MEDIAN
GROUP INC
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
AS
OF MARCH 31, 2017 AND DECEMBER 31, 2016
|
|
|
|
March
31
2017
|
|
December
31
2016
|
|
Notes
|
|
(Unaudited)
|
|
(Audited)
|
|
|
|
US$
|
|
US$
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
169,041
|
|
797,230
|
Accounts receivables
|
|
|
5,873
|
|
-
|
Prepayments and deposits
|
|
|
115,498
|
|
113,981
|
Amount
due from a related party
|
7
|
|
880,332
|
|
2,229
|
Total current assets
|
|
|
1,170,744
|
|
913,440
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICITS
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Other payables and accruals
|
6
|
|
837,839
|
|
651,880
|
Amounts due to related parties
|
7
|
|
949,578
|
|
806,812
|
Total current liabilities
|
|
|
1,787,417
|
|
1,458,692
|
|
|
|
|
|
|
Long-term debts:
|
|
|
|
|
|
Shareholder loan
|
8
|
|
2,000,000
|
|
2,000,000
|
Total non-current liabilities
|
|
|
2,000,000
|
|
2,000,000
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,787,417
|
|
3,458,692
|
|
|
|
|
|
|
Commitments and contingencies
|
11
|
|
|
|
|
|
|
|
|
|
|
Stockholders
'
deficits:
|
|
|
|
|
|
Common
stock, no par value, 85,000,000,000 shares authorized, 11,427,232,960 (2016: 11,427,232,960) shares issued and outstanding
|
4
|
|
4,095,230
|
|
4,095,230
|
Accumulated deficits
|
|
|
(6,578,613)
|
|
(6,519,665)
|
Accumulated other comprehensive losses
|
|
|
(133,290)
|
|
(120,817)
|
Total Median Group
Inc. stockholders' deficits
|
|
|
(2,616,673)
|
|
(2,545,252)
|
Non-controlling interest
|
|
|
-
|
|
-
|
Total stockholders’ deficits
|
|
|
(2,616,673)
|
|
(2,545,252)
|
Total
liabilities and stockholders’ deficits
|
|
|
1,170,744
|
|
913,440
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements
F-2
MEDIAN
GROUP INC
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
|
(UNAUDITED)
|
|
|
|
Three
Months Ended
31
March
|
|
|
|
2017
|
|
2016
|
|
Notes
|
|
US$
|
|
US$
|
|
|
|
|
|
|
Net
revenue
|
|
|
5,866
|
|
20,897
|
Cost
of revenue
|
|
|
(3,407)
|
|
(13,618)
|
|
|
|
|
|
|
Gross profit
|
|
|
2,459
|
|
7,279
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Administration
expenses
|
|
|
(42,486)
|
|
(141,048)
|
Selling
and distribution expenses
|
|
|
-
|
|
-
|
Total
operating expenses
|
|
|
(42,486)
|
|
(141,048)
|
|
|
|
|
|
|
Operating loss
from continuing operations
|
|
|
(40,027)
|
|
(133,769)
|
|
|
|
|
|
|
Other
income / (expenses)
|
|
|
|
|
|
Other
income
|
|
|
21,122
|
|
465
|
Finance
charges
|
|
|
(43)
|
|
(80)
|
Interest expenses
|
|
|
(40,000)
|
|
(40,000)
|
|
|
|
|
|
|
Net
loss
|
|
|
(58,948)
|
|
(173,384)
|
|
|
|
|
|
|
Less:
Net loss attributable to non-controlling interests
|
|
|
-
|
|
(26,135)
|
|
|
|
|
|
|
Net
loss attributable to Median Group Inc.
|
|
|
(58,948)
|
|
(147,249)
|
|
|
|
|
|
|
Net
loss per share attributable to Median Group Inc. shareholders – Basic and diluted
|
|
|
(0.00)
|
|
(0.00)
|
|
|
|
|
|
|
Basic
and diluted weighted average number of common shares *
|
|
|
11,427,232,960
|
|
11,307,232,960
|
*
|
Weighted
average number of shares used to compute basic and diluted loss per share for the three months ended March 31, 2017 and 2016
are the same since the effect of dilutive securities are anti-dilutive.
