**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-Q**

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

For the quarterly period ended** March 31, 2017**

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number:** 333-150952**

**China Media Inc.**

(Exact name of registrant as specified in its charter)
| **Nevada**

 

**46-0521269**

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

**Room 10128,  No. 269-5-1 Taibai South Road,**

**Yanta District, Xi'an City, Shaan'xi Province, China**

 

**710068**

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: **(86) 298765-1114**

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days    [X] Yes    [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes    [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[  ] Large accelerated filer Accelerated filer

[  ] Non-accelerated filer

[X] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

[ ] Yes   [X] No

As of May 11, 2017, the registrant had 39,750,000 shares of common stock outstanding.

 

 

 

1

 

 

**Table of Contents**

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements 

 

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

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Item 4. Controls and Procedures

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

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

 

Item 3. Defaults Upon Senior Securities

 

Item 4. Submission of Matters to a Vote of Security Holders

 

Item 5. Other Information

 

Item 6. Exhibits

 

 

 

 

 

**PART I - FINANCIAL INFORMATION**

 

 

**Item 1.  Financial Statements**

 

The unaudited interim consolidated financial statements of China Media Inc. (the “Company”, “China Media”, “we”, “our”, “us”) follow. All currency references in this report are to U.S. dollars unless otherwise noted.

 

**CHINA MEDIA INC.**

**MARCH 31, 2017**

**(UNAUDITED**)

**Financial Statement Index**

 

Consolidated Balance Sheets as of  March 31, 2017 (Unaudited) and June 30, 2016 

 

Consolidated Statements of Operations for the three and nine months ended March 31, 2017 and 2016 (Unaudited)

 

Consolidated Statements of Cash Flows for the nine months ended March 31, 2017 and 2016 (Unaudited)

 

Notes to the Consolidated Financial Statements (Unaudited)

 

 

 

 

2

**CHINA MEDIA INC.**

**CONSOLIDATED BALANCE SHEETS**

 

 

 

**March 31,**

**2017**

 

**JUNE 30,**

**2016**

**Assets**

**(Unaudited)**

 

 

**Current assets**

 

 

 

 

Cash and cash equivalents

$

8,686 

 

$

37,190 

 

Accounts receivable, net of allowance of $618,794 and $641,810 at March 31, 2017 and June 30, 2016, respectively

583,412 

 

605,112 

 

Notes receivable, net of allowance of $2,062,006 and $2,138,702 at March 31, 2017 and June 30, 2016, respectively

2,032,980 

 

2,138,702 

 

Prepaid and other receivable

149,573 

 

155,020 

**Total current assets**

2,774,651 

 

2,936,024 

 

 

 

 

 

 

Fixed assets, net

16,326 

 

18,142 

 

Film costs

725,637 

 

752,627 

 

Prepaid and other assets

725,637 

 

752,627 

 

 

 

 

 

**Total assets**

$

4,242,251 

 

$

4,459,420 

 

 

 

 

 

**Liabilities and Stockholders' Equity**

 

 

 

**Current liabilities**

 

 

 

 

Accounts payable

$

8,902 

 

$

9,122 

 

Accrued liabilities and other payable

298,427 

 

286,437 

 

Due to related party

354,441 

 

272,501 

**Total current liabilities**

661,770 

 

568,060 

 

 

 

 

 

**Total liabilities**

661,770 

 

568,060 

 

 

 

 

 

**Stockholders' equity**

 

 

 

 

Common stock, $0.00001 par value, 180,000,000 shares authorized; 39,750,000 shares issued and outstanding at March 31, 2017 and June 30, 2016

398 

 

398 

 

Additional paid-in capital

11,269,722 

 

11,257,801 

 

Accumulated other comprehensive income

537,710 

 

674,991 

 

Accumulated deficit

(8,227,349)

 

(8,041,830)

**Total stockholders' equity**

3,580,481 

 

3,891,360 

 

 

 

 

 

**Total liabilities and stockholders' equity**

$

4,242,251 

 

$

4,459,420 

 

 

 

 

 

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

3

**CHINA MEDIA INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

**(Unaudited)**

 

 

 

 

 

 

 

 

 

 

 

 

 

