WEB NEWS Comments & Business Outlook
GME INNOTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended September 30,
Nine months ended September 30,
2015
2014
2015
2014
REVENUES
$
1,948,278
$
571,270
$
6,193,593
$
1,390,900
COST OF SALES
1,551,391
400,988
4,981,126
899,125
GROSS PROFIT
396,887
170,282
1,212,467
491,775
EXPENSES
Sales & marketing expenses
88,172
10,748
166,625
32,999
General and administrative
550,743
182,549
1,142,504
565,888
TOTAL OPERATING EXPENSES
638,915
193,297
1,309,129
598,887
OPERATING LOSS
(242,028)
(23,015)
(96,662)
(107,112)
OTHER INCOME/(EXPENSE)
Other income
266,583
19,192
337,146
31,158
Interest expense
(20,032)
-
(79,387)
-
Other expenses
(13,430)
(2,131)
(17,073)
(14,368)
TOTAL OTHER INCOME/(EXPENSE)
233,121
17,061
240,686
16,790
NET INCOME/(LOSS) BEFORE PROVISION FOR INCOME TAXES
(8,907)
(5,954)
144,024
(90,322)
PROVISION FOR INCOME TAXES
-
-
-
-
NET INCOME / (LOSS) FOR THE PERIOD
$
(8,907)
$
(5,954)
$
144,024
$
(90,322)
NET INCOME/ (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
$
(50,783)
$
-
$
66,959
$
-
NET INCOME / (LOSS) ATTRIBUTABLE TO GME Innotainment, INC. AND SUBSIDIARIES
$
41,876
$
(5,954)
$
77,065
$
(90,322)
Gain / (Loss) on foreign exchange translation
$
(91)
$
-
$
(139)
$
-
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD
$
41,785
$
(5,954)
$
76,926
$
(90,322)
BASIC INCOME / LOSS PER SHARE
$
0.00
$
(0.00)
$
0.00
$
(0.00)
DILUTED INCOME / LOSS PER SHARE –
$
0.00
$
(0.00)
$
0.00
$
(0.00)
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
28,433,094
25,878,660
27,832,362
24,559,306
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
32,069,458
25,878,660
31,486,726
24,559,306
Management Discussion and Analysis
Revenues
Revenues increased by $1,377,008 to $1,948,278 for the three months ended September 30, 2015 as compared to $571,270 for the same period in 2014, representing a 241% increase. The increase in revenue was mainly due to the acquisition of Markwin Investment Limited and its portfolio of Artiste talent.
Net loss from operations increased by $2,953 to a net loss of $8,906 for the three months ended September 30, 2015 as compared to net loss of $5,954 for the same period in 2014.
Comments & Business Outlook
GME INNOTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended June 30,
Six months ended June 30,
2015
2014
2015
2014
REVENUES
$
3,692,290
$
531,820
$
4,245,315
$
819,630
COST OF SALES
3,099,200
336,655
3,429,735
498,137
GROSS PROFIT
593,090
195,165
815,580
321,493
EXPENSES
Sales & marketing expenses
50,059
11,240
78,453
22,251
General and administrative
401,099
178,787
591,761
383,339
TOTAL OPERATING EXPENSES
451,158
190,027
670,214
405,590
OPERATING INCOME/(LOSS)
141,932
5,138
145,366
(84,097)
OTHER INCOME/(EXPENSE)
Other income
65,793
26,379
70,563
26,966
Interest expense
(59,355)
-
(59,355)
-
Other expenses
(2,559)
(900)
(3,643)
(12,237)
TOTAL OTHER INCOME
3,879
25,479
7,565
14,729
NET INCOME/(LOSS) BEFORE PROVISION FOR INCOME TAXES
145,811
30,617
152,931
(69,368)
PROVISION FOR INCOME TAXES
-
-
-
-
NET INCOME / (LOSS) FOR THE PERIOD
$
145,811
$
30,617
$
152,931
$
(69,368)
NET (INCOME) / LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
$
(127,586)
$
-
$
(117,742)
$
-
NET INCOME / (LOSS) ATTRIBUTABLE TO GME Innotainment, INC. AND SUBSIDIARIES
$
18,225
$
30,617
$
35,189
$
(69,368)
Gain / (Loss) on foreign exchange translation
$
536
$
-
$
(48)
$
-
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD
$
18,761
$
30,617
$
35,141
$
(69,368)
BASIC INCOME / LOSS PER SHARE
$
0.00
$
(0.00)
$
(0.00)
$
(0.00)
DILUTED INCOME / LOSS PER SHARE –
$
0.00
$
(0.00)
$
(0.00)
$
(0.00)
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
28,433,094
25,660,390
27,527,016
23,892,480
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
30,886,788
26,111,068
29,980,710
24,343,158
Management Discussion and Analysis
Revenues
Revenues increased by $3,160,470 to $3,692,290 for the three months ended June 30, 2015 as compared to $531,820 for the same period in 2014, representing a 594.27% increase. The increase in revenue was mainly due to the acquisition of Markwin Investment Limited and its portfolio of Artiste talent.
Net income from operations increased by $115,194 to a net income of $145,811 for the three months ended June 30, 2015 as compared to of $30,617 for the same period in 2014.
Auditor trail
ITEM 4.01. Changes in Registrant’s Certifying Accountant
a.On June 22, 2015, the Company was informed that our registered independent public accountant, DKM Certified Public Accountants of Clearwater Florida (“DKM”), will be withdrawing from work before the Securities and Exchange Commission (“SEC”).
b.DKM had audited the years ending December 31, 2013 and 2014 and reviewed the financial statements of the quarterly periods ended March 31, 2014 through March 31, 2015. The financial statements for the year ended December 31, 2012 were audited by others. The reports for the years ended December 31, 2013 and December 31, 2014 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to audit scope or accounting, except that the report contained an explanatory paragraph stating that there was substantial doubt about the Company’s ability to continue as a going concern.
c.Our Board of Directors participated in and approved the decision to change independent accountants. Through the period covered by the audit firm, commencing March 26, 2014 through June 22, 2015, including the annual statements for December 31, 2013 and 2014 and the quarterly statement for March 31, 2015, there have been no disagreements with DKM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of DKM would have caused them to make reference thereto in their report on the financial statements. Through the interim period ending June 22, 2015 (the date of DKM’s letter announcing its withdrawal from work before the SEC), there have been no disagreements with DKM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of DKM would have caused them to make reference thereto in their report on the financial statements.
d.We have authorized DKM to respond fully to the inquiries of the successor accountant
e.During the years ending December 31, 2013 and 2014 and the interim period through June 22, 2015, there have been no reportable events with us as set forth in Item 304(a)(1)(iv) of Regulation S-K.
f.The Company provided a copy of the foregoing disclosures to DKM prior to the date of the filing of this Report and requested that DKM furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agrees with the statements in this Report. A copy of such letter is filed as Exhibit 16.1 to this Form 8-K.