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
MEDIAN
GROUP INC
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
|
(UNAUDITED)
|
|
|
|
Three
Months Ended
31
March
|
|
|
|
201
|
7
|
2016
|
|
Notes
|
|
US$
|
|
US$
|
|
|
|
|
|
|
Net
loss
|
|
|
(58,948)
|
|
(173,384)
|
|
|
|
|
|
|
Other comprehensive
(loss)/income, net of tax
|
|
|
|
|
|
Foreign
currency translation (loss)/gain
|
|
|
(12,473)
|
|
6,539
|
Total comprehensive
loss
|
|
|
(71,421)
|
|
(166,845)
|
Less: Net
loss attributable to non-controlling interests
|
|
|
-
|
|
(26,135)
|
Less:
Other comprehensive income attributable to non-controlling interests – foreign currency translation gain
|
|
|
-
|
|
10,207
|
Total
comprehensive loss attributable to Median Group Inc.
|
|
|
(71,421)
|
|
(150,917)
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
MEDIAN
GROUP INC
|
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2017
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
Common
Stock Amount
|
|
Accumulated
Other Comprehensive Loss
|
|
Accumulated
Deficits
|
|
Total
Stockholders’ Deficits
|
|
|
|
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017 (Audited)
|
|
11,427,232,960
|
|
4,095,230
|
|
(120,817)
|
|
(6,519,665)
|
|
(2,545,252)
|
Other
comprehensive loss – foreign currency translation loss
|
|
-
|
|
-
|
|
(12,473)
|
|
-
|
|
(12,473)
|
Net loss for the period
|
|
-
|
|
-
|
|
-
|
|
(58,948)
|
|
(58,948)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2017
|
|
11,427,232,960
|
|
4,095,230
|
|
(133,290)
|
|
(6,578,613)
|
|
(2,616,673)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
MEDIAN
GROUP INC
(Formerly
China Media Group Corporation)
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
March
31
|
|
|
|
2017
|
|
2016
|
|
|
|
US$
|
|
US$
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net loss
|
|
|
(58,948)
|
|
(173,384)
|
Changes in asset and liabilities
|
|
|
|
|
|
Decrease/(increase) in assets:
|
|
|
|
|
|
Accounts receivables
|
|
|
(5,873)
|
|
6,970
|
Prepayments and deposits
|
|
|
(1,517)
|
|
34,879
|
Amounts due from related
parties
|
|
|
(200,458)
|
|
(93,918)
|
(Decrease)/ increase in liabilities:
|
|
|
|
|
|
Accounts
payables
|
|
|
-
|
|
(6,273)
|
Other payables and accruals
|
|
|
185,959
|
|
18,088
|
Net cash used in operating activities
|
|
|
(80,837)
|
|
(213,638)
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
-
|
|
-
|
Master
distributor deposit
|
|
|
(677,645)
|
|
-
|
Net cash used in investing
activities
|
|
|
(677,645)
|
|
-
|
|
|
|
|
|
|
Cash flows from
financing activities :
|
|
|
|
|
|
Advances
from related parties
|
|
|
142,766
|
|
143,043
|
Cash flows from
financing activities :
|
|
|
142,766
|
|
143,043
|
|
|
|
|
|
|
Effect of exchange rate in comprehensive (loss)/income
|
|
|
(12,473)
|
|
6,539
|
Net decrease in cash and cash equivalents
|
|
|
(628,189)
|
|
(64,056)
|
Cash and cash equivalents - net, beginning
|
|
|
797,230
|
|
77,164
|
|
|
|
|
|
|
Cash and cash equivalents - net, ending
|
|
|
169,041
|
|
13,108
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
Interests paid
|
|
|
-
|
|
-
|
|
|
|
|
|
|
Income tax paid
|
|
|
-
|
|
-
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
F-6
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Median
Group Inc. (the "Company") is a Texas corporation, incorporated on October 1, 2002.
In
January 2006, the Company established a wholly owned subsidiary Ren Ren Media Group Limited, a company incorporated in Hong Kong,
as its operating company in Hong Kong. In March 2007, the Company acquired all the outstanding shares of Good World Investments
Limited, a British Virgin Islands corporation that holds 50% of Beijing Ren Ren Health Culture Promotion Limited, a company incorporated
in China in the advertising and media business in China.