**FOR THE NINE MONTHS ENDED MARCH 31,**

 

**FOR THE THREE MONTHS ENDED MARCH 31,**

 

**2017 **

 

**2016 **

 

**2017 **

 

**2016 **

 

 

 

 

 

 

 

 

Revenues

$

- 

 

$

- 

 

$

- 

 

$

- 

Cost of revenues

- 

 

- 

 

- 

 

- 

Gross profit

- 

 

- 

 

- 

 

- 

 

 

 

 

 

 

 

 

Selling, general and administrative

176,692 

 

165,435 

 

36,343 

 

31,882 

Depreciation and amortization expense

1,181 

 

1,467 

 

379 

 

411 

    Total operating expenses

177,873 

 

166,902 

 

36,722 

 

32,293 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

    Interest income

- 

 

61,062 

 

- 

 

- 

    Interest expense

(11,959)

 

(13,081)

 

(3,785)

 

(2,677)

    Other income

4,313 

 

- 

 

- 

 

- 

Net loss before income taxes

(185,519)

 

(118,921)

 

(40,507)

 

(34,970)

Income taxes

- 

 

- 

 

- 

 

- 

Net loss

$

(185,519)

 

$

(118,921)

 

$

(40,507)

 

$

(34,970)

 

 

 

 

 

 

 

 

Comprehensive loss

 

 

 

 

 

 

 

    Net loss

(185,519)

 

(118,921)

 

(40,507)

 

(34,970)

    Foreign currency translation adjustment

(137,281)

 

(414,930)

 

27,317 

 

45,483 

Comprehensive income (loss)

$

(322,800)

 

$

(533,851)

 

$

(13,190)

 

$

10,513 

 

 

 

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.00)

 

$

(0.00)

 

$

(0.00)

 

$

(0.00)

Weighted average number of common shares outstanding - basic and diluted

39,750,000 

 

39,750,000 

 

39,750,000 

 

39,750,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

4

**CHINA MEDIA INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

 

 

 

 

**FOR THE NINE MONTHS ENDED MARCH 31,**

 

 

 

 

**2017**

 

**2016**

CASH FLOWS OPERATING ACTIVITIES

 

 

 

 

Net loss

 $                       (185,519)

 

 $                      (118,921)

 

Adjustments to reconcile net loss to net cash provided by (used in)

 

 

 

operating activities:

 

 

 

 

 

Imputed interest

11,921

 

13,081

 

 

Depreciation expense

1,181

 

1,467

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid and other receivable

(114)

 

(787,159)

 

 

 

Accrued liabilities and other payable

22,575

 

38,307

 

 

 

Net change in film costs

-

 

1,598,772

Net cash provided by (used in) operating activities 

(149,956)

 

745,547

 

 

 

 

 

 

 

CASH FLOW INVESTING ACTIVITIES

 

 

 

 

 

 

Collection of notes receivable

30,004

 

-

Net cash provided by investing activities 

30,004

 

-

 

 

 

 

 

 

 

CASH FLOW FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from related party advances

93,628

 

57,456

 

 

 

Repayments of related party advances

-

 

(799,386)

Net cash provided by (used in) financing activities 

93,628

 

(741,930)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash 

(2,180)

 

                             (22,047)

NET CHANGE IN CASH

(28,504)

 

(18,430)

CASH AT BEGINNING OF THE PERIOD

37,190

 

75,612

CASH AT END OF THE PERIOD

 $8,686

 

 $57,182

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

Interest paid

 $                                    - 

 

 $                                   - 

 

Income taxes paid

 $                                    -

 

$                                   -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

5

**CHINA MEDIA INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

**March 31, 2017**

**NOTE 1. Description of Business**

 

China Media Inc. (“we”, “our”, the “Company”, “China Media”), formerly Protecwerx Inc., was incorporated in the State of Nevada on October 16, 2007.

The Company does not conduct any substantive operations of its own; rather, it conducts its primary business operations through Vallant Pictures Entertainment Co., Ltd., its wholly owned subsidiary incorporated under the laws of the British Virgin Islands, which in turn, conducts its business through Xi’an TV Media Co. Ltd. (“Xi’An TV”). Effective control over Xi’An TV was transferred to the Company through the series of contractual arrangements without transferring legal ownership in Xi’An TV. As a result of these contractual arrangements, the Company maintained the ability to approve decisions made by Xi’An TV and was entitled to substantially all of the economic benefits of Xi’An TV.

