China Media Group Corp (OTC BB:CHMD)

On March 15, 2012, China Media Group Corporation ("CMG"), Good World Investments Limited ("Purchaser"), a wholly owned subsidiary of CMG, ECE Holdings Sdn. Bhd. (the "Vendor") and A-Team Resources Sdn. Bhd. ("ATeam") entered into a conditional Sale and Purchase Agreement ("SP Agreement") for the Purchaser to acquire 100% equity interest in ATeam from the Vendor. The purchase consideration is the issuance of 558,779,837 shares at a price of USD0.0036 per share in CMG which represents approximately 51% of the enlarge share capital of CMG to the Vendor.

This SP Agreement is conditional upon the satisfactory due diligence determined at the Purchaser's sole discretion on or before the 18 April 2012 (the "Long Stop Date"). If the Purchaser is not satisfied with the due diligence on or before the Long Stop Date, then the SP Agreement will be cancelled with no effect.

If the purchase of ATeam and the CMG issued in accordance with the SP Agreement, then the Vendor shall be the controlling shareholder. As such, the Company will publish the financial statements of ATeam within 4 days of closing the acquisition of ATeam in accordance with the SEC rules and regulations.

ATeam, a company incorporated in Malaysia, is principally engaged in the trading of consumer electronic products.

The management believes this transaction shall expand the business units of the Company and is for the best interest of the Company.

On December 22, 2010, the Company's subsidiary company, China Integrated Media Corporation Limited, a public company incorporated in Australia ("CIMC"), entered into an arrangement to lease 400 advertising sign boards in Kuala Lumpur, Malaysia for a lease term of 6 years from World Class Media Sdn. Bhd. for a total consideration of AUD515,000, which shall be settled by the issuance of i) a AUD15,000 promissory note payable in 30 days, and ii) 2,500,000 shares in CIMC.

World Class, a Malaysia incorporated company, is engaged in the outdoor media business in Malaysia and has a 10,000 sign board concession in various schools granted by the Ministry of Education in Malaysia.

CHMD has not yet generated revenues and has over 500,00,000 shares outstanding.

Due to the recent global economic recession, Companies have been more cautious in their discretionary spending. We believe that the China advertising market has rebounded with the continued growth of its economy. We will look to re-launch the outdoor advertising markets and to raise the adequate capital to roll out the Beijing Ren Ren outdoor project. In October 2010, we acquired 69% interests in China Integrated Media Corporation Limited ("CIMC"), a public company in Australia that operates in digital signage media and China's television media, having the rights to three TV channels on an IPTV platform. This acquisition will open up the television sector to the Group. In November 2010, CIMC acquired a digital signage solutions company, Touche Adaptive Systems Pty. Limited ("Touche") to utilize Touche's technology for other markets such as China and Malaysia. In conjunction with this acquisition, the Group reorganized its outdoor sign business by transferring our subsidiary company Premier Multimedia Sdn. Bhd. under CIMC thereby consolidating all the board business into the CIMC group. CIMC will then be able to develop and focus on the board business for the Group. We will also explore other markets in the Asia region for any synergistic business opportunities.

The Company is not profitable and has 544,132,450 shares outstanding.

We hope to generate additional revenues in the next twelve months by engaging business operations through internal growth and through strategic acquisitions and cooperative advertising agreements, as described more fully under "Overview" above. We have cash and cash equivalents of $19,572 as of September 30, 2010; a decrease from the previous period end of December 31, 2009. In the opinion of management, these funds will not satisfy our working capital requirements to operate at our current level of activity for the next twelve months. To effectuate our business plan, during the next twelve months, we must arrange for adequate funding to implement our plans of increasing our advertising offerings and promote our advertising services, through cooperation agreements and otherwise.

Specifically, we hope to accomplish the steps listed below to implement our business plan. We estimate that we will require approximately $2,000,000 to commence operations as envisioned below during the next twelve months. The figures and steps outlined below are estimates only, and our actual progress and cost may vary from these estimates and is subject to our ability to obtain adequate funding. Such additional capital may be raised through public or private equity financing, borrowings, or other sources, such as contributions from our officers and directors. If we are unable to obtain funds necessary to implement our business plan, we may revise or scale back our business plan.

