##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB/A
 o
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
[          ]þ
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from October 1, 2005 to March 31,
2006
 000-26347
 Sun New Media, Inc.
  MINNESOTA
    
    410985135(State or other jurisdiction of incorporation)
    
    (IRS Employer
Identification No.)
 Fourth Floor 1120 Avenue of the Americas, New York, NY
    
    10036(Address of principal executive offices)
    
    (Zip Code)
 (212) 626-6744
 None
 Common Stock, par value $0.01 per
share
    þ o
 o
 o þ
 $402,173
   (1)
   DOCUMENTS INCORPORATED BY REFERENCE
 None.
  o þ




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##### 



TABLE OF CONTENTS
  
 PagePART I
    
    
    4Item 1. Description of Business
    
    
    4Item 1A. Risk Factors
    
    
    11Item 2.
Properties
    
    
    22Item 3. Legal Proceedings
    
    
    22Item 4. Submissions of Matters to a Vote of Security Holder
    
    
    22PART II
    
    
    23Item 5. Market for Common Equity and Related Shareholder Matters
    
    
    23Item 6. Management Discussion and Analysis
    
    
    24Item 7. Financial Statements
    
    
    27Item 8. Changes In and Disagreements With Accountants on Accountingand Financial Disclosure
    
    
    49Item 8A. Controls and Procedures
    
    
    49Item 8B. Other Information
    
    
    49PART III
    
    
    50Item 9. Directors and Executive Officers of the Registrant
    
    
    50Item 10. Executive Compensation
    
    
    52Item 11. Security Ownership of Certain Beneficial Owners and Management
    
    
    53Item 12. Certain Relationships and Related Transactions
    
    
    55Item 13. Exhibits
    
    
    55Item 14. Principal Accountant Fees and Services
    
    
    58SIGNATURES
    
    
    59EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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FORWARD LOOKING INFORMATION
     3




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PART I
 
 Item 1. Description of Business
 Overview
    http://www.sunnewmedia.net
 Background
   4




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Corporate Strategy
  
    
    Integrate our acquired businesses. We completed our first acquisitions in the first
half of calendar 2006. During fiscal 2007 we intend to complete the integration of all of
our acquisitions and leverage the efficiencies that we believe can be obtained by
providing services to multiple verticals.
    
    Increase our value to customers by developing broader service offerings.We intend to
develop additional services to offer to our customers. Among other projects, we are
developing an integrated business communications software application that integrates
industry information, database access, and secure communication tools on a single
platform, accessible via PC or mobile device.
    
    Increase our brand awareness.We intend to increase market awareness of our brand and
services through leveraging our presence in Chinas business media industry and dedicated
marketing services team to promote integrated brand solutions for the Sun New Media brand.
    
    Continue to explore complimentary acquisitions. We intend to continue to seek
acquisition of companies or strategic relationships that will allow us to offer services
in additional verticals.
 Services
  Transactional Services Division
  5




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Information Services Division
    Media Investments
 investments China Business Post
 6




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##### Table of Contents



Competition
     Proprietary Rights
  Governmental Regulation
  
    
    the Ministry of Culture;
    
    the Ministry of Information Industry;
    
    the State Press and Publications Administration;
    
    the State Copyright Bureau;
    
    the State Administration for Industry and Commerce;
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
    
    the Ministry of Public Security; and
    
    the Bureau of State Secrecy.
   
    
    Sun China Media (Beijing) Technology Co., Ltd. (SCMBT), a PRC company controlled
through us by contract and is owned equally by Qiong Zhou and Yuling Li, each of whom are
non-executive employees of the Company.
    
    Suizhou Focus Trading Development Co., Ltd. (SFC), a PRC company controlled by us by
contract and is engaged in marketing, information and technology services to beverage and
electronic device distributors. It is 60% owned by Qi Yang, one of our officers and
directors and 25% and 15% owned by Bingwei Wu and Quanyi Mao, two employees of the Company
respectively.
    
    Shanghai Shengji Technology Co., Ltd (Shengji), a PRC company controlled by us by
contract, and is engaged in wireless mobile services. It is 40% owned by Hui Yan, 40%
owned by Min Lin and 20% owned by Kezhou Luan, each employees of the Company.
    
    Sun China Media (Beijing) International Advertising Co. Ltd (SCMIA), a China company
controlled by us by contract and is engaged in advertising business. It is 50% owned by
Qiong Zhou, and 50% owned by Yuling Li, non-executive PRC employees of the Company.
  Employees
  Recent Developments
 Board Changes
  
    
    William Adamopoulos, May 11, 2006;
    
    Yang Qi, May 11, 2006;
    
    Mark Newburg, May 31, 2006; and
    
    Ricky Gee Hing Ang, June 29, 2006
  
    
    Chauncey Shey, May 11, 2006; and
    
    John Zongyang Li, June 28, 2006.
  
    
    On June 29, 2006, our wholly owned subsidiary, Sun New Media
Holdings Limited entered into an agreement with MIDGET Limited and
divested our interest in Compass Multimedia Holdings Limited for
a consideration of approximately RMB5.3 million (US$0.67 million).
 
    
    On June 14, 2006, we entered into a Sales & Purchase Agreement
(the Credit 114 Purchase Agreement) with Sun Media Investment
Holdings Ltd. (SMIH) to acquire 100% of the outstanding
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shares of Credit Network 114 Limited (Credit 114). Credit 114 is incorporated in the British
Virgin Islands and is engaged in the business of data collection and management.
 Dragon List Music Sales Report Music
Radio Report
   
    
    On June 8, 2006, we entered into an agreement with Mr. Ren
Huiliang (the Seller) to purchase 100% of William Brand
Administer Limited and its subsidiary, William Textiles Limited,
collectively William Brand. William Brand is a China-based
producer and distributor of womens luxury apparel. The
consideration for the acquisition is to be
satisfied in full through the issuance of 4,655,172 shares of our
common stock. The Company will issue the shares to the Seller in
four installments: the first installment of 1,163,793 shares to be
issued within thirty days of the completion of the deal and the
remaining shares to be issued in thirds at the end of each of the
next three years, subject to William Brand achieving minimum
revenue and profit targets in each of the 3 years, commencing June
1, 2006. These revenue and profit targets are as follows: revenue
of US$15 million in year one, US$17.5 million in year two, and
US$20 million in year three, and minimum after-tax profit of US$3
million, US$3.5 million, and US$4 million in years one, two and
three, respectively.
 
    
    On May 23, 2006, we signed a strategic cooperative and sales
purchase agreement (the CEAC Agreement) with China Electronic
Appliances Corporation (CEAC), a subsidiary of the state-owned
China Electronics Corporation (CEC), and two individuals, Mr.
Yong Li and Mr. Mianchun Wang, management designees from CEAC
(collectively, the Sellers). The CEAC Agreement provides that we
will purchase a 49% interest in Beijing Trans Global Logistics
(BTGL) and its subsidiary, Beijing CEAC Trans Global Logistics
(BCTG) from Messrs. Wang and Li and a 31% stake in BTGL from
CEAC. As a result, we will effectively own 80% of shares of BTGL
and will effectively own 64% of the shares in BCTG. The
consideration for the acquisition is to be
satisfied through a combination of cash and shares as follow: RMB
9 million in cash and the remaining through the
issuance of 138,066 shares of our common stock.
   
    
    On April 20, 2006, we entered into an agreement (the Purchase
Agreement) with Sun Media Investment Holdings Ltd. (SMIH). The
Purchase Agreement provides that we will purchase various assets,
including real estate, automobiles, office equipment, and program
rights, as well as approximately 48.6 million shares in Asia
Premium Television Group (OTCBB: ASTV, ASTV) for a total
consideration of US$3,442,587, to be satisfied by the issuance of
860,647 shares of our common stock.
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
    
    On April 20, 2006, we divested 100% of Global American Investments
Inc., our legacy brokerage business, to Kingston Capital Group
Limited for US$40,000 in cash.
 