Xi’An TV was incorporated in Xi’An, Shaan’xi Province, People’s Republic of China (“PRC”) and is in the business of investing, producing and developing film and television programming for the Chinese market.

**NOTE 2. Summary of Significant Accounting Policies**

***Basis of Presentation and Consolidation***

The accompanying unaudited interim consolidated financial statements of China Media Inc. have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual financial statements for the year ended June 30, 2016. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the year ended June 30, 2016 have been omitted.

***Use of Estimates***

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television products, the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements and loss contingencies. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are made based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis.

***Recent Accounting Pronouncements***

In September 2016, the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”. These amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variable interest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable interests 

6

in a variable interest entity held through related parties, including related parties that are under common control with the reporting entity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity adopts the pending content that links to this paragraph in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-17, “Consolidation (Topic 810): Interest Held through Related Parties That Are under Common Control”. These amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect interests in the entity held through related parties that are under common control with the reporting entity. If a reporting entity satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variable interest entity), the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, to include all of its direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable interests in a variable interest entity held through related parties, including related parties that are under common control with the reporting entity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity adopts the pending content that links to this paragraph in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

In December 2016, the FASB issued ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The amendments in this ASU is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those periods. Early adoption is permitted under certain circumstances. The amendments should be applied prospectively as of the beginning of the period of adoption. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-03, *“Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323)”.* This pronouncement amends the SEC’s reporting requirements for public filers in regard to new accounting pronouncements or existing pronouncements that have not yet been adopted. Companies are to provide qualitative disclosures if they have not yet implemented an accounting standards update. Companies should disclose if they are unable to estimate the impact of a specific pronouncement, and provide disclosures including a description of the effect on accounting policies that the registrant expects to apply. These provisions apply to all pronouncements that have not yet been implemented by registrants. There are additional provisions that relate to corrections to several other prior FASB pronouncements. The Company has incorporated language into other recently issued accounting pronouncement notes, where relevant for the corrections in FASB ASU 2017-03. The Company is implementing the updated SEC requirements on not yet adopted accounting pronouncements with these consolidated financial statements.

**NOTE 3. Related Party Transactions**

From time to time, the Company borrowed loans from Dean Li, the President and Chief Executive Officer of the Company.  As of March 31, 2017 and June 30, 2016, the Company owed Dean Li $354,441 and $272,501, respectively. The loans borrowed from Mr. Dean Li are non-secured, free of interest with no specified maturity date. The imputed interests are assessed as an expense to the business operation and an addition to the paid-in-capital and calculated based on annual interest rate in the range of 4.67%-6.56% with reference to one-year loan.

In July 2015, the Company entered into an agreement to invest RMB 5 million (approximately $752,627) in a film that is produced by Beijing Huaxia Star Media Co., Ltd. and the payment was made in August 2015. As of March 31, 

7

2017, the film was still in preparation stage. Dean Li, the President and Chief Executive Officer of the Company, holds 13% equity interest in Beijing Huaxia Star Media Co., Ltd.

**NOTE 4. Notes Receivable, Net**

On March 20, 2013, the Company lent RMB 946,500 (approximately $155,000) in the form of an interest free loan to China Fengde Movie and TV Copyright Agency (“Zhongshi Fengde”), one of the Company’s business partners. The Company collected RMB 530,000 (approximately $86,305) as of June 30, 2015. No repayment was collected during the year ended June 30, 2016. As of March 31, 2017, an allowance of RMB 208,250 (approximately $30,223) was reserved by the Company against the note receivable.

