Pop Culture Group Co., Ltd Reports Fiscal Year 2022 Financial Results

XIAMEN,China,Oct. 29,2022 --Pop Culture Group Co.,Ltd ("Pop Culture" or the "Company") (Nasdaq: CPOP),a hip-pop culture company inChina,today reported its financial results for the fiscal year ended June 30,2022.

Fiscal Year 2022 Financial Highlights

Total revenue was $32.28 million,an increase of 26% from $25.53 million in fiscal year 2021.

Revenue from event hosting was $14.71 million,a decrease of 2% from $14.98 million in fiscal year 2021.

Revenue from brand promotion was $8.73 million,an increase of 1,064% from $0.75 million in fiscal year 2021.

Revenue from event planning and execution was $8.42 million,a decrease of 8% from $9.20 million in fiscal year 2021.

Gross profit was $6.25 million,a decrease of 14% from $7.22 million in fiscal year 2021.

Net income was $0.69 million,compared with $4.27 million in fiscal year 2021.

Basic and diluted earnings per share were $0.04,compared with $0.25 in fiscal year 2021.

Fiscal Year 2022 Operational Highlights

The Company's concerts and hip-hop events generated an aggregate attendance of 203,233 during the fiscal year ended June 30,2022.

The Company's online hip-hop programs generated over 210 million views during the fiscal year ended June 30,2022.

The Company served 21 clients in 56 events with respect to event planning and execution during the fiscal year ended June 30,2022.

Mr. Zhuoqin Huang,Chairman and Chief Executive Officer of Pop Culture,commented,"We continued to deliver recorded performance during fiscal year 2022,as our revenue reached $32.28 million,representing an increase of 26% from fiscal year 2021,despite the challenging and uncertainty macroeconomic headwinds. Our brand promotion business generated an increase of 1,064% in revenue from fiscal year 2021. Our strong financial performance during this year reflected the continued success of our high-quality services to help clients achieve their goals,our expertise and deep understanding of hip-hop culture,and our strong capabilities to meet the needs of our clients."

Mr. Huang continued,"We developed several strategic initiatives to gain competitive edges on the market. We aim to benefit more street dance organizations through our software-as-a-service (SaaS) platform. There were over 60,000 students using the SaaS platform provided by our subsidiary,Shenzhen Jam Box Technology Co.,Ltd.,as of June 30,2022,and we expect to continue to upgrade the SaaS platform,implement horizontal growth strategy,and further provide services to companies from the education and training industry. Also,the development of metaverse-related business remains our priority,we will continue to make investment in metaverse-related business to provide a comprehensive of hip-hop experience to users. Looking forward,we aim to leverage the strengths of our intellectual property portfolio and services to strengthen our existing customer base,attract new customers,and enhance our market position. We believe our solid business model and strategic development plan position us well to capture the growth opportunity in the market and maintain our momentum. As we look to fiscal year 2023,we are excited to deliver innovative content and experience to users and generate long-term value for our shareholders."

Fiscal Year 2022 Financial Results

Revenue

Following table presents the Company's revenue by revenue source and by proportion:

For the Fiscal Years Ended June 30,

Change

2022

%

2021

%

Amount

%

Event Hosting

$

14,711,787

46

%

$

14,978,643

59

%

$

(266,856)

(2)

%

Brand Promotion

8,733,764

27

%

750,315

3

%

7,983,449

1,064

%

Event Planning and Execution

8,420,328

26

%

9,196,773

36

%

(776,445)

(8)

%

Other Services

415,664

1

%

600,826

2

%

(185,162)

(31)

%

Total revenue

$

32,281,543

100

%

$

25,526,557

100

%

$

6,754,986

26

%

Total revenue increased by$6.75 million,or 26%,to$32.28 million in fiscal year 2022,from$25.53million in fiscal year 2021.

Revenue from event hosting decreased by$0.27 million,or 2%,to$14.71 million in fiscal year 2022,from$14.98 million in fiscal year 2021. The decrease was primarily because the Company's PRC operating entitiespostponed most of their Move It campaigns until July 2022 due to the Covid-19 pandemic.

Revenue from brand promotion increased by$7.98 million,or 1,064%,to$8.73 million in fiscal year 2022,from$0.75 million in fiscal year 2021. The increase was generated from clients' increasing investment in online platforms like TikTok,Kuaishou,and Xigua.