    
    On January 27, 2006, we completed the acquisition of China Focus
Channel Development Co. Ltd. (Focus), pursuant to a Sale and
Purchase agreement (the Focus Purchase Agreement) dated November
22, 2005 with Yang Qi, Mao Quan Yi and Wu Bing Wei (collectively,
the Sellers) in exchange for 14,900,000 shares of our common
stock. We have based our beverages vertical business on the
business of Focus.
  a)
    
    the audited net profit after tax (PAT) of Suizhou Focus Channel Development Limited
(SFC), wholly owned subsidiary of Focus, is in excess of $4.5 million for the fiscal
year ending December 31, 2006,b)
    
    the audited PAT of SFC is in excess of $5.0 million for the fiscal year ending
December 31, 2007; andc)
    
    the audited PAT of SFC for the fiscal year ending December 31, 2008 is in excess of
$5.5 million.
      a)
    
    the profit related shares shall be reduced to 700,000 shares per year from the
original 2,000,000 shares per year for which the profit guarantees are met;b)
    
    the Company shall pay the Sellers a cash component of RMB40 million (approximately
US$5 million); andc)
    
    the business and assets of HZTD shall remain with HZTD and will not be transferred to
SFC as provided in the original Purchase Agreement.
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Reports to Securities Holders
  
 
 Item 1A. Risk Factors
 You should consider carefully all of the information in this Annual Report on Form 10-KSB ,
including the risks and uncertainties described below, before making an investment in our common
stock. Any of the following risks could have a material adverse effect on our business, financial
condition and results of operations. In any such case, the market price of our common stock could
decline, and you may lose all or part of your investment.
 Risks Related to Our Business
 The development of our business is dependent upon the completion of a number of acquisitions and
other transactions that have only recently or not yet closed.
  Our short operating history and rapidly evolving business makes it difficult for us to accurately
forecast revenues and expenses.
   
    
    offer new and innovative products and services to attract and retain a larger consumer base;
    
    attract customers;
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
    
    increase awareness of our brand and continue to develop consumer and customer loyalty;
    
    respond to competitive market conditions;
    
    respond to changes in our regulatory environment;
    
    manage risks associated with intellectual property rights;
    
    maintain effective control of our costs and expenses;
    
    raise sufficient capital to sustain and expand our business;
    
    attract, retain and motivate qualified personnel; and
    
    upgrade our technology to support increased traffic and expanded services.
  If the Internet and, in particular, interactive marketing are not broadly adopted in China, our
ability to increase revenue and sustain profitability could be materially and adversely affected.
  
    
    difficulties associated with developing a larger consumer base with
demographic characteristics attractive to customers;
    
    increased competition and potential downward pressure on online marketing prices;
    
    ineffectiveness of our online marketing delivery, tracking and reporting systems; and
    
    lack of increase in Internet usage in China.
 We face significant competition and may suffer from a loss of users and customers as a result.
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Our business depends on a strong brand, and if we are not able to maintain and enhance our brand,
our business and operating results may be harmed.
  If we fail to continue to innovate and provide relevant services, we may not be able to
generate sufficient user traffic levels to remain competitive.
  If we fail to keep up with rapid technological changes, our future success may be adversely
affected.
  We may face intellectual property infringement claims and other related claims, that could be
time-consuming and costly to defend and may result in our inability to continue providing certain
of our existing services.
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We may not be able to prevent others from unauthorized use of our intellectual property, which
could harm our business and competitive position.
  If we fail to attract customers for our online marketing services, our business and growth
prospects could be seriously harmed.
  Because we primarily rely on distributors in providing our e-marketing services, our failure
to retain key distributors or attract additional distributors could materially and adversely affect
our business.
  Our strategy of acquiring complementary businesses, assets and technologies may fail.
  
    
    potential ongoing financial obligations and unforeseen or hidden liabilities;
    
    failure to achieve the intended objectives, benefits or revenue-enhancing opportunities;
    
    costs and difficulties of integrating acquired businesses and managing a larger business; and
    
    diversion of resources and management attention.
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We may not be able to manage our expanding operations effectively.
  Our operating results may fluctuate, which makes our results difficult to predict and could
cause our results to fall short of expectations.
  
    
    general economic conditions in China and economic conditions
specific to the Internet, Internet search and online marketing;
    
    our ability to attract additional customers;
    
    the announcement or introduction of new or enhanced products and
services by us or our competitors;
    
    the amount and timing of operating costs and capital expenditures
related to the maintenance and expansion of our businesses,
operations and infrastructure;
    
    the results of our acquisitions of, or investments in, other businesses or assets;
    
    PRC regulations or actions pertaining to activities on the
Internet, including gambling, online games and other forms of
entertainment; and
    
    geopolitical events or natural disasters such as war, threat of
war, Severe Acute Respiratory Syndrome, or SARS, or other
epidemics.
  The successful operation of our business depends upon the performance and reliability of the
Internet infrastructure and fixed telecommunications networks in China.
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Our success depends on the continuing efforts of our senior management team and other key
personnel and our business may be harmed if we lose their services.
   We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel
or hire qualified personnel, we may not be able to grow effectively.
   Interruption or failure of our information technology and communications systems could impair
our ability to effectively provide our products and services, which could damage our reputation and
harm our operating results.
  Our business could be adversely affected if our software contains bugs.
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Concerns about the security of electronic commerce transactions and confidentiality of
information on the Internet may reduce use of our network and impede our growth.
  We have limited business insurance coverage.
  Risks Related to Our Corporate Structure
 PRC laws and regulations governing our businesses and the validity of certain of our
contractual arrangements are uncertain. If we are found to be in violation, we could be subject to
sanctions. In addition, changes in such PRC laws and regulations may materially and adversely
affect our business.
   Our corporate actions are substantially controlled by our principal shareholders and
affiliated entities.
  17




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Risks Related to Doing Business in China
 Adverse changes in economic and political policies of the PRC government could have a material
adverse effect on the overall economic growth of China, which could adversely affect our business.
  Our subsidiaries and affiliates are subject to restrictions on paying dividends and making other
payments to us.
  Uncertainties with respect to the PRC legal system could adversely affect us.
   18




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You may experience difficulties in effecting service of legal process, enforcing foreign
judgments or bringing original actions in China based on United States or other foreign laws
against us or our management.
  Governmental control of currency conversion may affect the value of your investment.
  Fluctuation in the value of RMB may have a material adverse effect on your investment.
  We face risks related to health epidemics and other outbreaks.
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Risks Related to Our Common Stock
 There has been only a limited public market for our common stock to date.
  The market price for our common stock may be volatile.
  
    
    actual or anticipated fluctuations in our quarterly operating results;
    
    changes in financial estimates by securities research analysts, if any;
    
    conditions in the China consumer goods and online marketing markets;
    
    changes in the economic performance or market valuations of other
U.S. public companies with substantial operations in China;
    
    announcements by us or our competitors of new products,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
    
    addition or departure of key personnel;
    
    fluctuations of exchange rates between RMB and the U.S. dollar;
    
    intellectual property litigation; and
    
    general economic or political conditions in China.
  We will need additional capital, and the sale of additional common stock or other equity
securities could result in additional dilution to our shareholders.
  Substantial future sales or the perception of sales of our common stock in the public market
could cause the price of our common stock to decline.
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You may face difficulties in protecting your interests, and your ability to protect your
rights through the U.S. federal courts may be limited, because we conduct a significant portion of
our operations in China and all of our officers reside outside the United States.
  If we fail to maintain an effective system of internal control over financial reporting, we may not
be able to accurately report our financial results or prevent fraud.
  We will incur increased costs as a result of being a public company.
  21




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When we account for employee share options using the fair value method, such accounting
treatment could significantly reduce our net income.
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
  
 Item 4. Submissions of Matters to a Vote of Security Holders
  Name
    
    For
    
    WithheldBruno Wu
    
    63,573,194
    
    Yu Bing
    
    63,523,194
    
    50,000Herbert Kloiber
    
    63,523,194
    
    50,000Kay KoplovitzYang Qi,
    
    63,573,194
    
    William Adamopoulos
    
    63,573,194
    
    Mark Newburg
    
    63,523,194
    
    50,000
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For
    
    Against
    
    Abstain
    
    Broker Non-Votes63,386,639
    
    186,555
    
    
    
    
 
 Part II.
 
 Item 5. Market for Common Equity and Related Shareholder Matters
  04/01/05 to 03/31/06
    
    
    04/01/04 to 03/31/05High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    
    4.88
    
    
    
    2.82
    
    
    
    0.34
    
    
    
    0.34Second Quarter
    
    
    4.20
    
    
    
    2.84
    
    
    
    0.60
    
    
    
    0.60Third Quarter
    
    
    4.15
    
    
    
    3.00
    
    
    
    1.90
    
    
    
    1.40Fourth Quarter
    
    
    4.35
    
    
    
    3.60
    
    
    
    5.10
    
    
    
    1.24
   Dividend Policy
  Recent Sales of Securities
 Securities Act of 1933,
    
    
    14,900,000 shares of common stock pursuant to the acquisition of China Focus Channel
Development Co., Limited (Focus);
 
    
    2,000,000 shares of common stock as finders fee for the acquisition of Focus;
 
    
    853,333 shares of common stock pursuant to the acquisition of Telefaith Holdings Limited; and
 
    
    409,207 shares of common stock pursuant to the acquisition of Magzone Asia Pte Ltd.
  23




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Item 6. Management Discussion and Analysis
 Overview
    Results of Operations
 Fiscal Period Ended March 31, 2006
   Revenue.
 Expenses.
  Net
Loss.
  24




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Fiscal Period Ended September 30, 2005
  Revenue.
 Expenses.
 Net Loss.
 Liquidity and Capital Resources
    Off-Balance Sheet Arrangement
  Capital Expenditure Commitments
  Recent Accounting Pronouncements
   25




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Critical Accounting Policies and Estimates
  Revenue recognition
 Revenue Recognition
 Stock-based compensation
 Share Based
Payment
   26




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Item 7. Financial Statements
 Financial Statements
 Sun New Media, Inc.
 Consolidated Financial Statements
 Period from October 1, 2005 to March 31, 2006
  27




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Report of Independent Registered Public Accountants
    29Consolidated Balance Sheet
    30Consolidated Statement of Operations
    31Consolidated Statement of Changes in Stockholders Equity
    32Consolidated Statement of Cash Flows
    34Notes to Consolidated Financial Statements
    35
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Sun New Media, Inc.
     /s/ Bernstein & Pinchuk LLP 
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SUN NEW MEDIA INC.
 
