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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly three month period ended December 31, 2005
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from [            ] to [            ]
 Commission
File Number: 0001088005
 Sun New Media, Inc.
  MINNESOTA
    
    410985135(State or other jurisdiction of incorporation)
    
    (IRS Employer
Identification No.)
 P.O. Box 297, 1142 South Diamond Bar Boulevard, Diamond Bar, CA
    
    91765(Address of principal executive offices)
    
    (Zip Code)
 (604) 871-9909
 None
 Common Stock, par value $0.01 per
share
 (Title of class)
   þ o
  o þ
   o þ




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##### 



FORWARD LOOKING INFORMATION
 Private
Securities Litigation Reform Act of 1995
    PART I
 Item 1. Financial Statements
  Sun New Media, Inc.
 Condensed Consolidated Financial Statements
 December 31, 2005
 (Unaudited)
   
 Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statement of Operations
    
    
    4Condensed Consolidated Statement of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 31.3EXHIBIT 32.1EXHIBIT 32.2EXHIBIT 32.3
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SUN NEW MEDIA INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  (Unaudited)
    
    (Audited)December
    
    September31, 2005
    
    30, 2005NOTE
    
    US$
    
    US$ASSETSCurrent AssetsCash and bank balances
    
    
    
    
    
    
    1,128,975
    
    
    
    201,957Accounts receivable
    
    
    
    
    
    
    57,437
    
    
    
    6,277Other debtor, prepayments and deposits
    
    
    5
    
    
    
    379,163
    
    
    
    24,859Amounts due from related parties
    
    
    
    
    
    
    2,802
    
    
    
    Amounts due from stockholder
    
    
    6
    
    
    
    56,748
    
    
    
    53,097Amounts due from parent company
    
    
    
    
    
    
    
    
    
    
    97,349Total current assets
    
    
    
    
    
    
    1,625,125
    
    
    
    383,539Plant and equipment
    
    
    
    
    
    
    7,290
    
    
    
    5,554Clearing broker deposit
    
    
    
    
    
    
    36,980
    
    
    
    36,980Total Assets
    
    
    
    
    
    
    1,669,395
    
    
    
    426,073LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    
    
    
    
    
    93,981
    
    
    
    71,204Other payables and accruals
    
    
    
    
    
    
    414,828
    
    
    
    38,526Amounts due to parent company
    
    
    6
    
    
    
    163,770
    
    
    
    Amounts due to related parties
    
    
    
    
    
    
    1,500
    
    
    
    Convertible note
    
    
    7
    
    
    
    918,000
    
    
    
    Total current liabilities
    
    
    
    
    
    
    1,592,079
    
    
    
    109,730Commitments and Contingencies
    
    
    8STOCKHOLDERS EQUITYCommon stock; authorized 750,000,000 shares, US$0.01 par valuePreference stock, authorized 250,000,000 shares, US$0.01 par value64,536,870/ 9,259,370 shares of common stock issued and
outstanding, US$0.01 par value
    
    
    
    
    
    
    645,369
    
    
    
    92,59450,000/ 55,250,000 shares of common stock reserved to be
issued, US$0.01 par value
    
    
    3
    
    
    
    500
    
    
    
    552,500Additional paid in capital
    
    
    
    
    
    
    127,675
    
    
    
    5,250Deficit
    
    
    
    
    
    
    (696,228
    )
    
    
    (334,001
    )Total stockholders equity
    
    
    
    
    
    
    77,316
    
    
    
    316,343Total liabilities and stockholders equity
    
    
    
    
    
    
    1,669,395
    
    
    
    426,073
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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SUN NEW MEDIA INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
  Three monthsended December31, 2005NOTE
    
    US$REVENUES
    
    
    
    
    
    
    182,114Cost of revenues
    
    
    
    
    
    
    91,785Gross Profit
    
    
    
    
    
    
    90,329Other income
    
    
    
    
    