Our subsidiary, China Integrated Media Corporation Limited, will consider raising funds by equity financing through an IPO in Australia in early 2011. Such plans are still at a preliminary stage and further announcements will be made once we have a detailed plan going forward.

On September 20, 2010, China Media Group Corporation ("CMG") filed a current report Form 8-K with the SEC to announce that CMG, Good World Investments Limited ("GWIL"), a wholly owned subsidiary of CMG, and Tidewell Limited ("Tidewell") entered into a Sale and Purchase Agreement ("SP Agreement") for GWIL to acquire 100% equity interest in Jademan International Limited ("Jademan") from Tidewell for a total purchase consideration of US$250,000, of which US$50,000 shall be paid by the issuance of a 6% per annum interest bearing promissory note and the remaining balance of US$200,000 shall be paid by the issuance of 10,000,000 shares in CMG.

On September 24, 2009, Good World Investments Limited, a wholly owned subsidiary of China Media Group Corporation, subscribed for 51% in the shares of Premium Multimedia Sdn. Bhd. for a total subscription price of RM5,100. PM is a company incorporated in Malaysia and is intended to be engaged in the business of outdoor media and advertising. At the date of the subscription, the Company has received the right to 19 outdoor billboards in Kuala Lumpur of which 9 has been built, but has not commenced sale of these advertising boards.

Source: SEC Form 8K (September 30, 2009)

We remain confident about the prospect for our business in 2009 despite the challenging global economic environment. In the first quarter of 2009, we have obtained the exclusive provincial-level rights to distribute Nianlianping, which is widely used to prevent surgical adhesions, in Guangdong province, and believe that the addition of exclusive distribution rights products such as these will help improve our margins going forward.

'We believe that the strength and experience of our management team, our exciting new self-branded pharmaceutical products, which include a new herbal tea and 'BeThin,' our weight loss product, combined with our strategy of obtaining more national exclusive distribution rights to pharmaceutical products and further improving our core business, will enable us to perform well this year and expand our overall market share. We are strongly committed to increasing value for our shareholders in 2009 and beyond and look forward to reporting many quarters of positive performance.'

Source: PR Newswire (May 13, 2009)

 

 

The company has been able to grow revenues and net income rapidly over the past three years. However, EPS growth has been less robust, due to dilutive events that have resulted in an increase in the amount of shares outstanding. On a positive note it does not seem that the company will have to raise more capital unless they were to make an acquisition:

“We intend to use our available funds to accelerate the development and testing of new drugs. We believe that our available funds will provide us with sufficient capital for at least the next twelve months; however, we may acquire one or two production facilities to manufacture our own products. To the extent that we make acquisitions or establish our own production facilities, we may require additional capital for the acquisition or for the operation of the combined companies.” (Source: 10 K for the fiscal year ended 2007 )


We are concerned that the company gave net income guidance without EPS guidance. This could infer the possibility of some lingering dilutive events.

The GEO Team is currently attempting to verify the current outstanding share amount as it relates to outstanding warrants and preferred stock.

The 2008 guidance of 20% net income growth is a little below the GEO Team’s minimum 30% requirement, however we will continue to monitor developments due to the stock’s current low valuation based on its P/E ratio.

Recently issued guidance:

"During 2008 we expect to see continued solid growth in sales, along with improving margins as we leverage our expanded distribution footprint, expand sales of higher margin exclusive products, and see a growing contribution from sales of our proprietary medical formulations,' said Mr. Yang. 'We are very encouraged by the contribution of our R&D partnerships to building a strong new product pipeline, and expect to report significant clinical milestones over the course of 2008. We are also focused on moving our novel ADTZ product into commercialization this year, and expect to obtain our production permit for the treatment of animal feed and begin trial sales in 2008. If we are successful, this would set us up to begin recognizing meaningful revenues from ADTZ in 2009 and could be an important driver for the Company's future growth. Finally, China Medicine continues to evaluate opportunities to acquire a pharmaceutical manufacturing facility to strengthen our competitive position and achieve vertical integration for our proprietary products, while enhancing our overall profitability", concluded Mr. Yang.

Based on China Medicine's expectations of continued strong demand in the pharmaceutical market, the company expects to achieve revenue growth in the range of approximately 25-35%, gross margins in the range of 30-35%, and approximately 20-22% growth in net income for the full year of 2008.


( Source: Press March 27, 2008 )