(2) New Independent Public Accountant:
a.On July 24, 2015, the Company engaged Stevenson & Company CPAS LLC (“Stevenson”), of Tampa, FL, as its new registered independent public accountant. During the years ended December 31, 2013 and 2014 and prior to July 24, 2015 (the date of the new engagement), we did not consult with Stevenson regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by Stevenson, in either case where written or oral advice provided by Stevenson would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues, or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).
Acquisition Activity
Item 1.01 Entry into a Material Definitive Agreement.
Pursuant to the terms of the Share Exchange Agreement, the Company acquired 20% of DSGL in exchange for DSGL acquiring 55% of GMEH from the Company.
Prior to the closing, the Company held 100% ownership of GMEH. After the closing, the Company retained the equivalent of 56% of GMEH (45% plus 20% of 55%).
Comments & Business Outlook
GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
2014
2013
CONTINUING OPERATIONS
REVENUES
$
2,970,181
$
2,310,329
COST OF SALES
2,416,999
1,562,252
GROSS PROFIT
553,182
748,077
EXPENSES
Sales & marketing expenses
44,771
51,330
General and administrative expenses
839,784
1,648,016
Loss on impairment of assets
451,908
15,000
1,336,463
1,714,346
LOSS FROM CONTINUING OPERATIONS
(783,281)
(966,269)
OTHER INCOME/(EXPENSE)
Interest income
318
3,008
Interest expenses
(559)
(102,564)
Other income
51,839
22,238
Other expenses
(19,542)
(84,780)
32,056
(162,098)
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(751,225)
(1,128,367)
PROVISION FOR INCOME TAXES
-
-
NET LOSS FROM CONTINUING OPERATIONS
$
(751,225)
$
(1,128,367)
DISCONTINUED OPERATIONS
Net loss from discontinued operations
-
(477,244)
Gain on disposal of discontinued operations
-
672,927
NET INCOME FROM DISCONTINUED OPERATIONS
-
195,683
NET LOSS FOR THE YEAR
$
(751,225)
$
(932,684)
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
1,065
-
NET LOSS ATTRIBUTABLE TO GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES
$
(750,160)
$
(932,684)
OTHER COMPREHENSIVE INCOME ATTRIBUTABLE TO
GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES
Gain on foreign exchange translation
2,288
-
TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
- Arising from continuing operations
(747,872)
(1,128,367)
- Arising from discontinued operations
-
195,683
$
(747,872)
$
(932,684)
BASIC LOSS PER SHARE–
- Arising from continuing operations
(0.03)
(0.24)
- Arising from discontinued operations
-
0.04
$
(0.03)
$
(0.20)
DILUTED LOSS PER SHARE
- Arising from continuing operations
(0.03)
(0.24)
- Arising from discontinued operations
-
0.04
$
(0.03)
$
(0.20)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic
25,005,208
4,562,360
Diluted
25,005,208
4,562,360
Management Discussion and Analysis
Revenues
Sales revenue increased by $659,852 to $2,970,181 for the year ended December 31, 2014 as compared to $2,310,329 for 2013, representing a 28.56% increase. The increase in revenue was mainly due to the increase of 1) $924,716 by ticket sale of an artist concert hosted in Hong Kong, 2) $52,852 by artist-related merchandising and shared profit of intellectual property rights and 3) $28,453 by the artists’ performances in TV shows offset the decrease of promotional performances for brands and institutional customers by $343,169.
Net loss from continuing operations decreased by $370,142 to a net loss of $751,225 for the year ended December 31, 2014 as compared to $1,128,367 for 2013.
Comments & Business Outlook
EXPLANATORY NOTE
Although Great China Mania Holdings, Inc. (the “Company”) and Concept X agreed to the terms of the Share Exchange on December 31, 2014, the actual exchange of shares did not occur. Accordingly, since the acquisition and share exchange had not occurred, the information should not have been reported under Item 1.01 Entry into a Material Definitive Agreement, but rather under Item 7.01 Regulation FD Disclosure. As of the date of the filing of this Amended 8-K, the share exchange has not occurred.
On December 31, 2014, Great China Mania Holdings, Inc. (the “Company”) and Concept X Limited (“Concept X”) agreed to the terms of a Share Exchange. The Company approved the due diligence review and confirmed that all existing unsettled bank loans of Concept X had been transferred to a third party and would not be the responsibility of GMEC at closing. Upon closing, Concept X would be a wholly owned subsidiary of GMEC and GMEC will have transferred 500,000 restricted shares of GMEC’s common stock to Concept X’s sole shareholder. If Closing occurs as anticipated, these transactions would be dilutive to existing shareholders. No assurance can be had that the above transactions will be satisfactorily concluded. If these transactions are in fact concluded, the acquisition will be reported in a report on Form 8-K.
Acquisition Activity
Item 1.01 Entry into a Material Definitive Agreement.
The Company approved the due diligence review and confirmed that all existing unsettled bank loans of Concept X had been transferred to a third party and are not the responsibility of GMEC at the date of closing.
At the closing, GMEC acquired 100% ownership of Concept X. Consideration paid by the Company was 500,000 newly-issued restricted shares of its common stock.
Deal Flow
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Amount to be registered (1)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$257.60
Total
5,714,285
$2,000,000
$257.60
(1)
Pursuant to Rule 416 of the Securities Act of 1933, as amended, the shares of Common Stock offered hereby also include such presently indeterminate number of shares of our Common Stock as shall be issued by us as a result of stock splits, stock dividends or similar transactions.
(2)
Pursuant to Rule 457(p) the dollar amount of the filing fee of $46.99 previously paid is offset against the currently due filing fee. The prior registration statement was filed by Great China Mania Holdings, Inc. on March 12, 2013, registration number 333-187235.
Deal Flow
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Amount to be registered (1)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$257.60
Total
5,714,285
$2,000,000
$257.60
(1)
Pursuant to Rule 416 of the Securities Act of 1933, as amended, the shares of Common Stock offered hereby also include such presently indeterminate number of shares of our Common Stock as shall be issued by us as a result of stock splits, stock dividends or similar transactions.
(2)
Pursuant to Rule 457(p) the dollar amount of the filing fee of $46.99 previously paid is offset against the currently due filing fee. The prior registration statement was filed by Great China Mania Holdings, Inc. on March 12, 2013, registration number 333-187235.