 CONSOLIDATED BALANCE SHEET
 (Restated)Note
    
    
    As of
    
    
    As of September 30,March 31, 2006
    
    

20051US$
    
    US$ASSETSCurrent AssetsCash and bank balances
    
    
    
    
    
    
    1,373,715
    
    
    
    201,957Accounts receivable, net of provision for
doubtful debts $72,046 (2005: Nil)
    
    
    
    
    
    
    415,735
    
    
    
    6,277Other receivable, prepayments and deposits
    
    
    8
    
    
    
    466,396
    
    
    
    24,859Inventories
    
    
    
    
    
    
    85,346
    
    
    
    Marketable securities
    
    
    
    
    
    
    8,140,377
    
    
    
    Amounts due from stockholders
    
    
    9
    
    
    
    292,106
    
    
    
    150,446Amounts due from related parties
    
    
    9
    
    
    
    892,699
    
    
    
    Total current assets
    
    
    
    
    
    
    11,666,374
    
    
    
    383,539Investment in associated company
    
    
    
    
    
    
    24,987
    
    
    
    Goodwill and intangible assets
    
    
    4
    
    
    
    61,794,537
    
    
    
    Plant and equipment
    
    
    5
    
    
    
    2,205,536
    
    
    
    5,554Clearing broker deposit
    
    
    
    
    
    
    36,980
    
    
    
    36,980Total Assets
    
    
    
    
    
    
    75,728,414
    
    
    
    426,073LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    
    
    
    
    
    987,238
    
    
    
    71,204Other payables and accruals
    
    
    10
    
    
    
    6,928,098
    
    
    
    38,526Amounts due to related parties
    
    
    9
    
    
    
    489,122
    
    
    
    Factoring loan
    
    
    11
    
    
    
    233,043
    
    
    
    Total current liabilities
    
    
    
    
    
    
    8,637,501
    
    
    
    109,730Minority interest
    
    
    
    
    
    
    (101,520
    )
    
    
    Convertible notes
    
    
    6
    
    
    
    2,816,000
    
    
    
    Discount on convertible notes
    
    
    6
    
    
    
    (2,570,634
    )
    
    
    Commitments and Contingencies
    
    
    12STOCKHOLDERS EQUITYCommon stock; authorized 750,000,000
shares, US$0.01 par valuePreference stock, authorized 250,000,000
shares, US$0.01 par value84,055,510 (2005: 9,259,370) shares of
common stock issued and outstanding,
US$0.01 par value
    
    
    
    
    
    
    840,555
    
    
    
    92,59414,537,253 (2005: 55,250,000) shares of
common stock reserved to be issued,
US$0.01 par value
    
    
    
    
    
    
    145,372
    
    
    
    552,500Additional paid in capital
    
    
    
    
    
    
    79,439,397
    
    
    
    5,250Foreign currency translation adjustments
    
    
    
    
    
    
    1,920
    
    
    
    Deficit
    
    
    
    
    
    
    (13,480,177
    )
    
    
    (334,001
    )Total stockholders equity
    
    
    
    
    
    
    66,947,067
    
    
    
    316,343Total liabilities and stockholders equity
    
    
    
    
    
    
    75,728,414
    
    
    
    426,073
 
 (1)
    
    Information for the comparative period is not applicable since the Company commenced its operations on June 6, 2005. The accompanying notes are an integral part of these consolidated financial statements.
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SUN NEW MEDIA INC.
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 (Restated)Note
    
    
    Period from
    
    
    Period fromOctober 1, 2005
    
    
    June 6, 2005to March 31, 2006
    
    
    to September 30,
2005(1)US$
    
    
    US$REVENUES
    
    
    
    
    
    
    402,173
    
    
    
    27,358Direct costs
    
    
    
    
    
    
    245,063
    
    
    
    18,723157,110
    
    
    
    8,635OPERATING EXPENSESGeneral and administrative
    
    
    
    
    
    
    1,129,847
    
    
    
    16,938Depreciation and amortization
    
    
    
    
    
    
    6,767
    
    
    
    Finders fee
    
    
    
    
    
    
    
    
    
    
    55,000Stock-based compensation
    
    
    
    
    
    
    9,654,099
    
    
    
    Consulting and professional fees
    
    
    
    
    
    
    988,772
    
    
    
    32,638Impairment loss on marketable securities
    
    
    
    
    
    
    1,456,221
    
    
    
    Total operating expenses
    
    
    
    
    
    
    13,235,706
    
    
    
    104,576Operating loss
    
    
    
    
    
    
    (13,078,596
    )
    
    
    (95,941
    )Interest income
    
    
    
    
    
    
    637
    
    
    
    Amortization
of discount on notes
    
    
    
    
    
    
    (105,807
    )
    
    
    Other income
    
    
    
    
    
    
    37,590
    
    
    
    Loss
before income tax expense
    
    
    
    
    
    
    (13,146,176
    )
    
    
    (95,941
    )Income tax expenses
    
    
    7
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    (13,146,176
    )
    
    
    (95,941
    )Earnings per share:Weighted average number of shares outstandingBasic and diluted
    
    
    
    
    
    
    72,809,160
    
    
    
    15,398,259Net loss per share of common stockBasic and diluted
    
    
    
    
    
    
    (0.18
    )
    
    
    (0.01
    )
 
 (1)
    
    Information for the comparative period is not applicable since the Company commenced its operations on June 6, 2005. The accompanying notes are an integral part of these consolidated financial statements.
 31




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##### Table of Contents



SUN NEW MEDIA INC.
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 Common sharesIssued
    
    

Reserve
and to be issuedNumber
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    Additionalof
    
    
    
    
    
    
    of
    
    
    
    
    
    
    Paid in
    
    
    
    
    
    
    TranslationNote
    
    
    Shares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    Deficit
    
    
    Adjustment
    
    
    TotalUS$
    
    
    
    
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$Balance, June 6, 2005
    
    
    
    
    
    
    250,000
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250,000Elimination of SNMG shares upon reverse
acquisition
    
    
    
    
    
    
    (250,000
    )
    
    
    (250,000
    )
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    
    
    
    
    
    
    
    
    Consolidation of SNMD shares upon reverse
acquisition
    
    
    
    
    
    
    18,518,740
    
    
    
    185,188
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185,188Additional paid in capital of SNMD upon
reverse acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,269,359
    
    
    
    
    
    
    
    
    
    
    
    6,269,359Accumulated losses of SNMD upon reverse
acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,350,013
    )
    
    
    
    
    
    
    
    
    
    
    (6,350,013
    )1 for 2 reverse split
    
    
    
    
    
    
    (9,259,370
    )
    
    
    (92,594
    )
    
    
    
    
    
    
    
    
    
    
    92,594
    
    
    
    
    
    
    
    
    
    
    
    Issuance of stocks for acquisition of SNMG
    
    
    (i
    )
    
    
    
    
    
    
    
    
    
    
    50,000,000
    
    
    
    500,000
    
    
    
    (500,000
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of stocks for finders fees
    
    
    (i
    )
    
    
    
    
    
    
    
    
    
    
    5,000,000
    
    
    
    50,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    55,000Issuance of stocks for management fees
    
    
    (i
    )
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    2,500
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    2,750Par value of shares issued for reverse
acquisition in excess of the additional
paid-in capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    238,060
    
    
    
    (238,060
    )
    
    
    
    
    
    
    Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95,941
    )
    
    
    
    
    
    
    (95,941
    )Balance, September 30, 20051
    
    
    
    
    
    
    9,259,370
    
    
    
    92,594
    
    
    
    55,250,000
    
    
    
    552,500
    
    
    
    5,250
    
    
    
    (334,001
    )
    
    
    
    
    
    
    316,343
 (i)
    
    The stocks were reserved as of September 30, 2005 and were issued on October 4, 2005.(1)
    
    Information for the comparative period is not applicable since the Company commenced its operations on June 6, 2005. The accompanying notes are an integral part of these consolidated financial statements.
 32




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##### Table of Contents



SUN NEW MEDIA INC.
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 Common sharesIssued
    
    

Reserved and to be issuedForeignNumber
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Currencyof
    
    
    
    
    
    
    of
    
    
    
    
    
    
    Paid in
    
    
    
    
    
    
    TranslationNote
    
    
    Shares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    Capital
    
    
    Deficit
    
    
    Adjustment
    
    
    TotalUS$
    
    
    
    
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$
    
    
    US$Balance,
October 1, 2005
    
    
    
    
    
    
    9,259,370
    
    
    
    92,594
    
    
    
    55,250,000
    
    
    
    552,500
    
    
    
    5,250
    
    
    
    (334,001
    )
    
    
    
    
    
    
    316,343Issuance of stocks for acquisition from
SNMG
    
    
    
    
    
    
    55,250,000
    
    
    
    552,500
    
    
    
    (55,250,000
    )
    
    
    (552,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of
stocks for stock options exercised
    
    
    
    
    
    
    43,000
    
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    34,090
    
    
    
    
    
    
    
    
    
    
    
    34,520Issuance of stocks for stock purchase
    
    
    
    
    
    
    296,000
    
    
    
