UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the quarterly period ended March 31, 2018
   
[    ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
   
  For the transition period from [          ] to [          ]

 

 

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Commission File Number: 000-50431

 

MEDIAN GROUP INC.

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(Exact name of small business issuer as specified in its charter)

 

 

Texas 7310 32-0034926
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(State or other jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.)
     

 

No. 09-03, Level 9, Tower 2, Bank Rakyat Twin Tower,

No. 33, Jalan Rakyat, 50470 Kuala Lumpur, Malaysia

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(Address of Company's principal executive offices) (Zip Code)

 

Tel: +603 2725 9391  Fax: +603 2725 9394

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(Company's Telephone Number, Including Area Code)

 

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

 

Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ x ]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ x ] No [  ]

Indicate by check whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act. (check one)

Large Accelerated Filer [  ]  Accelerated Filer [  ]   Non-Accelerated Filer [  ]   Smaller Reporting Company [ x ]

SEC 1296 (03-10) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]     No[ x ]

The number of common equity shares outstanding as of May 1, 2018 was 11,593,899,627 shares of Common Stock, no par value.

 

 

 

 

FORWARD-LOOKING STATEMENTS
 
This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 . These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States Dollars.
 
As used in this quarterly report, the terms "we", "us", "our", "MGI", and "the Company" mean Median Group Inc. and its subsidiaries unless otherwise indicated.

 

 

- 1 -

 

 

PART I

 

   
Item 1. Condensed Consolidated Financial Statements

 

 

 

 

  MEDIAN GROUP INC

Median Group Inc.

 

Condensed Consolidated Financial Statements

(Unaudited)

(Expressed In United States Dollars)

 

 

Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 (Audited)
 
Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017
 
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017
 
Condensed Consolidated Statement of Stockholders' Deficits for the three months ended March 31, 2018

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017

 

Notes to Condensed Consolidated Financial Statements

 

 

F-1

 

 

MEDIAN GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2018 AND DECEMBER 31, 2017

 

 

     

March 31

2018

 

December 31

2017

  Notes   (Unaudited)   (Audited)
      US$   US$
ASSETS          
Current assets:             
Cash and cash equivalents     45,355   10,131
Accounts receivables     15,706   32,237
Prepayments and deposits     74,449   69,666
Amounts due from related parties 7   1,035,172   1,019,760
Total current assets     1,170,682   1,131,794
           
Non-current assets:          
Intangible assets - goodwill     541,307   541,307
Property and equipment 5   42,073   40,964
      583,380   582,271
           
Total assets     1,754,062   1,714,065
           
LIABILITIES AND STOCKHOLDERS' DEFICITS          
Current liabilities:          
Accounts payable     9,842   9,400
Other payables and accruals 6   778,725   776,370
Amounts due to related parties 7   1,054,851   1,014,223
Total current liabilities     1,843,418   1,799,993
           
Long-term debts:          
Shareholder loan 8   2,000,000   2,000,000
Total non-current liabilities     2,000,000   2,000,000
           
Total liabilities     3,843,418   3,799,993
           
Commitments and contingencies 11        
           
Stockholders ' equity:          
Common stock, no par value, 85,000,000,000 shares authorized, 11,593,899,627 (2017: 11,593,899,627) shares issued and outstanding 4   4,728,563   4,728,563
Accumulated deficits     (6,786,273)   (6,742,570)
Accumulated other comprehensive losses     (157,749)   (189,230)
Total Median Group Inc. stockholders' deficits     (2,215,459)   (2,203,237)
Non-controlling interest     126,103   117,309
Total stockholders' deficits     (2,089,356)   (2,085,928)
           
Total liabilities and stockholders' deficits     1,754,062  

1,714,065

 

 

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, 2018 AND 2017
(UNAUDITED)

 

 

     

Three Months Ended

31 March

      2018   2017
  Notes   US$   US$
           
Net revenue     96,707   5,866
Cost of revenue     (15,486)   (3,407)
           
Gross profit     81,221   2,459
           
Operating expenses:          
Administration expenses     (103,527)   (42,486)
Total operating expenses     (103,527)   (42,486)
           
Operating loss from continuing operations     (22,306)   (40,027)
           
Other income (expenses)          
  Other income     27,876   21,122
  Finance charges     (56)   (43)
  Interest expenses     (40,000)   (40,000)
           
Net loss     (34,486 )  (58,948)
           
Less: net income attributable to non-controlling interests     (9,217)   -
           
Net loss attributable to Median Group Inc.     (43,703)   (58,948)
           
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 *     11,593,899,627   11,427,232,960

 

 

* Weighted average number of shares used to compute basic and diluted loss per share for the three months ended March 31, 2018 and 2017 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, 2018 AND 2017
(UNAUDITED)

 

 

     

Three Months Ended

31 March

      201 8  2017
  Notes   US$   US$
            
Net loss     (34,486)   (58,948)
           
Other comprehensive income (loss), net of tax          
  Foreign currency translation gain (loss)     31,058   (12,473)
Total comprehensive loss     (3,428)   (71,421)
Less: net income attributable to non-controlling interests     (9,217)   -
Less: other comprehensive income attributable to non-controlling interests
  - foreign currency translation gain 		    423   -
Total comprehensive loss attributable to Median Group Inc.     (12,222)   (71,421)

 

 

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

 

 

F-4

 

 

MEDIAN GROUP INC.
 