In
May 2009, the Group established a 50/50 joint venture company, ATC Marketing Limited, which is to be in the business of marketing
and distributing of convergent multimedia communication and internet devices.
In
June 2012, the Company acquired 100% equity interests of A-Team Resources Sdn. Bhd. (“A-Team”), a distributor of electronics
and light appliances, at a consideration price of $2,011,607 by the issuance of 558,779,837 shares, at a price of $0.0036 per
share.
On
January 15, 2014, the Company sold its subsidiaries namely Ren Ren Media Group Limited, A-Team Resources Sdn Bhd, Good World Investments
Limited and Beijing Ren Ren Health Culture Promotion Limited (the “Disposed Subsidiaries”) containing its light appliances
distribution business and advertising business in China.
On
January 31, 2014, the Group closed the transaction to acquire 63.2% of Clixster Mobile Sdn. Bhd. (“CMSB”), a company
incorporated in Malaysia in exchange of 10,193,609,664 shares of common stock of the Company. CMSB is a mobile virtual network
provider and principally engaged in providing cellular and mobile broadband services in Malaysia. CMSB was treated as the acquirer
for accounting purpose since the original stockholders of CMSB owned a majority (85%) of the shares of the Company’s common
stock immediately following the completion of the transaction. CMSB was the legal acquiree but deemed to be the accounting acquirer.
The Company was the legal acquirer but deemed to be the accounting acquiree in the reverse merger. The historical financial statements
prior to the acquisition are those of the accounting acquirer (CMSB). Historical stockholders’ equity of the acquirer prior
to the merger are retroactively restated (a recapitalization) for the equivalent number of shares received in the merger. Operations
prior to the merger are those of the acquirer. After completion of the transaction, the Company’s consolidated financial
statements include the assets and liabilities, the operations and cash flow of the Company and its subsidiaries.
During
the year, on July 28, 2015, the Company disposed of its 63.2% of CMSB to refocus the business of the Group to sell post-paid rather
than prepaid telecom services for the mobile network virtual operator (“MNVO”) operation, with a gain of approximately
$5 million.
As
announced in a Form 8-K on December 16, 2015 on December 11, 2015 the Company acquired a 51% interests in Naim Indah Mobile Communication
Sdn. Bhd. (“NIMC”), a company engaged in providing mobile communication services through MVNO platform. NIMC has a
registered capital of RM2,000,001 (or about US$480,000) of which the Company is required to pay RM1,000,001 (or about US$240,000)
for its 51% interests. NIMC has an exclusive agreement with MyAngkasa Holdings Sdn. Bhd. (“MyAngkasa”) for the provision
of telecom services to members of the National Cooperative Malaysia Bhd and known as Angkatan Koperasi Kebangsaan Malaysia Berhad
(“Angkasa”). Further details can be found in Note 13 of the financial statements enclosed herein this report. The
Company intends to focus on post-paid customers in working with Angkasa. Our director Ahmad Shukri Abudl Ghani is a 30% shareholder
of NIMC. MyAngkasa is a shareholder of the Company holding 50 million shares or about 0.44% of the issued share capital of the
Company.
In
October 2016, the Company raised $1,320,000 from independent third parties by issuing 120,000,000 shares at $0.011 per share.
This money raised was used for working capital.
On
December 2, 2016, the Company disposed its 51% interest in NIMC for a fair market value of RM1,000,001 or about US$224,574 to
a company owned by directors of the Company, and realized a gain of $194,947. On or about the same date, our subsidiary company,
Median Digital Sdn. Bhd (formerly Grid Mobile Sdn. Bhd.) (“MDSB”) entered into a Master Distribution Agreement with
NIMC whereby NIMC would appoint MDSB to be its preferred distributor of its mobile products and services in Malaysia for two years.
Under this Master Distribution Agreement, MDSB would need to pay a refundable deposits of RM3,000,000 or about $668,747 to NIMC
and MDSB would not procure, engage or appoint any other company that offers the same services as NIMC.
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS
|
The
accompanying condensed consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of the U.S. Securities
and Exchange Commission, and should be read in conjunction with the audited financial statements and
notes thereto for the year ended December 31, 2016. As permitted under the rules of the SEC for interim
reporting, they do not include all information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. However, except as disclosed
herein, there has been no material change in the information disclosed in the notes to the financial
statements for the year ended December 31, 2016 included in the Company Form 10-K filed with the Securities
and Exchange Commission.