    2,960
    
    
    
    
    
    
    
    
    
    
    
    651,840
    
    
    
    
    
    
    
    
    
    
    
    654,800Issuance of stocks for acquisition of
Focus
    
    
    
    
    
    
    14,900,000
    
    
    
    149,000
    
    
    
    
    
    
    
    
    
    
    
    24,851,013
    
    
    
    
    
    
    
    
    
    
    
    25,000,013Issuance of stocks for finders fee
    
    
    
    
    
    
    2,000,000
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    7,780,000
    
    
    
    
    
    
    
    
    
    
    
    7,800,000Issuance of stocks for acquisition of
Telefaith
    
    
    
    
    
    
    853,333
    
    
    
    8,533
    
    
    
    
    
    
    
    
    
    
    
    359,396
    
    
    
    
    
    
    
    
    
    
    
    367,929Issuance of stocks for acquisition of
Magzone
    
    
    
    
    
    
    409,207
    
    
    
    4,092
    
    
    
    
    
    
    
    
    
    
    
    1,595,910
    
    
    
    
    
    
    
    
    
    
    
    1,600,002Issuance of stocks for employees
performance incentives
    
    
    
    
    
    
    1,044,600
    
    
    
    10,446
    
    
    
    
    
    
    
    
    
    
    
    3,868,653
    
    
    
    
    
    
    
    
    
    
    
    3,879,099Issuance of stocks for purchase of assets
    
    (ii)
    
    
    
    
    
    
    
    
    
    
    1,156,303
    
    
    
    11,563
    
    
    
    4,035,497
    
    
    
    
    
    
    
    
    
    
    
    4,047,060Issuance of stocks for grant of license
    
    (ii)
    
    
    
    
    
    
    
    
    
    
    6,900,000
    
    
    
    69,000
    
    
    
    24,081,000
    
    
    
    
    
    
    
    
    
    
    
    24,150,000Issuance of stocks for shares swap
    
    (ii)
    
    
    
    
    
    
    
    
    
    
    5,042,017
    
    
    
    50,420
    
    
    
    6,896,178
    
    
    
    
    
    
    
    
    
    
    
    6,946,598Issuance of stocks for acquisition of
CSTV
    
    (iii)
    
    
    
    
    
    
    
    
    
    
    460,526
    
    
    
    4,605
    
    
    
    556,732
    
    
    
    
    
    
    
    
    
    
    
    561,337Issuance of stocks for acquisition of
Lifestyle
    
    (iii)
    
    
    
    
    
    
    
    
    
    
    978,407
    
    
    
    9,784
    
    
    
    2,259,490
    
    
    
    
    
    
    
    
    
    
    
    2,269,274Discount on convertible notes and
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,676,441
    
    
    
    
    
    
    
    
    
    
    
    2,676,441Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,907
    
    
    
    
    
    
    
    
    
    
    
    89,907Expenses incurred on issuance of stocks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (302,000
    )
    
    
    
    
    
    
    
    
    
    
    (302,000
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,920
    
    
    
    1,920Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,146,176
    )
    
    
    
    
    
    
    (13,146,176
    )Balance,
March 31, 2006 (Restated)
    
    
    
    
    
    
    84,055,510
    
    
    
    840,555
    
    
    
    14,537,253
    
    
    
    145,372
    
    
    
    79,439,397
    
    
    
    (13,480,177
    )
    
    
    1,920
    
    
    
    66,947,067
 (ii)
    
    The stocks were reserved as of March 31, 2006 and were issued on May 9, 2006.(iii)
    
    The stocks were reserved as of March 31, 2006 and were issued on April 17, 2006. The accompanying notes are an integral part of these consolidated financial statements.
 33




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##### Table of Contents



SUN NEW MEDIA INC.
 CONSOLIDATED STATEMENT OF CASH FLOWS
 (Restated)October 1, 2005
    
    
    June 6, 2005 toto March 31, 2006
    
    
    September 30, 2005US$
    
    
    US$(1)Cash flows from operating activitiesNet loss for the period
    
    
    (13,146,176
    )
    
    
    (95,941
    )Adjustments to reconcile net loss to net cash
used in operating activities;Finders fee
    
    
    
    
    
    
    55,000Stock-based compensation
    
    
    9,654,099
    
    
    
    Depreciation of fixed assets
    
    
    6,767
    
    
    
    Amortization
of discount on notes
    
    
    105,807
    
    
    
    Impairment loss on marketable securities
    
    
    1,456,221
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    (43,689
    )
    
    
    Other receivables, deposits and prepayments
    
    
    (294,642
    )
    
    
    Due from related parties
    
    
    (751,166
    )
    
    
    Due from stockholders
    
    
    (141,660
    )
    
    
    (97,349
    )Accounts payable
    
    
    241,856
    
    
    
    1,920Other payables and accruals
    
    
    853,701
    
    
    
    38,526Due to related parties
    
    
    403,628
    
    
    
    Net cash used in operating activities
    
    
    (1,655,254
    )
    
    
    (97,844
    )Cash flows from investing activitiesPurchase of fixed assets
    
    
    (5,680
    )
    
    
    Cash acquired in business combination, net
    
    
    (403,159
    )
    
    
    49,801Investment in associated company
    
    
    (24,987
    )
    
    
    Net cash provided by investing activities
    
    
    (433,826
    )
    
    
    49,801Cash flows from financing activitiesIssuance of common stock
    
    
    654,800
    
    
    
    250,000Issuance of convertible notes
    
    
    2,816,000
    
    
    
    Expenses incurred on issuance of common stock
    
    
    (302,000
    )
    
    
    Minority interest, net
    
    
    89,907
    
    
    
    Net cash provided by financing activities
    
    
    3,258,707
    
    
    
    250,000Net effect of exchange rate changes on
consolidating subsidiaries
    
    
    2,131Net increase in cash and cash equivalents
    
    
    1,171,758
    
    
    
    201,957Cash and cash equivalents, beginning of the period
    
    
    201,957
    
    
    
    Cash and cash equivalents, end of the period
    
    
    1,373,715
    
    
    
    201,957
 
 (1)
    
    Information for the comparative period is not applicable since the Company commenced its operations on June 6, 2005. The accompanying notes are an integral part of these consolidated financial statements.
 34




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##### Table of Contents



SUN NEW MEDIA INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Organization and Nature of Business
     
    
    change its name from SE Global to Sun New Media, Inc;
 
    
    complete a one for two reverse stock split (reverse split) of the
issued and outstanding shares of common stock of SE Global; and
 
    
    amend its authorized share capital to consist of 750,000,000 shares of
common stock with a par value of $0.01 per share; and 250,000,000
shares of preferred stock with a par value of $0.01 per share.
    
    
    SNMG;
    
    Global-American Investments Inc (GAI);
    
    SE Global Equity Inc;
    
    SE Global Capital Inc;
    
    Sun Global Marketing Network Limited;
    
    China Focus Channel Development (HK) Limited;
    
    Sun New Media Holdings Limited;
    
    Telefaith Holdings Limited;
    
    Magzone Asia Pte Ltd;
    
    Lifestyle Magazines Publishing Pte Ltd; and
    
    China Sports Television Production Limited.
 
 35




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##### Table of Contents



Note 2  Summary of the Companys significant accounting policies
 Basis of Consolidation and Presentation
   
    
    Sun China Media (Beijing) Technology Co., Ltd. (SCMBT), a PRC
company controlled through us by contract and is owned equally by
Qiong Zhou and Yuling Li, each of whom are non-executive employees
of the Company.
 
    
    Suizhou Focus Trading Development Co., Ltd. (SFC), a PRC company
controlled by us by contract and is engaged in marketing,
information and technology services to beverage and electronic
device distributors. It is 60% owned by Qi Yang, one of our
officers and directors and 25% and 15% owned by Bingwei Wu and
Quanyi Mao, two employees of the Company respectively.
 
    
    Shanghai Shengji Technology Co., Ltd (Shengji), a PRC company
controlled by us by contract, and is engaged in wireless mobile
services. It is 40% owned by Hui Yan, 40% owned by Min Lin and 20%
owned by Kezhou Luan, each employees of the Company.
 