Revenue from event planning and execution decreased by$0.78 million,or 8%,to$8.42 million in fiscal year 2022,from$9.20 million in fiscal year 2021. The decrease was primarily attributable to a decrease in the number and size of the events the Company's PRC operating entities undertook.

In fiscal year 2022,other service revenue included music recording service income,digital collection sales income,and SaaS software service income. Other service revenue was $415,664 in fiscal year 2022,a decrease of 31% from fiscal year 2021. Compared with fiscal year 2021,the Company's PRC operating entities generated revenue from certain newly developed businesses,including $350,886 from music recording services,$55,536 from digital collection sales,and $9,242 from SaaS software services in fiscal year 2022. In fiscal year 2021,the Company's PRC operating entities generated advertisement distribution service revenue of $616,292,while they did not generate such revenue in fiscal year 2022.

Cost of Revenue

The cost of revenue increased by $7.73 million,or 42%,to $26.04 million in fiscal year 2022,from $18.30 million in fiscal year 2021.

The cost of revenue was derived from the following sources:

For the Fiscal Years Ended June 30,

Change

2022

%

2021

%

Amount

%

Event Hosting

$

9,853,996

38

%

$

10,345,925

56

%

$

(491,929)

(5)

%

Brand Promotion

1,358,040

5

%

366,433

2

%

991,607

271

%

Event Planning and Execution

7,332,011

28

%

7,553,522

41

%

(221,511)

(3)

%

Other Services

7,491,964

29

%

36,614

1

%

7,455,350

20,362

%

Total Cost of Revenue

$

26,036,011

100

%

$

18,302,494

100

%

$

7,517

42

%

Gross Profit and Gross Margin

Gross profit decreased by $0.98 million,or 14%,to $6.25 million in fiscal year 2022,from $7.22 million in fiscal year 2021. Gross margin was 19% in fiscal year 2022,compared with 28% in fiscal year 2021.

The following table displays the gross profit:

For the Fiscal Years Ended June 30,

2022

2021

Change

Amount

%

GP%

Amount

%

GP %

Amount

%

Event Hosting

$

4,857,791

78

%

33

%

$

4,632,718

64

%

31

%

$

225,073

5

%

Brand Promotion

7,375,724

118

%

84

%

383,882

5

%

51

%

6,991,842

1821

%

Event Planning and Execution

1,088,317

17

%

13

%

1,643,251

23

%

18

%

(554,934)

(34)

%

Other Services

(7,076,300)

(113)

%

(1702)

%

564,212

8

%

94

%

(7,640,512)

(1354)

%

Total gross profit

$

6,245,532

100

%

19

%

$

7,224,063

100

%

28

%

$

(978,531)

(14)

%

Operating Expenses

Total operating expenses increased by $3.44 million,or 247%,to $4.83 million in fiscal year 2022,from $1.39 million in fiscal year 2021. Operating expenses as a percentage of total revenue increased to 15.0% in fiscal year 2022 from 5.5% in the same period of last year.

Selling and marketing expenses increased by$0.25 million,or 185%,to$0.38 millionin fiscal year 2022,from$0.13 millionin fiscal year 2021. The increase was primarily due to sales and marketing staff recruitment and compensation for business development.

General and administrative expenses increased by$3.19 million,or 253%,to$4.45 million in fiscal year 2022,from$1.26 millionin fiscal year 2021. The increase was mainly driven by two factors: management bonus for calendar year 2021 was issued in the first quarter of fiscal year 2022; and a majority of legal fees occurred in fiscal year 2021 was IPO-related,thus offset as equity-settled capital reserve,while legal fees in fiscal year 2022 were recorded as administrative expenses.

Income from Operations

Income from operations was $1.42 million in fiscal year 2022,compared to $5.83 million in fiscal year 2021.

Income Tax Expenses

Income tax expenses were $871,231 and $1,416,872for fiscal year 2022 and 2021,respectively. The decrease was primarily from accrued regular income tax in fiscal year 2020 and a preferential tax rate that Company's subsidiaries were entitled to.

Net Income

Net income was $0.69 million in fiscal year 2022,compared with$4.27 million in fiscal year 2021. Net income attributable to the Company's shareholders was$0.79 million in the fiscal year 2022,compared with$4.27 million in fiscal year 2021.

Basic and Diluted Earnings per Share

Basic and diluted earnings per share were$0.04 in fiscal year 2022,compared with basic and diluted earnings per share of$0.25 in fiscal year 2021.