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICITS

FOR THE THREE MONTHS ENDED MARCH 31, 2018

(UNAUDITED)

 

                             
    Number of Shares   Common Stock Amount   Accumulated Other Comprehensive Loss   Accumulated Deficits  

Total Median Group Inc.

Stockholders' deficit

 

Non-controlling

Interests

  Total Stockholders' Deficits
    US$   US$   US$   US$   US$   US$   US$
                             
Balance at January 1, 2018 (Audited)   11,593,899,627   4,728,563   (189,230)   (6,742,570)   (2,203,237)   117,309   (2,085,928)
Other comprehensive income (loss)
  - foreign currency translation gain (loss) 		  -   -   31,481   -   31,481   (423)   31,058
Net (loss) income for the period   -   -   -   (43,703)   (43,703)   9,217   (34,486)
                             
Balance at March 31, 2018   11,593,899,627   4,728,563   (157,749)   (6,786,273)   (2,215,459)   126,103   (2,089,356)
                             

 

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

 

 

F-5

 

 

MEDIAN GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(UNAUDITED)

 

           
     

Three Months Ended

March 31

      2018   2017
      US$   US$
Cash flows from operating activities:          
Net loss     (34,486)   (58,948)
Adjust for non-cash items:          
   Depreciation     2,174   -
      (32,312)   (58,948)
Changes in asset and liabilities          
   Decrease (increase) in assets:          
      Accounts receivables     16,531   (5,873)
      Prepayments and deposits     (4,783)   (1,517)
      Amounts due from related parties     (15,412)   (200,458)
   (Decrease) increase in liabilities:          
      Accounts payables     442   -
      Other payables and accruals     2,355   185,959
Net cash used in operating activities     (33,179)   (80,837)
           
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     40,628   142,766
Cash flows from financing activities :     40,628   142,766
           
Effect of exchange rate in comprehensive income (loss)     27,775   (12,473)
Net increase (decrease) in cash and cash equivalents     35,224   (628,189)
Cash and cash equivalents - net, beginning     10,131   797,230
           
Cash and cash equivalents - net, ending     45,355   169,041
           
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

 

 

NOTE 1 ORGANIZATION

 

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 Abdul 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, Grid Mobile Sdn. Bhd. ("Grid Mobile") entered into a Master Distribution Agreement with NICM whereby NIMC would appoint Grid Mobile to be its preferred distributor of its mobile products and services in Malaysia for two years. Under this Master Distribution Agreement, Grid Mobile has a refundable deposits of RM3,000,000 or about $738,000 to NIMC and Grid Mobile would not procure, engage or appoint any other company that offers the same services as NIMC. To date the project has not started and it is expected that the deposits shall be returned later on during the year.

 

On June 15, 2017 the Company acquired 51% equity interest in GNS Technology (M) Sdn. Bhd. ("GNS Malaysia") by the issuance of 166,666,667 new shares in the Company. GNS is engaged in the provision of network design, construction and maintenance services for fiber optics backbone and Fiber-to-the-Home (FTTH") broadband services. Pursuant to the acquisition agreement, the Vendors are entitled to an additional consideration of US$1,500,000 provided that GNS Malaysia accumulated audited profits record at least US$3,000,000 for the 5 year period from December 31, 2017 to December 31, 2022. The additional consideration shall be paid by the issuance of new shares in the Company at a price equal to the higher of (i) US$0.006 per share and (ii) the 20 days average closing share price immediately prior to the parties agreeing on the accumulated audited profits stated above.

 

At the date of this report, the Group will mainly concentrate on its Telecommunications and Mobile Business Unit and the network design and construction business. The Group will terminate and streamline its advertising business unit and product services unit until a viable business opportunity is available. The revenue generated from the network design, construction and maintenance service for broadband services during the period ended March 31, 2018 was $96,707.

 

 

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS

 

Basis of Presentation

 

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, 2017. 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, 2017 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, 2018 include the financial statements of the Company and its wholly owned subsidiaries Alpha Sunray Sdn. Bhd and Median Digital Sdn. Bhd and its 51% interest subsidiary in GNS Technology (M) 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.

 

Use of Estimates

 

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.

 

Net Loss Per Share

 

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, 2018 and 2017 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.

 

Trade Receivables

 

Trade receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on managements' assessment of known requirements, aging of receivables, payment history, the customer's current credit worthiness and the economic environment. The Company recorded no allowance for doubtful accounts for the years presented.

 

Property and Equipment

 

Property and equipment is stated at costs. Depreciation are computed using the straight-line method over the estimated economic useful lives as follows:

 

Office equipment and computers 5 years
Motor vehicle 5 years

 

Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of plant and equipment is the difference

 

Intangible Assets

The Company evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows. Recoverability of intangible assets, other long-lived assets and, goodwill is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss

 

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)

 

Revenue

 

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.

 

Network design services income is recognized as revenue when the services has been substantially provided.

 

Cost of revenue

 

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.

 

Comprehensive Income

 

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.

 

Segment Reporting

 

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, 2018.

 

Related Parties

 

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)

 

Income Taxes

 

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 Malaysia subsidiaries are maintained in Malaysia Ringgit (RM). 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, 2018, the comprehensive loss was $157,749.

