WASHINGTON, D.C. 20549
CHINA ENTERTAINMENT GROUP, INC.
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date. As of March 11, 2008, there were approximately 128,963,425 shares of the issuer's $.001 par value common stock issued and outstanding.
PART I - FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | March 31, 2007 | | | December 31, 2006 | |
| | | $ | | | | $ | | |
| | | | | | | | | |
| ASSETS | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash and cash equivalents | | | 951,756 | | | | 1,019,888 | |
| Accounts receivable | | | 55,744 | | | | 112,951 | |
| Deposits paid to artist management services | | | 956,250 | | | | 1,038,113 | |
| Prepaid expenses and other current assets | | | 64,429 | | | | 94,850 | |
| Amount due from an affiliate | | | 15,771 | | | | 15,771 | |
| Total current assets | | | 2,043,950 | | | | 2,281,573 | |
| | | | | | | | | |
| Fixed assets, net | | | 35,440 | | | | 38,183 | |
| | | | | | | | | |
| Total assets | | | 2,079,390 | | | | 2,319,756 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | | 121,742 | | | | 120,279 | |
| Accrued liabilities and other liabilities | | | 250,913 | | | | 389,053 | |
| Deposits received from customers | | | 1,273,597 | | | | 1,255,754 | |
| Amounts due to affiliates | | | 1,674,616 | | | | 1,636,005 | |
| Total current liabilities | | | 3,320,868 | | | | 3,401,091 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders’ Deficiency | | | | | | | | |
| Common stock, $0.001 par value; 200,000,000 shares authorized; | | | | | | | | |
| 128,963,425 shares issued and outstanding | | | 128,963 | | | | 128,963 | |
| Additional paid-in capital | | | 118,762 | | | | 118,762 | |
| Accumulated deficit | | | (1,489,203 | ) | | | (1,329,060 | ) |
| Total stockholders’ deficiency | | | (1,241,478 | ) | | | (1,081,335 | ) |
| | | | | | | | | |
| Total liabilities and stockholders’ deficiency | | | 2,079,390 | | | | 2,319,756 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| | | Three months ended March 31, | |
| | | 2007 | | | 2006 | |
| | | | | | $ | |
| | | | | | | |
| Revenue, net | | | 99,546 | | | | 581,240 | |
| | | | | | | | | |
| Other revenue | | | 629 | | | | 168 | |
| | | | | | | | | |
| General and administrative expenses | | | (260,318 | ) | | | (272,479 | ) |
| | | | | | | | | |
| Provisions for impairment of deposits paid and other current assets | | | - | | | | (318,180 | ) |
| | | | | | | | | |
| Loss before income tax | | | (160,143 | ) | | | (9,251 | ) |
| | | | | | | | | |
| Income tax | | | - | | | | - | |
| | | | | | | | | |
| Net loss | | | (160,143 | ) | | | (9,251 | ) |
| | | | | | | | | |
| Basic and diluted loss per share | | | (0.0012 | ) | | | (0.0001 | ) |
| | | | | | | | | |
| Basic and diluted weighted average shares outstanding | | | 128,963,425 | | | | 128,963,425 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| | | Three months March 31, | |
| | | 2007 | | | 2006 | |
| | | | | | $ | |
| Operating activities | | | | | | |
| Net loss | | | (160,143 | ) | | | (9,251 | ) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities | | | | | | | | |
| Depreciation | | | 2,743 | | | | 2,716 | |
| Provisions for impairment of deposits paid and other current assets | | | - | | | | 318,180 | |
| Changes in operating assets and liabilities | | | | | | | | |
| Decrease in accounts receivable | | | 57,207 | | | | 32,558 | |
| Decrease in deposits paid, prepaid expenses and other current assets | | | 112,284 | | | | 278,323 | |
| Decrease in accounts payable, accrued liabilities, other liabilities and deposits received | | | (118,834 | ) | | | (461,496 | ) |
| Net cash (used in) provided by operating activities | | | (106,743 | ) | | | 161,030 | |
| | | | | | | | | |
| Financing activities | | | | | | | | |
| Advances from affiliates | | | 38,611 | | | | 387,064 | |
| Net cash provided by financing activities | | | 38,611 | | | | 387,064 | |
| | | | | | | | | |
| (Decrease)/increase in cash and cash equivalents | | | (68,132 | ) | | | 548,094 | |
| | | | | | | | | |
| Cash and cash equivalents, beginning of period | | | 1,019,888 | | | | 269,760 | |
| | | | | | | | | |
| Cash and cash equivalents, end of period | | | 951,756 | | | | 817,854 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENDSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Note 1. | LIQUIDITY AND GOING CONCERN |
As of March 31, 2007 and December 31, 2006, the Company had negative working capital and accumulated deficit. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Although the Company expects to incur additional losses for at least next twelve months, the Company anticipates that its current cash and cash equivalents and the ability to borrow from affiliates will be sufficient to fund its operations at least through March 31, 2008. This assumes the Company either achieves profitable operations and the cash burn rate from the results experienced in the recent past does not increase significantly. If, however, the Company is unable to realize profitable operations and additional resources are required to operate, the Company may be forced to borrow additional funds, which could increase the risk of operating as a going concern, or cease operations. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.