Comments & Business Outlook
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended
September 30,
Nine months ended
September 30,
2014
2013
2014
2013
CONTINUING OPERATIONS
REVENUES
$ 571,270 $ 470,279 $ 1,390,900 $ 1,455,059
COST OF SALES
400,988 338,243 899,125 924,716
GROSS PROFIT
170,282 132,036 491,775 530,343
EXPENSES
Sales & marketing expenses
10,748 7,828 32,999 29,657
General and administrative
182,549 604,448 565,888 1,342,300
TOTAL OPERATING EXPENSES
193,297 612,276 598,887 1,371,957
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
(23,015 ) (480,240 ) (107,112 ) (841,614 )
OTHER INCOME/(EXPENSE)
Other income
19,192 3,588 31,158 8,781
Interest expense
- (32,795 ) - (98,517 )
Other expenses
(2,131 ) (70,296 ) (14,368 ) (84,276 )
TOTAL OTHER EXPENSE
17,061 (99,503 ) 16,790 (174,012 )
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(5,954 ) (579,743 ) (90,322 ) (1,015,626 )
PROVISION FOR INCOME TAXES
- - - -
NET LOSS FROM CONTINUING OPERATIONS
$ (5,954 ) $ (579,743 ) $ (90,322 ) $ (1,015,626 )
DISCONTINUED OPERATIONS
Net loss
- - - (501,965 )
Gain on disposal of discontinued operations
- - - 697,649
NET INCOME / (LOSS) FROM DISCONTINUED OPERATIONS
$ - $ - $ - $ 195,684
NET INCOME/ (LOSS) FOR THE PERIOD
$ (5,954 ) $ (579,743 ) $ (90,322 ) $ (819,942 )
OTHER COMPREHENSIVE INCOME
- - - -
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD
Arising from continuing operations
(5,954 ) (579,743 ) (90,322 ) (1,015,626 )
Arising from discontinued operations
- - - 195,684
$ (5,954 ) $ $(579,743 ) $ (90,322 ) $ (819,942 )
LOSS PER SHARE, BASIC AND DILUTED – CONTINUING OPERATIONS
$ 0.00 $ (0.11 ) $ (0.00 ) (0.24 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED
25,878,660 4,572,250 24,559,306 4,327,951
Management Discussion and Analysis
Revenues
Revenues increased by $100,991 to $571,270 for the three months ended September 30, 2014 as compared to $470,279 for the same period in 2013, representing a 21.47% increase. The increase in revenue was mainly due to 1.) the increase of $76,920 generated by a new sales contract, and 2.) the increase of $24,071 due to the volume increase of overseas artists’ performance.
Net income from continuing operations decreased by $573,789 to a net loss of $5,954 for the three months ended September 30, 2014 as compared to a net loss of $579,743 for the same period in 2013.
Deal Flow
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Amount to be registered (1)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$257.60
Total
5,714,285
$2,000,000
$257.60
Deal Flow
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Amount to be registered (1)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$257.60
Total
5,714,285
$2,000,000
$257.60
Comments & Business Outlook
Item 1.01 Entry into a Material Definitive Agreement.
On October 14, 2014, Great China Mania Holdings, Inc. (the “Company”) entered into a shareholder agreement (the “Agreement”) with an individual, Darren Kong, to form two joint venture subsidiaries in Shanghai and Sydney in the field of models management, models scouting and event management.
Under the terms of the Agreement, the Company will own 51% of each subsidiary’s common stock. Darren Kong will invest approximately US$59,000 capital into the two subsidiaries and the Company will license its trademark to the subsidiaries to advertise and execute their goods and services.
Deal Flow
Title of Each Class of Securities to be Registered
Amount to be registered (1)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$257.60
Total
5,714,285
$2,000,000
$257.60
Comments & Business Outlook
Item 1.01 Entry into a Material Definitive Agreement.
Under the terms of the Agreement, the Company will own 51% of each subsidiary’s common stock. Bong will invest approximately US$490,000 capital into the two subsidiaries and the Company will license its trademark to the subsidiaries to advertise and execute their goods and services.
Deal Flow
Title of Each Class of Securities to be Registered
Amount to be registered (1)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$257.60
Total
5,714,285
$2,000,000
$257.60
Acquisition Activity
Item 1.01 Entry into a Material Definitive Agreement.
The shares will remain restricted and will be locked up for a period of twelve (12) months from the date of completion of the acquisition (the “Restriction Period). The Company will have the first right of refusal to repurchase the shares from Lee Chi Lun after the Restriction Period at the agreed upon price of USD $1.00 per share. After the Restriction Period, should Lee Chi Lun elects to sell the shares, he agrees to apply the proceeds from the sale of the shares to settle the net trade payables of Concept X as of the date of closing.
Deal Flow
Title of Each Class of Securities to be Registered
Amount to be registered (1)(3)
Proposed maximum offering price per unit (2)
Proposed Maximum Aggregate Offering Price( 2)
Amount of Registration Fee( 2)(3)
Common Stock par value $0.01
5,714,285
$0.35
$2,000,000
$46.99
Total
5,714,285
$2,000,000
$46.99
Comments & Business Outlook
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended June 30,
Six months ended June 30,
2014
2013
2014
2013
CONTINUING OPERATIONS
REVENUES
$ 531,820
$ 613,389
$ 819,630
$ 984,780
COST OF SALES
336,655
418,204
498,137
586,473
GROSS PROFIT
195,165
195,185
321,493
398,307
EXPENSES
Sales & marketing expenses
11,240
8,409
22,251
21,829
General and administrative
178,787
452,023
383,339
737,852
TOTAL OPERATING EXPENSES
190,027
460,432
405,590
759,681
INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
5,138
(265,247 )
(84,097 )
(361,374 )
OTHER INCOME/(EXPENSE)
Other income
26,379
2,979
26,966
5,193
Interest expense
-
(33,476 )
-
(65,722 )
Other expenses
(900 )
(7,828 )
(12,237 )
(13,980 )
TOTAL OTHER EXPENSE
25,479
(38,325 )
14,729
(74,509 )
NET LOSS BEFORE PROVISION FOR INCOME TAXES
30,617
(303,572 )
(69,368 )
(435,883 )
PROVISION FOR INCOME TAXES
-
-
-
-
NET INCOME / (LOSS) FROM CONTINUING OPERATIONS
$ 30,617
$ (303,572 )
$ (69,368 )
$ (435,883 )
DISCONTINUED OPERATIONS
Net loss
-
(328,017 )
-
(501,965 )
Gain on disposal of discontinued operations
-
697,649
-
697,649
NET INCOME / (LOSS) FROM DISCONTINUED OPERATIONS
$ -
$ 369,632
$ -
$ 195,684
NET INCOME / (LOSS) FOR THE PERIOD
$ 30,617
$ 66,060
$ (69,368 )
$ (240,199 )
OTHER COMPREHENSIVE INCOME
-
-
-
-
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD
Arising from continuing operations
30,617
(303,572 )
(69,368 )
(435,883 )
Arising from discontinued operations
-
369,632
-
195,684
$ 30,617
$ 66,060
$ (69,368 )
$ (240,199 )
BASIC INCOME / LOSS PER SHARE – CONTINUING OPERATIONS
$ (0.00 )
$ (0.00 )
$ (0.00 )
(0.00 )
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
25,660,390
3,483,800
23,892,480
3,483,800
DILUTED INCOME / LOSS PER SHARE – CONTINUING OPERATIONS
$ (0.00 )
$ (0.00 )
$ (0.00 )
$ (0.00 )
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
26,111,068
3,483,800
23,892,480
3,483,800
Management Discussion and Analysis
Revenues
Revenues decreased by $81,569 to $531,820 for the three months ended June 30, 2014 as compared to $613,389 for the same period in 2013, representing a 13.30% decrease. The decrease in revenue was mainly due to the loss of a material sales contract values $120,312 in 2014 offset the increase of revenue generated in overseas in by $38,743 in aggregate.
