EX-99 3 ext992-061112cmg.htm PROFORMA FINANCIAL STATEMENT - CHINA MEDIA GROUP CORP China Media Group Corporation 8-K Ext 99.2

Exhibit 99.2

















CHINA MEDIA GROUP CORPORATION
PRO-FORMA COMBINED FINANCIAL STATEMENTS
December 31, 2011
(Unaudited)























Exhibit 99.2

China Media Group Corporation

CONTENTS

PAGE NO.

Pro-forma Combined Balance Sheet at December 31, 2011 (Unaudited)

P - 1

Pro-forma Combined Statement of Operations for the year ended December 31, 2011 (Unaudited)

P - 2

Significant Notes and Assumptions to Pro-forma Combined Financial Statements (Unaudited)

P - 3


Exhibit 99.2


CHINA MEDIA GROUP CORPORATION
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS


On the June 8, 2012, Good World Investments Limited, a wholly owned subsidiary of China Media Group Corporation (the "Company" or "CMG") acquired all of the outstanding capital stock of A-Team Resources Sdn. Bhd. ("ATeam") in a sale and purchase transaction (the "SP Transaction"). ATeam is a manufacturer of consumer electronics and light appliances. ATeam"s operations are conducted in Malaysia.

In connection with the SP Transaction, the Company issued 558,779,837 shares of its Common Stock in acquiring all the shares of the capital stock of ATeam. Upon completion of the SP Transaction, the prior shareholder of ATeam owned approximately 50% of the Common Stock of the CMG.


Anticipated Accounting Treatment of the Acquisition Transaction


For accounting purposes, the transaction is being accounted for as a reverse merger, since the stockholder of ATeam will own a majority of the issued and outstanding shares of Common Stock of the Company. ATeam is treated as the acquirer for accounting purposes. This acquisition is being accounted for at historical cost in a manner similar to that in pooling of interests method. The historical financial statements will be combined of CMG and ATeam.


The accompanying unaudited pro forma condensed consolidated balance sheet has been presented with consolidated subsidiaries at December 31, 2011 and the unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2011 has been presented as if the acquisition had occurred.


You are being provided this information to aid in your analysis of the financial aspects of the SP Transaction. This information has been derived from the audited financial statements of ATeam as of and for the year ended December 31, 2011 and the audited financial statements of CMG for the respective periods. The pro forma adjustments are based on available information and assumptions that are believed to be reasonable. The unaudited pro forma condensed financial information does not represent the results of operations that would have occurred had such transactions been consummated on the dates indicated or the financial position for any future date or period. CMG and Ateam do not assume any responsibility for the accuracy or completeness of the information provided by the other party. This information should be read in conjunction with the companies" respective historical financial statements and notes included thereto.


The following unaudited pro forma adjustments are included in the accompanying unaudited pro forma condensed consolidated balance sheet as of December 31, 2011 and the unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2011 to reflect the acquisition of ATeam by the Company.


Exhibit 99.2

China Media Group Corporation
Pro Forma Combined Balance Sheet
December 31, 2011
(Unaudited)

Historical

Year Ended

China Media

A-Team

December 31,

Group

Resources

Pro Forma Adjustments

2011

Corporation

  Sdn. Bhd.

Dr Cr

Pro Forma

ASSETS
Current assets
  Cash and cash equivalents $

15,600

$

23,992

$

39,592

  Trade receivables

-

3,017,369

3,017,369

  Restricted cash

-

57,395

57,395

  Due to related parties

372,541

-

372,541

  Prepayments, deposits and receivables

169,152

139,055

308,207

     Total current assets

557,293

3,237,811

3,795,104

Non current assets
Fixed assets, net

2,232

83,905

86,137

Advance payment for distribution rights

69,000

-

69,000

Investment in shares

81,556

-

81,556

Goodwill

-

-

(1)

6,093,535

6,093,535

Total non current assets

152,788

83,905

6,330,228

Total Assets $

710,081

$

3,321,716

$

10,125,332

LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)/EQUITY
Liabilities
Current liabilities
  Other payables and accruals $

424,396

$

298,534

$

722,930

  Trade payables

-

44,197

44,197

   Trade financing payables

-

335,671

335,671

  Short term debt

100,000

205,463

305,463

  Due to officers and directors

448,145

133,027

581,172

  Taxation

-

90,739

90,739

  Due to related parties

1,656,981

-

1,656,981

  Other liabilities

236,504

-

236,504

    Total current liabilities

2,866,026

1,107,631

3,973,657

Non current liabilities
  Lease obligations

-

54,921

54,921

  Long term debts

2,000,000

274,589

2,274,589

Total non current liabilities

2,000,000

329,510

2,329,510

Total liabilities

4,866,026

1,437,141

6,303,167

Stockholders' (deficiency)/equity
  Common Stock

7,773,902 

583,107 

(1)