| Note 2. | SUMMARY OF PRINCIPAL ACCOUNTING POLICIES |
Basis of presentation
The condensed consolidated financial statements include the accounts of China Entertainment Group, Inc. and its subsidiaries. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All significant intercompany transactions and balances have been eliminated.
The condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accrued liabilities necessary for a fair presentation of our condensed consolidated balance sheets, operating results and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicatives of the results for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the 2006 annual report on Form 10-KSB.
Reclassifications
Certain financial statements line items have been reclassified to conform to the current period presentation and have no impact on the previously reported consolidated net revenue, operating result, or net financial position.
Concentration risk
The Company is subject to certain concentration of risk as follow:
| · | Due to accounts receivable – Accounts receivable as at March 31, 2007 and December 31, 2006 includes 3 customers that each accounted for more than 10% of the accounts receivable balance as at the respective balance sheet date. |
| · | Due to revenue and major customers – For the three months ended March 31, 2007 and 2006, 6 and 1 artists that each accounted for more than 10% of the Company’s net revenue during the corresponding period. |
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENDSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Share-based compensation
Prior to January 1, 2006, the Company applied Statement of Financial Accounting Standards (“SFAS”) 123 and Accounting Principle Board Opinion (“APB”) No. 25 in accounting for its stock option plans that no compensation cost would be recognized in the Company’s consolidated financial statements for stock options granted under any of the stock option plans which on the date of grant the exercise price per share was equal to or exceeded the fair value per share. Compensation cost was only recognized for warrants and options granted to non-employees for services provided. Effective January 1, 2006, the Company adopted the provisions of SFAS 123-R, Share-Based Payment (“SFAS 123(R)”) in recording and disclosing its share-based compensation. SFAS 123(R) requires that all share-based payments to employees, including grants of stock options, is measured based on their grant-date fair value and recognize as expense. The adoption of SFAS 123(R) has no significant impact on the result of operations for the three months ended March 31, 2007 as the Company did not have share-based compensation during that period.
| Note 3. | RECENT ACCOUNTING PRONOUNCEMENTS |
In February 2006, the Financial Accounting Standards Board (the “FASB”) issued SFAS 155, Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements 133 and 140 (“SFAS 155”). The statement permits interests in hybrid financial instruments that contain an embedded derivative that would otherwise require bifurcation, to be accounted for as a single financial instrument at fair value, with changes in fair value recognized in earnings. This election is permitted on an instrument-by-instrument basis for all hybrid financial instruments hold, obtain, or issue as of the adoption date. The provisions of SFAS 155 are effective for the Company on January 1, 2007. The application of this guidance has not had a material effect on the Company’s consolidated financial positions, cash flows and results of operation.
In June 2006, the FASB issued Interpretation 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. This interpretation requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for the Company on January 1, 2007, with the cumulative effect of the change in accounting principle, if any, recorded as an adjustment to opening retained earnings. The application of this guidance has not had a material effect on the Company’s consolidated financial positions, cash flows and results of operation.
In September 2006, the FASB issued SFAS 157, Fair Value Measurements (“SFAS 157”), which provides guidance about how to measure assets and liabilities that use fair value. SFAS 157 will apply whenever another US GAAP standard requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard will also require additional disclosures in both annual and quarterly reports. SFAS 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007, and will be adopted by us beginning in the first quarter of 2008. The Company does not expect there to be any significant impact of adopting SFAS 157 on its consolidated financial positions, cash flows and results of operation.
