
Balance at February 29, 2020		284,280,000	$	284,280	$	3,681,379	$	(446,025	)	$	(3,844,738	)	$	(2,098	)	$	-		$	(327,202	)
Proceed received from subscriber								134,680												134,680
Proceed received from sale of 15% interest in subsidiary						3,214,837														3,214,837
Net income for the period											919,805						(140,587	)		779,218
Foreign currency translation														(234,075	)					(234,075	)
Balance at May 31, 2020 (Unaudited)		284,280,000	$	284,280	$	6,896,216	$	(311,345	)	$	(2,924,933	)	$	(236,173	)	$	(140,587	)	$	3,567,458

(UNAUDITED)

	Common Stock				Additional			Subscription Receivables/					Accumulated Other					Total
	Number of shares		Amounts		Paid-in Capital			Shares Issuable		Accumulated Deficit			Comprehensive Loss			Noncontrolling Interests		Stockholders’ Deficit
Balance at February 28, 2019		75,000,000	$	105,000	$	1,634,576		$	-	$	(2,337,167	)	$	(763	)	$	-	$	(598,354	)
Issuance of common stock for the acquisition of China VTV Ltd.		115,550,000		115,550		(115,550	)												-
Net loss for the period											(103,039	)					-		(103,039	)
Foreign currency translation														(227	)		-		(227	)
Balance at May 31, 2019 (Unaudited)		190,550,000	$	220,550	$	1,519,026		$	-	$	(2,440,206	)	$	(990	)	$	-	$	(701,620	)

For the Three and Six Months Ended August 31, 2020

The accompanying notes are an integral part of these consolidated financial statements.

													Accumulated
							Subscription						Other						Total
	Common Stock				Additional		Receivables/			Accumulated			Comprehensive			Non			Stockholders’
	Number of				Paid-in		Shares			Income			Income			controlling			Equity
	shares		Amounts		Capital		Issuable			(Deficit)			(Loss)			Interests			(Deficit)

Balance at February 29, 2020		284,280,000	$	284,280	$	3,681,379	$	(446,025	)	$	(3,844,738	)	$	(2,098	)	$	-		$	(327,202	)
Proceed received from subscriber								134,680												134,680
Proceed received from sale of 15% interest in VIE subsidary						3,214,837											14,737			3,229,574
Net income for the period											919,805						(140,587	)		779,218
Foreign currency translation														(234,075	)					(234,075	)
Balance at May 31, 2020 (Unaudited)		284,280,000	$	284,280	$	6,896,216	$	(311,345	)	$	(2,924,933	)	$	(236,173	)	$	(125,850	)	$	3,582,195
Proceed received from subscriber								102,060												102,060
Net income for the period											134,954						(57,102	)		192,056
Foreign currency translation														607,812						607,812
Balance at August 31, 2020 (Unaudited)		284,280,000	$	284,280	$	6,896,216	$	(209,285	)	$	(2,789,979	)	$	371,639		$	(68,748	)	$	4,484,123

For the Three and Six Months Ended August 31, 2019

													Accumulated
								Subscription					Other					Total
	Common Stock				Additional			Receivables/					Comprehensive			Non		Stockholders’
	Number of				Paid-in			Shares		Accumulated			Income			controlling		Equity
	shares		Amounts		Capital			Issuable		Deficit			(Loss)			Interests		(Deficit)

Balance at February 28, 2019		75,000,000	$	105,000	$	1,634,576		$	-	$	(2,337,167	)	$	(763	)	$	-	$	(598,354	)
Issuance of common stock for the acquisition of China VTV Ltd.		115,550,000		115,550		(115,550	)												-
Net loss for the period											(103,039	)					-		(103,039	)
Foreign currency translation														(227	)		-		(227	)
Balance at May 31, 2019 (Unaudited)		190,550,000	$	220,550	$	1,519,026		$	-	$	(2,440,206	)	$	(990	)	$	-	$	(701,620	)
Net loss for the period											(114,478	)					-		(114,478	)
Foreign currency translation														112			-		112
Balance at August 31, 2019 (Unaudited)		190,550,000	$	220,550	$	1,519,026		$	-	$	(2,554,684	)	$	(878	)	$	-	$	(815,986	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

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CHINA VTV LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited

CHINA VTV LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited

	For the Six Months Ended
	August 31,			August 31,
	2020			2019
Cash Flows from Operating Activities
Net income (loss)	$	971,274		$	(217,517	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		1,322,582			5,023
Changes in assets and liabilities:
Accounts receivable		(82,679	)		-
In advances to suppliers		2,046,399			-
Inventories and copyrights		(5,320,300	)		-
Other receivables and current assets		2,095,146			-
Accounts payable		(7,072,162	)		1,275
Wages payable		149,200			-
Interest payable		-			-
Deferred revenue		3,891,429			-
Taxes payable		66,115			-
Increase in accrued expenses and other payable		-			77,811
Net cash provided by (used in) operating activities		(1,932,996	)		(133,408	)

Cash Flows from Investing Activities
Acquisition of copyrights and intangible assets		(1,336,005	)		-
Acquisition of equipment		(1,017	)		(111,166	)
Proceeds from sale of ownership interest in subsidiary		4,300,336			-
Net cash provided by investing activities		2,963,314			(111,166	)

Cash Flows from Financing Activities
(Decrease) increase in due to related parties		9,639			233,727
Proceeds received from related parties		236,740			-
Lease Payments		(30,698	)		-
Decrease in short-term debt		(1,141,600	)		-
Net cash provided by (used in) financing activities		(925,919	)		233,727

Effect of exchange rate changes on cash and cash equivalents		2,725			-

Net decrease in cash and cash equivalents		107,124			(10,847	)

Cash and Cash Equivalents
Beginning		51,551			17,548
Ending	$	158,675		$	6,701

Supplement Disclosure of Cash Flows
Interest expenses	$	-		$	-
Income taxes	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

	For the Three Months Ended
	May 31,			May 31,
	2020			2019
Cash Flows from Operating Activities
Net income (loss)	$	779,218		$	(103,039	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		871,239			-
Changes in assets and liabilities:
Accounts receivable		(573,263	)		-
In advances to suppliers		3,582,465			-
Inventories		(3,112,432	)		-
Other receivables and current assets		(176,203	)		-
Accounts payable		10,006			-
Wages payable		56,876			-
Interest payable		14,335			-
Deferred revenue		1,799,020			-
Taxes payable		1,236,654			-
Accrued expenses and other payable		(3,801,019	)		16,020
Net cash provided by (used in) operating activities		686,896			(87,019	)
Cash Flows from Investing Activities
Acquisition of copyrights and intangible assets		(2,414,308	)		-
Proceeds from sale of ownership interest in subsidiary		3,214,837			-
Net cash provided by investing activities		800,529			-
Cash Flows from Financing Activities
(Decrease) increase in due to related parties		(1,348,333	)		79,522
Decrease in short-term debt		(16,910	)		-
Net cash provided by (used in) financing activities		(1,365,243	)		79,522
Effect of exchange rate changes on cash and cash equivalents		(82,556	)		-
Net decrease in cash and cash equivalents		39,626			(7,497	)
Cash and Cash Equivalents
Beginning		51,551			17,548
Ending	$	91,177		$	10,051
Supplement Disclosure of Cash Flows
Cash paid during the year for:
Interest expenses	$	2,202		$	-
Income taxes	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Table of Contents

CHINA VTV LIMITED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~MAY~~AUGUST 31, 2020

NOTE 1. ~~ORGANIZATION~~DESCRIPTION ~~AND~~OF BUSINESS

China VTV Limited, ~~formerly~~and ~~known~~its consolidated subsidiaries and variable interest entities are referred to collectively herein as ~~T-Bamm~~the “Company.,” ~~was~~The ~~incorporated~~Company is primarily engaged in broadcasting news, videos, television shows, tourists’ programs and other entertainment programs through its application (or “App”) over the ~~State~~internet. ofThe ~~Nevada~~Company’s broadcasting programs can be played via smart TVs, our application or App on ~~February~~both 19IOS and Android mobile phones or tablets, ~~2015~~computers, and issatellite aTVs. ~~holding~~The ~~company~~Company ~~which~~also ~~has~~produces ~~not~~certain ~~carried~~original ~~out~~news ~~substantive~~programs, ~~business~~travel ~~operations~~programs, ofand ~~its~~other ~~own.~~entertainment shows, and adapts original literature into internet TV shows, internet movies, audible books, and video games.

