CHND China Media Inc (CE)

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, 2013

[  ] 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)

Copy of Communications to:

Bernard & Yam, LLP

Attn: Bin Zhou, Esq.

401 Broadway, Suite 1708

New York, NY 10013

Phone: 212-219-7783

Facsimile: 212-219-3604

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.

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 March 31, 2013 and May 13, 2013, the registrant had 39,750,000 shares of common stock outstanding.

Table of Contents

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, 2013

(UNAUDITED )

Financial Statement Index

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CHINA MEDIA INC.

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.

Revenues

During the nine months ended March 31, 2013, we increased revenue of $3,849, compared to $19,121 in the nine months ended March 31, 2012. The revenue was generated through commercial sales to advertising agencies.

Cost of revenues

We had no cost of revenues for the nine months ended March 31, 2013 and 2012. This is due to the reason that we reported our advertising revenue based on net amount retained as an agent and no other sales transactions occurred during the periods.

Gross profit

As a result of the foregoing, our gross profit increased $3,849 for the nine months ended March 31, 2013 relative to the nine months ended March 31, 2012.

Operating expenses

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During the nine months ended March 31, 2013 our total operating expenses were $234,531, an increase of $13,842 as compared to $220,689 for the nine months ended March 31, 2012.  

Net loss

For the nine months ended March 31, 2013 we incurred a net loss of $178,933. During the nine months ended March 31, 2012 we incurred a net loss of $156,362. This increase was the result of increased general and administrative expenses and decreased interest income.

Comparison of the three months ended March 31, 2013 and 2012:

Revenues

During the three months ended March 31, 2013, we increased revenue of $7,127, compared to $8,045 in the three months ended March 31, 2012. The revenue was generated through commercial sales to advertising agencies.

Cost of revenues

We had no cost of revenues for the three months ended March 31, 2013 and 2012. This is due to the reason that we reported our advertising revenue based on net amount retained as an agent and no other sales transactions occurred during the periods.

Gross profit

As a result of the foregoing, our gross profit increased $7,127 for the three months ended March 31, 2013 relative to the three months ended March 31, 2012.

Operating expenses

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During the three months ended March 31, 2013 our total operating expenses were $63,681, an increase of $11,223 as compared to $52,458 for the three months ended March 31, 2012.

Net loss

For the three months ended March 31, 2013 we incurred a net loss of $37,735. During the three months ended March 31, 2012 we incurred a net loss of $20,580. This increase was the result of increased general and administrative expenses and decreased interest income.

As of March 31, 2013 we had cash of $204,530 in our bank accounts and a working capital surplus of $2,811,158.

For the nine months ended March 31, 2013, we used net cash of $3,113,319 in operating activities, compared to net cash used of $880,551 in operating activities during the nine months ended March 31, 2012. The decrease in net of cash of $2,232,768 was mainly due to cash paid for film costs including TV series “The Love of  The Hawthorn Tree” in the amount of RMB 3,000,000 (approximately $476,100), TV series “Zhu De” in the amount of RMB 10,000,000 (approximately $1,587,000), and TV series “Qiang Xia” in the amount of RMB 8,000,000 (approximately $1,269,600).

During the nine months ended March 31, 2013, we received net cash of $3,178,835 in investing activities, including $3,172,589 collection of long term investments and $158,228 collection of notes receivable. During the nine months ended March 31, 2012 we spent approximately net cash of $646,993 in investing activities for investment in Shiqiang advertising project.

During the nine months ended March 31, 2013, we earned net cash of $87,055 in financing activities, compared to net cash earned of $590,405 in financing activities during the nine months ended March 31, 2012. The decrease was mainly due to we received a short-term loan from an unrelated party in fiscal year 2011.

Our cash level increased by $158,849 during the nine months ended March 31, 2013, compared to a decrease of $923,878 in the nine months ended March 31, 2012, mainly due to the net cash earned from investing activities as 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 2012 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, 2012.

Off-Balance Sheet Arrangements

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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, 2013. 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 effective.

  Management Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the evaluation performed, our management concluded that during the period covered by this report, our internal controls over financial reporting were effective.

During the quarterly period, we implemented the following measures to improve our internal control over financial reporting:

(1).

Engaged outside consultants to assist in our assessment of the effectiveness of the company’s internal controls over financial reporting; and

(2).

Developed and instituted new internal control procedures to strengthen our month-end close and financial reporting processes;

We believe these measures have strengthened our internal control over financial reporting and disclosure controls and procedures.

Changes in Internal Control

Except for the changes discussed above, there was no change 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.

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