On June 13, 2014, the Company lent RMB 18 million (approximately $2,931,119) to Shaan’xi Hushi Culture Communication Company (SHCC), a company owned by a business friend of Dean Li, the President and Chief Executive Officer of the Company. Based on the agreement, the Company will waive interest on the loan if SHCC repays the loan within 30 days; the Company will charge interest rate at 200% of the prevailing PRC prime rate if SHCC repays the loan after 30 days. In July 2014, the Company received repayment of RMB 11 million (approximately $1,786,410). On January 8, 2015, the Company received interest of RMB 455,000 (approximately $74,165) on the loan. The outstanding balance was RMB 7 million (approximately $1,015,891) as of March 31, 2017 and an allowance of RMB 3.5 million (approximately $507,946) was reserved by the Company against the note receivable.

On July 1, 2014, the Company lent an additional RMB 3 million (approximately $487,203) to SHCC with three months term. Based on the agreement, the Company will waive interest on the loan if SHCC repays the loan within 30 days; the Company will charge interest rate at four times of the current bank loan rate if SHCC repays the loan after 30 days. On January 19, 2015, the Company received interest of RMB 360,000 (approximately $58,694) on the loan. In September 2016, the Company received repayment of RMB 100,000 (approximately $15,002) from SHCC. An allowance of RMB 1.5 million (approximately $217,691) was reserved by the Company against the note receivable as of March 31, 2017.

On November 30, 2012, the Company entered into an agreement with Zhongshi Fengde to co-purchase copyrights of two TV series with the Company’s total investment at RMB 18 million (approximately $2.86 million at the time of investment). On January 28, 2015, both parties agreed to transfer the Company’s payment in these two TV series to a short-term loan to Zhongshi Fengde as the copyrights purchase was not successfully completed. As a result, film costs of approximately $2.8 million were reclassified to notes receivable. In September 2016, the Company received repayment of RMB 100,000 (approximately $15,002) from Zhongshi Fengde. As of March 31, 2017, the Company reserved RMB 9 million (approximately $1,306,146) against the notes receivable.

8

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

**Forward Looking Statements**

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.

**Results of Operations**

**Comparison of the nine months ended March 31, 2017 and 2016:**

 

 

 

 

 

 

*** ***  

**For Nine Months Ended**

**March 31,**

  

**2017**

 

**2016**

  

 

 

 

Revenues

$

-

 

$

-

Cost of revenues

 

-

 

 

-

Gross profit

 

-

 

 

-

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Selling, general and administrative 

 

176,692

 

 

165,435

Depreciation and amortization expenses

 

1,181

 

 

1,467

Total operating expenses

 

177,873

 

 

166,902

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

      Interest income 

 

-

 

 

61,062

      Interest expense

 

(11,959)

 

 

(13,081)

      Other income

 

4,313

 

 

-

           Total other income (expenses)

 

(185,519)

 

 

47,981

 

 

 

 

 

 

Net loss before income taxes

 

(185,519)

 

 

(118,921)

Income taxes

 

        -

 

 

        -

Net loss

$

(185,519)

 

$

(118,921)

*Revenue and Cost*

We had no sales and cost for the nine months ended March 31, 2017 and 2016. 

 

*Operating expenses*

During the nine months ended March 31, 2017, our total operating expenses were $177,873, an increase of $10,971 as compared to $166,902 for the nine months ended March 31, 2016. The main increase was relevant to increase in payroll expenses. 

*Net loss*

9

Our net loss increased by $66,598 or 56% for the nine months ended March 31, 2017 as compared to the same period of 2016. This increase was mainly the result of decrease in interest income of notes receivable.

**Comparison of the three months ended March 31, 2017 and 2016:**

 

 

 

 

 

 

*** ***  

**For Three Months Ended**

**March 31,**

  

**2017**

 

**2016**

  

 

 

 

Revenues

$

-

 

$

-

Cost of revenues

 

-

 

 

-

Gross profit

 

-

 

 

-

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

Selling, general and administrative 

 

36,343

 

 

31,882

Depreciation and amortization expenses

 

379

 

 

411

Total operating expenses

 

36,722

 

 

32,293

 

 

 

 

 

 

Other expenses

 

 

 

 

 

      Interest expense

 

(3,785)

 

 

(2,677)

           Total other expenses

 

(40,507)

 

 

(34,970)

 

 

 

 

 

 

Net loss before income taxes

 

(40,507)

 

 

(34,970)

Income taxes

 

        -

 

 

        -

Net loss

$

(40,507)

 

$

(34,970)

*Revenue and Cost*

We had no sales and cost for the three months ended March 31, 2017 and 2016. 