Net income from continuing operations increased by $334,189 to $30,617 for the three months ended June 30, 2014 as compared to a net loss of $303,572 for the same period in 2013.
Acquisition Activity
Item 1.02 Termination of a Material Definitive Agreement
Acquisition Activity
On June 12, 2014, Great China Mania Holdings, Inc. (the “Company”) entered into a binding
letter of intent (
the “Letter of Intent”) with Phaedra Media Group Limited (“Phaedra Media Group”) for the proposed acquisition of 100% equity interest in Phaedra Media Group (the “Letter of Intent”). Phaedra Media Group, through its subsidiaries (consisting of a wholly-owned foreign enterprises company in China and its three wholly-owned operating subsidiaries) specializes in total advertising solutions and operates an online advertising system in China. Pursuant to the Letter of Intent, the Company will purchase 100% equity interest of Phaedra Media Group for consideration of a to-be-determined amount of 12,000,000 to 15,000,000 shares of the Company’s common stock (the “Consideration Shares”).
Acquisition Activity
Item 1.01 Entry into a Material Definitive Agreement.
In the Letter of Intent, the parties have agreed that Lee Wor Kuen and Lee Ho Shok Fong shall assume the liabilities of all existing unsettled loans owed to third parties and financial institutions by Concept X, cancel all payables and loans owed to related parties by Concept X (specifically those loans from Lee Wor Kuen, Lee Ho Shok Fong and Chee Yan Label Weaving & Press Printing Co., Limited) and assume the liabilities of the net trade payables (defined as trade payables minus trade receivables) as of the date of completion of acquisition of Concept X.
After the consummation of the definitive agreements, and after the Restriction Period, if Lee Wor Kuen and Lee Ho Shok Fong elect to sell the Consideration Shares, they agree they will apply the proceeds from the sale to pay down the balance of unsettled loans owed to third parties and financial institutions after the Restriction Period and to deliver an amount equal to HKD 1,500,000 to the bank account of Concept X to settle the net trade payables of Concept X at the date of completion of acquisition.
The Company will have one week from the date of the Letter of Intent to conduct all due diligence procedures concerning Concept X. If the Company determines after performing the due diligence that it does not want to enter into a definitive agreement with Concept X, they must notify Concept X in writing of the cancellation of the transactions set forth in the Letter of Intent. The Closing Date for the acquisition will be the earlier to occur of (1) the Company agreeing that they are satisfied with their due diligence; or (2) one week following the date of the Letter of Intent. At Closing, the parties shall also enter into a definitive acquisition agreement that will more specifically define the transaction as well as the roles of the respective parties on a going forward basis.
Comments & Business Outlook
Year ended December 31, 2013
2013
2012
CONTINUING OPERATIONS
REVENUES
$ 2,310,329 $ 1,931,005
COST OF SALES
1,562,252 1,282,555
GROSS PROFIT
748,077 648,450
EXPENSES
Sales & marketing expenses
51,330 43,182
General and administrative expenses
1,648,016 986,138
Loss on impairment of assets
15,000 -
1,714,346 1,029,320
LOSS FROM CONTINUING OPERATIONS
(966,269 ) (380,870 )
OTHER INCOME/(EXPENSE)
Interest income
3,008 12,682
Interest expenses
(102,564 ) (54,116 )
Other income
22,238 6,167
Other expenses
(84,780 ) (14,760 )
(162,098 ) (50,027 )
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(1,128,367 ) (430,897 )
PROVISION FOR INCOME TAXES
- -
NET LOSS FROM CONTINUING OPERATIONS
$ (1,128,367 ) $ (430,897 )
DISCONTINUED OPERATIONS
Net loss from discontinued operations
(477,244 ) (103,590 )
Gain on disposal of discontinued operations
672,927 -
NET INCOME FROM DISCONTINUED OPERATIONS
195,683 (103,590 )
NET LOSS FOR THE YEAR
$ (932,684 ) $ (534,487 )
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
- Arising from continuing operations
(1,128,367 ) (430,897 )
- Arising from discontinued operations
195,683 (103,590 )
$ (932,684 ) $ (534,487 )
BASIC LOSSPER SHARE–
- Arising from continuing operations
(0.24 ) (0.13 )
- Arising from discontinued operations
0.04 (0.03 )
$ (0.20 ) $ (0.16 )
DILUTED LOSSPER SHARE
- Arising from continuing operations
(0.24 ) (0.13 )
- Arising from discontinued operations
0.04 (0.03 )
$ (0.20 ) $ (0.16 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic
4,562,360 3,442,672
Diluted
4,562,360 3,442,672
Management Discussion and Analysis
Sales revenue increased by $379,324 to $2,310,329 for the year ended December 31, 2013 as compared to $1,931,005 for 2012, representing a 19.64% increase. The increase in revenue was mainly due to the increase of $454,779 by the artists’ performances in promotional events for brands and institutional customers and $8,978 by artist-related merchandising and shared profit of intellectual property rights offset by the decrease of $84,433 by the artists’ performances in TV shows.
Net loss from continuing operations increased by $697,470 to a net loss of $1,128,367 for the year ended December 31, 2013 as compared to $430,807 for 2012.
Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant
On March 26, 2014 Great China Mania Holdings, Inc. (the “Company” or “we”, “us”) dismissed Albert Wong & Co. (“Wong”) as its independent registered accounting firm.
Wong's report on the financial statements for the years ended December 31, 2012 contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to audit scope or accounting, except that the report contained an explanatory paragraph stating that there was substantial doubt about the Company’s ability to continue as a going concern.
Our Board of Directors participated in and approved the decision to change independent accountants. Through the period covered by the financial audit for the year ended December 31, 2012 and including Wong’s review of financial statements of the quarterly periods through September 30, 2013, there have been no disagreements with Wong on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Wong would have caused them to make reference thereto in their report on the financial statements. Through the interim period from September 30, 2013 to the date of the board decision (date), there have been no disagreements with Wong on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Wong would have caused them to make reference thereto in their report on the financial statements.
We have authorized Wong to respond fully to the inquiries of the successor accountant
During the year ended December 31, 2012 and the interim period through date, there have been no reportable events with us as set forth in Item 304(a)(1)(iv) of Regulation S-K.
The Company provided a copy of the foregoing disclosures to Wong prior to the date of the filing of this Report and requested that Wong furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agrees with the statements in this Report. A copy of such letter is filed as Exhibit 16.1 to this Form 8-K.