 

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, 2018, the Company has incurred an accumulated deficits totaling $6,786,273 and its current liabilities exceed its current assets by $672,736. 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 June 15, 2017, the Company issued 166,666,667 shares of the Company at the then market price of $0.0038 per share for a total share consideration of $633,333 to satisfy the consideration for acquiring 51% equity interest in GNS Technology (M) Sdn. Bhd.

 

As of March 31, 2018, the Company had a total of 11,593,899,627 shares of its common stock issued and outstanding.

 

 

NOTE 5 PROPERTY AND EQUIPMENT, NET

 

Property and equipment is summarized as following:

 

   

March 31

2018

 

December 31

2017

    US$   US$
Cost        
Furniture, fixtures and equipment   24,040   23,387
Motor vehicle   25,392   25,375
    49,432   48,762
Less:        
Accumulated depreciation   (10,155)   (7,981)
Effect of foreign exchange   2,796   189
Balance at end of period   42,073   40,964
         

 

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

2018

 

December 31

2017

    US$   US$
         
Potential tax penalty liability   410,000   410,000
Other payables and accruals   368,725   366 370
    778,725   776,370
          

 

NOTE 7 AMOUNTS DUE FROM/TO RELATED PARTIES

 

   

March 31

2018

 

December 31

2017

    US$   US$
         
Amounts due from related parties:        
- Trade   844,831   826,469
- Non-trade   190,341   193,291
    1,035,172   1,019,760
          
Amounts due to related parties:        
- Trade   -   -
- Non-trade   1,054,851   1,014,223
    1,054,851   1,014,223
           

 

The trade receivable due from a related company which the two of our directors have interests, is non-secured, non-interest bearing and repayable on demand. This trade receivable is relates to the Master Distribution Agreement disclosed in 2016 accounts (Note 12(b)) where the Company is required to pay a refundable deposit and other costs for the use of license to commence its telecom service. This trade receivable amount is expected to be refunded later this year.

 

The non-trade receivable amounts are due from related parties, which one of our subsidiary director has an interest. The non-trade receivable amounts are unsecured, non-interest bearing and repayable on demand. The Company also has an option to offset these amounts against certain amounts owed on amounts due to related parties.

 

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

2018

  December 31 2017  
    US$   US$  
           
Shareholder loan   2,000,000   2,000,000  
                 

 

This long term shareholder loan is unsecured and repayable on November 25, 2019, and bears interest of 8% per annum. The accrued interest for the three months ended March 31, 2018 was $40,000 (2017: $40,000).

 

NOTE 9 RELATED PARTY TRANSACTIONS

 

(a) For the three months period ended March 31, 2018, the Company paid no remuneration (2017: 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. This deposit is expected to be refunded late this year.

 

 

F-12

 

 


MEDIAN GROUP INC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

NOTE 10 INCOME TAXES

 

No provision was made for income tax for the three months ended March 31, 2018 and 2017, since the Company and its subsidiaries had significant net operating loss. In the three months ended March 31, 2018 and 2017, the Company and its subsidiaries incurred net operating losses for tax purposes of approximately $34,487 and $58,948, respectively. Total net operating losses carry forward as at March 31, 2018 and 2017, (i) for Federal and State purpose were $12,379,959 and $12,163,959, respectively and (ii) for its entities outside of the United States $66,831 and $59,207. 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, 2018 and December 31, 2017 was approximately $5,094,272 and $5,038,671 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:

 

    2018   2017
         
Malaysia statutory rate   24%   24%
Tax allowance   -   -
Valuation allowance - Loss carryforward under Malaysia rate   (24%)   (24%)
         
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

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward Looking Statements

 

THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF MANAGEMENT OF THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS "MAY", "SHALL", "COULD", "EXPECT", "ESTIMATE", "ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.

 

THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED ON THE ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. WE CANNOT GUARANTY THAT ANY OF THE ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.

 

Critical Accounting Policy and Estimates

 

Our Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations section discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our consolidated financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in our Quarterly Report on Form 10-Q for the period ended March 31, 2018.

 

 

- 2 -

 

 

Overview

 

DESCRIPTION OF BUSINESS

 

OUR BACKGROUND. The Company was incorporated in Texas on October 1, 2002 and in 2005 changed its business focus to advertising and media in the emerging China market. Under the then new management, the Company commenced to position the Company to capitalize on the growth of the Chinese advertising market where global companies are rushing into China to try to grab and hold the attention of its 1.3 billion citizens.

 

Our mission then was to become one of China's new age media companies through the use of new technologies and devices combined with traditional media of TV, Newspapers, Magazines, Billboards and Internet to reach today's mobile society. In order to facilitate this, the Company established 3 strategic business units being "Advertising", "Telecommunications and Mobile Computing", and "Products and Services". However due to limited financial resources we were not able to implement our business plans in the China media sector.

 

In June 2012, the Group acquired A-Team Resources Sdn. Bhd. a company that distributes light appliances products in South East Asia and Middle East to strengthen our Products and Services Business Unit. In January 2014 the Company disposed the loss making light appliances and advertising operation to streamline the operation and to focus on its new acquisition on telecom services business unit.