~~China~~The ~~VTV~~Company ~~Ltd. (“China VTV”) was incorporated on January 9, 2015 under the laws of Hong Kong. China VTV~~ has developed ~~its~~a ~~own~~ blockchain-operated ~~and~~ cloud-based ~~application~~ platform (the “APP Platform”) that distributes streaming media as a standalone product directly to viewers over the ~~internet~~Internet, bypassing telecommunications, multichannel ~~televisions~~television, and broadcast television platforms that traditionally act as a controller or distributor of such content. The Company has built the technology to distribute media programs on smart TVs, computers, Android smart phones via its App (collectively, the “End Devices”) and through multiple social media channels, such as Weibo, Facebook and YouTube.

On May 6, 2019, pursuant to a Share Exchange Agreement among China VTV Limited, China VTV and its shareholders, China VTV Limited issued an aggregate of 115,550,000 shares of its common stock to the shareholders of China VTV in exchange for all of the issued and outstanding equity interests of China VTV and five individuals who provided prior services to China VTV. As a result, China VTV has become a wholly-owned subsidiary of China VTV Limited. The acquisition of China VTV has been accounted for as a reverse acquisition (the “Reverse Merger”), and the business of China VTV became the business of China VTV Limited. At the time of the Reverse Merger, China VTV Limited was not engaged in any active business.

Butterfly Effect Culture Media (Beijing) Co., Ltd. (the “Butterfly Effect”) was formed under the laws of the People’s Republic of China (the “PRC”) on February 23, 2016.Butterfly Effect is primarily engaged in literary adaptation business and centers its operations on internet Chinese literary and literary adaptation for TV shows, movies, audible books and mobile phone video games that are primarily distributed through online platforms.

On February 24, 2020 (the “Closing Date”), China VTV Limited, VTV Global Culture Media (Beijing) Co., Ltd., a Chinese wholly-foreign-owned entity and a wholly-owned subsidiary of China VTV Limited (the “WFOE”), Butterfly Effect, and each and all of the Equity Holders of the Butterfly Effect closed the transactions contemplated under an Acquisition Agreement. Pursuant to this Acquisition Agreement, China VTV Limited effectively controls Butterfly Effect Culture Media (Beijing) Co., Ltd. via a series of VIE Agreements, which have been executed by the WFOE, Butterfly Effect Culture Media (Beijing) Co., Ltd. and each Butterfly Effect’s Equity Holder on the Closing Date. On February 25, 2020, in accordance with the terms of the Acquisition Agreement, the Company issued a total of 24,000,000 restricted shares of its common stock to the Butterfly Effect’s Equity Holders. The Acquisition is accounted for as a regular acquisition pursuant to which China VTV Limited is considered the acquiring entity for accounting purposes in accordance with generally accepted accounting principles in the United States of America.

Following the acquisition, China VTV Limited and its consolidated subsidiaries and variable interest entities (“VIE”) are referred to collectively herein as the “Company”. The Company plans to focus on the business of building and operating of LED advertising billboards in South Asia, Australia, the United States (the U.S.), Taiwan and the People’s Republic of China (the “PRC”); the e-media online streaming platform; and the literary adaptation whereby the Company adapts original stories or books into TV shows, movies and mobile video games that will be distributed outside the PRC through the internet. The Company is currently exploring a model to distribute contents, such as TV show episodes, produced by the Company on its online streaming platform.

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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States of America, and the SEC's regulations for interim financial information and the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows, and stockholders’ equity for the periods presented. The results for the three and six months ended ~~May~~August 31, 2020 are not necessarily indicative of the results to be expected for the full year.

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended February 29, 2020 filed with the Securities and Exchange Commission on July 29, 2020.

Consolidation

These unaudited interim consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and include the accounts of the ~~Company~~China VTV Limited, its subsidiaries and entities controlled through VIE agreements. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassification

Certain reclassifications have been made to the prior year’s financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss nor accumulated deficit.

Advances to Suppliers

The Company advances funds to certain authors or publishers for the purchase of literature copyrights and productions. Based on management’s assessment, no allowance for advances to suppliers is required at the balance sheet date.

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Inventories

Inventories comprises work-in-progress which are stated at the lower of cost or net realizable value. Costs include direct production cost of audiobooks and related production overhead. The cost of inventories is calculated on a title-by-title basis. Any excess of the cost over the net realizable value of each item of inventories is recognized as a loss in the statement of operations.

Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.

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Copyrights

Copyrights consist of payments made to holders for use of the copyrights during the licensed term. Amortization of capitalized copyrights commences when the copyrights is available for use by the Company and is recorded on a title-by-title basis in statement of operations over the licensed term, ranging from 3 to 10 years. Copyrights are stated at the lower of amortized cost or net realizable value. The valuation of copyrights is reviewed on a title-by-title basis when an event or change in circumstances indicated that the fair value of a copyright is less than its unamortized cost.

Revenue Recognition

The Company adopted Topic 606 effective March 1, 2019 and recognizes revenue based on the five criteria for revenue recognition that are established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.

The Company began to generate revenue during the year ended February 29, 2020. The Company sells advertising services to third-party advertising agencies and advertisers. Advertising contracts are signed to establish the price and specify the advertising services to be provided. Pursuant to the advertising contracts, the Company provides advertisement placements on its APP Platform in different formats, including but not limited to video, banners, links, logos, brand placement and buttons. The Company performs a credit assessment of the customers to assess the collectability of the revenue prior to entering into contracts. For contracts where the Company provides customers with multiple performance obligations, primarily for advertisements to be displayed in different spots, placed under different forms and occurred at different times, the Company would evaluate all the performance obligations in the arrangement to determine whether each performance obligation is distinct. Consideration is allocated to each performance obligation based on its standalone selling price and revenue is recognized as each performance obligation is satisfied by displaying the advertisements in accordance with the advertising contracts.

The Company sells copyrights of scripts and original stories to third parties, and sells the video and audio products to internet content platforms for broad distribution, upon the finishing of the production of TV shows, movies, audible books or video games. Revenue from the sales of copyrights, original stories, and finished products are recognized when the Company delivers products and passes its contractual rights or copyrights to the customers in accordance with the sales contracts. Prepayments for sales of product is recorded as deferred revenue and is generally recognized as revenue when the production is completed, and the product is transferred, or copyrights have been passed to customers and collectability is reasonably assured.

The Company also grants licenses to third parties for using its literary copyrights. Revenue derived from licenses of the Company’'s literal copyrights and original stories, which provide customers with a right to use the intellectual properties as they exist and are available to customers, are recognized at the point of time when the intellectual property is made available to customers. Prepayments for sales of product is recorded as deferred revenue from customers and is generally recognized as revenue when the production is completed, and the product is transferred, or copyrights have been passed to customers and collectability is reasonably assured.

For revenue from licensing of literal copyrights where the Company continues to develop the product or provide maintenance services, the Company recognizes the fixed fee proportionately over the licensing term. For royalty derived from licensing of literature copyrights, as revenue, it is recognized when sales or usage occurs based upon the licensee’s usage reports. When these reports are not available, revenue is recognized based on historical data, industry information and other relevant trends.

The Company sells advertising services to third-party advertising agencies and advertisers. Advertising contracts are signed to establish the price and specify the advertising services to be provided. Pursuant to the advertising contracts, the Company provides advertisement placements on its APP Platform in different formats, including but not limited to video, banners, links, logos, brand placement and buttons. The Company performs a credit assessment of the customers to assess the collectability of the revenue prior to entering into contracts. For contracts where the Company provides customers with multiple performance obligations, primarily for advertisements to be displayed in different spots, placed under different forms and occurred at different times, the Company would evaluate all the performance obligations in the arrangement to determine whether each performance obligation is distinct. Consideration is allocated to each performance obligation based on its standalone selling price and revenue is recognized as each performance obligation is satisfied by displaying the advertisements in accordance with the advertising contracts.