On March 26, 2014, the Company engaged DKM Certified Public Accountants (“DKM”) of Clearwater, Florida, as its new registered independent public accountant. During the years ended December 31, 2012 and prior to date (the date of the new engagement), we did not consult with DKM regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by DKM, in either case where written or oral advice provided by DKM would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively)..
Auditor trail
This 8-K/A has been amended to update an error in the dates listed.
Dismissal of Previous Independent Auditors
On March 26, 2014 Great China Mania Holdings, Inc. (the “Company” or “we”, “us”) dismissed Albert Wong & Co. (“Wong”) as its independent registered accounting firm.
Wong's report on the financial statements for the years ended December 31, 2012 contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to audit scope or accounting, except that the report contained an explanatory paragraph stating that there was substantial doubt about the Company’s ability to continue as a going concern.
Our Board of Directors participated in and approved the decision to change independent accountants. Through the period covered by the financial audit for the year ended December 31, 2012 and including Wong’s review of financial statements of the quarterly periods through September 30, 2013, there have been no disagreements with Wong on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Wong would have caused them to make reference thereto in their report on the financial statements. Through the interim period from September 30, 2013 to the date of the board decision (date), there have been no disagreements with Wong on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Wong would have caused them to make reference thereto in their report on the financial statements.
We have authorized Wong to respond fully to the inquiries of the successor accountant
During the year ended December 31, 2012 and the interim period through date, there have been no reportable events with us as set forth in Item 304(a)(1)(iv) of Regulation S-K.
The Company provided a copy of the foregoing disclosures to Wong prior to the date of the filing of this Report and requested that Wong furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agrees with the statements in this Report. A copy of such letter is filed as Exhibit 16.1 to this Form 8-K.
On March 26, 2014, the Company engaged DKM Certified Public Accountants (“DKM”) of Clearwater, Florida, as its new registered independent public accountant. During the years ended December 31, 2012 and prior to date (the date of the new engagement), we did not consult with DKM regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by DKM, in either case where written or oral advice provided by DKM would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively)..
Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant
On March 26, 2013 Great China Mania Holdings, Inc. (the “Company” or “we”, “us”) dismissed Albert Wong & Co. (“Wong”) as its independent registered accounting firm.
Our Board of Directors participated in and approved the decision to change independent accountants. Through the period covered by the financial audit for the year ended December 31, 2012 and including Wong’s review of financial statements of the quarterly periods through September 30, 2013, there have been no disagreements with Wong on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Wong would have caused them to make reference thereto in their report on the financial statements. Through the interim period from September 30, 2013 to the date of the board decision (date), there have been no disagreements with Wong on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Wong would have caused them to make reference thereto in their report on the financial statements.
We have authorized Wong to respond fully to the inquiries of the successor accountant
During the year ended December 31, 2012 and the interim period through date, there have been no reportable events with us as set forth in Item 304(a)(1)(iv) of Regulation S-K.
The Company provided a copy of the foregoing disclosures to Wong prior to the date of the filing of this Report and requested that Wong furnish it with a letter addressed to the Securities & Exchange Commission stating whether or not it agrees with the statements in this Report. A copy of such letter is filed as Exhibit 16.1 to this Form 8-K.
On March 26, 2014, the Company engaged DKM Certified Public Accountants (“DKM”) of Clearwater, Florida, as its new registered independent public accountant. During the years ended December 31, 2012 and prior to date (the date of the new engagement), we did not consult with DKM regarding (i) the application of accounting principles to a specified transaction, (ii) the type of audit opinion that might be rendered on the Company’s financial statements by DKM, in either case where written or oral advice provided by DKM would be an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issues or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively)..
Comments & Business Outlook
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended June 30,
Six months ended June 30,
2013
2012
2013
2012
CONTINUING OPERATIONS
REVENUES
$ 613,389 $ 445,566 $ 984,780 $ 880,884
COST OF SALES
418,204 288,512 586,473 558,339
GROSS PROFIT
195,185 157,054 398,307 322,545
EXPENSES
General and administrative
460,432 191,632 759,681 386,041
TOTAL OPERATING EXPENSES
460,432 191,632 759,681 386,041
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
(265,247 ) (34,578 ) (361,374 ) (63,496 )
OTHER INCOME/(EXPENSE)
Other income
2,979 3,596 5,193 5,701
Interest expense
(33,476 ) (6,595 ) (65,722 ) (6,595 )
Other expenses
(7,828 ) (3,362 ) (13,980 ) (6,678 )
TOTAL OTHER EXPENSE
(38,325 ) (6,361 ) (74,509 ) (7,572 )
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(303,572 ) (40,939 ) (435,883 ) (71,068 )
PROVISION FOR INCOME TAXES
- - - -
NET LOSS FROM CONTINUING OPERATIONS
$ (303,572 ) $ (40,939 ) $ (435,883 ) $ (71,068 )
DISCONTINUED OPERATIONS
Net (loss) / income
(328,017 ) (2,544 ) (501,965 ) 7,491
Gain on disposal of discontinued operations
697,649 - 697,649 -
NET INCOME / (LOSS) FROM DISCONTINUED OPERATIONS
$ 369,632 $ (2,544 ) $ 195,684 $ 7,491
NET INCOME/ (LOSS) FOR THE PERIOD
$ 66,060 $ (43,483 ) $ (240,199 ) $ (63,577 )
OTHER COMPREHENSIVE INCOME
- - - -
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD
Arising from continuing operations
(303,572 ) (40,939 ) (435,883 ) (71,068 )
Arising from discontinued operations
369,632 (2,544 ) 195,684 7,491
$ 66,060 $ $(43,483 ) $ (240,199 ) $ (63,577 )
LOSS PER SHARE, BASIC AND DILUTED – CONTINUING OPERATIONS
$ (0.00 ) $ (0.00 ) $ (0.00 ) (0.00 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED
83,158,681 69,676,000 84,042,343 64,404,956
Comments & Business Outlook
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended March 31,
2013
2012
CONTINUING OPERATIONS
REVENUES
$ 371,391 $ 435,318
COST OF SALES
168,269 269,827
GROSS PROFIT
203,122 165,491
EXPENSES
General and administrative
299,249 194,409
TOTAL OPERATING EXPENSES
299,249 194,409
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
(96,127 ) (28,918 )
OTHER INCOME/(EXPENSE)
Other income
2,214 2,105
Interest expenses
(32,246 ) -
Other expenses
(6,152 ) (3,316 )
TOTAL OTHER EXPENSE
(36,184 ) (1,211 )
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(132,311 ) (30,129 )
PROVISION FOR INCOME TAXES
- -
NET LOSS FROM CONTINUING OPERATIONS
$ (132,311 ) $ (30,129 )
DISCONTINUED OPERATIONS
Net (loss) / income
(173,948 ) 10,035
NET INCOME FROM DISCONTINUED OPERATIONS
$ (173,948 ) $ 10,035
NET (LOSS) / INCOME FOR THE PERIOD
$ (306,259 ) $ (20,094 )
OTHER COMPREHENSIVE LOSS
- -
Arising from continuing operations
- -
Arising from discontinued operations
- -
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD
Arising from continuing operations
(132,311 ) (30,129 )
Arising from discontinued operations
(173,948 ) 10,035
$ (306,259 ) $ (20,094 )
LOSS PER SHARE, BASIC AND DILUTED – CONTINUING OPERATIONS
$ (0.00 ) (0.00 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED
80,341,537 58,501,824
Restructuring Activity
HONG KONG, May 16, 2013 (GLOBE NEWSWIRE ) -- Great China Mania Holdings, Inc., (OTCBB:GMEC) (the "Company" or "GMEC") announces it has closed the sales of 2 unprofitable businesses units.
