Thread by @_sensenlin_

Thread:

JYP was heavily in debt prior to GOT7 debut that not even WG, 2PM, Miss A, Suzy can save the company. That's not to say that they don't earn money, but it wasn't enough for this man's ambition of buying a $46,000,000 in debt publicly listed company.

I'll just start when they acquired J.Tune which Bi(rain) used to owned. When Bi(Rain) bought shares of it, it was already around $18,000,000 in debt. Then JYP bought it, as well as acquiring the rest of Bi's shares to own it. This is the publicly listed company, not the Parent.

There is a JYP Parent that is private. You'll understand why he gamble and bought this later when the merge happened and I'll show you the Parent's financial statements. Then I'll compare it to YGE who went public in the same year JYP bought this company.

I'll make it less hard by just highlighting these things for you: Capital Surplus, Retained Earnings, Total Assets, liabilities, Revenues, Net Income. You will have a harder time if I add in more stuff. So let's start from the year JYP acquired J.Tune and changed it to JYP Ent.

They called this the 16th term, which start from July 2010 - June 30th, 2011. Current exchange, inflation included.

Retained Earnings: -$45,960,703
Capital Surplus: $52,532,826
Sales/Revenue: $8,601,256
Net Income: $209,257
Total Liabilities: $3,879,771
Total Asset: $19,343,519

Total assets are of current and long term. Same goes to Total Liabilities. Sales/Revenues are only there to allow you to see how much money they take in while Net Income allow you to see how much has been taken out, including taxes. Net Income is their true earning for the year.

Touch up in the ss is sales/revenue (google translate...lol) Net Income is the number that they can put in retained earnings. So in this year, their RE is negative. They have a positive NI, so when they file that into RE, it'd lowering the negative number. Paying RE debt by NI.

Current Asset is where the money to fund comebacks are. And 'advance payment' from customers are also filed in Current Asset. Advance Payment are in current liabilities and current asset until it's recognized as revenue.

Now the 17th term from July 2011-December 2011. It's a half year because the company changes their fiscal year after the acquisition. Changes in RE in just 6 months.

16th Term: -$45,943,291
17th Term: -$48,089,924

I'll continue later because next is the merger between this JYP Ent. & JYP Parent. In which you can see the financial statements for the parent. I feel I need to make a separate thread...But they too had a negative RE in the year they acquire JYP Ent.

You can read this summary thread that I created weeks ago while researching and trying to make sense of some stuff while you wait. I said I'll talk about the building but I haven't. This time I will.

https://twitter.com/_sensenlin_/status/1285463147944517632

JYPE in 2012. Right after acquiring the rest of J.Tune, JYPE report on major shareholder changes. They changed the fiscal year to Jan -December of a year.

A summary of their debts and sales for the year of 2012 (this is now when JYPE fully take over the company.) Data in 2nd column. Third column is for 17th term.

Retained Earnings: -$54,893,077
Capital Surplus: $57,738,217
Sales: $11,113,425
Net Income: -$7,049,561

Okay, here is something I can show you not to believe in articles and for a public company, you need to go and take a look at their financial statements and look at their Net Income / Loss instead of looking for Gross Profit.

In 2012, JYPE:
Sales/Revenues: $11,113,425
Cost of Sales: $8,731,628
Gross Profit: $2,384,587
Net Income: -$7,049,561

Did you see how they have a positive gross profit, yet a huge net loss? Their Net Income/Loss is the true bottom line of the company yearly earning.

Because Gross Profit is just the profit from selling products minus the cost of creating those products. It hasn't calculate in administration (upkeep of the company, advertisements, taxes, dividends, etc.) Net Income is after paying everything!

Your bias can sell amazingly but in the end of the day it would still not be enough to keep a company standing because they have other things to pay. And a $2,384,587 gross profit will not be enough to pay off these:

Admin Cost: $5,471,190
Other Costs: $4,653,925

Media can hyped all they want about a company Gross Profit, for us accountants, the bottom line matters for a company to keep operating year to year. The net income is reserve in Retained Earnings. Because JYPE operate at a huge loss, their RE keep going deep negative

They added another $20m in that negative reserve since the take over until they decided to merge their private company (that was in the negative but made it out to positive) in order to get capital surcharge to pay off the huge debt and restart everything.

When they planned this, GOT7 was already planned to debut. Not only GOT7, but the plan was to have 4 new groups of which they got 3 out. But if you think about it properly, if the first group comes out and isn't earning money, will the other have enough funding to debut?

No one is denying 2PM's contribution. They did a lot and as much as they can with that company, but it was truly not enough to pay off such huge debt. They tour so much but the company still operate at a net loss!

2013, when JYP Parent Merge with JYPE (publicly listed company). This was JYP Parent's financial statements from 2009 up until the merge 2013. The format messed up when translated to English, but the last line is Retained Earnings.

End of June 2013: $1,040,826
2009: -$8,909,776

When 2PM and Miss A debut, the company too was in the negative in the reserves. They did help bring the company into the positive as you can see the slowly rebuild of the RE from the chart I provided. That is for JYP Parent, much smaller. You can see for yourself.

Then, 2011 roll around and there's news of YGE going public with an IPO (initial public offering) up to $30 a share. Around this time, there were news of JYPE possibly going bankrupt. JYP was way behind SME and YGE, way way behind, he can't go public koreatimes.co.kr/www/news/biz/2…

with his company because it was still in debt.

2011 Retained Earnings: -$6,421,116

It's not qualified to get a quote from anyone, and to rebuild the company to a prime state so they can go public to get a high IPO would be harder because they lost private investors trusts.

The best bet, and the only way for JYP to have a publicly listed company is to acquire one. The profitable company will be hard to attain, so the best is to get one that has the lowest price, but that one has huge debt. It's a huge gamble to acquire such a heavily in debt comp.

The amount to pay off is not small, the capital surplus isn't enough considering there are liabilities and admin expenses. But if they can get it right then they will have a profitable publicly listed company. However, they have to plan ahead with new groups in order to

gain back the investor trust. The heavy investors are the one they want. There were 4 groups that they planned (There was a report on their plan, I didn't save it, so whatever if you don't believe it.) They prepped them while merging the two company to get the capital surcharge

that goes into capital surplus in order to use to pay off the retained earnings debt. They merged in 2013, but it took a whole year for it to be reflected. So when GOT7 debut in Jan of 2014, the company still did not have a lot of fund, to buy time they were pushed out to touring

A lot of fanmeets overseas and domestics. 2PM too were touring a lot in 2014-2015. Japanese tour is lucrative, but here is something that you wouldn't know if you don't read their financial statements. Japanese labels takes a huge cut out of the revenues that is incurred.

Why is this? Japanese labels are the one that incurred cost for promotion. The more promotions they do, the more costly they are, and the contract agreement was that JYPE has to pay them in revenues/sales. (it stated in their financial statements.)

Now let's do a comparison of 2013 vs 2014. The merged happened in October of 2013. GOT7 debut in Jan 2014. *note* I'm using non-consolidated(Without subsidiaries in the mix, I'm being lenient lol.)

Capital Surplus:
2013: $94,041,055
2014: $94,041,055

Retained Earnings:
2013: -$58,598,182
2014: -$52,987,133

Sales:
2013: $14,995,310
2014: $37,323,267

*touch = sales* Now look at Cost, Gross Profit, Expenses, then look for Net Income(Loss). Then go take a look at GOT7's activities and sales throughout 2014. tbc...