    
    7,180OPERATING EXPENSESGeneral and administrative
    
    
    
    
    
    
    75,753Management fees and salaries
    
    
    
    
    
    
    188,344Professional fees
    
    
    
    
    
    
    195,639Total operating expenses
    
    
    
    
    
    
    459,736Operating loss before income taxes
    
    
    
    
    
    
    (362,227
    )Income tax expenses
    
    
    4
    
    
    
    Net loss
    
    
    
    
    
    
    (362,227
    )Loss per share:Weighted average number of shares outstandingBasic and diluted
    
    
    
    
    
    
    64,518,537Net loss per share of common stockBasic and diluted
    
    
    
    
    
    
    (0.01
    )
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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SUN NEW MEDIA INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
  Three Monthsended December31, 20005US$Cash flows from operating activitiesNet loss for the period
    
    
    (362,227
    )Adjustments to reconcile net loss to net cash used in
operating activities;Depreciation
    
    
    29Changes in assets and liabilities:Accounts receivable
    
    
    (51,160
    )Other debtor, deposits and prepayments
    
    
    (354,304
    )Amounts due from related parties
    
    
    (2,802
    )Accounts payable
    
    
    22,777Other payables and accruals
    
    
    376,302Amounts due to related parties
    
    
    1,500Net cash used in operating activities
    
    
    (369,885
    )Cash flows from investing activitiesPurchase of fixed assets
    
    
    (1,765
    )Net cash used in investing activities
    
    
    (1,765
    )Cash flows from financing activitiesIssuance of common stock
    
    
    123,200Proceeds from convertible note
    
    
    918,000Amounts due from stockholders
    
    
    257,468Net cash provided by financing activities
    
    
    1,298,668Net increase in cash and cash equivalents
    
    
    927,018Cash and cash equivalents, beginning of the period
    
    
    201,957Cash and cash equivalents, end of the period
    
    
    1,128,975
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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SUN NEW MEDIA INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
    
    NATURE OF OPERATIONS AND BASIS OF PRESENTATIONSun New Media Inc (formerly known as SE Global Equity Corp, SE Global), a Minnesota
corporation, and each of its subsidiaries are collectively referred to herein as the
Company or SNMI.As of September 30, 2005, SNMIs subsidiaries are Sun New Media Group Limited (SNMG),
Global-American Investments Inc (GAI), SE Global Equity Inc and SE Global Capital Inc.During the quarter, the Company incorporated a new subsidiary, Sun Global Marketing Network
Ltd (SGMN) in the Cayman Islands.SNMI offers a software platform that provides electronic low cost order routing of U.S.
securities through its wholly owned subsidiary, GAI  a licensed U.S. securities
broker-dealer to investors. All order routing and support services are provided by the
individual alliance broker in compliance with local regulatory requirements. GAI is a U.S.
licensed securities broker-dealer and provides a wide range of brokerage services in the
United States.SNMG has had no operations since its date of incorporation on June 6, 2005. SNMG plans to
engage in the provision of managerial and marketing services for the distribution and
promotion of television programs and electronic publishing materials and websites.SGMN has had no operations since its date of incorporation on December 5, 2005. SGMN plans
to engage in the provision of sales and marketing services for the digital publishing of
various magazine titles.SE Global Equities Inc and SE Global Capital Inc are currently dormant.The accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q of Regulation S-B. They do not include all
information and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments considered necessary
for a fair presentation, consisting solely of normal recurring adjustments have been made.
Operating results for the three months ended December 31, 2005 are not necessarily
indicative of the results that may be expected for the year ending March 31, 2006.These financial statements should be read in conjunction with the consolidated financial
statements included in the Companys Annual Report on Form 10-KSB for the period ended
September 30, 2005.
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2.
    