    
    Sun China Media (Beijing) International Advertising Co. Ltd
(SCMIA), a China company controlled by us by contract and is
engaged in advertising business. It is 50% owned by Qiong Zhou,
and 50% owned by Yuling Li, non-executive PRC employees of the
Company.
  Use of estimates
  Financial instruments
  36




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##### Table of Contents



Business combinations
  Goodwill and intangible assets, net
   Plant and equipment
  YearsFurniture, fixtures and equipment
    
    
    3 - 5Motor vehicles
    
    
    5
 Impairment of marketable securities
  Revenue recognition
  Loss per share
  37




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##### Table of Contents



Foreign
currency translation
  Income taxes
  Stock-based compensation
    Recently Issued Accounting Pronouncements
  38




---



##### Table of Contents



Related Parties
  Deferred Expenses
  NOTE 3  BUSINESS ACQUISITIONS
   Share Purchase Agreement between the Company and Sun Business Network Ltd.
    39




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##### Table of Contents



Share Purchase Agreement between the Company and Lifestyle Magazines Publishing Pte Ltd (Lifestyle Magazines)
     Cash
    
    $
    63,590Current assets
    
    
    683,702Other assets
    
    
    11,657Current liabilities
    
    
    (1,051,983
    )Intangible assets
    
    
    2,562,308Purchase price
    
    $
    2,269,274
 Share Purchase Agreement between the Company and Magzone Asia Pte Ltd (Magzone)
    Cash
    
    $
    112,407Current assets
    
    
    15,126Other assets
    
    
    4,852Current liabilities
    
    
    (116,622
    )Goodwill on consolidation
    
    
    96,683Intangible assets
    
    
    1,887,554Purchase price
    
    $
    2,000,000
 Share Purchase Agreement between the Company and Telefaith Holdings Limited (Telefaith)
   40




---



##### Table of Contents



Cash
    
    $
    456Current assets
    
    
    6,194Other assets
    
    
    106,484Current liabilities
    
    
    (47,573
    )Intangible assets
    
    
    302,368Purchase price
    
    $
    367,929
 Share Purchase Agreement between the Company and Sun New Media Holdings Limited (SNMH)
  Share Purchase Agreement between the Company and China Focus Channel Development Co. Ltd (Focus)
   a)
    
    the audited net profit after tax (PAT) of Suizhou Focus Channel Development Limited
(SFC), wholly owned subsidiary of Focus, is in excess of $4.5 million for the fiscal year
ending December 31, 2006,
 b)
    
    the audited PAT of SFC is in excess of $5.0 million for the fiscal year ending December 31,
2007; and
 c)
    
    the audited PAT of SFC for the fiscal year ending December 31, 2008 is in excess of $5.5
million.
      i)
    
    the profit related shares shall be reduced to 700,000 shares per year from the original
2,000,000 shares per year for which the profit guarantees are met;
 ii)
    
    the Company shall pay the Sellers a cash component of RMB40 million (approximately US$5
million); and
 iii)
    
    the business and assets of HZTD shall remain with HZTD and will not be transferred to SFC as
provided in the original Purchase Agreement.
 41




---



##### Table of Contents



Cash
    
    $
    13Current assets
    
    
    Other assets
    
    
    Current liabilities
    
    
    Goodwill on consolidation
    
    
    7,800,000Intangible assets
    
    
    25,000,000Purchase price
    
    $
    32,800,013
 Share Purchase Agreement between SE Global and Sun Media
     US$Consideration:Shares of SNMD common stock outstanding as of September 18, 2005
    
    
    9,259,370Fair value per share of SNM
    
    
    0.01108Fair value of SNMD common stock
    
    
    102,614Book value of SNMD prior to CombinationStockholders equity at September 18, 2005
    
    
    102,614
 42




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##### Table of Contents



NOTE 4  GOODWILL AND INTANGIBLE ASSETS
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$000
    
    
    US$000Focus
    
    
    7,800
    
    
    
    7,800
    
    
    
    
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$000
    
    
    US$000Service agreements
    
    
    25,000
    
    
    
    Magazines mastheads
    
    
    2,562
    
    
    
    License
    
    
    24,452
    
    
    
    Technology
    
    
    1,980
    
    
    
    53,994
    
    
    
    
  Service agreements
    
    30 yearsTechnology
    
    3 to 10 years
 NOTE 5  PLANT AND EQUIPMENT, NET
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    
    US$CostMotor vehicles
    
    
    124,303
    
    
    
    Leasehold building and improvement
    
    
    1,401,397
    
    
    
    Furniture, fixtures and equipments
    
    
    982,650
    
    
    
    7,4192,508,350
    
    
    
    7,419Accumulated depreciation
    
    
    (302,814
    )
    
    
    (1,865
    )2,205,536
    
    
    
    5,554
 NOTE 6
 Convertible Notes With Detachable Warrants and Stock Options
 Convertible
Notes With Detachable Warrants
  43




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##### Table of Contents



Detachable Warrants
  Stock Option Plan
 2001 Stock Option Plan
  2004 Stock Option Plan
   Weighted AverageWeighted Average
    
    
    RemainingNumber of
    
    
    Exercise Price
    
    
    Contractual Lifeoptions
    
    
    US$
    
    
    YearsBalance, September 18, 2005
    
    
    977,000
    
    
    
    0.382
    
    
    
    2.15Revere stock split adjustment
    
    
    (488,500
    )
    
    
    0.382
    
    
    
    Balance, September 30, 2005
    
    
    488,500
    
    
    
    0.765
    
    
    
    1.82Exercise of stock options
    
    
    (43,000
    )Balance, March 31, 2006
    
    
    445,500
    
    
    
    0.741
    
    
    
    0.82
 2006 Stock Award
  44




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##### Table of Contents



NOTE
7  INCOME TAXES
   As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    

US$Loss subject to non-China operations
    
    
    (12,914,275
    )
    
    
    (95,941
    )Loss subject to China operations
    
    
    (231,901
    )
    
    
    Loss before taxes
    
    
    (13,146,176
    )
    
    
    (95,941
    )Income taxes subject to China operations
    
    
    
    
    
    
    Effective tax rate for China operations
    
    
    
    
    
    
    
    As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    

US$Deferred tax assets:Net operating loss carry forward
    
    
    
    
    
    
    Allowance for doubtful accounts,
accruals and other liabilities
    
    
    27,280
    
    
    
    Depreciation
    
    
    
    
    
    
    Total deferred tax assets
    
    
    27,820
    
    
    
    Less: Valuation allowance
    
    
    (27,820
    )
    
    
    Deferred tax assets
    
    
    
    
    
    
    
 45




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##### Table of Contents



As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005Federal Income Tax Rate
    
    
    34.0
    %
    
    
    34.0
    %Effect of valuation allowance
    
    
    (34.0
    %)
    
    
    (34.0
    %)Effective Income Tax Rate
    
    
    
    
    
    
    
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    
    US$Income tax at statutory rates
    
    
    (635,445
    )
    
    
    (32,620
    )Unrecognized benefits of non-capital losses
    
    
    635,445
    
    
    
    32,620Total current income taxes
    
    
    
    
    
    
    
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    
    US$Future income tax assets (liabilities):Operating losses available for future periods
    
    
    1,067,509
    
    
    
    32,620Valuation allowance
    
    
    (1,067,509
    )
    
    
    (32,620
    )Net future income tax asset (liability)
    
    
    
    
    
    
    
  NOTE 8  OTHER RECEIVABLES, PREPAYMENTS AND DEPOSITS
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    
    US$Other receivables
    
    
    114,923
    
    
    
    Staff advances
    
    
    34,069
    
    
    
    Deferred expenses
    
    
    2,063
    
    
    
    2,750Rental deposits
    
    
    9,111
    
    
    
    12,945Prepaid administrative expenses
    
    
    306,230
    
    
    
    9,164466,396
    
    
    
    24,859
  46




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##### Table of Contents



NOTE 9   AMOUNTS DUE FROM STOCKHOLDERS AMOUNT DUE FROM/ (TO) RELATED PARTIES
   NOTE 10  OTHER PAYABLES AND ACCRUALS
  As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    

US$Other payables
    
    
    126,835
    
    
    
    8,326Accrued operating expenses
    
    
    6,726,887
    
    
    
    30,200Prepayment from customers
    
    
    74,376
    
    
    
    6,928,098
    
    
    
    38,526
  NOTE 11  FACTORING LOAN
  NOTE 12  COMMITMENTS AND CONTINGENCIES
 Commitments
   As of
    
    
    As ofMarch 31, 2006
    
    
    September 30, 2005US$
    
    

US$2006
    
    
    174,862
    
    
    
    30,9652007
    
    
    61,979
    
    
    
    29,161236,841
    
    
    
    60,126
 47




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##### Table of Contents



Contingencies
  NOTE 13  RELATED PARTIES TRANSACTIONS
     NOTE 14  OPERATING RISKS
 Credit risk
   NOTE 15  REPORT OF SEGMENT INFORMATION
   Period from
    
    
    Period fromOctober 1, 2005
    
    
    June 6, 2005to March 31,2006
    
    
    to September 30,2005US$
    
    
    US$RevenueOnline Brokerage
    
    
    397,912
    
    
    
    27,358Transactional Service
    
    
    
    
    
    
    Information Service
    
    
    4,261
    
    
    
    Gross profitOnline Brokerage
    
    
    152,849
    
    
    
    8,635Transactional Service
    
    
    
    
    
    
    Information Service
    
    
    4,261
    
    
    
    Depreciation and amortizationOnline Brokerage
    
    
    732
    
    
    
    Transactional Service
    
    
    
    
    
    
    Information Service
    
    
    6,035
    
    
    
    
 NOTE 16  SUBSEQUENT EVENTS
 
    
    On June 14, 2006, the Company entered into a Sales & Purchase
Agreement with Sun Media Investment Holdings Ltd. (SMIH) to
acquire 100% of the outstanding shares of Credit Network 114
Limited (Credit 114). Credit 114 is incorporated in British
Virgin Islands and is engaged in the business of data collection
and management The Company also signed a supplementary agreement
with SMIH to acquire            search engine technology and additional
on-line business media content. The transaction is expected to
take place over a 90 day period, over which time the Company will
pay SMIH a total of US $2.5 million for 100 percent ownership of
Credit 114 and the assets described above. The first of four
equal payments of US $625,000 will be made within 10 days of
signing the agreement, the second within 30 days of signing, the
third within 60 days and the fourth within 90 days.
 