In September 2006, the SEC staff issued Staff Accounting Bulletin (“SAB”) 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 was issued to eliminate the diversity of practice in how public companies quantify misstatements of financial statements, including misstatements that were not material to prior years’ financial statements. The Company began to apply the provisions of SAB 108 to its annual financial statements for the year ending December 31, 2006. The application of this guidance has not had a material effect on the Company’s consolidated financial positions, cash flows and results of operation.
In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115 (“SFAS 159”), which will be effective for the Company beginning January 1, 2008. This standard permits entities to choose to measure many financial instruments and certain other items at fair value and consequently report unrealized gains and losses on such items in earnings. The Company does not expect there to be any significant impact of adopting this standard on its consolidated financial positions, cash flows and results of operation.
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENDSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations (“SFAS 141(R)”). SFAS 141 (R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141 (R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141 (R) will be effective for financial statements issued for fiscal years beginning after December 15, 2008, and will be adopted by us beginning in the first quarter of 2009. The Company does not expect there to be any significant impact of adopting SFAS 141 (R) on its consolidated financial position, cash flows and results of operations.
In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No.51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 will be effective for financial statements issued for fiscal years beginning after December 15, 2008, and will be adopted by us beginning in the first quarter of 2009. The Company does not expect there to be any significant impact of adopting SFAS 160 on its consolidated financial position, cash flows and results of operations.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force (“EITF”)), the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
| Note 4. | SEGMENT INFORMATION |
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operation decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Metrolink Pacific Limited’s (“MPL’s”) wholly-owned subsidiaries are as follows: Anglo Market International Limited ("AMIL"), China Star Management Limited ("CSML"), and Metrolink Global Limited ("MGL"). The principal activities of MPL’s subsidiaries are the provision of artist management services. The “other” column represents unallocated corporate-related costs of the parent company.
The Company’s segment information for the three months ended March 31, 2007 and 2006 and as at March 31, 2007 and 2006 are as follows:
| 2007 | AMIL | CSML | MGL | OTHER | Total |
| | $ | $ | $ | $ | $ |
| Revenue, net | 49,231 | 50,315 | - | - | 99,546 |
| Net (loss) income | 45,402 | (184,338) | (3,846) | (17,361) | (160,143) |
| Total assets | 80,884 | 1,117,408 | 881,098 | - | 2,079,390 |
| 2006 | AMIL | CSML | MGL | OTHER | Total |
| | $ | $ | $ | $ | $ |
| Revenue, net | 4,968 | 576,272 | - | - | 581,240 |
| Net (loss) income | 1,082 | 253,125 | (262,785) | (673) | (9,251) |
| Total assets | 21,290 | 1,619,413 | 753,487 | - | 2,394,190 |
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENDSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Geographic information is based on the location of the selling service. Revenues from external customers by geographic region are as follows:
| | | Three month ended | |
| | | March 31 | |
| | | 2007 | | | 2006 | |
| People’s Republic of China | | | 51 | % | | | - | |
| Hong Kong | | | 49 | % | | | 99 | % |
| United States of America | | | - | | | | 1 | % |
| | | | | | | | | |
| | | | 100 | % | | | 100 | % |
No income tax was provided for the three months ended March 31, 2007 and 2006 as the Company and its subsidiaries did not have assessable profit at each period presented.
Litigations
Lang, et al. v. Welch, et al. (China Entertainment Group, Inc.) (United States District Court, Central District California, Case No. CV 07-1068-GHK-PJWx). On December 20, 2006, plaintiffs Sanford Lang and Martin Goldrod (collectively, “Plaintiffs”) initiated a lawsuit in the Los Angeles Superior Court, Central District, alleging claims for fraud, breach of contract, violations of RICO, and civil conspiracy against several parties, including the Company. The Company was provided with a copy of Plaintiffs’ Complaint on or about February 28, 2007, after the matter was removed to United States District Court. According to the Complaint, the Company is a “nominal Defendant” as Plaintiffs purport to assert claims derivatively on its behalf. Accordingly, it appears that no relief sought against the Company itself. On or about January 31, 2008, Plaintiffs and Defendants, including the Company, entered into a confidential settlement agreement to resolve all claims pending between them. Subject to satisfactory discharge of certain obligations, as set forth in the confidential settlement agreement, it is anticipated that a dismissal of the action will be filed no later than early January 2009.