 

On January 31, 2014 the Company acquired 63.2% in Clixster Mobile Sdn Bhd ("CMSB"), a mobile virtual network operator ("MVNO") in order to expand our telecommunication business unit with a focus on provision of mobile telecom service through a MVNO platform initially in Malaysia and then to other regions.

 

The operation in CMSB incurred significant losses in 2014 and in 2015. The Group determined to re-focus the operation in the higher margin post-paid rather than pre-paid telecom services. As a result, on July 28, 2015, the Group disposed of its investment in CMSB to refocus its MVNO business from pre-paid to post-paid telecom services and a digital service provider.

 

In September, 2015, New China Electronics Limited, a company wholly owned by our director, Mr. Ching Chiat Kwong, acquired a total of 7,130,134,431 shares representing about 63.06% interests in the Company to become the controlling shareholder of the Company. On January 8, 2016, New China then transferred 350,000,000 shares each to Andrew Hwan Lee and Ahmad Shukri Bin Abdul Ghani, both directors of the Company. New China then held 6,430,134,431 shares representing 56.87% in the Company.

 

On September 27, 2015 the Board approved the change of company name from Clixster Mobile Group Inc. to Median Group Inc. and the name change was effected on October 7, 2015.

 

In December 2015, the Company acquired 51% interests in Naim Indah Mobile Communications Sdn Bhd ("NIMC"). NIMC is a newly established MVNO holding all the necessary licenses to operate as an MNVO. However on December 2, 2016 the Company disposed its equity interest in NIMC to focus on the development of its integrated Digital Services Platform rather than an MVNO platform.

 

In its new strategic plan, the Company's wholly owned subsidiary, Median Digital Sdn. Bhd. (formerly known as Grid Mobile Sdn. Bhd.) ("MDSB") shall combine the telecommunication services together with its other financial technology (fintech) services onto an integrated Digital Services Platform which is currently at early development stage.

 

In October 2016, the Company raised $1,320,000 by issuing 120,000,000 shares at $0.011 per share. The money raised was to be used for working capital.

 

On November 30, 2016, the Company's wholly owned subsidiary MDSB signed a Memorandum of Understanding ("MOU") with Mobisphere Sdn Bhd ("Mobisphere"). The Memorandum entails the collaboration of both parties to introduce and promote financial technology ("fintech") solutions vis-a-vis an integrated mobile payment ecosystem equipped with virtual account and digital wallet connected to membership, debit, prepaid and/or credit cards to Medium Digital members.

 

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, Grid Mobile Sdn. Bhd. ("Grid Mobile") entered into a Master Distribution Agreement with NICM whereby NIMC would appoint Grid Mobile to be its preferred distributor of its mobile products and services in Malaysia for two years. Under this Master Distribution Agreement, Grid Mobile has paid a refundable deposits of RM3,000,000 or about $738,000 to NIMC and Grid Mobile would not procure, engage or appoint any other company that offers the same services as NIMC. To date the project has not started and it is expected that the deposits shall be returned later on during the year.

 

On June 15, 2017 the Company acquired 51% equity interest in GNS Technology (M) Sdn. Bhd. ("GNS Malaysia") by the issuance of 166,666,667 new shares in the Company. GNS is engaged in the provision of network design, construction and maintenance services for fiber optics backbone and Fiber-to-the-Home (FTTH") broadband services. Pursuant to the acquisition agreement, the Vendors are entitled to an additional consideration of US$1,500,000 provided that GNS Malaysia accumulated audited profits record at least US$3,000,000 for the 5 year period from December 31, 2017 to December 31, 2022. The additional consideration shall be paid by the issuance of new shares in the Company at a price equal to the higher of (i) US$0.006 per share and (ii) the 20 days average closing share price immediately prior to the parties agreeing on the accumulated audited profits stated above.

 

At the date of this report, the Group will mainly concentrate on its Telecommunications and Mobile Business Unit and the network design and construction business. The Group will terminate and streamline its advertising business unit and product services unit until a viable business opportunity is available. During year ended. The revenue generated from the network design, construction and maintenance service for broadband services during the period ended March 31, 2018 was $96,707.

 

 

- 3 -

 

 

OUR BUSINESS REVIEW AND FUTURE STRATEGY. The Group has 3 business units namely "Advertising", "Products and Services" and "Telecommunication and Mobile Computing". The management has determined to only focus our business in the Telecommunications and Digital Services business unit going forward, and have the Advertising and Products and Services business units inactive until viable business opportunities are presented.

 

2018 Products & Services Overview

 

Telecommunications Unit.

 

In 2006, the Company announced the establishment of the Telecommunications and Mobile Computing Division to focus on the new media advertising where we would take advantage of new convergent devices for telecommunications advertising. We have seen over the years the importance of advertising through social media using telecommunication services.

 

In December 2016, we signed a Master Distribution Agreement to concentrate on the provision of services rather than the running of the MVNO Platform ourselves. Given the competitive telecom services market, we have scaled back our telecom services division until we can identify a niche market we can compete in. In the meantime, the network design, construction and maintenance service recorded a revenue of $96,707 for this quarter ended March 31, 2018. We will continue to pursue the sale of telecom services and concentrate on postpaid customers, where the margins are higher, through our partner networks. We will also focus on the network design, construction and maintenance services.