 7,773,902

2,580,543

(1)

1,997,436

  Additional paid up capital

1,799,358

-

(1)

1,799,358

-

  Shares to be issued

52,510

-

52,510

  Comprehensive income

66,176

106,458

(1)

67,176

105,458

  Accumulated deficits

(13,867,043)

839,332

(1)

13,867,043

839,332

  Profit and loss

(99,304)

355,678

256,374

  Uncontrolled interests

118,456

-

(1)

130,508 

(12,052)

Total stockholders' (deficiency)/equity

(4,155,945)

1,884,575

3,822,165

Total liabilities and stockholders' equity $

710,081

$

3,321,716

$

10,125,332

See Summary of Significant Notes and Assumptions to Pro Forma Financial Statements

P -1


Exhibit 99.2

China Media Group Corporation
Proforma Combined Statement of Operations
For the Year Ended December 31, 2011
(Unaudited)

Historical

Year Ended

China Media

A-Team

December 31,

Group

Resources

Pro Forma Adjustments

2011

Corporation

  Sdn. Bhd.

Dr Cr

Pro Forma

Revenues $

142,132

$

6,932,545

$

7,074,677

Cost of sales

40,185

5,437,816

5,478,001

Gross profit

101,947

1,494,729

1,596,676

Operating expenses:
Impairment of distribution rights

68,800

-

68,800

Selling, general and administrative

213,754

953,784

1,167,538

282,554 

 953,784

1,236,338

(Loss) / Income from operations before other expenses

(180,607)

540,945

518,238

Other income (expenses):
Gain on disposal of investment in unlisted shares

251,538

-

251,538

Gain on disposal of fixed assets

1,498

-

1,498

Other income

-

16,599

16,599

Income tax expenses

-

(127,947)

(127,947)

Interest expenses

(183,785)

(73,919

)

(257,704)

Net (loss) / income before uncontrolled interest

(111,356)

355,678

244,322

Uncontrolled interests

12,052

-

12,052

Net (loss) / Income

(99,304)

355,678

256,374

Other comprehensive income

(1,000)

(51,442)

(52,442)

Comprehensive (loss) / income $

(100,304)

$

304,236

$

203,932

See Summary of Significant Notes and Assumptions to Pro Forma Financial Statements

P - 2


Exhibit 99.2

China Media Group Corporation
SIGNIFICANT NOTES AND ASSUMPTIONS TO PRO-FORMA FINANCIAL
STATEMENTS
(Unaudited)

(1)

The accompanying unaudited pro-forma financial information reflects the financial statements of China Media Group Corporation ("CMG") and A-Team Resources Sdn. Bhd. ("ATeam") regarding a planned acquisition of ATeam by CMG. The pro-forma adjustments to the balance sheet give effect to the acquisition as if it occurred on January 1, 2011 and the pro-forma statement of operations gives effect to the acquisition as if it occurred on January 1, 2011.The acquisition is treated as a reverse acquisition of CMG by ATeam since the stockholders of ATeam obtained a controlling interest in the voting Common Stock of CMG and management control of CMG as a result of the acquisition.Accordingly, the assets and liabilities of ATeam are recorded at their historical cost and the assets and liabilities of CMG are measured in accordance with the value at the date of combination. The retained earnings and other equity balances of ATeam before the business combination becomes the retained earnings and other equity balances of CMG after the combination. In addition, the amount recognized as issued share capital interests is determined by adding the issued share capital of acquiring ATeam immediately prior to the business combination and the equity interests CMG issued to effect the combination. Under reverse acquisition accounting, the historical results of operations are those of ATeam and the results of operations of CMG are included only from the acquisition date.


(2)


Significant assumptions include (a) the Common Stock of CMG based on December 31, 2011 shares outstanding and the newly issued 558,779,837 Common Stock in acquiring ATeam, (b) the operation of CMG and ATeam were combined from January 1, 2011, the as if acquisition date, to December 31, 2011. In addition, no transactions that may have occurred subsequent to December 31, 2011 have been considered.


(3)

The following reflect the pro forma adjustments as of December 31, 2011.

First adjustment is to reflect the effect of the acquisition of ATeam by CMG by treating it as a reverse acquisition.

Dr

Cr

Share capital - CMG

7,773,902

Additional paid in capital - CMG

1,799,358

Comprehensive income - CMG

67,176

Accumulated deficits - CMG

13,867,043

Uncontrolled interests - CMG

130,508

Goodwill on acquisition of A-Team

6,093,535

Share capital - CMG

1,997,436

P - 3