Deferred Revenue

Deferred revenue, primarily relating to licensing fees, is stated at the amount of licensing fees received less the amount previously recognized as revenue over the terms of the respective literary licensing contracts.

Stock-Based Payments

The Company follows the provisions of ASC Topic 718, Compensation - Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, non-employee directors, and consultants, including employee stock options. Stock compensation expense, which is based on the grant date’s fair value estimated in accordance with the provisions of ASC 718, is recognized as an expense over the requisite service period, and the Company made a policy election to recognize forfeitures when they occur.

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The fair value of each option grant is estimated using the Black-Scholes option-pricing model, which requires assumptions regarding the expected volatility of the stock price, the expected lifetime of the options, an expectation regarding future dividends on the Company’s common stock, and estimation of an appropriate risk-free interest rate. The Company’s expected common stock price volatility assumption is based upon the historical volatility of the stock price of some similar companies due to limited history of our own stock price. The expected lifetime assumption for stock options grants was based upon the simplified method provided under ASC 718-10, which averages the contractual term of the options with the vesting term. The dividend yield assumption of zero is based upon the fact that the Company has never paid cash dividends in the past and has presently no intention of paying cash dividends in the future. The risk-free interest rate used for each grant was based upon the prevailing short-term interest rates over the expected lifetime of the options.

Translation Adjustment

The accounts of China VTV and Butterfly Effect were maintained, and their financial statements were expressed, in Hong Kong Dollar (“HKD”) and Chinese Yuan (RMB), respectively. Such financial statements were translated into U.S. Dollars (“$” or “USD”) in accordance ASC 830, “Foreign Currency Matters”, with the HKD and RMB as the functional currencies. Pursuant to the ASC 830, all assets and liabilities are translated at the current exchange rate, stockholders’ equity (deficit) are translated at the historical rates, and income statement items are translated at an average exchange rate for the period.

The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit).

Impairment of Long-Lived Assets and Goodwill

The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates its long-lived assets for impairment annually or more often if events and circumstances warrant. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed to be reported at the lower of the carrying amount or the fair value less costs to sell.

Goodwill represents the excess of the purchased consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company’s acquisitions of interests in VIE and its subsidiaries. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company first assesses the qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test will be performed. Application of a goodwill impairment test requires significant management judgment.

Fair Value Measurements

The Company has adopted FASB Accounting Standard Codification Topic on Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. ASC 820 establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable input, which may be used to measure fair value and include the following:

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Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2 - observable prices that are based on inputs not quoted on active markets but corroborated by market data; and

Level 3 - unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The carrying values of certain assets and liabilities of the Company approximate to fair value due to their relatively short maturities.

Noncontrolling Interests

For the Company’s non-wholly owned subsidiaries, a noncontrolling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company. Consolidated net income in the consolidated income statements includes net income (loss) attributable to noncontrolling interests.

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Basic and Diluted Earnings (Loss) Per Share

Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock warrants (using the treasury stock method) and common shares issuable upon the conversion of convertible notes payable (using the as-if converted method). These common stock equivalents may be dilutive in the future.

All potentially dilutive common shares were excluded from the computation of diluted shares outstanding as they would have an anti-dilutive impact on the Company’s net losses and consisted of the following:

	May 31,		May 31,
	August 31,		August 31,
	2020		2019
Stock options		500,000	-	-
		500,000		-

Income Taxes

The Company accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Recently Issued Accounting Pronouncements

Management has considered all recent accounting pronouncements issued and their potential effect on the consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on its consolidated financial statements.

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Risks and Uncertainties

The major operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 caused interruption of operation in the Company’s China facilities from February to early March 2020. The breakout of COVID-19 around the world in the first and second quarters of 2020 has caused significant market volatility in China, U.S., and the rest of the world. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the global economies and, as such, the Company is unable to determine if it will have a material impact on its financial result of the fiscal year of 2021.

NOTE 3. INVENTORIES

Inventories consist of the following:

	As of
	May 31, 2020		February 29, 2020
	August 31,		February 29,
Script development	$	4,155,008	$	2,235,979
	2020		2020
Mobile audio games		2,905,270		1,215,000
Script development	$	6,144,761	$	2,235,979
Artwork		362,673		859,540
Mobile audio games		1,237,925		1,215,000
Total inventories		7,422,951		4,310,519
Artwork		32,174		859,540
Total inventories	$	7,414,860	$	4,310,519

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NOTE 4. COPYRIGHTS, NET

	As of
	May 31,2020			February 29, 2020
Licensed copyrights at cost	$	10,477,657		$	8,326,199
Less: amortization		(2,181,792	)		(1,716,939	)
Copyrights, net		8,295,865			6,609,260

Copyrights, net, consist of the following:

	As of
	August 31,			February 29,
	2020			2020
Licensed copyrights at cost	$	10,896,166		$	8,326,199
Less: amortization		(2,788,545	)		(1,716,939
Copyrights, net	$	8,107,621		$	6,609,260

NOTE 5. ADVANCES TO SUPPLIERS, NET

Advances to suppliers, net, consist of the following:

	As of
	May 31,2020			February 29, 2020
	August 31,			February 29,
Deposits	$	6,367,678		$	10,223,973
	2020			2020
Prepaid expenses		667,820			168
Deposits	$	8,182,055		$	10,223,973
Total advance to suppliers		7,035,498			10,224,141
Prepaid expenses		16,304			168
Less: allowance for doubtful accounts		(1,969,417	)		(1,575,595	)
Total advance to suppliers		8,198,359			10,224,141
Advance to suppliers, net	$	5,066,081		$	8,648,546
Less: allowance for doubtful accounts		(1,613,906	)		(1,575,595
Advance to suppliers, net	$	6,584,453		$	8,648,546

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NOTE 6. OTHER RECEIVABLES AND CURRENT ASSETS

Other receivables and current assets consist of the following:

	As of
	May 31,2020		February 29,2020
	August 31,		February 29,
Other receivables	$	3,057,833	$	3,088,659
	2020		2020
Other current assets		522,248		312,304
Other receivables	$	1,056,081	$	3,088,659
Total	$	3,580,081	$	3,400,963
Other current assets		404,752		312,304
Total	$	1,460,833	$	3,400,963

NOTE 7. INVESTMENT IN EQUITY INVESTEES

Investments are in equity of companies which shares are not publicly traded, and that the Company does not have control or significant influence. The investments are recorded at cost less impairment, as the fair value of the share prices are not readily determinable.

	As of
	May 31,2020			February 29,2020
	August 31,			February 29,
Investment in equity investees	$	3,820,258		$	3,852,622
	2020			2020
Less: impairment		(565,006	)		(576,693	)
Investment in equity investees	$	3,845,312		$	3,852,622
Total	$	3,255,252		$	3,275,929
Less: impairment		(587,574	)		(576,693	)
Total	$	3,257,738		$	3,275,929

~~NOTE~~F-10 8.Table ~~CAPITAL~~of ~~ASSETS, NET~~Contents

~~Capital~~NOTE ~~assets,~~8. ~~net~~INTANGIBLES, ~~consist of the following:~~NET

	As of
	May 31,2020			February 29,2020
Furniture and office equipment	$	169,620		$	168,641
Software		530,374			541,345
Leasehold improvements		304,773			295,231
Total capital assets		1,004,767			1,005,217
Less: accumulated depreciation		(326,278	)		(312,025	)
Capital assets, net	$	678,489		$	693,192

Depreciation expense was $14,407 and $0 for the three months ended May 31, 2020 and May 31, 2019, respectively.