 

A more thorough discussion on becoming a digital service provider and infrastructure provider are discussed below.

 

Towards Becoming A Digital Service Provider

 

The decision to become a DSP rests solely on providing the needs of a new generation of consumers. There has been a great shift in consumers' behaviors. The way purchases are made, the types of media consumed, the way information are obtained and the way trust and relationships are built. These have created new rules of consumer engagement where mobile platform is highly utilized, allowing consumers to communicate, transact and gain almost instantaneous feedback and response. E-commerce now is evolving into M-Commerce (mobile-commerce) and into S-Commerce (social-commerce) allowing customers to instantly transact and share.

 

We must seize the opportunity to build our business model around this market segment through our offerings with three main differentiators:

 

(i) An advanced set of products and services that will disrupt the market landscape;

 

(ii) A customer engagement model that is currently not offered by others; and

 

(iii) A technology superiority and scalability that will support future growth.

 

The first challenge to become a digital service provider involves a change in the mindset and culture; we need to view ourselves not as a communication service provider but as a genuine digital competitor. We need to shift away from serving as a channel and toward creating a platform, and the way for us to capitalize on the opportunities in the digital services domain and its associated revenue is to build our business as a digital service provider. Our journey towards becoming a DSP has progressed well over the past 3 months where we are building a solid eco-system that will enable us to offer attractive and disruptive services to the market.

 

 

- 4 -

 

 

Key Business Focus: Digital Service Provider

 

While MVNO remains as its business focus, the Company would now focus on developing its Next Generation Intelligent Network (NGIN) and Business Support System (BSS) as a platform to support White Label MVNO businesses. This platform is aimed to provide a leading-edge telecommunication services as part of our Digital Services eco-system alongside the financial technology ("fintech") solutions vis-a-vis an integrated mobile payment equipped with virtual account and digital wallet connected to membership, debit, prepaid and/or credit cards.

 

Our Mission Critical System

 

The NGIN and BSS systems are required to provide a real-time unified charging across all services and devices, and payment methods with differentiated service offerings with a quick time-to-market advantage to allow NIMC to quickly capitalize and execute on market opportunities. Our BSS platform combines payment methods, with 'on demand' payments for some services and recurring subscription models for others.

 

* Online charging system (OCS) is the central system that governs all subscribers' charging and rating. It is a system that allows an operator to charge their customers, in real time, based on event or session service usage.
* Policy & Charging Rules Function (PCRF) , a software component designated in real-time to determine policy rules that accesses subscriber databases and other specialized functions, such as a charging system PCRF supports the creation of rules and then automatically making policy decisions for each subscriber active on the network.
* Business Support Systems   (BSS) are the components that we use to run its business operations towards customers. Together with operations support systems (OSS), these are used to support various end-to-end telecommunication services. BSS and OSS have their own data and service responsibilities.
* Enterprise Resource Planning (ERP) is a system that handles all essential business functions such as accounting, HR, sales, marketing, service, warehousing, and more. The SAP B1 system provides a complete visibility and better control help us run our end-to-end business processes professionally.

 

We are now at the final stage of negotiating the purchase of these systems from the respective solution provider. We expect to complete the deployment of these systems by the end of Q2.

 

Infrastructure Provider

 

The principal activities of GNS are provision of network design, construction and maintenance services for fiber optics backbone and Fiber-to-the-Home (FTTH) broadband services.

 

The telecommunications industry comprised of many types of companies at different levels within the industry, all making products and/or providing a service to supply local and long distance telephone service, internet service, and new technologies (including VoIP, CATV, HDTV, and security) to the end users (residential, business, and institutional).

 

A large portion of the telecommunications industry is comprised of equipment manufacturers (switch, router, and network component companies) producing products that make and/or route connections from point-to-point via a central office location. Whether these products are used in networks supporting wired or wireless applications, the ultimate goal for equipment manufacturers is to produce an efficient, cost effective, and reliable product to support network service providers.

 

Solution providers is another level of the telecommunications industry which is large in size. In this segment, companies source, develop, and implement the network infrastructure that 'service providers' will use to supply communication connections to the end users. As a segue between component manufacturers and service providers, solutions providers greatly influence network structures, protocols, and the successful implementation of emerging technologies.

 

The other large segment of the telecommunications industry is service providers. This market is focused on providing communications, in one form or other, to the end users. For most people, this segment is viewed as the face of the industry, delivering the final product/service that the equipment manufacturers and solutions providers support. The most common applications for this segment are premises networks, LAN (local area networks), WAN (wide area networks), and wireless networks.

 

GNS's offerings are that of connectivity at multiple levels of the telecommunications industry ranging from standard cable assemblies and loopbacks for the equipment manufacturing segment to optical drop cables to support service provider networks.

 

 

- 5 -

 

 

Moving Forward

 

Moving forward, we will continue to strive in executing our roadmap for growth which encompasses five key areas namely, strengthening our talents and resources, expanding our product range, widening our geographical reach, improving customers' journey and experience and enhancing our internal process. The positive results from these areas would create a stable platform for the Group to spread its wings regionally and globally to unveil the vast potential of the digital services market segment. Talks and negotiations are ongoing with several mobile network enablers and operators in the South East Asian region. This would promulgate further the Group's vision and commitment in becoming a regional mobile service operator with an assortment of deliverables that would satisfy the ravishing appetite of the customers. Being in a competitive industry where customers' satisfaction is uncompromising, we are continuously ensuring that customers' experience would be the fundamental element in all facets of our operation.