Cash Flows

Net cash used in operating activities was $19.37 million in fiscal year 2022,compared to $4.04 million in fiscal year 2021. Net cash used in investing activities was $0.80 million in fiscal year 2022,compared to $nil in fiscal year 2021. Net cash provided by financing activities was $33.06 million for fiscal year 2022,compared to $3.95 million in fiscal year 2021.

Cash and Cash Equivalents

As of June 30,the Company had cash and cash equivalents of $14.40 million,compared to $1.32 million as of June 30,2021.

About Pop Culture Group Co.,Ltd

Headquartered inXiamen,Pop Culture Group Co.,Ltd is a hip-hop culture company. The Company aims to promote hip-hop culture and its values,and to promote cultural exchanges with respect to hip-hop betweenthe United StatesandChina. With the values of hip-hop culture at its core and the younger generation as its primary target audience,the Company hosts entertainment events,operates hip-hop related online programs,and provides event planning and execution services and brand promotion services to corporate clients. The Company has in recent years focused on developing and hosting its own hip-hop events. For more information,visit the Company's website athttp://ir.cpop.cn/.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties,including the further spread of the COVID-19 virus or new variants thereof,or the occurrence of another wave of cases and the impact it may have on the Company's operations and the demand for the Company's services,and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition,results of operations,business strategy,and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to," or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances,or changes in its expectations,except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable,it cannot assure you that such expectations will turn out to be correct,and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and its other filings with the SEC.

For more information,please contact:

Pop Culture Group Co.,Ltd

Investor Relations Department

Email: ir@cpop.cn

Ascent Investors Relations LLC

Tina Xiao

President

Phone: 917-609-0333

Email:tina.xiao@ascent-ir.com

POP CULTURE GROUP CO.,LTD

CONSOLIDATED BALANCE SHEETS

(In U.S. dollars,except share data)

As of June 30,

2022

2021

ASSETS

CURRENT ASSETS:

Cash

$

14,396,032

$

1,319,977

Accounts receivable,net

26,278,634

25,537,236

Advance to suppliers

9,351,431

1,999,876

Prepaid expenses and other current assets

805,427

3,028

TOTAL CURRENT ASSETS

50,831,524

32,410,117

Property and equipment,net

71,763

48,393

Intangible asset,net

2,204,411

1,635,321

Operating right-of-use asset

461,399

194,747

Prepaid Taxes

332,022

-

Deferred tax assets

457,649

140,757

Other non-current assets

10,009,200

-

TOTAL ASSETS

$

64,367,968

$

34,429,335

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Short-term bank loans

$

3,792,121

$

5,140,990

Accounts payable

966,822

1,900,883

Deferred revenue

47,710

1,648,847

Taxes payable

4,697,267

4,232,391

Due to a related party

149,296

225,000

Accrued liabilities and other payables

229,209

77,567

Operating lease liability – current

208,926

98,427

TOTAL CURRENT LIABILITIES

10,091,351

13,324,105

Long-term bank loans

1,254,087

1,672,370

Operating lease liability - non-current

250,178

104,755

TOTAL LIABILITIES

11,595,616

15,101,230

Commitments and contingencies

SHAREHOLDERS' EQUITY

Ordinary shares (par value $0.001per share;44,000,000Class A ordinary shares

authorized as of June 30,2021 and 2022;12,086,923and18,286,923Class A

ordinary shares issued and outstanding as of June 30,2021 and 2022,

respectively;6,000Class B ordinary shares authorized,5,763,077Class B

ordinary shares issued and outstanding as of June 30,2021 and 2022) *

24,050

17,850

Subscription receivable

(15,441)

(15,441)

Additional paid-in capital

40,158,643

6,118

Statutory reserve

1,499,369

1,241,573

Retained earnings

11,028,345

10,498,183

Accumulated other comprehensive (loss) income

69,019

942,822

TOTAL POP CULTURE GROUP CO.,LTD SHAREHOLDERS' EQUITY

52,985

19,328,105

Non-controlling interests

8,367

-

TOTAL SHAREHOLDERS' EQUITY

52,772,352

19,105

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

64,335

*

Certain shares are related to the reorganization for the founding shareholders and are presented on a retroactive

basis to reflect the reorganization.