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NOTE 9. INTANGIBLES, NET

Intangible assets consist of the followings:

	As of
	May 31, 2020			February 29, 2020
	August 31,			February 29,
Copyrights	$	2,574,687		$	2,311,837
	2020			2020
Less: accumulated amortization		(1,157,139	)		(781,837	)
Copyrights	$	4,018,696		$	2,311,837
Copyrights, net	$	1,417,548		$	1,530,000
Less: accumulated amortization		(1,357,524	)		(781,837	)
Copyrights, net	$	2,661,172		$	1,530,000

~~Amortization~~NOTE ~~expense~~9. ~~was~~SHORT-TERM ~~$379,317 and $0 for the three months ended May 31, 2020 and May 31, 2019, respectively.~~DEBT

~~NOTE~~Short-term 10debt represents amounts due to a bank and other lenders, and are generally due on demand or within one year. ~~SHORT~~As of August 31, 2020, short-~~TERM~~term ~~DEBT~~debts consist of the following:

Short-term debt represents amounts due to a bank and other lenders, and are generally due on demand or within one year. As of May 31, 2020, short-term debts consist of the following:

	As of
	August 31,		February 29,
	2020		2020
Interest at 0% per annum, unsecured, due on demand	$	511,000	$	787,050
Interest at 4.35% per annum, unsecured, due on demand		146,000		286,200
Interest at 5.22% per annum, unsecured, due on demand		436,500		429,300
Interest at 10% per annum, unsecured, due on demand		0		715,500
	$	1,093,500	$	2,218,050

	As of
	May 31, 2020		February 29, 2020
Interest at 0% per annum, unsecured, due on demand	$	795,471	$	787,050
Interest at 4.35% per annum, unsecured, due on demand		289,262		286,200
Interest at 5.22% per annum, unsecured, due on demand		433,893		429,300
Interest at 10% per annum, unsecured, due on demand		682,514		715,500
	$	2,201,140	$	2,218,050

In June 2019, Butterfly Effect entered into a line of credit agreement with Bank of Beijing, Beijing, PRC to borrow up to $708,500 (RMB5 million). As of August 31, 2020, Butterfly Effect had borrowed $436,500 (RMB3 million) from Bank of Beijing with an annual interest rate of 5.22%. The line of credit is unsecured and due on demand.

InNOTE ~~June 2019, Butterfly Effect entered into a line of credit agreement with Bank of Beijing, Beijing, PRC to borrow up to $708,500 (RMB5 million)~~10. AsRELATED ofPARTY ~~May~~TRANSACTIONS ~~31,~~AND ~~2020, Butterfly Effect had borrowed $433,893 (RMB3 million) from Bank of Beijing with an annual interest rate of 5.22%. The line of credit is unsecured and due on demand.~~BALANCES

NOTE 11. RELATED PARTY TRANSACTIONS AND BALANCES

The related parties of the Company with whom transactions are reported in these consolidated financial statements are as follows:

Name of entity or individual Relationship with the Company and its subsidiary Mr. Tijing Song Shareholder, Chairman of the Board, CEO and President Mr. Guoping Chen Shareholder, ~~Director, interim CFO, Secretary~~ and ~~Treasurer~~Director Ms. Qiongfang Shi Shareholder and Director

Due to related parties:

	As of
	May 31, 2020		February 29, 2020
	August 31,		February 29,
Mr. Tijing Song	$	440,755	$	448,151
	2020		2020
Mr. Guoping Chen		412,204		403,155
Mr. Tijing Song	$	440,500	$	448,151
Ms. Qiongfang Shi		1,617,908		2,967,894
Mr. Guoping Chen		420,445		403,155
Total due to related parties	$	2,470,867	$	3,819,200
Ms. Qiongfang Shi		-		2,967,894
Total due to related parties	$	860,945	$	3,819,200

The Company has received advances from its related parties for working capital purposes. The advances are unsecured, bear no interest, and are due on demand.

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NOTE 1211. ACQUISITION LIABILITY

In accordance with the initial acquisition agreement dated on December 18, 2019 and the first amended acquisition agreement (“Amendment No. 1”) dated December 28, 2019, which were entered by the Company, the WOFE, and Butterfly Effect Media and each of Butterfly Effect Media’s equity holders (“Equity Holders”), China VTV Limited and its subsidiaries agreed to pay a total of RMB 288,000,000 (the “Cash Consideration”) to the Equity Holders pro rata with the their equity percentage over a period as set forth in the Amendment NO. 1. Per the Amendment No. 1, the Company agreed to pay the Equity Holders at least RMB 45 million (approximately $6.39 million) pro rata from the proceeds of its first public or private offering of its shares after the Acquisition, make payments to the Equity Holders pro rata of an additional RMB 99 million (approximately $14.07 million) by December 31, 2020, and a further payment of RMB 144 million (approximately $20.46 million) on or before December 31, 2021. In accordance with Amendment No. 1, after the Company makes the cash payments of at least RMB 144 million (approximately $20.46 million), which is a half of the total Cash Consideration, to the Equity Holders, the Company may choose to pay the half of the remaining Cash Consideration, equivalent to RMB 72 million (approximately $10.23 million), in the form of its common stock at a price of $2.00 per share to the Equity Holders as opposed to making such cash payment in the amount of RMB 72 million.

The total Cash Consideration is RMB 288 million. The above arrangements allow the Company to settle RMB 72 million by the Company’s common stock, if certain specified conditions are met.

The Company recognized the RMB 288 million as acquisition liability as of the acquisition date. As it is the Company’s decision to settle the remaining RMB 72 million either by cash or by shares of its common stock, the settlement by shares is not an obligation for the Company when this is not beneficial to the Company. Therefore, the settlement by shares of the Company is not considered as a contingent liability at the acquisition date.

The total fair value of the considerations was determined to be $36,931,000 (RMB 288 million), which has been fully recognized as a liability, as a result of the business acquisition.

NOTE 1312. OTHER CONTINGENT LIABILITY

On September 30, 2019, the Company entered into a strategic development agreement (the “Strategic Development Agreement”) with CybEye Image, Inc. (“CybEye”). CybEye agreed to develop and provide technical support and maintenance to the Company’s online streaming OTT Platform and incorporate blockchain technologies to enhance security of the Company’s OTT Platform. The Strategic Development Agreement will continue in full force and effect until September 29, 2022.

Concurring to this agreement, the Company also entered into a non-exclusive licensing agreement, and amended on December 13, 2019, with CybEye, pursuant to which CybEye agreed to grant the Company a non-exclusive right and license to certain technologies for 20 years, expiring on September 30, 2029.

Pursuant to the Strategic Development Agreement, the Company agreed to issue 2,500,000 shares of its common stock to CybEye for the technical services to develop the OTT Platform. CybEye may sell and dispose any or all of the 2,500,000 shares at any time at a per share price of no less than $5.00. In the event that the Company issues and sells its common stock in a public offering facilitated by a broker-dealer or investment bank at a price less than $4.00 per share (the “Better Price”) within the following twelve (12) months from the agreement date, the Company agreed to grant CybEye options to purchase a number of shares of the Company’s common stock which is calculated by multiplying the difference of $4.00 and the Better Price by 2,500,000, then dividing the product by the Better Price, at an exercise price equaling to the Better Price.

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As compensation for the license and services provided to maintain the APP Platform, the Company agreed to issue 40,000 shares of its common stock monthly to CybEye until the Company’s shares are trading on a national stock exchange market, and thereafter a monthly payment of $150,000 until September 2022. In addition, during the term of the Strategic Development Agreement, the Company agreed to grant stock options of up to 500,000 shares of the common stock each year to the owner of CybEye and stock options of up to 200,000 shares of the common stock each year to 2 technicians of CybEye for their services to the Company. The granting of the options is subject to the approval of the Board of Directors.

The 500,000 stock options to the owner of CybEye were approved and granted for the year ended February 29, 2020. The Company has not issued the 2,500,000 shares and 200,000 shares agreed to be issued to CybEye, and has not approved the granting of the 200,000 stock options to the 2 technicians as described above.

During the year ended February 29, 2020, CybEye completed the development of the OTT Platform. As of ~~May~~August 31, 2020, the Company estimated the fair value of the 2,700,000 shares issuable at a fair value of $172,260 and recognized the corresponding amount as shares issuable on the consolidated balance sheets.