SEC filings
The Company has failed to comply with substantially all of the obligations imposed upon it by the Securities Exchange Act of 1934 Act (the “1934 Act”) and is delinquent in filing its periodic filings including its annual report on Form 10-KSB for 2006 and its 2007 quarterly reports on Form 10-QSB. As a result, the Company and its officers and directors could be subject to substantial civil and criminal penalties due to such non-compliance. There can be no assurance that substantial civil and criminal penalties will not be imposed.
CHINA ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENDSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Note 7. | RELATED PARTY TRANSACTIONS |
Amounts due from/to affiliates are unsecured, interest-free and due on demand. The following table summarizes significant related party balances at March 31, 2007 and December 31, 2006:
| Related party | | Nature of relationship and control | | Description of transactions | | March 31, 2007 | | December 31, 2006 |
| | | | | | | $ | | $ |
| | | | | | | | | |
| Due from | | | | | | | | |
| Together Again Limited (“TAL”) | | Intermediate holding company, 51% owned by Colima Enterprise Holdings, Inc. (“Colima”) and 49% owned by China Star Entertainment Limited (“China Star”) | | Amount receivable in relation to service income and funds transferred between entities for working capital purposes | | 15,771 | | 15,771 |
| | | | | | | | | |
| Due to | | | | | | | | |
| Ms. Chen Ming Yin, Tiffany | | Director of the Company | | Director compensation | | 19,231 | | 15,385 |
| | | | | | | | | |
| Mr. Tang Chien Chang | | Director of the Company | | Funds transferred to the Company for working capital purposes | | 215,263 | | 277,006 |
| | | | | | | | | |
| Imperial International Limited (“Imperial”) | | Intermediate holding company, ultimately owned by Colima | | Funds transferred between entities for working capital purposes | | 661,922 | | 663,845 |
| | | | | | | | | |
| China Star HK Distribution Limited (“China Star Distribution”) | | Related company, a subsidiary of China Star which owned 49% of TAL | | Amount receivable in relation to service income and funds transferred between entities for working capital purposes | | 778,200 | | 679,769 |
| | | | | | | | | |
| | | | | | | 1,674,616 | | 1,636,005 |
Related party transactions included in the condensed consolidated statement of income for the periods presented include the following:
| | | | | | Three months ended March 31, |
| Related party | | Nature of relationship and control | | Description of transactions | | 2007 | | 2006 |
| | | | | | | $ | | $ |
| | | | | | | | | |
| China Star Distribution | | Related company, a subsidiary of China Star which owned 49% of TAL | | Service income, net (note a) | | 15,449 | | 541,205 |
| | | | | | | | | |
| China Star | | Related company, owned 49% of TAL | | Management fee paid (note b) | | 26,923 | | 26,923 |
| | | | | | | | | |
| China Star Laser Disc Company Limited | | Related company, a subsidiary of China Star which owned 49% of TAL | | Management fee paid (note b) | | 126,923 | | 126,923 |
| Notes: | (a) | The transactions were carried out at market price or, where no market price was available, at cost plus a percentage profit mark-up. |
| | | |
| | (b) | The transactions were carried out at terms agreed between both parties. |
Effective December 31, 2007, the major stockholder of the Company approved the Disposal of 100% of total issued and paid up capital of MPL to Imperial at a consideration of $1 and the accounts of MPL and its subsidiaries have been deconsolidated from the Company effectively from the effective date of the Disposal. Subsequent to the Disposal, the Company has no active operation and is searching for a new business opportunity.
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS. |
THE 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, GUARANTEE, 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.
INTRODUCTION
China Entertainment Group, Inc. (together with our direct and indirect subsidiaries, and their respective predecessors, unless the context otherwise requires, the "Company") is a multi-faceted entertainment company with historically profitable operations in film, television, print and music artist management fees comprised of talent development fees, artist casting, booking and brokering commissions, and artist promotional fees. Our Company's Board of Directors and management team is comprised of senior management from the group headed by China Star Entertainment Limited ("China Star," and together with its subsidiaries, "China Star Group"), a Hong Kong listed company and one of the largest media companies in Asia.