In
the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
of financial position and results of operations for the interim period presented have been included. Operating results
for the interim period are not necessary indicative of the results that may be expected for the respective full year.
|
F-7
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS (Continued)
|
Principles
of Consolidation
|
The
condensed consolidated financial statements for the period ended March 31, 2017 include the financial statements of the Company
and its wholly owned subsidiaries Alpha Sunray Sdn. Bhd and Median Digital Sdn. Bhd (formerly Grid Mobile Sdn. Bhd.)
|
The
results of subsidiaries acquired or sold during the period are consolidated from their effective dates of acquisition or through
their effective dates of disposition, respectively.
|
All
significant inter-company transactions and balances have been eliminated on consolidation.
|
The
preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
Basic
earnings per share were computed by dividing net loss by the weighted average number of shares of common stock outstanding
during the year. Diluted loss per common share for the period ended March 31, 2017 and 2016 respectively, are not presented
as it would be anti-dilutive.
|
Fair
Value Measurements and Disclosures
|
|
ASC 820 "Fair
Value Measurements and Disclosures" codified SFAS No. 107, "Disclosures about Fair Value of Financial Instruments".
ASC 820 applies to all entities, transactions, and instruments that require or permit fair value measurements, with specific
exceptions and qualifications. The Company is required to disclose estimated fair values of financial instruments. Unless
otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments, none of
which are held for trading purposes, approximate their respective carrying values of such amounts.
|
Cash
and Cash Equivalents
|
The
Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily
convertible into cash to be cash equivalents.
|
Impairment
of long-lived assets
|
In
accordance with the provisions of ASC Topic 360, “
Impairment or Disposal of Long-Lived Assets
”, all long-lived
assets such as plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment charge
for the year/period presented.
|
F-8
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS (Continued)
|
The
Company recognizes its revenue in accordance with the Securities and Exchange Commissions ("SEC") Staff Accounting
Bulletin No. 104, "Revenue Recognition in Financial Statements" ("SAB 104"). Revenue is recognized when
persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability
is reasonably assured. The recognition of revenues involves certain management judgments. The amount and timing of our revenues
could be materially different for any period if management made different judgments or utilized different estimates.
|
Revenue
is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
|
Prepaid
telecom revenues are collected by its distributors and/or resellers through the sale of our branded prepaid or reload cards,
which are sold in a form of SIM/reload cards to its final customers through its distributors and/or resellers. The sale of
Sim, prepaid or reload cards is recognized as revenue when the products are delivered to its distributors and/or resellers,
based upon their request. Prepaid cards will expire two years after the date of card production if they have never been activated.
The proceeds from the expired cards are recognized as revenue upon expiration of cards.
|
Cost
of revenue consists primarily of cost of SIM and prepaid/reload cards, telecommunication services and traffic charges which
are directly attributable to the delivery of telecom service upon the activation of prepaid and/or reload cards.
|
ASC
Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner
sources. Accumulated comprehensive income, as presented in the accompanying statements of stockholders’ equity consists
of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the
computation of income tax expense or benefit.
|
ASC
Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis
consistent with the Company’s internal organization structure as well as information about geographical areas, business
segments and major customers in financial statements. The Company operates in one reportable operating segment in Malaysia
during the period ended March 31, 2017.
|
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial and operating decisions.
Companies are also considered to be related if they are subject to common control or common significant influence.
|
F-9
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
NOTE
2
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS (Continued)
|
The
Company accounts for income taxes under ASC 740 “Income Taxes”. Under the asset and liability method of ASC 740,
deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain
deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
|
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial
statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially
be recognized in the financial statements when it is more likely than not the position will be sustained upon examination
by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit
that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge
of the position and relevant facts.
|
(a)
|
Current
Tax
|
|
Current
tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting
date.
Current
taxes are recognized in the statement of income except to the extent that the tax relates to items recognized outside
the statement of income, either in other income or directly in equity.
|
(b)
|
Deferred
Tax
|
|
Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax
credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled.