 

Technology is the staple food of today's consumers, which is ever changing, we will be investing our resources into R&D, talent enhancement, product innovation, and technology adoption in our delivery processes. This will enable us to be more efficient in providing an unmatched customers' experience, which will translate into a faster and higher subscribers' acquisition. We will continue to jointly work closely with mobile enablers to penetrate new markets and opportunities this year and beyond.

 

Industry Overview and Competition

 

Telecommunication Market

 

Asia Pacific

 

Asia Pacific has been the biggest contributor to global subscriber growth in recent years and still has considerable room for growth over the rest of the decade. As of the end of 2016, there were 2.7 billion unique subscribers in Asia Pacific, accounting for two thirds of the region's population. More than half the world's mobile subscribers live in Asia Pacific - mostly in China and India.

 

Over the last few years there has been a dramatic shift towards higher speed mobile technology in Asia Pacific. In 2016, mobile broadband (3G and above) became the dominant technology, accounting for just over half of total connections across the region, up from 20% in 2012. 2016 was also the year 4G connections overtook 3G connections.

 

Other previously 'laggard' 4G markets such as Malaysia, Indonesia, Myanmar, the Philippines and India are now beginning to see an accelerating migration to 4G, driven by ongoing network investment by mobile operators, increased competition, falling device prices and growing consumer appetite for higher speed mobile. Overall in the region, 4G will account for 48% of total connections by 2020.

 

As smartphone adoption continues to rise in the region (just over half of total connections were smartphones at the end of 2016) and as more users come online, an increasing range of mobile services are being consumed, including video, social media, e-commerce and financial services.¹

 

For the period ending January 2018 within the South East Asia nations, mobile connections as against the country's population was led by Indonesia with a penetration rate of 157% followed by Vietnam (153%), Singapore (150%), Thailand (135%) and Malaysia (133%). On the other hand, mobile broadband penetration was highest in Singapore (150%) and followed by Thailand (134%), Malaysia (107%) Indonesia (84%) and Philippines (65%) with the worldwide average at 63%.³

 

On mobile social media penetration, Singapore was ahead with 75% with Malaysia and Thailand closing in at 69%, 67% respectively. They were followed by Philippines (59%), Vietnam (52%) and Indonesia (45%) with the worldwide average at 39%.

 

Meanwhile, Thailand led the mobile banking penetration rate with 56% followed by Singapore and Malaysia (47% each), Vietnam (30%), Philippines (28%) and Indonesia (27%)

 

The active M-commerce countries were Thailand with a penetration rate of 52%, Malaysia (40%), Singapore (39%), Vietnam (33%) and Indonesia (31%).⁴

 

 

- 6 -

 

 

Malaysia

 

Growth in the information and communication sub-sector was also higher, reflecting higher demand for data communication and computer services. The information and communication subsector continued to record a strong growth of 8.4% in 2017 (2016: 8.1%).²

 

In the fourth quarter of 2017 (4Q2017), mobile-cellular penetration rate was at 131.2% (3Q2017: 131.8%) with 35.3 million (4Q2016: 28.5 million) mobile broadband subscriptions. There were 32.1 million (3Q2017: 32.4 million) prepaid subscriptions and 10.2 million (3Q2017: 10.0 million) postpaid subscriptions. ⁵

 

 

¹

²

³

⁴

⁵

 

The Mobile Economy Asia Pacific 2017 - GSMA

Bank Negara Malaysia Annual Report 2017

Digital in 2018 : Global Overview - we are social & Hootsuite

Digital in 2018 : Southeast Asia - we are social & Hootsuite

Malaysian Communications and Multimedia Commission - Communications and Multimedia : Pocket Book of Statistics 2017

 

Fiber Internet in Malaysia

 

Fiber internet represents a faster broadband than practically any other type of broadband in Malaysia. "Faster" means that more data transfers per second than other types of broadband services. Essentially, fiber optic technology converts electrical signals that carry data into light, which are transferred via hair-thin glass cables. Fiber also supports simultaneous access to internet, voice and television connections.

 

Fiber-optics is a fairly recent development worldwide and particularly in Malaysia. It is available to limited areas because of the infrastructure required. In Malaysia, it is typically known as Fiber to the Home (FTTH), and it is replacing ADSL in urban centres, bringing with it a shift to 24-month package contracts typical of a UK or US internet provider.

 

Fiber internet services in Malaysia typically provide speeds ranging from 5 Mbps to 100 Mbps. Companies offering FTTH include Time dotCom, Telekom Malaysia's UniFi and Maxis among others. The fiber options are typically much faster than the ADSL and Wireless Broadband options. However, fiber broadband in Malaysia is still not as fast as some fiber broadband options in the United States, like Google Fiber, which offers up to 1 Gbps.