    BASIS OF CONSOLIDATION AND PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accompanying unaudited condensed consolidated financial statements of SNMI include the
accounts of SNMI and its wholly owned subsidiaries. All material inter-company balances
and transactions have been eliminated in the consolidation. The consolidated financial
statements have been prepared in accordance with accounting principles generally accepted
in the United States.A summary of the Companys significant accounting policies follows:
 (a)
    
    Use of estimatesThe preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of revenue
and expenses for the periods that the financial statements are prepared. Actual amounts
could differ from these estimates.(b)
    
    Financial instrumentsConvertible noteThe proceeds from the issue of convertible note is allocated entirely to liability
except when the fair value of the common stock into which the conversion note can be
converted exceeds the proceeds (a beneficial conversion feature), a portion of the
proceeds equal to that excess is allocated to additional paid-in capital.As of the date of issuance during the quarter, the fair value of the common stock into
which the convertible note can be converted into does not exceed the proceeds.
Accordingly, the whole proceeds are recorded as liability.Other financial instrumentsThe Companys financial instruments include cash and cash equivalents, accounts
receivable and payable. The fair values of these financial instruments approximate
their carrying values due to the short-term maturity of the instruments.(c)
    
    Plant and equipmentPlant and equipment are stated at cost, net of depreciation. Depreciation is computed
primarily on the straight-line method for financial reporting purposes over the
following estimated useful lives:
 YearsFurniture, fixtures and equipment
    
    
    5
 (d)
    
    Revenue recognitionBrokerage fees and commissions derived from securities transactions and related
revenues and expenses are recorded on a trade date basis. Commission revenues are
recorded on a settlement date basis.
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(e)
    
    Loss per shareBasic loss per share includes no dilution and is computed by dividing loss available to
common stockholders by the weighted average number of common shares outstanding for the
year. Diluted net loss per share reflects the potential dilution of securities that
could share in the loss of the Company. The accompanying presentation is only at basic
loss per share as the potential dilutive factors are anti-dilutive to basic loss per
share.(f)
    
    Foreign currency transactionsThe Company considers U.S. Dollars as its functional currency as a substantial portion
of the business activities are based in U.S. Dollars. Some of the subsidiaries are
operating in Hong Kong Dollars.The Company has chosen the United States dollar as its reporting currency.Transactions in currencies other than the functional currency during the year are
translated into the functional currency at the applicable rates of exchange prevailing
at the time of the transactions. Monetary assets and liabilities denominated in
currencies other than the functional currency are translated into the functional
currency at the applicable rates of exchange in effect at the balance sheet date.
Exchange gains and losses are recorded in the consolidated statements of operations.For translation of financial statements into the reporting currency, assets and
liabilities are translated at the exchange rate at the balance sheet date, equity
accounts are translated at historical exchange rates, and revenues, expenses, gains and
losses are translated at the weighted average rates of exchange prevailing during the
period.Translation adjustments resulting from this process are recorded in accumulated other
comprehensive income (loss) within stockholders equity. No other comprehensive income
for foreign currency translation was recorded for the three months ended December 31,
2005 because the Hong Kong dollar was pegged at a constant rate to the United States
dollar at all times during the period.(g)
    
    Income taxesThe Company follows the liability method of accounting for income taxes. Under this
method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax balances. Future
tax assets and liabilities are measured using enacted or substantially enacted tax
rates expected to apply to the taxable income in the years in which those differences
are expected to be recovered or settled. The effect on future tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment or substantive enactment. A valuation allowance is
provided for deferred tax assets if it is more likely than not that the Company will
not realize the future benefit, or if the future deductibility is uncertain.
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(h)
    
    Share-based compensationIn December 2004, the FASB issued Statement of Financial Accounting Standards (SFAS)
No. 123R, Share-Based Payment, which establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for goods or services.
A key provision of this statement is the requirement of a public entity to measure the
cost of employee services received in exchange for an award of equity instruments
(including stock options) based on the grant date fair value of the award. That cost
will be recognized over the period during which an employee is required to provide
service in exchange for the award (i.e., the requisite service period or vesting
period). This standard becomes effective for the Company for its first annual or
interim period ended on or after December 15, 2005. The Company has adopted SFAS 123R
for the quarter ended December 31, 2005. The adoption of SFAS 123R did not have a
material impact on the Companys financial position or results of operations.(i)
    