As of March 31, 2007, we owned all of the equity interest in Metrolink Pacific Limited ("MPL"), a British Virgin Islands corporation. MPL, in turn, owns a 100% equity interest in Anglo Market International Limited, a corporation incorporated in the British Virgin Islands on September 15, 2000, a 100% equity interest in China Star Management Limited, a company incorporated in Hong Kong on September 6, 1985, and a 100% equity interest in Metrolink Global Limited, a corporation incorporated in the British Virgin Islands on September 10, 2004. MPL's subsidiaries currently provide artist management, talent development and artist brokering services. Our principal executive office is located at Unit 3409 Shun Tak Centre, West Tower, 168-200 Connaught Road Central, Hong Kong. Our telephone number is 011-852-2313-1888.
HISTORICAL BACKGROUND
We were originally incorporated in the state of Nevada as Shur De Cor, Inc. ("Shur De Cor") on August 14, 1987. By 1999, Shur De Cor was a public company with no operations searching for a business opportunity. In April 1999, Shur De Cor merged with Interactive Marketing Technology, Inc., a New Jersey corporation ("Interactive New Jersey"), in an arm's length transaction. Interactive New Jersey was engaged in the business of direct marketing of consumer products and desired to become a public company. Shur De Cor was the surviving corporation and changed its name to Interactive Marketing Technology, Inc. Shur De Cor's management resigned and the management of Interactive New Jersey filled the vacancies.
Through our then wholly owned subsidiary, IMT's Plumber, Inc., we produced, marketed, and sold a licensed product called the Plumber's Secret, which was discontinued during fiscal 2001. In May 2002, we discontinued our former business and actively sought to either acquire a third party, merge with a third party or pursue a joint venture with a third party in order to re-enter our former business of direct marketing of proprietary consumer products in the United States and worldwide.
On November 17, 2004, our Board of Directors unanimously approved, subject to shareholder approval, entering into a Share Exchange Agreement (the "Agreement") with MPL, an international business company organized to do business under the laws of the British Virgin Islands. At that time, MPL was wholly owned by Imperial International Limited ("Imperial"), a company incorporated under the laws of the British Virgin Islands. The parent company and 100% owner of Imperial is Together Again Limited ("Together Again").
On November 17, 2004, the Board also approved, subject to shareholder approval, amendments to our Articles of Incorporation to change our corporate name ("Name Change") from Interactive Marketing Technology, Inc. to China Artists Agency, Inc. ("China Artists"), and to increase the authorized common stock of the Company to 200,000,000 shares (the "Authorized Share Increase"). On that same date, and also subject to shareholder approval, the Board also approved a 1 for 1.69 reverse stock split to accommodate the terms of the Agreement (the "Reverse Split"), and a spin-off of the Company's existing business, including its assets and liabilities, into a Nevada corporation formed as the Company's wholly owned subsidiary into a separate public company by means of a pro-rata share dividend (the "Spin-off").
The above-described actions approved by the Board also required approval by a majority of the Company's shareholders under Nevada Revised Statutes. Thus, on November 15, 2004, as authorized by the Nevada Revised Statutes, the majority shareholders, who together owned 50.4% of our issued and outstanding shares of common stock, approved the Agreement, the Authorized Share Increase, the Name Change, the Reverse Split, and the Spin-off by action of written consent.
On November 17, 2004, the Company, as contemplated under the Agreement, issued an aggregate of 109,623,006 shares of its common stock to Imperial, the sole shareholder of MPL, in exchange for 100% of the issued and outstanding shares of MPL capital stock transferred to China Artists by Imperial at the closing (the "Share Exchange"). The acquisition of the 100% interest includes MPL's interests in its subsidiaries, Anglo Market International Limited, China Star Management Limited, and Metrolink Global Limited (hereinafter MPL and its subsidiaries are collectively referred to as the "Metrolink Group"). Upon completion of the Share Exchange, MPL became the Company's wholly owned subsidiary and China Artist's former owner subsequently transferred control of China Artists to Imperial. We relied on Rule 506 of Regulation D of the Securities Act of 1933, as amended, (the "Act") in regard to the shares that we issued pursuant to the Share Exchange. We believe this offering qualified as a "business combination" as defined by Rule 501(d). Reliance on Rule 506 requires that there are no more than 35 non-accredited purchasers of securities from the issuer in an offering under Rule 506. MPL represented to us that it had one stockholder who certified that it was an “accredited investor” as defined in Rule 501(a) of Regulation D. MPL also represented to us that there had been no advertising or general solicitation in connection with this transaction. The Company's Certificate of Amendment to our Articles of Incorporation to effect the Name Change, the Reverse Split, and the Authorized Share Increase was filed with the Nevada Secretary of State and became effective on December 21, 2004. Concurrent with Name Change, Reverse Split and Authorized Share Increase, the Company also obtained a new stock symbol, "CAAY", and a new CUSIP Number. The new stock symbol and CUSIP number also became effective on December 21, 2004.