For the year ended February 29, 2020, the Company estimated the fair value of the 500,000 stock option at $9,531, based on the Black Scholes Model using the following assumptions: share price - $0.068, exercise price - $12.00, expected lifetime of the option – 7 years, volatility – 150%, dividend yield - $0, interest rate – 1.61%. As of February 29, 2020, the Company recognized the fair value of $9,530 as additional paid in capital.

~~NOTE~~F-12 ~~14.~~Table ~~EQUITY~~of Contents

NOTE 13. EQUITY

The Company’s authorized common stock is comprised of 600,000,000 shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.

Pursuant to the Share Exchange Agreement (See Note 1), the Company issued an aggregate of 115,550,000 shares of common stock to the shareholders of China VTV and five individuals who provided prior services to China VTV on May 6, 2019.

In December 2019, the Company granted 12,400,000 shares to its eight executives and directors and 550,000 shares to employees for their services. The total fair value of the shares, in the amount of $791,120 and $35,090 respectively, was recorded as stock-based compensation expense for the year ended February 29, 2020.

On December 31, 2019 and January 21, 2020, the Company issued 2,500,000 shares and 22,600,000 shares, respectively, to four individual subscribers for $732,963. As of ~~May~~August 31, 2020, $~~474~~209,~~184~~285 of the proceeds has not been received and is recorded as subscription receivables, a contra equity account.

On February 25, 2020, in accordance with the Acquisition Agreement with Butterfly Effect, the Company issued a total of 24,000,000 restricted shares of its common stock at nominal value as Stock Consideration (see NOTE 3.). In addition, the Company also issued 1,680,000 restricted shares of common stock to the broker of this acquisition as finder’s fee for the introduction and services provided in completing the acquisition. The fair value of 1,680,000 shares was determined to be $46,704 and was recognized as stock-based compensation for the year ended February 29, 2020.

In March 2020, the Company sold its 15% interest in its 86.5% owned VIE subsidiary, Khorgas Goldfish Culture Media Co., Ltd. (the “Subsidiary”), to Shanghai Qinggua Network Technologies, Ltd., an unrelated Chinese company. After the sale of its 15% ownership in the Subsidiary, the Company still owns 71.1% interest in the Subsidiary. The sale of the 15% ownership interest was approved by the Company’s Board and is the one of the steps to reshape and expand the Company’s core business. The sale was accounted for as an equity transaction and the net proceeds of $3.2 million received from the sale was recognized as additional paid in capital in our balance sheet.

F-15 Table of Contents

2019 Stock Plan

On November 29, 2019, the board of directors (the “Board”) of the Company adopted an incentive stock plan (the “2019 Stock Plan”) under which the Company may issue up to an aggregate of 22,000,000 shares of stock awards, options, or performance shares, subject to certain adjustments set forth therein. The Board of the Company has the sole authority to implement and administer the 2019 Stock Plan and may delegate a committee or one or more officers to grant awards under the 2019 Stock Plan. This 2019 Stock Plan became effective upon the Board approval on November 29, 2019 and will terminate ten years thereafter. Pursuant to the 2019 stock plan, the Company issued 12,950,000 shares of common stock to directors and employees, vested immediately on the date of award. The fair value of the 12,950,000 shares is determined to be $826,210 which is recognized as stock-based compensation expense for the year ended February 29, 2020 (see above).

Stock Options

On ~~September~~August 3031, 2019, the Company granted 500,000 stock options in pursuant to the Strategic Development Agreement (see NOTE 14.). The options vest 25% each on every quarter end from the grant date. The options are exercisable at $12.00 per share until September 29, 2026.

There were no stock options issued during the three and six months ended ~~May~~August 31, 2020. There were 500,000 stock options were issued during the three and ~~May~~six months ended August 31, 2019~~, respectively~~.

As of ~~May~~August 31, 2020, ~~250~~375,000 of the outstanding 500,000 options are exercisable. The 500,000 options are expected to vest one year from the grant date, with the weighted-average exercise price of $12.00 per share. The weighted-average contractual remaining life is 6.6 years, and the aggregate intrinsic value is $0.

~~There~~As ~~were~~of noAugust 31, 2019, 500,000 stock options were outstanding asand of250,000 ~~May~~stock ~~31,~~options ~~2019.~~were exercisable.

~~NOTE~~F-13 ~~15.~~Table ~~INCOME~~of ~~TAXES~~Contents

NOTE 14. INCOME TAXES

United States

The Company files income tax returns in the U.S. federal jurisdiction and local jurisdictions. The Company is not currently under examination by the Internal Revenue Service or any state income tax authorities. The 2015 through 2017 tax years remain subject to examination by the Internal Revenue Service. On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset, since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years.

Hong Kong

China VTV was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. No provision for Hong Kong income or profit tax has been made as the China VTV has no assessable profit for the period from January 9, 2015 (date of inception) to ~~May~~August 31, 2020. China VTV has provided a full valuation allowance on the deferred tax assets for the net operating loss carry-forward because of the uncertainty regarding its realizability.

China

~~The~~China ~~Company'~~VTV Limited’s subsidiary, the WFOE, and the VIE subsidiaries, Butterfly Effect Media, are entities incorporated in the PRC (the "PRC entities") and are subject to PRC Enterprise Income Tax (EIT), on the taxable income in accordance with the relevant PRC income tax laws, which have adopted a unified income tax rate of 25% since January 1, 2008.

Provision for income tax expense (benefit) consisted of the following:

	For the Three Months Ended
	For the Six Months Ended
	May 31, 2020		May 31, 2019
	August 31,		August 31,
	2020		2019
Current	$	-	$	-
Deferred		-		-
Total provision for income tax expense (benefit)	$	-	$	-

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The following is a reconciliation of the statutory tax rate to the effective tax rate:

	For the Three Months Ended
	For the Six Months Ended
	May 31, 2020			May 31, 2019
	August 31,				August 31,
PRC statutory rate	25.0	%		-	%
	2020				2019
Temporary difference between US GAAP and PRC tax accounting	(25.0	)%		-	%
PRC statutory rate		25.0	%		-	%
Effective income tax rate	-	%		-	%
Temporary difference between US GAAP and PRC tax accounting		(25.0	)%		-	%
Effective income tax rate		-	%		-	%

~~F-17~~The ~~Table~~significant component of ~~Contents~~deferred income tax assets as of August 31, 2020 and February 29, 2020 are as follows:

The significant component of deferred income tax assets as of May 31, 2020 and February 29, 2020 are as follows:

	As of
	August 31,			February 29,
	2020			2020
Net operating loss carry-forward	$	932,371		$	867,187
Other receivable		492,075			482,963
Deferred revenue		11,683			11,559
Valuation allowance		(1,436,129	)		(1,361,709	)
Net deferred income tax assets	$	-		$	-

	As of
	May 31,2020			February 29, 2020
Net operating loss carry-forward	$	879,671		$	867,187
Other receivable		488,130			482,963
Deferred revenue		11,683			11,559
Valuation allowance		(1,379,483	)		(1,361,709	)
Net deferred income tax assets	$	-		$	-

NOTE 15. SUBSEQUENT EVENTS

~~NOTE~~On ~~16.~~September ~~SUBSEQUENT~~4, ~~EVENTS~~2020, in accordance with the Company’s agreement with a Director, the Company issued 2,000,000 shares of common stock to the Director for her compensation, which were valued at $55,600.

The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these consolidated financial statements and determined that no other subsequent event requires recognition or disclosure to the consolidated financial statements ~~in accordance with FASB ASC Topic 855, “Subsequent Events~~.”

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This section of this Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Organization and Business Operations

China VTV Limited (“China VTV”), formerly known as T-Bamm., was incorporated in the State of Nevada on February 19, 2015 and is a holding company which has not carried out substantive business operations of its own.

China VTV Ltd. (“China VTV HK”) was incorporated on January 9, 2015 under the laws of Hong Kong. China VTV HK provided a streaming media platform that distributes streaming media as a standalone product directly to viewers over the Internet, bypassing telecommunications, multichannel television, and broadcast television platforms that traditionally act as a controller or distributor of such content. China VTV HK provides news, entertainment shows, TV episodes and other programs on its website and social media accounts.