 

In the fourth quarter of 2017 (4Q2017), broadband penetration rate per 100 inhabitants was 117.3% (4Q2016:99.8%) with 2.6 million (4Q2016:2.5 million) fixed broadband subscriptions. ¹

 

Among Asean countries, the fixed broadband subscriptions per 100 inhabitants in 2016 of Malaysia was 8.8 whilst Singapore recorded 26.0 followed by Thailand and Vietnam with 10.5 and 9.6 respectively. Others were namely Brunei (8.5), Philippines (5.5), Indonesia (2.0), Cambodia (0.6), Laos (0.4) and Myanmar (0.2). ¹

 

  ¹ Malaysian Communications and Multimedia Commission - Communications and Multimedia : Pocket Book of Statistics 2017

 

 

- 7 -

 

 

Plan of operations

 

OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS.

We hope to generate additional revenues in the next twelve months by engaging business operations through internal growth and through strategic acquisitions.

 

We have cash and cash equivalents of $45,355 as of March 31, 2018; an increase of $35,224 from the previous period end of $10,131 at December 31, 2017. In the opinion of management, the current 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 deploying our digital service provider and network service provider businesses.

 

Financing and funding

 

Management intends to continue to raise additional financing through debt and equity financing or other means and interests that it deems necessary, with a view to implementing our business plan and building a revenue base. We plan to use the proceeds of such financings to provide working capital to our operations and increase our capital expenditure for marketing and working with our co-operative partners. There can be no assurances that sufficient financing will be available on terms acceptable to us or at all. Our forecast for the period for which financial resources will be needed to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors.

 

Specifically, we hope to accomplish the steps as set out in this report to implement our business plan in respect of developing and integrating digital service provider and infrastructure provider. The success of our plans 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.

 

We are not currently conducting any research and development activities, other than the continual development of our website. We do not anticipate conducting any other research and development activities in the near future. In the event that we expand our business scope, then we may need to hire additional employees or independent contractors as well as purchase or lease additional equipment and open new office locations.

 

Governmental Regulation

 

We are subject to federal, state and local laws and regulations applied to businesses in general. We believe that we comply with the requirements in Malaysia for any licenses or approvals to pursue our proposed business plan. In locations where we operate, the applicable laws and regulations are subject to amendment or interpretation by regulatory authorities. Generally, such authorities are vested with relatively broad discretion to grant, renew and revoke licensee and approvals, and to implement regulations. Licenses may be denied or revoked for various reasons, including the violation of such regulations, conviction of crimes and the like. Possible sanctions which may be imposed include the suspension of individual employees, limitations on engaging in a particular business for specific periods of time, revocation of licenses, censures, redress to customers and fines. We believe that we are in conformity with all applicable laws in all relevant jurisdictions. We may be prevented from operating if our activities are not in compliance and must take action to comply with the relevant laws and regulations.

 

We have posted our privacy policy and practices concerning the use and disclosure of any consumer information collected on our website, www.mediangroupinc.com. Any failure by us to comply with posted privacy policies, Federal Trade Commission requirements or other domestic or international privacy-related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially harm our business, results of operations and financial condition. In this regard, there are a large number of legislative proposals before the U.S. Congress and various state legislative bodies regarding privacy issues related to online commerce to which the Group may participate in the future. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could harm our business by causing a decrease in the use of our applications and services by our small business customers and thereby a decrease in our revenues. Such decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements before consumers can utilize our Internet technology solutions.

 

 

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Results of operation.

 

FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 2018 COMPARED TO THE THREE MONTHS PERIOD ENDED MARCH 31, 2017.

 

REVENUES.

 

For the three months period ended March 31, 2018, the Group derived $96,707 in revenue, $15,486 in cost of revenue and therefore had $81,221 in gross profit from its operations. For the three months period ended March 31, 2017, the Group derived $5,866 in revenue, $3,407 in cost of revenue and therefore had $2,459 in gross profit from its operations. The increase in revenue is the result of the network design work for the period.

 

OPERATING EXPENSES.

 

For the three month period ended March 31, 2018, we had recorded $81,221 in gross profit and our total operating expenses were $103,527, all of which were general and administrative expenses. We also had $27,876 in other income, $56 in finance charges and $40,000 in interest expenses, so that the net loss to our shareholders from operation for the three months period ended March 31, 2018 was $34,486. This was in comparison for the three month period ended March 31, 2017, from our continuing operation we had $2,459 in gross profit and our total operating expenses were $42,486, all of which were general and administrative expenses. We also had $21,122 in other income, $43 in finance charges and $40,000 in interest expenses, so that the net loss to our shareholders from operation for the three months period ended March 31, 2017 was $58,948.

 

Liquidity and Capital Resources

 

As at March 31, 2018, the Company had $45,355 in cash and the other current assets consisted of $15,706 in accounts receivables, $74,449 in prepayments and deposits and $1,035,172 in amount due from a related parties for a total current assets of $1,170,682. We also had long term assets of $541,307 in goodwill and $42,073 in fixed assets so that our total asset is $1,754,062 as of March 31 2018. We also had current liabilities of $1,843,418 which were represented by $9,842 in accounts payables, $778,725 in other payables and accruals, $1,054,851 due to related parties. We also had $2,000,000 in long-term shareholder loan as at March 31, 2018, making our total liabilities $3,843,418. The working capital balance was a deficit of $672,736 as compared to $668,199 at December 31, 2017. The net cash used in operation was $42,396 during the current quarter as compared to $80,837 in the quarter ended March 31, 2017,

 

At present the Company does not have sufficient cash resources to provide for all general corporate operations in the foreseeable future. The Company will be required to raise additional capital in order to continue and expand its operations in fiscal 2017.