GMEC has closed the sales of Great China Games Limited ("GCG") in exchange for consideration of 3,000,000 GMEC shares from non-affiliate third party. GMEC canceled those 3,000,000, therefore reduced the number of shares outstanding of the Company. More details can be found on the current report on Form 8-K filed with the SEC. GCG reported a net segment loss of $51,860 from continuing operations for the year ended December 31, 2012.
GMEC has also closed the sale of GMEC's publishing segment, Great China Media Limited ("GCM"), in exchange for the third party's assumption of the existing liabilities of GCM. More details can be found on the current report on Form 8-K filed with the SEC.
GCM reported a net segment loss of $51,730 from continuing operations for the year ended December 31, 2012.
"One of our major objectives in 2013 was to restructure our business portfolio and discontinue unprofitable business segments," said Roy, CEO of GMEC. "We feel we have taken the necessary steps to accomplish this objective by disposing of our unprofitable business segments GCG and GCM. Both segments had negative net asset value for the period ending December 31, 2012 and during the first fiscal quarter of 2013. We are now able to focus solely on the most profitable business segment of the Company.
Deal Flow
8-K 4/23/2013
On April 23, 2013, the Company entered into an Asset Purchase and Sale Agreement (the “Agreement”) with Amanda Anderson (“Anderson”). Upon the closing of the Agreement, the Company will sell the assets and operations of Great China Games Ltd. to Anderson in exchange for Anderson assuming the liabilities of Great China Games Ltd. and also returning 3,000,000 shares of the Company common stock back to the Company.
Comments & Business Outlook
HONG KONG, April 23, 2013 (GLOBE NEWSWIRE ) -- Great China Mania Holdings, Inc., (OTCBB:GMEC ) (the "Company" or "GMEC") announces it has entered into an agreement with an individual non-affiliate third party to sell its retail business segment, Great China Games Limited ("GCG"), in exchange for consideration of 3,000,000 shares of GMEC. GMEC will cancel the 3,000,000 shares it receives from the non-affiliate third party upon completion of transaction and therefore reduces the number of shares outstanding of the Company. GCG reported a net segment loss of $51,860 from continuing operations for the year ended December 31, 2012.
"One of our major objectives in 2013 is to restructure our business portfolio and discontinue unprofitable business segments," said Roy, CEO of GMEC. "Looking forward we plan to complete more restructuring to better improve our profitability."
Liquidity Requirements
Please take note that the 2012 first quarter 10Q contains a New Liquidity Statement :
We currently generate our cash flow from our operations. We believe that our cash flow generated from operations will be sufficient to sustain our operations for at least the next 12 months. There is no identifiable expansion plan as of March 31, 2012, but from time to time, we may identify new expansion opportunities for which there will be a need for use of cash.
However, in previous filings the company made the following liquidity statement:
The Company will need additional working capital to carry out its planned activity , which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital through loans, equity financing or merger with another entity. Management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding and other financing which will enable the Company to operate for the coming year.
We are highly skeptical that enough has changed in the GMEC story to believe that previous capital requirements have changed. Furthermore, the company has not raised substantial capital.
Comments & Business Outlook
2012
2011
CONTINUING OPERATIONS
REVENUES
$ 1,454,156 $ 878,853
COST OF SALES
1,019,301 621,550
GROSS PROFIT
434,855 257,303
EXPENSES
General and administrative
455,766 263,485
TOTAL OPERATING EXPENSES
455,766 263,485
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
(20,911 ) (6,182 )
OTHER INCOME/(EXPENSE)
Other income
10,029 4,947
Other expenses
(9,212 ) (3,411 )
TOTAL OTHER INCOME
817 1,536
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(20,094 ) (4,646 )
PROVISION FOR INCOME TAXES
- -
NET LOSS FROM CONTINUING OPERATIONS
$ (20,094 ) $ (4,646 )
DISCONTINUED OPERATIONS
Net loss
- (80,233 )
Gain on disposal of discontinued operations
- 958,855
NET INCOME FROM DISCONTINUED OPERATIONS
$ - $ 878,622
NET (LOSS) / INCOME FOR THE PERIOD
$ (20,094 ) $ 873,976
OTHER COMPREHENSIVE INCOME
- -
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD
Arising from continuing operations
(20,094 ) (4,646 )
Arising from discontinued operations
- 878,622
$ (20,094 ) $ 873,976
LOSS PER SHARE, BASIC AND DILUTED – CONTINUING OPERATIONS
$ (0.00 ) (0.00 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED
58,501,824 13,156,467
Comments & Business Outlook
HONG KONG--(Marketwire - Apr 17, 2012 ) - Great China Mania Holdings, Inc . (OTCBB : GMEC) (the "Company" or " Great China Mania Holdings Inc.) and its wholly owned subsidiary Great China Media Limited, released its 10-K annual report and reported a sales revenue increase of $5,371,787 during 2011 as compared to nil in 2010. The gross profits increased to 1,143,333 in 2011 as compared to nil in 2010. The change was mainly due to the establishment of new and entirely different operations during 2011.
The revenue generated from artist and project management services operation, publication of magazines operation, and retail of video games and accessories operation newly established were $1,106,507, $2,641,324 and $1,623,956, respectively. The company's sources of revenue are mainly originated from Hong Kong and China.
Great China Mania Holdings, Inc. is an electronic content provider that creates and provides leisure and lifestyle-related electronic content to Hong Kong, Macau and China.
The company provides 3 main products and services:
1. Electronic content in the form of electronic magazines
Great China Mania Holdings, Inc. has established distribution agreements with various major operators in Hong Kong, Macau, and China. Customers can purchase subscription packages through the portal websites of their cell phone operators or through their cell phone and mobile devices directly. The contents of the company's electronic magazines will be regularly pushed to customers' cell phones and mobile devices through MMS and SMS once they have subscribed for the package. Subscription revenues are split between the company and cell phone operators.