Pursuant to the Share Exchange Agreement dated March 15, 2019, on May 6, 2019, we issued an aggregate of 115,550,000 shares of our common stock to the shareholders of China VTV HK in exchange for all of the issued and outstanding equity interests of China VTV HK and five individuals who provided prior services to China VTV HK.

As a result, China VTV HK has become our wholly-owned subsidiary. The acquisition of China VTV HK is treated as a reverse acquisition, and the business of China VTV became our business.

On December 18, 2019, the Company, VTV Global Culture Media (Beijing) Co., Ltd., a Chinese wholly foreign owned entity and a wholly-owned subsidiary of the Company (“WFOE”), Butterfly Effect Culture Media (Beijing) Co., Ltd., a corporation formed under the laws of China (the “Butterfly Effect”) and each and all of the shareholders of the Butterfly Effect (each, a “Butterfly Effect Shareholder”, and collectively, “Butterfly Effect Shareholders”) entered into a business acquisition agreement (the “Acquisition Agreement”), pursuant to which the Company through its WFOE agreed to acquire the Butterfly Effect through a series of management agreements (the “VIE Agreements”) to effectively control and own the Butterfly Effect (the “Acquisition”). In accordance with the Acquisition Agreement, in consideration for the effective control over the Butterfly Effect, the Company issued an aggregate of 24,000,000 shares of its common stock (the “Common Stock”) to the Butterfly Effect Shareholders in accordance with the percentage (the “Butterfly Effect Shareholder Equity Percentage”) as set forth in the Acquisition Agreement. In addition, subject to the terms and conditions in the Acquisition Agreement, the Company and its subsidiaries agreed to pay a total of RMB 288,000,000 (the “Cash Consideration”) to the Butterfly Effect Shareholders pro rata with the Butterfly Effect Shareholder Equity Percentage over a period of time as set forth therein.

Pursuant to the terms and conditions of the Acquisition Agreement, the Company also agreed to dedicate forty percent (40%) of the net proceeds actually received in any public or private equity offering (the “Qualified Offering”), in which the Company raises at least $20,000,000 USD in gross proceeds before deducting any underwriter or placement agent’s discount and commissions and any offering expenses, to be used to pay the Butterfly Effect Shareholders pro rata with the Butterfly Effect Shareholder Equity Percentage until the total amount of the Cash Consideration is paid in full, without the obligation to pay any interest thereon.

In addition, the Acquisition Agreement provides that in the event that the Butterfly Effect fails to meet the net profit milestones as set forth in the Acquisition Agreement, each Butterfly Effect Shareholder shall return the Common Stock or equivalent amount of cash (the “Claw-back”) according to the formula specified in the Acquisition Agreement. However, subject to the Claw-back provision, the Acquisition Agreement prescribes that if the Company does not make payments of at least half of the Cash Consideration to the Butterfly Effect Shareholders within one (1) year commencing on the first trading day (excluding the first trading day) of the Common Stock on a national stock exchange, i) the Butterfly Effect shall have the right to appoint the majority of the Company’s Board and manage and operate the Company and its subsidiaries and ii) each of the Butterfly Effect Shareholders shall have the right to receive the number of shares of the Common Stock equal to the result of (the total amount of Cash Consideration – the sum of cash received by the Butterfly Effect Shareholders)/ $2.00 per share* Butterfly Effect Shareholder Equity Percentage.

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The Company completed this acquisition transaction on February 24, 2020 (the “Closing Date”) and acquired Butterfly Effect Media’s business.

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Butterfly Effect is primarily engaging in literary adaptation business. The Company centers its business on internet Chinese literary and literary adaptation for television shows, movies, audible books and mobile phone video games that are primarily distributed through online platforms to provide marketing and media services to the entertainment industry in China, including production of media promotion and advertising services to movies, television shows, actors and commercial products in China. For the year ended February 29, 2020, the focus and revenue stream for the Company was the purchase and sale of literature copyrights, and licensing of the copyrights to video game software development companies.

Following the acquisition, China VTV Limited and its consolidated subsidiaries and variable interest entities (“VIE”) are referred collectively herein as the “Company”. The Company plans to focus on the businesses of outdoor LED billboard advertisement in South Asia, Australia, the U.S., Taiwan and the People’s Republic of China (the “PRC”); the e-media online streaming platform; and the literary adaptation whereby the Company adapts original stories or books into TV shows, movies and mobile video games that will be distributed outside PRC through the internet. The Company is currently exploring the model to distribute contents, such as TV show episodes, produced by the Company on its online streaming platform.

Consumer

~~Currently~~As of August 31, 2020, the Company ~~has~~had approximately 3.82 million viewers and subscribers, and most of them ~~live~~reside in Malaysia, Singapore, Australia, Canada, Hong Kong, Taiwan, Indonesia, India, Thailand, the U.S. and other countries and regions, including mainland China.

Strategic Development with CybEye and Chief Technology Officer

On September 30, 2019, we entered into a strategic development agreement (the “Strategic Development Agreement”) with CybEye Image, Inc. (“CybEye”), pursuant to which CybEye is developing and providing technical support and maintenance to the Company’s online streaming media OTT Platform and incorporating blockchain technologies to the Company’s OTT Platform to enhance security. CybEye is a mobile video-messaging APP platform company that builds customized applications for various industries. The Strategic Development Agreement shall continue in full force and effect until September 29, 2022. During the term of the Strategic Development Agreement, CybEye will develop the OTT Platform only for the Company, and will not engage in providing any services to other media companies. Subject to the terms and conditions of the Strategic Development Agreement, the Company shall issue to CybEye two million and five hundred thousand (2,500,000) shares of its unissued and registered common stock at one time and forty thousand (40,000) shares its unissued and registered common stock per month during the term of the Strategic Development Agreement upon the effectiveness of a registration statement to register those shares. Pursuant to the terms of the Strategic Development Agreement, upon listing of the Company’s common stock on a national stock exchange market, the Company shall make a cash payment of $150,000 to CybEye instead of the stock payment at the end of each whole month for CybEye’s services pursuant to this Agreement.

In connection with the Strategic Development Agreement, on September 30, 2019, the Company and CybEye entered into a non-exclusive licensing agreement (the “Licensing Agreement”), pursuant to which the Company and its affiliates were granted a fully-paid perpetual non-exclusive right and license to use and develop any intellectual property and proprietary information, including, without limitation, any patents and trademarks as set forth in Schedule A thereto, which CybEye owns, to carry out the purposes and goals of the Strategic Development Agreement. On December 13, 2019, the Company and CybEye entered into an amendment to the Licensing Agreement dated September 30, 2019, pursuant to which the term of the Licensing Agreement was amended to twenty (20) years (from September 30, 2019 to September 29, 2039) and the Company agreed to issue 2,500,000 shares of its common stock to CybEye as set forth in the Strategic Development Agreement dated September 30, 2019. A copy of such amendment was filed in a current report on Form 8-K on December 17, 2019.

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In addition, on September 30, 2019, the Company and Mr. Bing Liu (the “Executive”) entered into an executive employment agreement (the “Executive Employment Agreement”), in accordance with which, subject to the approval of the board of directors of the Company (the “Board”), the Executive shall be elected as a member of the Board and the Chief Technology Officer (“CTO”) of the Company. The Executive Employment Agreement has a term (the “Term”) of three (3) years, unless terminated earlier pursuant to the termination provisions therein. In accordance with the Employment Agreement, the Executive shall receive incentive stock options to purchase five hundred thousand (500,000) shares of the Company’s common stock each year during the Term of the employment pursuant to the stock option agreement (the “Stock Option Agreement”). Upon termination of the Strategic Development Agreement, the Executive Employment Agreement shall also be terminated, unless otherwise mutually agreed in writing. In connection with the Executive Employment Agreement, on September 30, 2019 (the “Grant Date”), the Company and the Executive entered into the Stock Option Agreement under the Company’s 2019 stock plan (the “Plan”), whereby the Company issued the Executive options (the “Options”) to purchase an aggregate of five hundred thousand (500,000) shares of the Company’s common stock, at an exercise price of $12.00 per share. The Stock Option Agreement provides that the Options shall become exercisable on September 29, 2020, one year from the Grant Date, and shall expire on September 29, 2026. Subject to the terms of the Stock Option Agreement and Plan, the Options shall vest in equal amounts each quarter from the Grant Date.