The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date. The Company records a valuation allowance for deferred tax assets if, based upon the available evidence,
it is more likely than not that some or all of the deferred tax assets will not be realized.
|
Foreign
Currency Translation
|
The
accounts of the Company's Hong Kong and Malaysia subsidiaries are maintained in Hong Kong dollars (HK) and Malaysia Ringgit
(RM), respectively. Such financial statements are translated into U.S. Dollars (USD) in accordance with ASC 830 “Foreign
Currency Translation” which codified Statement of Financial Accounts Standards ("SFAS") No. 52, "Foreign
Currency Translation," with the respective currency as the functional currency. According to the Statement, all assets
and liabilities were translated at the exchange rate on the balance sheet date, stockholder's equity are translated at
the historical rates and statement of operations items are translated at the weighted average exchange rate for the year.
The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, “Reporting
Comprehensive Income”. As of March 31, 2017, the comprehensive loss was $133,290.
|
Recently
Issued Accounting Pronouncements
|
The
Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact to
its financial position, results of operations or cash flows
.
|
Reclassifications
|
Certain
comparative amounts have been reclassified to conform to the current period’s presentation.
|
F-10
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE
3
|
UNCERTAINTY
OF ABILITY TO CONTINUE AS A GOING CONCERN
|
The
Company's condensed consolidated financial statements are prepared using the generally accepted accounting principles applicable
to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
As of March 31, 2017, the Company has incurred an accumulated deficits totaling $6,578,613 and its current liabilities exceed
its current assets by $616,673. In view of the matters described above, recoverability of a major portion of the recorded
asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn
is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a
going concern.
|
Management
has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide
the Company with the ability to continue as a going concern. The Company is actively pursuing additional funding and potential
merger or acquisition candidates and strategic partners, which would enhance stockholders' investment. Management believes
that the above actions will allow the Company to continue operations through the next fiscal year.
|
NOTE
4
|
STOCKHOLDERS’
EQUITY
|
Common
Stock
|
On
October 17, 2016, the Company issued 120,000,000 shares of the Company to 3 independent parties at a price
of $0.011 per share to raise a total cash proceed of approximately $1,320,000. The proceeds for this placement
shall be used for working capital of the Company.
|
As
of March 31, 2017, the Company had a total of 11,427,232,960 shares of its common stock issued and outstanding.
|
The
Company adopted ASC 718 “Compensation – Stock Compensation” and requires companies to measure and recognize
the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value.
|
2007
Stock Incentive Plan
|
On
February 19, 2007, the Company adopted the 2007 Stock Incentive Plan (the "2007 Plan") allowing for the awarding
of options to acquire shares of common stock. This plan provides for the grant of incentive stock options to key employees,
directors and consultants. Options issued under this plan will expire over a maximum term of ten years from the date of grant.
|
On
March 8, 2007, the Company registered 38,400,000 shares underlying stock options under the 2007 Stock Incentive Plan with
the SEC pursuant to a registration statement on Form S-8.
|
During
the years 2007 to 2013, the Company had issued a total of 6,522,309 shares to its staff and consultants for their service
provided.
|
During
the years from 2014 to 2016, the Company did not issue any share options under the 2007 Plan.
|
As
at March 31, 2017 and December 31, 2016, there were i) no outstanding stock options and ii) 31,877,691 shares available to
be issued under the 2007 Plan.
|
F-11
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE
6
|
OTHER
PAYABLES AND ACCRUALS
|
Other
payables and accruals consist of the following:
|
|
|
March
31
2017
|
|
December
31
2016
|
|
|
US$
|
|
US$
|
|
|
|
|
|
Customer deposit
|
|
158,117
|
|
-
|
Potential tax penalty liability
|
|
410,000
|
|
410,000
|
Other payables and accruals
|
|
269,722
|
|
241,880
|
|
|
837,839
|
|
651,880
|
|
|
|
|
|
NOTE
7
|
AMOUNTS
DUE TO RELATED PARTIES
|
|
|
March
31
2017
|
|
December
31
2016
|
|
|
US$
|
|
US$
|
|
|
|
|
|
|
Amounts due from
related parties:
|
|
|
|
|
|
- Trade
|
|
878,103
|
|
-
|
|
- Non-trade
|
|
2,229
|
|
2,229
|
|
|
|
880,332
|
|
2,229
|
|
|
|
|
|
|
|
Amounts due to related
parties:
|
|
|
|
|
|
- Trade
|
|
-
|
|
-
|
|
- Non-trade
|
|
949,578
|
|
806,812
|
|
|
|
949,578
|
|
806,812
|
|
|
|
|
|
|
|
|
|
|
|
|
The
trade receivables due from related parties which the two of our directors have interests,
is non-secured, non-interest bearing and repayable on demand. The funds were advanced
to the related parties in respect of paying a deposits under the Master Distribution
Agreement (Note 9(b)).