    
    On June 8, 2006, the Company entered into agreement with Mr. Ren
Huiliang (the Seller) to purchase 100% of William Brand
Administer Limited and its subsidiary William Textiles Limited,
collectively William Brand. William Brand is a China-based
producer and distributor of womens luxury apparel. The
consideration for the acquisition is to be
satisfied in full through the issuance of 4,655,172 shares of the
Companys common stock. The Company will issue the shares to the
Seller in four installments: the first installment of 1,163,793
shares will be issued within thirty days of the completion of the
deal; the remaining shares will be issued in thirds at the end of
each of the next three years, subject to William Brands
attainment of revenue and profit guarantees in each year. William
Brand must achieve a minimum of US $15 million of revenue in year
one, US $17.5 million in year two, and US $20 million in year
three. William Brand must also generate minimum after-tax profits
of US $3 million, US $3.5 million, and US $4 million in years one,
two and three, respectively.
 
    
    On May 23, 2006, the Company signed a strategic cooperative and
sales purchase agreement (the CEAC Agreement) with China
Electronic Appliances Corporation (CEAC), a subsidiary of the
China Electronics Corporation (CEC), and two individuals, Mr.
Yong Li and Mr. Mianchun Wang, management designees from CEAC.
The CEAC Agreement provides that the Registrant and its subsidiary
Focus shall purchase a 49% stake in Beijing Trans Global Logistics
(BTGL) and its subsidiary from Messrs. Wang and Li and a 31%
stake in BTGL from CEAC. As a result, the Company will effectively
own 80% of shares of BTGL and will effectively own 64% of the
shares in Beijing CEAC Trans Global Logistics. The consideration
for the acquisition is to be satisfied by the
Company with 9,000,000 RMB in cash and 6.71 million RMB in 139,792
shares of the Companys common stock. As part of the transaction,
CEAC and Mr. Yong Li and Mr. Mianchun Wang have provided a revenue
and profit guarantee to the Company. Assuming BTGL and its
subsidiary meet this guarantee in each of the
 48




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##### Table of Contents



three years following the signing of the agreement, the sellers will receive an additional
139,792 shares of the Companys common stock per year. Assuming management meets all
performance targets, a maximum aggregate of 559,168 shares may be issued in this transaction.
 
    
    On April 20, 2006, the Company entered into an agreement (the ASTV Purchase Agreement) with SMIH.
The ASTV Purchase Agreement provides that the Company will purchase various assets, including real estate,
automobiles, office equipment, and program rights, as well as SMIHs 48,629,331 shares in Asia Premium
Television Group (OTCBB: ASTV, ASTV) to be satisfied by the issuance of 860,647
shares of Company common stock.
 
    
    On April 20, 2006, pursuant to the Sale and Purchase Agreement (the GAI Purchase Agreement) dated
April 20, 2006 by and among the Company and Kingston Capital Group Limited (Kingston), the Company sold
100% of the issued and outstanding shares of Global American Investments Inc. to Kingston in exchange for
US$40,000. Kingston is unrelated to the Company and the transaction was negotiated at arms length.
 Note 17  Restatement
  
 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
    
 Item 8A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in internal control over Financial Reporting
  
 Item 8B. Other Information
  49




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##### Table of Contents



PART III
 
 Item 9. Directors and Executive Officers of the Registrant
  Date PositionName
    
    Age
    
    Position
    
    First HeldBruno Wu
    
    
    39
    
    
    Chairman and Director
    
    Sept. 12, 2005Ricky Gee Hing Ang
    
    
    55
    
    
    Chief Executive Officer
    
    Mar. 1, 2006John Zongyang Li
    
    
    50
    
    
    Director
    
    Sept. 12, 2005Kay Koplovitz
    
    
    60
    
    
    Vice-Chairman and Director
    
    Sept. 12, 2005Herbert Kloiber
    
    
    58
    
    
    Director
    
    Jan. 4, 2006Yu Bing
    
    
    40
    
    
    Director
    
    Jan. 17, 2006William Adamopoulos
    
    
    44
    
    
    Director
    
    May 11, 2006Yang Qi
    
    
    38
    
    
    Director
    
    May 11, 2006Mark Newburg
    
    
    51
    
    
    Director
    
    May 31, 2006Frank Zhao
    
    
    46
    
    
    Chief Financial Officer and Secretary
    
    Mar 1, 2006Hwee Ling Ng
    
    
    32
    
    
    Senior Vice President, Finance
    
    Jan 4, 2006
 Dr. Bruno Wu, Chairman and Director.
   Mr. Ricky Gee Hing Ang, Chief Executive Officer.
 50




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##### Table of Contents



Mr. John Zongyang Li, Director.
  Kay Koplovitz, Vice-Chairman and Independent Director
 Dr. Herbert Kloiber, Director.
 Mr. Yu Bing, Director .
 Mr. William Adamopoulos, Director.
 Mr Yang Qi, Director.
 Mr. Mark Newburg, Director.
  Mr Frank Zhao, Chief Financial Officer and Secretary.
 51




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##### Table of Contents



Ms. Hwee Ling Ng, Senior Vice President, Finance.
  Audit Committee Financial Expert
  Compliance with Section 16(a) of the Securities Exchange Act of 1934
   Code of Ethics
 th
 
 Item 10. Executive Compensation
 Summary of Compensation of Executive Officers
    52




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##### Table of Contents



Compensation of Directors
  
 Item 11. Security Ownership of Certain Beneficial Owners and Management
 Equity Compensation Plan
 Number ofNumber of
    
    
    
    
    
    
    securitiessecurities to be
    
    
    
    
    
    
    remaining availableissued upon
    
    
    Weighted average
    
    
    for future issuanceexercise of
    
    
    exercise price of
    
    
    (excludingoutstanding
    
    
    outstanding
    
    
    securitiesoptions, warrants
    
    
    options, warrants
    
    
    reflected in columnand rights
    
    
    and rights
    
    
    (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    445,500
    
    
    
    $0.741
    
    
    
    
    (1)Equity compensation
plans not approved
by security holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ATotal:
    
    
    445,500
    
    
    
    $0.741
    
    
    
    
 Note
 (1)
    
    The number of securities remaining available for future
issuance has expired as of March 31, 2006. The Company
intends to implement a new shares option scheme to be
approved by the stockholders in due course.
 Security Ownership of Certain Beneficial Owners and Management
    53




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##### Table of Contents



Amount and Nature of
    
    
    Percentage ofName and Address of Beneficial Owner
    
    Beneficial Ownership(1)
    
    
    Class(1)Bruno Wu(2)
    
    
    38,053,145
    
    
    
    36.70
    %John Zongyang Li(3)
    
    
    24,924,825
    
    
    
    24.04
    %Kay Koplovitz
    
    
    1,000,000
    
    
    
    0.96
    %Herbert Kloiber(4)
    
    
    1,000,000
    
    
    
    0.96
    %Bing Yu
    
    
    
    
    
    
    William Adamopoulos
    
    
    500,000
    
    
    
    0.48
    %Yang Qi
    
    
    8,940,000
    
    
    
    8.62
    %Mark Newburg
    
    
    
    
    
    
    Ricky Gee Hing Ang(5)
    
    
    13,248,320
    
    
    
    12.78
    %Frank Zhao
    
    
    70,000
    
    
    
    0.07
    %Hwee Ling Ng
    
    
    60,000
    
    
    
    0.06
    %Sun Media Investment Holdings Limited (SMIH)
P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British
Virgin Islands
    
    
    24,774,825
    
    
    
    23.89
    %Sun Business Network Ltd. (SBN)
50 Raffles Place #29-00 Singapore Land Tower Singapore 048623
    
    
    13,098,320
    
    
    
    12.63
    %Sun Culture Foundation Limited
Room 3503,35/F.,Two International Finance Centre, 8 Finance Street, Central,
Hong Kong
    
    
    10,000,000
    
    
    
    9.64
    %Directors
and Executive Officers as a
Group(6)(7)
    
    
    49,773,145
    
    
    
    48.00
    %
 Notes:
 (1)
    
    Based on 103,689,630 shares of common stock issued and outstanding
as of June 18, 2006. Except as otherwise indicated, we believe
that the beneficial owners of the common stock listed above, based
on information furnished by such owners, have sole investment and
voting power with respect to such shares, subject to community
property laws where applicable. Beneficial ownership is determined
in accordance with the rules of the SEC and generally includes
voting or investment power with respect to securities. Shares of
common stock subject to options or warrants currently exercisable,
or exercisable within 60 days, are deemed outstanding for purposes
of computing the percentage ownership of the person holding such
option or warrants, but are not deemed outstanding for purposes of
computing the percentage ownership of any other person.(2)
    
    Includes 24,774,825 shares held by SMIH, 13,098,320 shares held by
SBN and 180,000 shares held by Ms. Yang Lan. Our Chairman, Dr
Bruno Wu, is also the Chairman and Director of SMIH and SBN. Dr.
Wu disclaims ownership except to the extent of his pecuniary
interest.(3)
    