Copies of the Strategic Development Agreement, Licensing Agreement, Executive Employment Agreement and Stock Option Agreement were filed in a current report on Form 8-K on October 3, 2019.

Since November 2019, our blockchain-operated App ~~have~~platform has been available for both iPhone and Android mobile phone users, and we have been trying to recruit more mobile phone users to use our App to watch our online ~~media~~ programs.

Impact of Covid-19

A novel strain of coronavirus, or COVID-19, was first identified in China in December 2019 and subsequently declared a pandemic on March 11, 2020, by the World Health Organization. As a result of the COVID-19 pandemic, all travel has been severely curtailed to protect the health of our employees and comply with local guidelines, and we temporarily closed our china offices from February toand resumed the office operations in early March 2020. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns in affected areas. The full impact of the pandemic on our business, operations and financial results will depend on various factors that continue to evolve which we may not accurately predict.

Results of Operations

Three and Six Months Ended ~~May~~August 31, 2020 compared to Three and Six Months Ended ~~May~~August 31, 2019

The following table sets forth ~~our~~selected ~~consolidated~~financial information from our statements of ~~operations~~comprehensive income for the ~~periods~~three ~~indicated~~months ended August 31, 2020 and 2019:

For the Three Months Ended

May 31, 2020

May 31, 2019

Dollar Change

August 31, 2020

August 31,2019

Dollar Change

Net Revenue

3,~~721~~024,~~618~~268

-3,828

3,~~721~~020,~~618~~440

Cost of Revenue

1,~~581~~261,~~567~~904

-1,276

1,~~581~~260,~~567~~628

Gross Profit

21,~~140~~762,~~051~~364

-2,552

21,~~140~~759,~~051~~812

General and Administrative Expenses

1,~~326~~558,~~517~~470

~~103~~117,~~039~~030

1,~~223~~441,~~478~~440

Income (Loss) from Operations

~~813~~203,~~534~~894

(~~103~~114,~~039~~478

)

~~916~~318,~~573~~372

Interest Expense

15(11,~~542~~530

)

15(11,~~542~~530

)

Other Loss

(~~18,774~~308

)

(~~18,774~~308

)

Income (Loss) Before Income Tax

~~779~~192,~~218~~056

(~~103~~114,~~039~~478

)

~~882~~306,~~257~~534

Provision for Income Tax

Net Income (Loss)

~~779~~192,~~218~~056

(~~103~~114,~~039~~478

)

~~882~~306,~~257~~534

Comprehensive Income (Loss)

~~685~~742,~~729~~766

(~~103~~114,~~266~~366

)

~~788~~857,~~995~~132

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The following table sets forth selected financial information from our statements of comprehensive income for the six months ended August 31, 2020 and 2019:

	For the Six Months Ended
	August 31, 2020			August 31, 2019			Dollar Change
Net Revenue	$	6,745,886		$	3,828		$	6,742,058
Cost of Revenue		2,843,471			1,276			2,842,195
Gross Profit		3,902,415			2,552			3,899,863
General and Administrative Expenses		2,884,987			220,069			2,664,918
Income (Loss) from Operations		1,017,428			(217,517	)		1,234,945
Interest Expense		(27,072	)		-			(27,072	)
Other Loss		(19,082	)		-			(19,082	)
Income (Loss) Before Income Tax		971,274			(217,517	)		1,188,791
Provision for Income Tax		-			-			-
Net Income (Loss)		971,274			(217,517	)		1,188,791
Comprehensive Income (Loss)	$	1,428,496		$	(217,632	)	$	1,646,128

Revenue:

During the three and six months ended ~~May~~August 31, 2020, we realized $3,~~721~~024,~~618~~268 and $6,745,886 in revenue, representing an increase of $3,~~721~~020,~~618~~440 and $6,742,058, respectively, as compared to $03,828 in revenue for the three and six months ended ~~May~~August 31, 2019. The ~~revenue~~revenues ~~was~~were generated from sales of literature copyrights and licensing of copyrights to video game software development companies. Prior to the acquisition of Butterfly Effect in February 2020, ~~the~~we ~~Company~~ did not conduct any significant revenue generating activities. During the three and six months ended August 31, 2019, we only generated revenue of $3,828 as a result of one-time advertising income.

Cost of Revenue:

Our cost of sales primarily consisted of direct production cost of audiobooks and related production overhead. During the three and six months ended ~~May~~August 31, 2020, we had cost of revenue of $1,~~581~~261,~~567~~904 and $2,843,471, respectively, compared to $01,276 during the three and six months ended ~~May~~August 31, 2019, as a result of the increase in revenue.

~~General~~Cost of Revenue during the three and ~~Administrative~~six ~~Expenses:~~months ended August 31, 2019 mainly consisted of the fees we pay to telecommunications carriers and other service providers for telecommunications and other content delivery-related services.

General and ~~administrative~~Administrative expenses primarily consisted of accrued salaries and benefits for the Company’s executives, directors and administrative staff, depreciation and amortization expenses, legal and other professional service fees, and rental expenses. General and administrative expenses were $1,326,517 for the three months ended May 31, 2020, as compared to $103,039 for the three months ended May 31, 2019, representing an increase of $1,223,478 or 1187%.Expenses

~~The~~General ~~increase in general~~ and administrative expenses ~~for~~primarily ~~the~~consisted ~~three~~of ~~months~~accrued ~~ended~~salaries ~~May~~and ~~31,~~benefits ~~2020~~for ~~was~~the ~~primarily~~Company’s ~~attributable~~executives, todirectors ~~the~~and ~~increase~~administrative instaff, depreciation and amortization expenses ~~of $577~~,~~304,~~ ~~salaries~~legal and ~~benefits~~other ~~accruals~~professional ~~for~~service ~~the~~fees, ~~Company’s~~and ~~executives,~~rental ~~directors~~expenses. General and administrative ~~staff~~expenses ofwere $~~560~~1,~~354~~558,470 ~~rental~~and ~~expenses of~~ $722,~~086~~884,987 ~~legal~~for the three and ~~other~~six ~~professional~~months ~~service~~ended ~~fees~~August 31, of2020, as compared to $10117,~~043,~~030 and ~~other~~$220,069 ~~office~~for the three and ~~miscellaneous~~six ~~expenses~~months ended August 31, 2019, representing an increase of $31,~~691~~441,440 and $2,664,918, respectively.

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The increase in general and administrative expenses for the three and six months ended August 31, 2020 were primarily attributable to the increase in depreciation and amortization expenses of $631,440 and $1,229,589, salaries and benefits accruals for the Company’s executives, directors and administrative staff of $565,535 and $1,099,442, legal and other professional service fees of $130,427 and $147,447, rental expenses of $47,772 and $117,599, and other office and miscellaneous expenses of $50,688 and $55,263.

Net Income (Loss):

Our net income ~~was~~were $~~779~~192,~~218~~056 and $971,274 for the three and six months ended ~~May~~August 31, 2020, as compared to a ~~loss~~losses of $~~103~~114,~~039~~478 and $217,517 for the three and six months ended ~~May~~August 31, 2019, representing an increase of $~~882~~306,~~257~~534 and $1,188,791, respectively. Prior to the acquisitions of China VTV HK and Butterfly Effect, the Company had only nominal operations and did not conduct any revenue generating activities. The Company substantially expanded its business operations in the beginning of its first fiscal quarter in 2020 through business combination transactions.

Comprehensive Income (Loss):

Our business operates in Chinese RMB and Hong Kong Dollars, but we report our results in our SEC filings in U.S. Dollars. The conversion of our accounts from RMB and Hong Kong Dollars to U.S. Dollars results in translation adjustments, which are reported as a middle step between net income and comprehensive income. The net loss is added to the accumulated deficit while the translation adjustment is added to a line item on our balance sheet labeled "other comprehensive income," since it is more reflective of changes in the relative values of U.S. and the foreign currencies than of the success of our business. During the three and six months ended ~~May~~August 31, 2020, the effect of converting our financial results to USD ~~was~~were agains ~~loss~~ of $~~234~~607,~~075~~812 and $373,737 to our other comprehensive income, as compared to a gain of $112 and a loss of $~~227~~115 during the three and six months ended ~~May~~August 31, 2019, respectively, as a result of the currency exchange rate ~~fluctuation~~fluctuations.