2011
2010
CONTINUING OPERATIONS
REVENUES
$ 5,371,787 $ -
COST OF SALES
4,228,454 -
GROSS PROFIT
1,143,333 -
EXPENSES
General and administrative
2,163,892 1,327,318
TOTAL OPERATING EXPENSES
2,163,892 1,327,318
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
(1,020,559 ) (1,327,318 )
OTHER INCOME/(EXPENSE)
Other income
13,342 -
Other expenses
(27,097 ) -
TOTAL OTHER INCOME/(EXPENSE)
(13,755 ) -
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(1,034,314 ) (1,327,318 )
PROVISION FOR INCOME TAXES
- -
NET LOSS FROM CONTINUING OPERATIONS
$ (1,034,314 ) $ (1,327,318 )
DISCONTINUED OPERATIONS
Net loss from:-
Water scientific
(80,233 ) (99,531 )
GEBD BVI
- (128,991 )
(80,233 ) (228,522 )
GAIN/(LOSS) ON DISPOSAL OF DISCONTINUED OPERATIONS
958,855 (5,223,073 )
NET INCOME/(LOSS) FROM DISCONTINUED OPERATIONS
878,622 (5,451,595 )
NET(LOSS)/INCOME FOR THE YEAR
$ (155,692 ) $ (6,778,913 )
OTHER COMPREHENSIVE INCOME
(Loss)/gain on foreign exchange translation
- Arising from continuing operations
1,492 (1,170 )
- Arising from discontinued operations
1,246 467,632
2,738 466,462
TOTAL COMPREHENSIVE INCOME/(LOSS) INCOME FOR THE YEAR
- Arising from continuing operations
(1,032,822 ) (1,328,488 )
- Arising from discontinued operations
879,868 (4,983,963 )
$ (152,954 ) $ (6,312,451 )
LOSS PER SHARE, BASIC AND DILUTED – CONTINUING OPERATIONS
$ (0.04 ) (0.03 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED
24,943,587 40,204,115
Deal Flow
On January 19, 2012 the Company entered into a
SUBSCRIPTION AGREEMENT (the “Agreement”) with Chan Ka Wai (the “Subscriber”) whereby the Subscriber purchased
28,500,000 shares of common stock from the Company (the “Shares”). The purchase price of the shares was
HK$ 4,050,000 (or US$
519,200). The Shares were acquired for long-term investment, and the transferability of the Shares is restricted. The Shares shall bear a legend stating that the Shares have not been registered under the Securities Act of 1933.
Comments & Business Outlook
GREAT CHINA MANIA HOLDINGS, INC. AND SUBSIDIARIES
AND COMPREHENSIVE INCOME (UNAUDITED)
Three months ended
September 30,2011
Three months ended
September 30, 2010
(Restated)
Nine months ended
September 30,2011
Nine months ended
September 30, 2010
(Restated)
CONTINUING OPERATIONS
REVENUES
$ 1,352,378 $ - $ 3,513,127 $ -
COST OF SALES
976,552 - 2,608,347 -
GROSS PROFIT
375,826 - 904,780 -
EXPENSES
General and administrative
501,523 156,483 1,257,482 524,711
TOTAL OPERATING EXPENSES
501,523 156,483 1,257,482 524,711
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES
(125,697 ) (156,483 ) (352,702 ) (524,711 )
OTHER INCOME/(EXPENSE)
Other income
4,241 - 6,842 -
Other expenses
- - (24,727 ) (232 )
TOTAL OTHER INCOME/(EXPENSE)
4,241 - (17,885 ) (232 )
NET LOSS BEFORE PROVISION FOR INCOME TAXES
(121,456 ) (156,483 ) (370,587 ) (524,943 )
PROVISION FOR INCOME TAXES
- - - -
NET LOSS FROM CONTINUING OPERATIONS
$ (121,456 ) $ (156,483 ) $ (370,587 ) $ (524,943 )
DISCONTINUED OPERATIONS
NET (LOSS)/INCOME
- 613,194 (80,233 ) 951,060
GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS
- - 958,855 -
NET INCOME FROM DISCONTINUED OPERATIONS
- 613,194 878,622 951,060
NET INCOME/(LOSS) FOR THE PERIOD
$ (121,456 ) $ 456,711 $ 508,035 $ 426,117
OTHER COMPREHENSIVE INCOME
1,497 - 1,497 -
TOTAL COMPREHENSIVE INCOME / (LOSS) INCOME FOR THE PERIOD
$ (119,959 ) $ 456,711 $ 509,532 $ 426,117
LOSS PER SHARE, BASIC AND DILUTED – CONTINUING OPERATIONS
$ (0.00 ) $ (0.00 ) $ (0.02 ) (0.01 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED
24,676,000 40,200,000 20,878,352 40,200,000
See accompanying notes to condensed consolidated financial statements.
Liquidity Requirements
The Company will need additional working capital to carry out its planned activity , which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital through loans, equity financing or merger with another entity. Management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding and other financing which will enable the Company to operate for the coming year.
Liquidity Requirements
We currently generate our cash flow through providing artiste and project management services, publication of magazines and retail of video games and accessories. We believe that our cash flow generated from operations will be sufficient to
sustain operations for at least the next 12 months. There is no identifiable expansion plan as of March 31, 2011, but from time to time, we may identify new expansion opportunities for which there will be a need for use of cash.
Comments & Business Outlook
2010
2009
Continuing
operations
Discontinued
operations
Total
Continuing
operations
Discontinued
operations
As previously
reported in 2009
10/K filing
Revenue
$
-
44,155,538
44,155,538
$
-
47,845,825
47,845,825
Cost of sales
-
35,894,026
35,894,026
-
35,909,267
35,909,267
Gross margin
-
8,261,512
8,261,512
-
11,936,558
11,936,558
Expenses
Selling and distribution
-
1,030,958
1,030,958
-
1,031,579
1,031,579
General and administrative
1,426,484
4,730,881
6,157,365
947,362
3,471,437
4,418,799
Total operating expense
1,426,484
5,761,839
7,188,323
947,362
4,503,016
5,450,378
Operating (loss)/income
(1,426,484)
2,499,673
1,073,189
(947,362)
7,433,542
6,486,180
Other income/(expense)
Other income
(17)
500,283
500,266
-
450,924
450,924
Interest income
-
115,763
115,763
-
167,043
167,043
Interest expense
-
(760,629)
(760,629)
-
(755,567)
(755,567)
Other expenses
(348)
(1,053,484)
(1,053,832)
-
(608,082)
(608,082)
Total other expense
(365)
(1,198,067)
(1,198,432)
-
(745,682)
(745,682)
(Loss)/income before provision for income taxes
(1,426,849)
1,301,606
(125,243)
(947,362)
6,687,860
5,740,498
Provision for income taxes
-
382,125
382,125
-
1,159,279
1,159,279
Net (loss)/income
$
(1,426,849)
919,481
(507,368)
$
(947,362)
5,428,581
4,581,219
Net income attributable to noncontrolling interests
-
1,048,472
1,048,472
-
3,635,486
3,635,486
Net (loss)/income after noncontrolling interests
(1,426,849)
(128,991)
(1,555,840)
(947,362)
1,893,095
945,733
Other comprehensive (loss)/income attributable to shareholders
(Loss)/gain on foreign exchange translation
(1,246)
467,708
466,462
-
(56,645)
(56,645)
Total comprehensive (loss)/income
(1,428,095)
338,717
(1,089,378)
(947,362)
1,836,450
889,088
Earnings per share, basic and diluted
$
(0.04)
(0.00)
(0.04)
$
(0.02)
0.04
0.02
Weighted average number of shares outstanding
40,204,115
40,204,115
40,204,115
40,083,836
40,083,836
40,083,836
Since December 30, 2010, the Company has restructured some of its business operations and corporate structure. As of the date of this filing, our corporate structure is as follows:
New Direction:
Water Scientific Holdings Limited
Water Scientific Holdings Limited (“Water Scientific”) was a fully-operating subsidiary of the Company from October 26, 2010 to March 31, 2011. Water Scientific produces a product called Solidwater(sometimes referred to as Waterlog, depending on the market). Solidwater is an ecological product that provides an optimal alternative solution for total irrigation and synchronous irrigation.
