Quarterly Report (10-q)

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, 2018

[ ] 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 15, 2018, the registrant had 39,750,000 shares of common stock outstanding.

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, 2018

(UNAUDITED )

Financial Statement Index


Consolidated Balance Sheets as of March 31, 2018 (Unaudited) and June 30, 2017
Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended March 31, 2018 and 2017 (Unaudited)
Consolidated Statements of Cash Flows for the nine months ended March 31, 2018 and 2017 (Unaudited)
Notes to the Consolidated Financial Statements (Unaudited)

CHINA MEDIA INC.

CONSOLIDATED BALANCE SHEETS


			MARCH 31, 2018	JUNE 30, 2017
			(Unaudited)
Assets
	Current assets
		Cash and cash equivalents	$ 2,713	$ 13,199
		Prepaid and other receivable, net of allowance of $117,946 and $109,302 at March 31, 2018 and June 30, 2017, respectively	15,909	14,742
	Total current assets		18,622	27,941

		Fixed assets, net	16,347	16,222
		Film cost	796,153	737,800
		Prepaid and other assets, non-current, net of allowance of $30,254 and $28,036 at March 31, 2018 and June 30, 2017, respectively	796,153	737,800

	Total assets		$ 1,627,275	$ 1,519,763

Liabilities and Stockholders' Equity
	Current liabilities
		Accounts payable	$ 9,478	$ 9,001
		Accrued liabilities and other payable	347,868	285,813
		Due to related party	567,652	407,208
	Total current liabilities		924,998	702,022

	Total liabilities		924,998	702,022

Stockholders' equity
		Common stock, $0.00001 par value, 180,000,000 shares authorized; 39,750,000 shares issued and outstanding at March 31, 2018 and June 30, 2017	$ 398	$ 398
		Additional paid-in capital	11,290,176	11,272,079
		Accumulated other comprehensive income	640,587	583,053
		Accumulated deficit	(11,228,884)	(11,037,789)
	Total stockholders' equity		702,277	817,741

	Total liabilities and stockholders' equity		$ 1,627,275	$ 1,519,763

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


CHINA MEDIA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)


	FOR THE NINE MONTHS ENDED MARCH 31,		FOR THE THREE MONTHS ENDED MARCH 31,
	2018	2017		2018	2017



Selling, general and administrative	$ 171,833	$ 176,692		$ 39,349	$ 36,343
Depreciation expense	1,110	1,181		354	379
Total operating expenses	172,943	177,873		39,703	36,722


Other income (expense)
Interest expense	(18,152)	(11,959)		(7,038)	(3,785)
Other income	-	4,313		-	-
Net loss before income taxes	(191,095)	(185,519)		(46,741)	(40,507)
Income taxes	-	-		-	-
Net loss	$ (191,095)	$ (185,519)		$ (46,741)	$ (40,507)


Comprehensive loss
Net loss	(191,095)	(185,519)		(46,741)	(40,507)
Foreign currency translation adjustment	57,534	(137,281)		26,182	27,317
Comprehensive loss	$ (133,561)	$ (322,800)		$ (20,559)	$ (13,190)


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.


CHINA MEDIA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				FOR THE NINE MONTHS ENDED MARCH 31,
				2018	2017
CASH FLOWS OPERATING ACTIVITIES
	Net loss			$ (191,095)	$ (185,519)
	Adjustments to reconcile net loss to net cash used in
	operating activities:
		Imputed interest		18,097	11,921
		Depreciation expense		1,110	1,181
	Changes in operating assets and liabilities:
			Prepaid and other receivable	-	(114)
			Accrued liabilities and other payable	37,836	22,575
Net cash used in operating activities				(134,052)	(149,956)

CASH FLOW INVESTING ACTIVITIES
			Collection of notes receivable	-	30,004
Net cash provided by investing activities				-	30,004

CASH FLOW FINANCING ACTIVITIES
			Advances from related party	122,993	93,628
Net cash provided by financing activities				122,993	93,628

Effect of exchange rate changes on cash and cash equivalents				573	(2,180)
NET CHANGE IN CASH AND CASH EQUIVALENTS				(10,486)	(28,504)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD				13,199	37,190
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD				$ 2,713	$ 8,686

SUPPLEMENTAL INFORMATION:
	Interest paid			$ -	$ -
	Income taxes paid			$ -	$ -



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

CHINA MEDIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2018

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. ( “ Vallant ” ), 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, 2017. 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 disclosures contained in the audited financial statements for the year ended June 30, 2017 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 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 March 2018, the FASB issued ASU 2018-05, “ Income Taxes (Topic 740) - Amendments to SEC Paragraphs

Pursuant to SEC Staff Accounting Bulletin No. 118 ” . This ASU adds SEC paragraphs pursuant to the SEC Staff

Accounting Bulletin No. 118, which expresses the view of the staff regarding application of Topic 740, Income

Taxes, in the reporting period that includes December 22, 2017 - the date on which the Tax Cuts and Jobs Act was

signed into law. The amendments are effective upon addition to the FASB Accounting Standards Codification. The

Company is currently evaluating the impact of the adoption of this guidance on the Consolidated Financial

Statements.