Liquidity and Capital Resources

Overview

The Company substantially expanded its business operations in the beginning of its first fiscal quarter in 2020 through mergers and acquisitions. For the ~~three~~six months ended ~~May~~August 31, 2020, we had net cash inflow of $686,896 from operations, compared to the same quarter of the prior year’s net cash outflow of $87,019.We expect to expand our business and grow our revenue with consistent operating profitability. We believe that cash flow from operations, financing arrangements, and cash on hand will adequately fund our operations for, at least, the next twelve months.

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The following table sets forth a summary of our cash flows for periods indicated:

	For the Three Months Ended
	For the Six Months Ended
	May 31, 2020			May 31,2019
	August 31, 2020			August 31, 2019
Net Cash Provided by (Used in) Operating Activities	$	~~686~~(1,~~896~~932,996	)	$	(87133,~~019~~408	)
Net Cash Provided by Investing Activities		~~800~~2,~~529~~963,314			-(111,166	)
Net Cash Provided by (Used in) Financing Activities		(1925,~~365,243~~919	)		79233,~~522~~727
Effect of Exchange Rate Changes on Cash and Cash Equivalents		~~(82~~2,~~556~~725	)		-
Net Increase (Decrease) in Cash and Cash Equivalents		39107,~~626~~124			(710,~~497~~847	)
Cash and Cash Equivalents
Beginning		51,551			17,548
Ending	$	91158,~~177~~675		$	106,~~051~~701

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Net Cash Provided by (Used in) Operating Activities

Net cash used in ~~provided by~~ operating activities was $~~686~~1,~~896~~932,996 during the ~~three~~six months ended ~~May~~August 31, 2020, compared to net cash provided ~~used in~~ by operating activities of $87133,~~019~~408 for the ~~three~~six months ended ~~May~~August 31, 2019, reflecting an increase in the amount of $~~773~~1,~~915~~799,588. The increase in the cash provided by operating activities was primarily due to the increase in net income from the business operations, the ~~decrease~~increase in ~~advances~~deferred ~~to suppliers~~revenue, and the ~~increase~~decrease in ~~deferred~~advances ~~revenue~~to suppliers, other receivables and tax payable, partly offset by the increase in ~~inventories,~~accrued expenses and ~~the decrease in other payable~~inventories, compared to the ~~three~~six months ended ~~May~~August 31, 2019.

Net Cash Provided by and Used in Investing Activities

Net cash provided by investing activities was $~~800~~2,~~529~~963,314 during the ~~three~~six months ended ~~May~~August 31, 2020, compared to net cash ~~provided~~used byin investing activities of $0111,166 for the ~~three~~six months ended ~~May~~August 31, 2019. The increase in cash ~~provided~~used byin investing activities in the amount of $~~800~~3,~~529~~074,480 was primarily due to acquisition of new copyrights in amount of $1,336,005, offset by the receipt of $34,~~214~~300,~~837~~336 net cash proceeds from the sale of 15% interest in a Company’s 86.5% owned subsidiary~~, offset by the increase in acquisition of new intangible assets in amount of $2,414,308~~.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities was $1925,~~365,243~~919 during the ~~three~~six months ended ~~May~~August 31, 2020, compared to the net cash provided by financing activities of $79233,~~522~~727 for the ~~three~~six months ended ~~May~~August 31, 2019. The increase in the cash used in financing activities in the amount of $1,~~444~~159,~~765~~646 was primarily due to the decrease in the balance of due to related parties and short-term debt during the ~~three~~six ended months ended ~~May~~August 31, 2020, offset by the proceeds of $102,060 received from shareholders, compared to the ~~three~~six months ended ~~May~~August 31, 2019.

Net increase in cash ~~and cash equivalents~~ was $39109,~~626~~644 for the ~~three~~six months ended ~~May~~August 31, 2020, compared to net decrease in cash and cash equivalents of $710,~~497~~847 for the ~~three~~six months ended ~~May~~August 31, 2019.

Sources of Liquidity

The principal sources of liquidity are derived from cash flows from operations, available borrowings including the related parties’ advances under our existing financing arrangements, proceeds from private placements, and existing cash on hand.

Uses of Liquidity

The Company's requirements for liquidity and capital resources are generally for the purposes of operating activities and capital expenditures.

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Critical Accounting Policies

Use of Estimates

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Reclassification

Advances to Suppliers

Inventories

Net realizable value is the estimated selling price in the normal course of business less any costs to complete and sell products.

Copyrights

Revenue Recognition

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Deferred Revenue

Stock-Based Payments

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Translation Adjustment

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The resulting translation adjustments are reported under accumulated other comprehensive income (loss) as a component of stockholders’ equity (deficit).

Impairment of Long-Lived Assets and Goodwill

Fair Value Measurements

Level 2 - observable prices that are based on inputs not quoted on active markets but corroborated by market data; and

The carrying values of certain assets and liabilities of the Company approximate to fair value due to their relatively short maturities.

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Noncontrolling Interests

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Basic and Diluted Earnings (Loss) Per Share

	May 31,		May 31,
	August 31,		August 31,
	2020		2019
Stock options		500,000		-
		500,000		-

Income Taxes

Recently Issued Accounting Pronouncements

~~Off-balance~~13 ~~sheet~~Table ~~arrangements~~of Contents

As of May 31, 2020, we had no off-balance sheet arrangements that had or were reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on their evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of ~~May~~August 31, 2020.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures is also based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter to which this Quarterly Report on Form 10-Q relates that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

13Off-balance ~~Table~~sheet ~~of Contents~~arrangements

As of August 31, 2020, we had no off-balance sheet arrangements that had or were reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

~~Currently~~On weNovember ~~are~~15, 2017, the Company and China VTV Taiwan Co., Ltd. (“China VTV Taiwan”) entered into a strategic partnership agreement, pursuant to which the two parties agreed to work together to promote the visibility of the Company. The Company believes that China VTV Taiwan did not ~~involved~~perform under such agreement and the agreement was terminated shortly thereafter. However, the Company then discovered that China VTV Taiwan submitted a trademark registration of the Company’s mark consisting of the English letters, Chinese letters and the rainbow under its own name in ~~any~~Taiwan ~~pending~~without ~~litigation~~consent or ~~legal~~approval ~~proceeding~~from the Company. Immediately thereafter on December 7, 2018, the Company filed an opposition to China VTV Taiwan’s mark registration in front of the Taiwan Intellectual Property Office. On November 12, 2019, the Taiwan Intellectual Property Office denied China VTV Taiwan’s mark registration application and China VTV Taiwan appealed such decision to the Ministry of Economic Affairs of Taiwan. On April 14, 2020, the Ministry of Economic Affairs of Taiwan affirmed the decision of the Taiwan Intellectual Property Office that it agreed with the Company on denying China VTV Taiwan’s mark registration in Taiwan. On July 7, 2020, the Company’s wholly owned subsidiary in Hong Kong received the affirmation from the Taiwan Intellectual Property Office to register the Company’s mark and the accompanying text in Taiwan.

Except as disclosed above, currently we are not involved in any pending litigation or legal proceeding.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2. Unregistered Sales of Securities and Use of Proceeds.

During the three months ended ~~May~~August 31, 2020, the Company did not issue any share of unregistered common stock except as disclosed in the Company’s current reports on form 8-K during such period.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mining Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

The following exhibits are filed herewith:

Exhibit No.		Description

31.1		Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	China VTV Limited
	(Registrant)
Date: August 19, 2020	By:	/s/ Tijin Song
Date: October 21, 2020	By:	/s/ Tijin Song
		Tijin Song
		Chief (Principal) Executive Officer

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Filing Compare · China VTV Ltd