POP CULTURE GROUP CO.,LTD

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In U.S. dollars,except share data)

For the years ended June30,

2022

2021

2020

REVENUE,NET

$

32,543

$

25,557

$

15,688,080

Cost of revenue

26,011

18,494

11,847

GROSS PROFIT

6,532

7,063

4,529,233

Selling and marketing

380,723

133,387

110,132

General and administrative

4,448,342

1,258,750

1,256,954

Total operating expenses

4,829,065

1,392,137

1,086

INCOME FROM OPERATIONS

1,467

5,926

3,162,147

Other (expenses) income:

Interest expenses,net

(235,327)

(243,458)

(125,560)

Other (expenses) income,net

377,979

95,946

46,235

Total other expenses,net

142,652

(147,512)

(79,325)

INCOME BEFORE INCOME TAX PROVISION

1,559,119

5,684,414

3,082,822

PROVISION FOR INCOME TAXES

871,231

1,872

457,005

NET INCOME

687,888

4,267,542

2,625,817

Less: net income attributable to non-controlling interests

(100,070)

-

189,996

NET INCOME ATTRIBUTABLE TO POP CULTURE GROUP

CO.,LTD SHAREHOLDERS

787,958

4,542

2,435,821

Other comprehensive (loss) income:

Foreign currency translation adjustment

(873,803)

1,335,757

(241,839)

COMPREHENSIVE INCOME

(185,915)

5,603,299

2,383,978

Less: comprehensive income attributable to non-controlling interest

(100,070)

-

174,392

COMPREHENSIVE INCOME ATTRIBUTABLE TO POP

CULTURE GROUP CO.,LTD SHAREHOLDERS

$

(85,845)

$

5,299

$

2,209,586

Net income per share

Basic and diluted

$

0.04

$

0.25

$

0.16

Weighted average shares used in calculating net income per share *

Basic and diluted

20,950,000

17,228,698

14,881,478

*

Certain shares are related to the reorganization for the founding shareholders and are presented on a retroactive

basis to reflect the reorganization.

POP CULTURE GROUP CO.,LTD

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars)

For the years ended June 30,

2022

2021

2020

Cash flows from operating activities:

Net Income

$

687,888

$

4,542

$

2,817

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Allowance for doubtful accounts

1,307,518

195,187

324,345

Depreciation and amortization

310,343

243,905

233,353

Deferred tax benefit

(334,045)

(47,802)

(84,246)

Non-cash lease expense

84,552

107,139

89,977

Loss/(gain) from disposal of property and equipment

(1,237)

-

19,300

Changes in assets and liabilities:

Accounts receivable

(3,001,954)

(9,259,862)

(5,992)

Advance to suppliers

(7,542,591)

1,440,794

(2,531,334)

Amounts due from related parties

-

-

153,586

Prepaid expenses and other current assets

1,533,471

(1,504,345)

(44,002)

Operating lease right-of-use assets

(563,300)

-

-

Other non-current assets

(10,050,789)

268,433

(252,816)

Accounts payable

(898,452)

(1,130,593)

49,588

Deferred revenue

(1,599,990)

(275,888)

1,762,730

Taxes payable

295,333

1,592,715

721,743

Accrued liabilities and other payables

156,840

(52,007)

54,234

Due to a related party

(225,000)

225,000

-

Operating lease liability

476,367

(107,550)

(54,112)

Net cash provided by (used in) operating activities

(19,365,046)

(4,037,332)

(2,604,829)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(82,733)

-

(1,716)

Proceed from disposal of property and equipment

-

-

4,977

Purchase of intangible asset

(720,000)

-

-

Net cash (used in) provided by investing activities

(802,733)

-

3,261

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans

3,433,810

6,341,729

1,838,833

Repayments of short-term bank loans

(4,956,629)

(3,472,851)

(1,981,799)

Proceeds from long-term bank loans

(245,791)

1,811,922

-

Repayments of long-term bank loans

-

-

Proceeds from issuance of shares

33,630,162

-

3,817,842

Payment for deferred offering costs

1,197,380

(729,977)

(409,743)

Net cash provided by financing activities

33,058,932

3,823

3,265,133

Effect of exchange rate changes

184,902

47,349

40,083

Net increase (decrease) in cash

13,055

(39,160)

703,648

Cash at beginning of year

1,977

1,359,137

655,489

Cash at end of year

$

14,032

$

1,977

$

1,137

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Income tax paid

$

398,370

$

34,765

$

17,408

Interest expense paid

$

56,733

$

235,361

$

126,095

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