    Related partiesParties are considered to be related if one party has the ability, directly or
indirectly, to control the other party, or exercise significant influence over the
other party in making financial and operating decisions. Parties are also considered
to be related if they are subject to common control or common significant influence.(j)
    
    Deferred expensesPayments made for future expenses were amortized over the life of service received.
 3.
    
    COMMON STOCK
 (a)
    
    2001 Stock Option PlanEffective October 10, 2001 SE Global awarded a total of 2,150,000 non-qualified options
at a price of $1.14 post-stock split ($0.57 pre stock split) under the 2001 Plan to
certain employees, officers, directors and consultants of SE Global and certain of its
subsidiaries of which 123,500 (post stock split) were outstanding as at December 31,
2005.(b)
    
    2004 Stock Option PlanEffective January 22, 2004, SE Global adopted the 2004 Stock Option Plan (the 2004
Plan) allowing for the awarding of options to acquire shares of SE Global. Effective
February 2, 2004 SE Global filed a Form S-8 registering a total of 3,000,000 shares of
SE Globals common stock in connection with SE Globals 2004 Plan.On January 26, 2004 a total of 200,000 non-qualified stock options were granted to
consultants at an exercise price of $0.66 post stock split ($0.33 pre stock split) per
share of which 100,000 are outstanding as at December 31, 2005, exercisable for a term
of five years and a total of 250,000 non-qualified stock options were granted to
employees, officers and directors at a price of $0.66, post stock split ($0.33 pre
stock split) per share, exercisable for a term of five years of which 125,000 are
outstanding as at December 31, 2005.
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4.
    
    INCOME TAXThe Company and its subsidiaries have combined tax losses carried forward, which may be
available to reduce future years taxable income that result in deferred tax asset.
Management believes that the realization of the benefits from these deferred tax assets
appears uncertain due to the Companys limited operating history. Accordingly a full
deferred tax asset valuation allowance has been provided and no deferred tax asset benefit
has been recorded5.
    
    PREPAYMENTS AND DEPOSITSPrepayments and deposits are summarized as follow:
 As of
    
    
    As ofDecember
    
    
    September31, 2005
    
    

30, 2005Notes
    
    US$
    
    
    US$Deferred expenses
    
    (i)
    
    
    2,406
    
    
    
    2,750Other debtor
    
    
    
    
    21,200
    
    
    
    Prepaid insurance premiums
    
    
    
    
    182,260
    
    
    
    Rental deposits
    
    
    
    
    12,945
    
    
    
    12,945Other deposits
    
    (ii)
    
    
    127,311
    
    
    
    Prepaid administrative expenses
    
    
    
    
    31,761
    
    
    
    9,164377,883
    
    
    
    24,859
  (i)
    
    The amount represents a prepayment for management fees under a management
agreement between SNMI and Capital Alliance Group Inc. (CAG) which lasts for two
years effective September 18, 2005.(ii)
    
    The amount represents a prepayment for the purchase of fixed assets.
 6.
    
    AMOUNTS DUE FROM/ (TO) STOCKHOLDERSThe amounts are non-trade, interest free and with no fixed terms of repayment.7.
    
    CONVERTIBLE NOTEOn December 31, 2005, the Company entered into a Note Purchase Agreement (the Agreement)
with Barron Partners LLP (Barron) whereby Barron purchased a convertible note of $918,000
(the Note) from the Company. The Note with the maturity date on December 31, 2008 bore
interest at a rate of 22% per annum payable in kind and could be converted to 450,000
shares of common stock at a conversion price of $2.04. Pursuant to the Agreement,
adjustments may be made to the conversion price subject to certain terms and conditions.The convertible note is classified as liability as it has no embedded conversion feature.
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8.
    