    Includes 24,774,825 shares held by SMIH. Our Director, John
Zongyang Li, is also a Director and shareholder of SMIH. Mr. Li
disclaims ownership except to the extent of his pecuniary
interest.(4)
    
    Includes 1,000,000 shares held by Tele-Munchen Fernseh-Gmbh & Co.
Our Director, Dr Herbert Kloiber, is also the Chairman and
majority shareholder of Tele-Munchen Fernseh-Gmbh & Co. Dr.
Kloiber disclaims ownership except to the extent of his pecuniary
interest.(5)
    
    Includes 13,098,320 shares held by SBN. Our Director, Ricky Gee
Hing Ang, is also the Executive Vice Chairman & Director of SBN. Mr. Ang disclaims ownership except to the
extent of his pecuniary interest.(6)
    
    Includes 24,774,825 shares held by SMIH, 13,098,320 shares held by
SBN and 1,000,000 shares held by Tele-Munchen Fernseh-Gmbh & Co.(7)
    
    The address of our current officers and directors is care of
Sun New Media Inc., Fourth Floor 1120 Avenue of the Americas,
New York, NY.
 54




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##### Table of Contents



Item 12. Certain Relationships and Related Transactions
        
 Item 13. Exhibits
 Exhibits
  2.1
    
    Share Purchase Agreement dated July 21, 2005 by and between
the Registrant and Sun Media Investment Holdings Limited to
acquire Sun New Media Group Limited (incorporated by
reference from our Current Report on Form 8-K filed on July
22, 2005)2.2
    
    Share Purchase Agreement dated November 21, 2005 by and
between the Registrant and Sun Business
 55




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##### Table of Contents



Network Ltd. to
acquire a group of property holdings in Beijing and shares
of Asia Premium Television Group, Inc.(incorporated by
reference from our Current Report on Form 8-K filed on
November 23, 2005)2.3
    
    Share Swap Agreement by and between the Registrant and Sun
Business Network Ltd. dated November 21, 2005 (incorporated
by reference from our Current Report on Form 8-K filed on
November 23, 2005)2.4
    
    Sale and Purchase Agreement by and between the Registrant,
Yang Qi, Mao Quan Yi and Wu Bing Wei dated November 22, 2005
to acquire China Focus Channel Development (HK) Limited
(incorporated by reference from our Current Report on Form
8-K filed on November 25, 2005)2.5
    
    Sale and Purchase Agreement by and between the Registrant
and Sun Media Investment Holdings Ltd. dated November 29,
2005 to acquire Sun New Media Holdings Ltd. (incorporated by
reference from our Current Report on Form 8-K filed on
December 1, 2005)2.6
    
    Sale and Purchase Agreement by and between the Registrant,
Yan Hui, Lin Min and Luan Kezhou dated December 6, 2005 to
acquire Telefaith Holdings Limited (incorporated by
reference from our Current Report on Form 8-K filed on
December 8, 2005)2.7
    
    Sale and Purchase Agreement dated December 6, 2005 by and
between the Registrant and Sun Media Investment Holdings
Limited to acquire shares of Sun Business Network Ltd.
(incorporated by reference from our Current Report on Form
8-K filed on December 8, 2005)2.8
    
    Stock Purchase Agreement between Sun New Media Inc and
Barron Partners LP dated December 31, 2005 (incorporated by
reference from our Current Report on Form 8-K filed on
January 6, 2006)2.9
    
    Share Purchase Agreement dated January 4, 2006 to acquire
Magzone Asia Pte Ltd (incorporated by reference from our
Current Report on Form 8-K filed on January 6, 2006)2.10
    
    Share Purchase Agreement dated February 13, 2006 by and
between the Registrant and China Entertainment Sports
Limited to acquire China Sport TV Productions Ltd
(incorporated by reference from our Current Report on Form
8-K filed on February 17, 2006)2.11
    
    Share Purchase Agreement dated February 14, 2006 by and
between the Registrant and United Home Limited to acquire
Lifestyle Magazines Publishing Pte Ltd (incorporated by
reference from our Current Report on Form 8-K filed on
February 17, 2006)2.12
    
    Stock Purchase Agreement between Sun New Media Inc and
Barron Partners LP dated March 6, 2006 (incorporated by
reference from our Current Report on Form 8-K filed on March
9, 2006)2.13
    
    Termination Agreement dated March 31, 2006 by and between
the Registrant and Sun Media Investment Holdings Limited
relating to the Sale and Purchase Agreement dated December
6, 2005 by and between the Registrant and Sun Media
Investment Holdings Limited to acquire shares of Sun
Business Network Ltd. (incorporated by reference from our
Current Report on Form 8-K filed on April 5, 2006)
 56




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##### Table of Contents



2.14
    
    Sale and Purchase Agreement dated April 20, 2006 by and between the Registrant and Kingston
Capital Group Limited to divest Global American Investments Inc (incorporated by reference from
our Current Report on Form 8-K filed on April 26, 2006)2.15
    
    Sale and Purchase Agreement dated April 20, 2006 by and between the Registrant and Sun Media
Investment Holdings Limited to purchase various assets (incorporated by reference from our
Current Report on Form 8-K filed on April 26, 2006)2.16
    
    Sales Purchase Agreement dated May 23, 2006 by and between the Registrant, its subsidiary, China
Focus Channel Development Co. Ltd (Focus) and China Electronic Appliances Corporation (CEAC)
and two individuals to purchase a 49% stake in Beijing Trans Global Logistics (BTGL) and its
subsidiary from the two individuals and a 31% stake in BTGL from CEAC (incorporated by reference
from our Current Report on Form 8-K filed on May 30, 2006)2.17
    
    Sale and Purchase Agreement dated June 8, 2006 by and between the Registrant, its subsidiary,
Focus, and Mr Ren Huiliang to acquire William Brand Administer Limited and its subsidiary William
Textiles Limited (incorporated by reference from our Current Report on Form 8-K filed on June 14,
2006)2.18
    
    Sale and Purchase Agreement dated June 14, 2006 by and between the Registrant and Sun Media
Investment Holdings Limited to acquire Credit Network 114 Limited (incorporated by reference from
our Current Report on Form 8-K filed on June 20, 2006)3.1
    
    Articles of Incorporation as Amended (incorporated by reference from our Form 10-SB Registration
Statement, filed June 14, 1999)3.2
    
    Certificate of Amendment to Articles of Incorporation, dated April 11, 2001 (incorporated by
reference from our Form 10-KSB, filed April 1, 2002)3.3
    
    Certificate of Amendment to Articles of Incorporation, dated September 15, 2005 (incorporated by
reference from our Current Report on Form 8-K filed on September 22, 2005)3.4
    
    Bylaws (incorporated by reference from our Form 10-SB Registration Statement, filed June 14, 1999)4.1
    
    Pooling Agreement by and between dated September 18, 2005 among the Registrant, Fidelity Transfer
Company, as Trustee, Sun Media Investment Holdings Ltd. And Capital Alliance Group Inc.
(incorporated by reference from our Current Report on Form 8-K filed on September 22, 2005)4.2
    
    Supplementary Pooling Agreement dated December 23, 2005 among the Registrant, Fidelity Transfer
Company, as Trustee, Sun Media Investment Holdings Ltd. And Capital Alliance Group Inc.
(incorporated by reference from our Current Report on Form 8-K filed December 27, 2005)4.3
    
    Supplementary Pooling Agreement dated March 15, 2006 among the Registrant, Fidelity Transfer
Company, as Trustee, Sun Media Investment Holdings Ltd. And Capital Alliance Group Inc.
(incorporated by reference from our Current Report on Form 8-K filed March 21, 2006)10.1
    
    Finders Fee Agreement by and between the Registrant and Yu Hiyang and Beckford Finance SA dated
July 21, 2005 (incorporated by reference from our Current Report on Form 8-K filed on July 22,
2005)10.2
    
    Stock Purchase Agreement by and between Capital Alliance and Sun Media dated July 21, 2005
(incorporated by reference from our Current Report on Form 8-K filed on July 22, 2005)10.3
    
    Management Agreement by and between the Registrant and Capital Alliance dated September 18, 2005
(incorporated by reference from our Current Report on Form 8-K filed on September 22, 2005)
 57




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##### Table of Contents



10.4
    
    Share Holding Agreement by between Capital Alliance, SE Global and
Sun Media Investment Holdings Ltd. dated September 18, 2005
(incorporated by reference from our Current Report on Form 8-K
filed on September 22, 2005)10.5
    
    Stock Purchase Agreement dated December 31, 2005 by and between
Sun New Media Inc. and Barron Partners LP(incorporated by
reference from our Current Report on Form 8-K filed on January 6,
2006)14.1
    
    Code of Ethics (incorporated by
reference to our Annual Report on Form 10KSB filed on
June 30, 2006)21
    
    Subsidiaries of Sun New Media, Inc. (incorporated by
reference to our Annual Report on Form 10KSB filed on
June 30, 2006)23.1
    
    Consent of Moores Rowland Mazars31.1
    
    Certificate of CEO as Required by Rule 13a-14(a)/15d-1431.2
    
    Certificate of CFO as Required by Rule 13a-14(a)/15d-1432.1
    
    Certificate of CEO as Required by Rule 13a-14(b) and Rule
15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United
States Code32.2
    