The
non-trade receivable amount due from a related party, a director of the Company, is unsecured, non-interest bearing and
repayable on demand.
The
amounts due to related parties are unsecured, non-interest bearing and repayable on demand. Imputed interest on these
amounts is considered insignificant.
|
|
|
|
|
|
|
|
NOTE
8
|
SHAREHOLDER
LOAN
|
|
|
|
March
31
2017
|
|
December
31 2016
|
|
|
|
US$
|
|
US$
|
|
|
|
|
|
|
|
Shareholder
loan
|
|
2,000,000
|
|
2,000,000
|
|
|
|
|
|
|
|
|
This
long term shareholder loan is due to Central High Limited, a major shareholder of the Company. This loan is unsecured and
repayable on November 25, 2018, and bears interest of 8% per annum. The accrued interest for the three months ended March
31, 2017 was $40,000 (2016: $40,000).
|
|
|
|
|
|
|
|
|
|
NOTE
9
|
RELATED
PARTY TRANSACTIONS
|
(a)
|
For the three months period
ended March 31, 2017, the Company paid no remuneration (2016: NIL) to its directors and its officers for their services provided
to the Company.
|
|
|
(b)
|
In early December 2016, the Company entered
into a Master Distribution Agreement with a company beneficially owned by two of our directors. Pursuant to the agreement,
the Company would pay a refundable deposit of RM3 million or about US$677,000 to be the preferred distributor of telecom products
and services (including access to the MVNO platform) in the territory of Malaysia for a period of two years. The Company may
receive certain rebates if it achieves sales of over RM10 million (about US$2,257,000) for each anniversary year, and such
rebates shall vary by products and services to be agreed by the parties.
|
F-12
MEDIAN GROUP INC
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
No
provision was made for income tax for the three months ended March 31, 2017 and 2016,
since the Company and its subsidiaries had significant net operating loss. In the three
months ended March 31, 2017 and 2016, the Company and its subsidiaries incurred net operating
losses for tax purposes of approximately $58,948 and $173,384, respectively. Total net
operating losses carry forward as at March 31, 2017 and 2016, (i) for Federal and State
purpose were $12,163,959 and $11,761,918, respectively and (ii) for its entities outside
of the United States $59,207 and $152,489. The net operating loss carry-forwards may
be used to reduce taxable income through the year 2025. The availability of the Company's
net operating loss carry-forwards are subject to limitation if there is a 50% or more
change in the ownership of the Company's stock.
There
was no significant difference between reportable income tax and statutory income tax. The gross deferred tax asset balance
as at March 31, 2017 and December 31, 2016 was approximately $5,038,671 and $5,170,610 respectively. A full valuation
allowance has been established against the deferred tax assets, as the utilization of the loss carry-forwards cannot reasonably
be assured.
A
reconciliation between the income tax computed at the Malaysia statutory rate and the Group's provision for income tax
is as follows:
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Malaysia statutory rate
|
|
24%
|
|
25%
|
Tax allowance
|
|
-
|
|
-
|
Valuation allowance – Loss carryforward
under Malaysia rate
|
|
(24%)
|
|
(25%)
|
|
|
|
|
|
Provision for income tax
|
|
-
|
|
-
|
NOTE
11
|
COMMITMENTS
AND CONTINGENCIES
|
The
Company’s commitments and contingencies are set out below as follows:-
|
(a)
|
The
Company has operating lease of its corporate office in Malaysia for 3 years ending April
1, 2019. The annual lease is RM406,998 (approximately US$90,720).
|
NOTE
12
|
SUBSEQUENT
EVENTS
|
The
Company evaluated subsequent events through the date the financial statements were issued and filed with this Form 10-Q. There
were no subsequent events that required recognition or disclosure.
|
F-13