    COMMITMENTS AND CONTINGENCIES
 (a)
    
    CommitmentsThe Company leases office premises for its subsidiary GAI, under operating leases.
Rental expenses under operating lease for the quarter ended December 31, 2005 was
$10,317.Future minimum rental payments under non-cancellable operating leases are approximately
as follows:
 As ofDecember31, 2005US$Within one year
    
    
    31,196Within 2 to 5 years
    
    
    21,20852,404
 (b)
    
    ContingenciesGAI is undergoing a review by the National Association of Security Dealers (NASD) for
compliance with NASD Rules applicable to Order Audit Trail System (OATS). While a
final determination has yet to be made, it is possible that GAI could be subject to
disciplinary action which may entail a penalty.The directors of GAI are of the opinion that the company is not at fault as there are
mitigating circumstances. The directors of GAI believe that the company can
successfully get waived any settlement fine but they cannot state categorically that
this will be the case. The past pattern of the NASD in an OATS violation was a fine of
approximately $10,000.
 9.
    
    SUBSEQUENT EVENTSOn January 27, 2006, the Company completed the acquisition of a 100% controlling interest
in China Focus Channel Development Ltd (FCD). FCD has a variable interest entity,
Suizhou China Focus Channel Development Limited. SFC is a variable interest entity owned
by FCD. FCD does not have any ownership interest in SFC. FCD is incorporated in Hong Kong
and is considered a foreign entity under the PRC laws. Under various contractual
agreements, SFCs stockholders are required to transfer their ownership in SFC to FCD or to
designees of FCD at any time for the amount of loans outstanding. All voting rights of SFC
are assigned to FCD and FCD has the right to appoint all directors and senior management
personnel of SFC. FCD has also entered into an exclusive consulting service agreement with
SFC under which FCD provides consulting and other services to SFC in exchange for all net
income of SFC. In addition, SFCs stockholders have pledged their shares in SFC as
collateral for the non-payment of loans due to FCD. In view of the above, SFC is
considered as FCDs variable interest entity.On February 13, 2006, SNMI entered into an agreement to acquire a 100% equity interest in
China Sport TV Productions Ltd (CSTV). Under the terms of the agreement, SNMI is to
issue 460,526 shares of common stock for 100% of the issued and outstanding shares of CSTV.On February 14, 2006, SNMI entered into an agreement to acquire a 100% equity interest in
Lifestyle Magazines Publishing Pte Ltd (Lifestyle). Lifestyle is mainly engaged in the
publishing of lifestyle and special interest magazines. Under the terms of the agreement,
SNMI is
to issue 978,406 shares of common stock for 100% of the issued and outstanding shares of
Lifestyle.On February 15, 2006, the Company completed the acquisition of a 100% controlling interest
in Sun New Media Holdings Limited (SNMH), according to the terms originally announced on
November 29, 2005. Through SNMH, the Company now has an 85% stake in Sun 365 Multimedia
Holdings Ltd, a Beijing based television and multimedia production-company; a 51% stake in
Compass Multimedia (HK) Ltd, the creator and distributor of the Gogosun e-publishing
platform and Chinas first digital TV Guide; and a 30% stake in Global Woman Multimedia Co.
Ltd, a TV and new media company with various online and offline media assets.On February 17, 2006, the Company change its fiscal year
end from September 30 to March 31.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
     Acquisitions
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Results of Operations
 Quarter Ended December 31, 2005
  Revenue
 Expenses
 Net Loss
  Liquidity and Capital Resources
      Off-Balance Sheet Arrangement
  Capital Expenditure Commitments
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Strategic Acquisitions and Recent Development
  Interactive Marketing
   Compass Multimedia, Ltd
   Magzone Multimedia, Pte Ltd:
 Sun Global Marketing Network, Ltd.: China Business Post Wine and Dine Smart
Investor Observer Star Wide Angle
 Telefaith Holdings Ltd. (to be renamed Shengji Mobile Media):
 Sales Services and Channel Management
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Supporting Media Investments
   Critical Accounting Policies and Estimates
  Revenue recognition
  Share-based compensation
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RISK FACTORS
 You should consider carefully all of the information in this Quarterly Report on Form 10-QSB ,
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 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;
    