    Certificate of CFO as Required by Rule 13a-14(b) and Rule
15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United
States Code
 58




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##### Table of Contents



Item 14. Principal Accountant Fees and Services
  March
31, 2006
    
    

September
30, 2005Audit Fees
    
    $
    120,000
    
    
    
    Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    $
    120,000
    
    
    
    
 Moores Rowland Mazars
  March
31, 2006
    
    

September
30, 2005Audit Fees
    
    $
    
    
    
    $
    20,000Audit-Related Fees
    
    
    11,000
    
    
    
    Tax Fees
    
    
    
    
    
    
    All Other Fees
    
    
    26,625
    
    
    
    $
    37,625
    
    
    $
    20,000
 Dale Matheson Carr-Hilton Labonte
  March
31, 2006
    
    

September
30, 2005Audit Fees
    
    
    
    
    
    $
    37,950Audit-Related Fees
    
    
    
    
    
    
    Tax Fees
    
    
    
    
    
    
    All Other Fees
    
    
    
    
    
    
    $
    
    
    
    $
    37,950
 59




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##### Table of Contents



SIGNATURES
  SUN NEW MEDIA, INC.By:

/s/
Ricky AngMr. Ricky Ang, Chief Executive Officer and DirectorDate: September 5, 2006 Securities Exchange Act of 1934
 By:
    /s/ Frank Zhao

Frank Zhao, CFO and Company Secretary
(Principal Financial Officer)
Date: September 5, 2006By:
    
    /s/ Hwee Ling Ng

Hwee Ling Ng, Sr. VP of Finance
(Principal Accounting Officer)
Date: September 5, 2006
 60




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##### Table of Contents



Exhibit No.
    
    Exhibit Title2.1
    
    Share Purchase Agreement dated July 21, 2005 by and between the
Registrant and Sun Media Investment Holdings Limited to acquire
Sun New Media Group Limited (incorporated by reference from our
Current Report on Form 8-K filed on July 22, 2005)2.2
    
    Share Purchase Agreement dated November 21, 2005 by and between
the Registrant and Sun Business Network Ltd. to acquire a group
of property holdings in Beijing and shares of Asia Premium
Television Group, Inc.(incorporated by reference from our Current
Report on Form 8-K filed on November 23, 2005)2.3
    
    Share Swap Agreement by and between the Registrant and Sun
Business Network Ltd. dated November 21, 2005 (incorporated by
reference from our Current Report on Form 8-K filed on November
23, 2005)2.4
    
    Sale and Purchase Agreement by and between the Registrant, Yang
Qi, mao Quan Yi and Wu Bing Wei dated November 22, 2005 to
acquire China Focus Channel Development (HK) Limited
(incorporated by reference from our Current Report on Form 8-K
filed on November 25, 2005)2.5
    
    Sale and Purchase Agreement by and between the Registrant and
Sun Media Investment Holdings Ltd. dated November 29, 2005 to
acquire Sun New Media Holdings Ltd. (incorporated by reference
from our Current Report on Form 8-K filed on December 1, 2005)2.6
    
    Sale and Purchase Agreement by and between the Registrant, Yan
Hui, Lin Min and Luan Kezhou dated December 6, 2005 to acquire
Telefaith Holdings Limited (incorporated by reference from our
Current Report on Form 8-K filed on December 8, 2005)2.7
    
    Sale and Purchase Agreement dated December 6, 2005 by and between
the Registrant and Sun Media Investment Holdings Limited to
acquire shares of Sun Business Network Ltd. (incorporated by
reference from our Current Report on Form 8-K filed on December
8, 2005)2.8
    
    Stock Purchase Agreement between Sun New Media Inc and Barron
Partners LP dated December 31, 2005 (incorporated by reference
from our Current Report on Form 8-K filed on January 6, 2006)2.9
    
    Share Purchase Agreement dated January 4, 2006 to acquire Magzone
Asia Pte Ltd (incorporated by reference from our Current Report
on Form 8-K filed on January 6, 2006)2.10
    
    Share Purchase Agreement dated February 13, 2006 to acquire China
Sport TV Productions Ltd (incorporated by reference from our
Current Report on Form 8-K filed on February 17, 2006)2.11
    
    Share Purchase Agreement dated February 14, 2006 to acquire
Lifestyle Magazines Publishing Pte Ltd (incorporated by reference
from our Current Report on Form 8-K filed on February 17, 2006)2.12
    
    Stock Purchase Agreement between Sun New Media Inc and Barron
Partners LP dated March 6, 2006 (incorporated by reference from
our Current Report on Form 8-K filed on March 9, 2006)2.13
    
    Termination Agreement dated March 31, 2006 relating to the Sale
and Purchase Agreement dated December 6, 2005 to acquire shares
of Sun Business Network Ltd. (incorporated by reference from our
Current Report on Form 8-K filed on April 5, 2006)2.14
    
    Sale and Purchase Agreement dated April 20, 2006 to divest Global
American Investments Inc (incorporated by reference from our
Current Report on Form 8-K filed on April 26, 2006)2.15
    
    Sale and Purchase Agreement dated April 20, 2006 to purchase
various assets (incorporated by reference from our Current Report
on Form 8-K filed on April 26, 2006)2.16
    
    Sales Purchase Agreement dated May 23, 2006 to purchase a 49%
stake in Beijing Trans Global Logistics (BTGL) and its
subsidiary from the two individuals and a 31% stake in BTGL
(incorporated by reference from our Current Report on Form 8-K
filed on May 30, 2006)2.17
    
    Sale and Purchase Agreement dated June 8, 2006 to acquire William
Brand Administer Limited and its subsidiary William Textiles
Limited (incorporated by reference from our Current Report on
Form 8-K filed on June 14, 2006)




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##### Table of Contents



2.18
    
    Sale and Purchase Agreement dated June 14, 2006 to acquire Credit
Network 114 Limited (incorporated by reference from our Current
Report on Form 8-K filed on June 20, 2006)3.1
    
    Articles of Incorporation as Amended (incorporated by reference
from our Form 10-SB Registration Statement, filed June 14, 1999)3.2
    
    Certificate of Amendment to Articles of Incorporation, dated
April 11, 2001 (incorporated by reference from our Form 10-KSB,
filed April 1, 2002)3.3
    
    Certificate of Amendment to Articles of Incorporation, dated
September 15, 2005 (incorporated by reference from our Current
Report on Form 8-K filed on September 22, 2005)3.4
    
    Bylaws (incorporated by reference from our Form 10-SB
Registration Statement, filed June 14, 1999)4.1
    
    Pooling Agreement by and between dated September 18, 2005 among
the Registrant, Fidelity Transfer Company, as Trustee, Sun Media
Investment Holdings Ltd. And Capital Alliance Group Inc.
(incorporated by reference from our Current Report on Form 8-K
filed on September 22, 2005)4.2
    
    Supplementary Pooling Agreement dated December 23, 2005 among the
Registrant, Fidelity Transfer Company, as Trustee, Sun Media
Investment Holdings Ltd. And Capital Alliance Group Inc.
(incorporated by reference from our Current Report on Form 8-K
filed December 27, 2005)4.3
    
    Supplementary Pooling Agreement dated March 15, 2006 among the
Registrant, Fidelity Transfer Company, as Trustee, Sun Media
Investment Holdings Ltd. And Capital Alliance Group Inc.
(incorporated by reference from our Current Report on Form 8-K
filed March 21, 2006)10.1
    
    Finders Fee Agreement by and between the Registrant and Yu Hiyang
and Beckford Finance SA dated July 21, 2005 (incorporated by
reference from our Current Report on Form 8-K filed on July 22,
2005)10.2
    
    Stock Purchase Agreement by and between Capital Alliance and Sun
Media dated July 21, 2005 (incorporated by reference from our
Current Report on Form 8-K filed on July 22, 2005)10.3
    
    Management Agreement by and between the Registrant and Capital
Alliance dated September 18, 2005 (incorporated by reference from
our Current Report on Form 8-K filed on September 22, 2005)10.4
    
    Share Holding Agreement by between Capital Alliance, SE Global
and Sun Media Investment Holdings Ltd. dated September 18, 2005
(incorporated by reference from our Current Report on Form 8-K
filed on September 22, 2005)10.5
    
    Stock Purchase Agreement dated December 31, 2005 by and between
Sun New Media Inc. and Barron Partners LP(incorporated by
reference from our Current Report on Form 8-K filed on January 6,
2006)14.1
    
    Code of Ethics (incorporated by
reference to our Annual Report on Form 10KSB filed on
June 30, 2006)21
    
    Subsidiaries of Sun New Media, Inc. (incorporated by
reference to our Annual Report on Form 10KSB filed on
June 30, 2006)23.1
    
    Consent of Moores Rowland Mazars31.1
    
    Certificate of CEO as Required by Rule 13a-14(a)/15d-1431.2
    
    Certificate of CFO as Required by Rule 13a-14(a)/15d-1432.1
    
    Certificate of CEO as Required by Rule 13a-14(b) and Rule
15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code32.2
    
    Certificate of CFO as Required by Rule 13a-14(b) and Rule
15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code