 

Liquidity and Capital Resources

 

The cash balance at March 31, 2018 was $45,355. There was no significant fund raising and investing activity in 2018. The Company intends to monitor the monthly cash outlays in the coming months to conserve cash until additional financing can be received through funding activities. We recorded a net loss of $34,486 before non-controlling interests for the three months ended March 31, 2018.

 

At present the Company does not have sufficient cash resources and cash flow from operations to provide for the planned roll out of its operations. The Company will be required to raise funds to meet its liabilities and operation requirements by i) selling its Common Stock ii) raise from the capital or debt markets, or iii) sell assets.

 

Going Concern

 

The Company's condensed consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

As of March 31, 2018, the Company has an accumulated deficits totaling $6,786,273 and its current liabilities exceed its current assets by $672,736. The Company has also experienced an operating loss for the three months ended March 31, 2018 of $34,486.

 

The Company's ability to continue as a going concern is contingent upon its ability to secure additional financing and attain profitable operations. In addition, the Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in developing markets and the competitive environment in which the Company operates.

 

The Company is pursuing financing for its operations and seeking additional investments. In addition, the Company is seeking to become a digital service provider and the network service provider including design, construction and maintenance services, for broadband service in Malaysia. Failure to secure such financing, to raise additional equity capital and to develop its operations may result in the Company depleting its available funds and not being able pay its obligations.

 

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Capital Expenditure Commitments

 

We had no material capital expenditures for the year ended March 31, 2018. However we expect to invest, subject to availability of funding, approximately $2,500,000 in capital expenditure over the next 12 month for the digital service provider and network service provider businesses.

 

Off Balance Sheet Arrangements

 

As of March 31, 2018, there were no off balance sheet arrangements. The Company has no off balance sheet obligations nor guarantees and has not historically used special purpose entities for any transactions.

 

 

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Item 3. Quantitative and Qualitative Disclosure About Market Risk.

 

Quantitative and Qualitative Disclosures about Market Risk:

 

The Company is exposed to various market risks, including changes in interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. The Company also has not entered into financial instruments to manage and reduce the impact of changes in interest rates and foreign currency exchange rates, although we may enter into such transactions in the future.

 

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures:

 

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive and financial officer have reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) within the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that the disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner as the Company did not have proper staffing of accounting personnel, including part time staff, to prepare the accounts in timely manner. However, this deficiency has since been rectified as we have now staffed 4 accountants in our accounting department to ensure that our financial reporting will be prepared and presented timely. Except for the staffing of the accounting department noted above, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive and financial officers.

 

Changes in Internal Controls over Financial Reporting:

 

There have been no changes in the Company's internal control over financial reporting during this quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

 

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PART II - OTHER INFORMATION

 

 

Item 1. Legal Proceedings

 

None.

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

 

Item 3. Defaults Upon Senior Securities

 

None.

 

 

Item 4. Submissions of Matters to a Vote of Security Holders

 

None.

 

 

Item 5. Other Information

 

None.

 

 

 

 

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Item 6. Exhibits

 

 

Exhibit No. Description of Exhibit
   
   
3.1 Articles of Incorporation (1)
3.1.1 Certificate of Amendment to Articles of Incorporation (2)
3.1.2 Certificate of Amendment to Articles of Incorporation, as amended.(3)
3.1.3 Certificate of Amendment to Articles of Incorporation, as amended.(4)
3.1.4 Certificate of Amendment to Articles of Incorporation, as amended.(5)
3.2 Bylaws (1)
   
31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

   
1. Incorporated by reference to our Registration Statement on Form SB-2 as filed with the SEC on April 15, 2003.
2. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on February 3, 2005.
3. Incorporated by reference to our Registration Statement on Form SB-2 as filed with the SEC on September 26, 2005.
4. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on April 7, 2014.
5. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on October 12, 2015.

 

* Filed herewith.

 

 

 

 

 

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SIGNATURES

 

 

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 34, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  Median Group Inc
  a Texas corporation
   
    /s/  Andrew Hwan Lee
  ---------------------------------------
  Andrew Hwan Lee
 

Chief Executive Officer

 

 

 

   
    /s/ Mohd Suhaimi bin Rozali
  ---------------------------------------
  Mohd Suhaimi bin Rozali
 

Chief Financial Officer

 

 

 

   

 

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:   /s/   Dato Haji Abdul Fattah Abdullah May 28, 2018
  -----------------------------------------------------  
  Dato Haji Abdul Fattah Abdullah  
Its: Director  

 

 

By:   /s/   Andrew Hwan Lee May 28, 2018
  -----------------------------------------------------  
  Andrew Hwan Lee  
Its: President, Chief Executive Officer, Director  

 

 

By:   /s/   Ahmad Shukri Abdul Ghani May 28, 2018
  -----------------------------------------------------  
  Ahmad Shukri Abdul Ghani  
Its: Director  

 

By:   /s/ Mohd. Suhaimi bin Rozali May 28, 2018
  -----------------------------------------------------  
  Mohd Suhaimi bin Rozali  
Its: Chief Financial Officer, Company Secretary, Treasurer  

 

 

 

 

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