 

*Operating expenses*

During the three months ended March 31, 2017, our total operating expenses were $36,722, a slight increase of $4,429 as compared to $32,293 for the three months ended March 31, 2016.The main increase was due to increase in payroll expenses. 

*Net loss*

Our net loss increased by $5,537 or 16% for the three months ended March 31, 2017 as compared to the same period of 2016. This increase was mainly the result of the increase in payroll expenses.

**Liquidity and Capital Resources**

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

 

 

 

 

 

 

 

 

 

  

 

**For the Nine Months Ended**

 

**  **

 

**March 31,**

 

**  **

 

**2017**

 

 

**2016**

 

  

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

(149,956)

 

 

 $

745,547

 

Net cash provided by investing activities

 

 

30,004

 

 

 

-

 

Net cash provided by (used in) financing activities

 

 

93,628

 

 

 

(741,930)

 

Effect of exchange rate changes on cash

 

 

(2,180)

 

 

 

(22,047)

 

NET CHANGE IN CASH

 

 

(28,504)

 

 

 

(18,430)

 

CASH AT BEGINNING OF PERIOD

 

 

37,190

 

 

 

75,612

 

CASH AT END OF PERIOD

 

$

8,686

 

 

$

57,182

 

As of March 31, 2017 we had cash of $8,686 in our bank accounts and a working capital surplus of $2,112,881.

For the nine months ended March 31, 2017, we used net cash of $149,956 in operating activities, compared to net cash received of 745,547 in operating activities during the same period of 2016. The net cash provided by operating activities decrease of $895,503 was mainly due to the decrease in cash received from film costs.

During the nine months ended March 31, 2017, we received net cash of $30,004 from investing activities, which was from collection of notes receivable. 

During the nine months ended March 31, 2017, we received net cash of $93,628 from financing activities, compared to net cash used of $741,930 in financing activities during the same period in fiscal 2016. The increase in net cash provided by financing activities was mainly due to the fact that there were no repayments of short-term loan to a related party, rather the Company received advances from a related party during the period.

Our cash level decreased by $28,504 during the nine months ended March 31, 2017, compared to a decrease of $18,430 in the same period of 2016. The changes in cash were results of the factors described above.

We anticipate that we will meet our ongoing cash requirements by retaining income as well as through equity or debt financing. We plan to cooperate with various individuals and institutions to acquire the financing required to produce and distribute our products and anticipate this will continue until we accrue sufficient capital reserves to finance all of our productions independently.

We intend to meet our cash requirements for the next 12 months through retaining income generated from daily operations and partnerships with finance groups on television and movie projects.

*Critical Accounting Policies and Estimates*

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2016 10-K for disclosures regarding our critical accounting policies and estimates. The interim financial statements follow the same accounting policies and methods of computations as those for the year ended June 30, 2016.

*Off-Balance Sheet Arrangements*

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

*Inflation*

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

*Audit Committee*

The functions of the audit committee are currently carried out by our Board of Directors, who has determined that we do not have an audit committee financial expert on our Board of Directors to carry out the duties of the audit committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert on the audit committee.

11

**Item 3.  Quantitative and Qualitative Disclosures About Market Risk**

Not applicable.

**Item 4.  Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

 

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2017. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

**Changes in Internal Control**

Except as discussed above, there were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that occurred during the quarterly period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

12

**PART II - OTHER INFORMATION**

 

 **Item 1.  Legal Proceedings**

 

We are not aware of any legal proceedings to which we are a party or of which our property is the subject. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.

 

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

 

None.

 

**Item 3.  Defaults Upon Senior Securities**

 

None.

 

**Item 4.  Submission of Matters to a Vote of Security Holders**

 

None.

 

**Item 5.  Other Information**

 

None.

 

13

**Item 6.  Exhibits**

**Exhibit Number**

**Exhibit Description**

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

 **SIGNATURES**

 

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

 

 

**China Media Inc.**

 

(Registrant)

 

 

 

*/s/ Dean Li*

Date: May 15, 2017

Dean Li

 

President, Chief Executive Officer

 

(Principal Executive Officer)

 

 

 

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