    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.
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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.
   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.
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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.
   We may not be able to prevent others from unauthorized use of our intellectual property, which
could harm our business and competitive position.
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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.
  We may not be able to manage our expanding operations effectively.
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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.
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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.
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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 Relating to our Brokerage Business
 Our brokerage business could be harmed by market fluctuations and other securities industry risks.
  Substantial competition could reduce our market share and harm our financial performance.
  Systems failures and delays could harm our business.
  Capacity constraints of our systems could harm our business.
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Regulatory and legal uncertainties could harm our business.
     The success of our business will depend on continued development and maintenance of the Internet
infrastructure.
  We will need to introduce new products and services to remain competitive.
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We may not be able to keep up with rapid technological and other changes.
  Our networks may be vulnerable to security risks.
  Failure to comply with net capital requirements could adversely affect our business.
  We are exposed to credit risk.
  Risks Related to Our Common Stock
 There has been only a limited public market for our common stock to date.
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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.
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##### Table of Contents



Item 3. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control
  PART II
 Item 1.
Legal Proceedings.
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  Item 3. Defaults Upon Senior Securities.
  Item 4.
Submissions of Matters to a Vote of Security Holders.
  Item 5. Other Information.
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Item 6. Exhibits and Reports on Form 8-K
 No.
    
    Description2.1
    
    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)2.2
    
    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)2.3
    
    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)2.4
    
    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)2.5
    
    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)2.6
    
    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)2.7
    
    Sale and 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)2.8
    
    Sale and 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)4.1
    
    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)10.1
    
    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)31.1
    
    Certificate of Co-CEO as Required by Rule 13a-14(a)/15d-1431.2
    
    Certificate of Co-CEO as Required by Rule 13a-14(a)/15d-1431.3
    
    Certificate of Acting CFO as Required by Rule 13a-14(a)/15d-1432.1
    
    Certificate of Co-CEO as Required by Rule 13a-14(b) and Rule
15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code32.2
    
    Certificate of Co-CEO as Required by Rule 13a-14(b) and Rule
15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code32.3
    
    Certificate of Acting CFO as Required by Rule 13a-14(b) and Rule
15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code
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##### Table of Contents



SIGNATURES
  SUN NEW MEDIA, INC.Date: February 21, 2006
    
    By:
    
    /s/ John Zongyang LiJohn Zongyang LiCo-Chief Executive OfficerDate: February 21, 2006
    
    By:
    
    /s/ Hwee Ling NgHwee Ling NgActing Chief Financial Officer
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##### Table of Contents



No.
    
    Description2.1
    
    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)2.2
    
    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)2.3
    
    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)2.4
    
    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)2.5
    
    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)2.6
    
    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)2.7
    
    Sale and 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)2.8
    
    Sale and 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)4.1
    
    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)10.1
    
    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)31.1
    
    Certificate of Co-CEO as Required by Rule 13a-14(a)/15d-1431.2
    
    Certificate of Co-CEO as Required by Rule 13a-14(a)/15d-1431.3
    
    Certificate of Acting CFO as Required by Rule 13a-14(a)/15d-1432.1
    
    Certificate of Co-CEO as Required by Rule 13a-14(b) and Rule
15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code32.2
    
    Certificate of Co-CEO as Required by Rule 13a-14(b) and Rule
15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code32.3
    
    Certificate of Acting CFO as Required by Rule 13a-14(b) and Rule
15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
Title 18 of the United States Code
 33