GME Holdings Limited Great China Media Limited Great China Games Limited
Acquisition Activity
On March 31, 2011 the Company entered into a ASSET SALE, PURCHASE AND TRANSFER AGREEMENT with Wong Heong Kin and Chung A. Tsan Guy whereby the Company sold its operations to the Buyers. As consideration for this transaction, the Buyers will assume all of the assets and liabilities of the subsidiary Water Scientific Holdings Limited.
Research
Shares of GEBD have fallen from around $1.00 to $0.12 (Bid) since its RTO transaction in March of 2008, probably due in part to stagnating sales and the lack of any meaningful IR. Furthermore, the following comment from the 2010 third quarter 10Q indicates that growth initiatives are not a priority:
We believe that our cash flow generated from operations will be sufficient to sustain operations for at least the next 12 months. There is no identifiable expansion plan as of September 30, 2010, but from time to time, we may identify new expansion opportunities for which there will be a need for use of cash.
Additional reasons to be weary of this story and why shares have been depressed :
High Debt to equity to equity: 1.34 (We generally prefer to invest in companies with a debt to equity ratio of less than 20%).
Short-term debt: $29.6 million (includes a large note payable)
Long-term debt: $2.8 million
Weak internal controls
Some investors may view the fact that the GEBD has some bank debt on its balance sheet to as an a testament to the reliability of its financial statements. Bank loans are also secured by Machineries of the Company Land and buildings of the Company.
The maturity dates for the bank loans are summarized as follows:
Bank loan balances
Drawn down
As of September
As of December
Name of bank
currency
Due date
30, 2010
31, 2009
China Construction Bank
RMB
May 2010
$
-
$
1,467,527
Industrial and Commercial Bank of China
RMB
Jan 2010
-
146,753
Industrial and Commercial Bank of China
RMB
Oct 2010
-
440,257
Bank of Communication
RMB
Jul 2010
-
733,764
Bank of Communication
RMB
Aug 2010
-
733,763
DBS Bank (Hong Kong) Limited
RMB
Nov 2012
1,010,730
1,301,899
DBS Bank (Hong Kong) Limited
RMB
Mar 2011
169,055
118,058
DBS Bank (Hong Kong) Limited
RMB
Mar 2012
166,878
DBS Bank (Hong Kong) Limited
RMB
Apr 2011
-
629,010
DBS Bank (Hong Kong) Limited
RMB
Sep 2011
351,537
541,777
DBS Bank (Hong Kong) Limited
RMB
Aug 2013
1,336,680
-
Hang Seng Bank Limited
HKD
Feb 2015
888,214
1,010,665
Hang Seng Bank Limited
HKD
Mar 2015
897,084
1,024,073
China Merchants Bank
RMB
Feb 2010
-
1,320,774
China Merchants Bank
RMB
Apr 2011
672,510
-
China Merchants Bank
RMB
Mar 2011
1,494,467
-
Shanghai Pudong Development Bank
RMB
Dec 2010
1,494,467
1,467,527
Bank of China
RMB
Jan 2011
1,494,467
-
Bank of Communication
RMB
Jul 2011
1,494,467
-
China Construction Bank
RMB
Jul 2011
1,494,467
-
$
12,798,145
$
11,102,725
The GeoTeam ® continually attempts to identify catalysts that can affect change in company's fortunes for the better or worse.
A couple recent events have prompted us to track (but not yet endorse ) GEBD:
1. It looks like GEBD ownership has changed hands
On December 30, 2010, the Company entered into an Asset Purchase and Sale Agreement with Chung A. Tsan Guy whereby the Company sold its subsidiary Great East Bottles & Drinks (BVI) Inc. in exchange for Mr. Chung surrendering 31,498,000 shares of common stock of the Company.
Pursuant to a private Stock Purchase Agreement dated January 25, 2011, between Chung A. Tsan Guy and Chan Ka Wai, Mr. Chung sold 6,099,400 shares of common stock of the Registrant to Mr. Wai for a total purchase price of $548,964 or $0.09 per share . According to this transaction, a change of control of the company has occurred. On January 28, 2011 the following individuals were appointed to the Board of Directors of the Company: Chan
2. The company recently consummated an acquisition:
On October 26. 2010, the Company entered into an Acquisition Agreement with Water Scientific Holdings Limited (“Water Scientific”) and the shareholder of Water Scientific whereby the Company acquired 100% of Water Scientific in exchange for 500,000 shares of common stock of the Company.
We will keep a close vigil on developments to this story and consider pulling SAIC filings.
Eastern Environment Sols (OTC BB:EESC) is another stock in this industry.
Internal Controls
We have identified a material weakness in our internal control over financial reporting. As a result of this material weakness and as a result of our failure to identify this material weakness in our internal control over financial reporting as a material weakness in our disclosure controls and procedures, our management, including our CEO and CFO, concluded that our disclosure controls and procedures
were not effective as of December 31, 2009 .
Notable Share Transactions
Pursuant to a private Stock Purchase Agreement dated
January 25, 2011 , between Chung A. Tsan Guy and Chan Ka Wai, Mr. Chung sold
6,099,400 shares of common stock of the Registrant to Mr. Wai for a total purchase price of
$548,964 or $0.09 per share . According to this transaction, a change of control of the company has occurred.
Share Structure
Shares Outstanding: 8,000,000 . This seems like a good number based on the following excerpt from the latest 10Q: "We currently generate our cash flow through production and sales of PET bottles and PET performs in China. We believe that our cash flow generated from operations will be sufficient to sustain operations for at least the next 12 months. There is no identifiable expansion plan as of March 31, 2008, but from time to time, we may identify new expansion opportunities for which there will be a need for use of cash."