Going Concern

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has a working capital deficit as of March 31, 2018. The Company also generated negative operating cash flows and incurred net loss for the nine months ended March 31, 2018.

These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, management intends to raise additional funds by way of cooperation with other film and television producers, obtaining loans from shareholders and borrowing from Dean Li, the President and Chief Executive Officer of the Company, to fund operations. The accompanying unaudited consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.

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, 2018 and June 30, 2017, the Company owed Dean Li $567,652 and $407,208, respectively. The loans borrowed from 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 4.67-5.14% with reference to one-year loans.

In July 2015, the Company entered into an agreement to invest RMB 5 million (approximately $752,627 at the time of investment) 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, 2018, 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.

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, 2018 and 2017:



	For Nine Months Ended March 31,
	2018		2017

Operating expenses
Selling, general and administrative	$	171,833	$	176,692
Depreciation expenses		1,110		1,181
Total operating expenses		172,943		177,873

Other income (expense):
Interest expense		(18,152)		(11,959)
Other income		-		4,313
Total other expense		(18,152)		(7,646)

Net loss before income taxes		(191,095)		(185,519)
Income taxes		-		-
Net loss	$	(191,095)	$	(185,519)

Revenue and Cost

We had no sales and cost for the nine months ended March 31, 2018 and 2017.

Operating expenses

During the nine months ended March 31, 2018, our total operating expenses were $172,943, a slight decrease of $4,930 or 3% as compared to $177,873 for the nine months ended March 31, 2017. The main decrease was due to decrease in office expenses.

Net loss

For the nine months ended March 31, 2018 we incurred a net loss of $191,095, as compared to a net loss of $185,519 for the nine months ended March 31, 2017, an increase of $5,576 or 3%. This increase was primarily due to the increase in interest expense.

Comparison of the three months ended March 31, 2018 and 2017:



	For Three Months Ended March 31,
	2018		2017

Operating expenses
Selling, general and administrative	$	39,349	$	36,343
Depreciation expenses		354		379
Total operating expenses		39,703		36,722

Other expense:
Interest expense		(7,038)		(3,785)
Total other expense		(7,038)		(3,785)

Net loss before income taxes		(46,741)		(40,507)
Income taxes		-		-
Net loss	$	(46,741)	$	(40,507)

Revenue and Cost

We had no sales and cost for the three months ended March 31, 2018 and 2017.

Operating expenses

During the three months ended March 31, 2018, our total operating expenses were $39,703, an increase of $2,981 or 8% as compared to $36,722 for the three months ended March 31, 2017. The main increase was due to increase in office expenses.

Net loss

For the three months ended March 31, 2018 we incurred a net loss of $46,741, as compared to a net loss of $40,507 for the three months ended March 31, 2017, an increase of $6,234 or 15%. This increase was primarily due to the increases in operating expenses and interest expense.

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,
	2018		2017

Net cash used in operating activities	$	(134,052)	$	(149,956)
Net cash provided by investing activities		-		30,004
Net cash provided by financing activities		122,993		93,628
Effect of exchange rate changes on cash and cash equivalents		573		(2,180)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(10,486)		(28,504)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		13,199		37,190
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,713	$	8,686

As of March 31, 2018, we had cash of $2,713 in our bank accounts and a working capital deficit of $906,376.

For the nine months ended March 31, 2018, we used net cash of $134,052 in operating activities, compared to net cash used of $149,956 in operating activities during the same period of 2017. The decrease of $15,904 for net cash used in operating activities was mainly due to increase in accrued liabilities and other payable.

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, 2018, we received net cash of $122,993 from financing activities, compared to net cash received of $93,628 in financing activities during the same period in fiscal year 2017. The increase of $29,365 in net cash provided by financing activities was mainly due to increase in advances received from a related party.

Our cash level decreased by $10,486 during the nine months ended March 31, 2018, compared to a decrease of $28,504 in the same period of 2017. The changes in cash were a result of the factors described above.

We anticipate that we will meet our ongoing cash requirements by obtaining 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 obtaining 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 2017 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, 2017.

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.

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, 2018. 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.

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.

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.