The Spin-off, which was approved by both the Board and the majority shareholders prior to the closing of the Agreement, resulted in the formation of a separate public company, All Star Marketing, Inc. ("All Star"). All Star is a Nevada corporation and it was formed as a wholly owned subsidiary of the Company. The Spin-off was satisfied by means of a pro-rata share dividend to the Company's shareholders of record as of December 10, 2004. The purpose of the Spin-Off was to allow the subsidiary to operate as a separate public company and raise working capital through the sale of its own equity. This allows our management to focus exclusively on our business after the Share Exchange, while at the same time, allowing the spun-off company to have greater exposure by trading as an independent public company. Additionally, the shareholders and the market can then more easily identify the results and performance of the Company as a separate entity from that of All Star.
On June 27, 2005, the Company's Board of Directors and the Company's majority shareholder approved and authorized a name change to China Entertainment Group, Inc. The Certificate of Amendment to our Articles of Incorporation to effect our name change to China Entertainment Group, Inc. was filed with the Nevada Secretary of State and became effective on August 4, 2005. Concurrent with the Name Change, we also obtained a new stock symbol, "CGRP", and a new CUSIP Number. The new stock symbol and CUSIP number became effective on August 9, 2005.
On January 17, 2008, the Company entered into an Agreement (“Agreement”) with Imperial, the Company’s current majority shareholder, pursuant to which the Company agreed to sell and Imperial agreed to purchase substantially all of the Company’s assets. Pursuant to the Agreement, the Company will sell 100% of total issued and paid up capital of MPL, the Company’s wholly-owned subsidiary and operating business to Imperial with effect from December 31, 2007 in exchange for Imperial’s payment of US$1 to the Company (the “Asset Sale”) at the closing of the Asset Sale transaction (the “Closing”). The Closing of the Asset Sale transaction is subject to the satisfaction of all of the closing conditions set forth in the Agreement. As of the date of this filing, all of the closing conditions have either been satisfied or waived by the Parties except for the Company’s compliance with the required notification provisions of Section 14(c) of the Securities Exchange Act of 1934, as amended, and Regulation 14C thereunder in regards to administrative notification of all Company shareholders regarding the majority shareholder’s approval of the Asset Sale (the “14C Requirements”). The Company presently intends to maintain its corporate existence after the Asset Sale transaction is fully completed. Although there are no specific plans, the Company expects that it may seek to find a private, operating company with which to combine. In the event Company can find and complete any such transaction, it is generally to be expected that the current owners of Company, in the aggregate, would have a significantly reduced equity ownership of the surviving company. There can be no assurance that the Company will be able to identify any business with which the Company may conduct a business combination, nor that any such transaction could be completed. The Agreement was attached to the Form 8-K filed with the Securities and Exchange Commission on February 22, 2008 as Exhibit 10.1 and is incorporated herein by reference; provided, however, that the warranties and representations contained in such agreement are made solely to Imperial and solely for purposes of the Asset Sale. The foregoing summary and description do not purport to be complete and are qualified in their entirety by reference to the Agreement.
We are currently authorized to issue 200,000,000 shares of common stock, $0.001 par value, of which 128,963,425 shares of common stock are issued and outstanding as of March 11, 2008. We are currently not authorized to issue preferred stock.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Acocunting Standards (“SFAS”) 155, Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements 133 and 140 (“SFAS 155”). The statement permits interests in hybrid financial instruments that contain an embedded derivative that would otherwise require bifurcation, to be accounted for as a single financial instrument at fair value, with changes in fair value recognized in earnings. This election is permitted on an instrument-by-instrument basis for all hybrid financial instruments hold, obtain, or issue as of the adoption date. The provisions of SFAS 155 are effective for the Company on January 1, 2007. The application of this guidance has not had a material effect on the Company’s consolidated financial positions, cash flows and results of operations.
In June 2006, the FASB issued Interpretation 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. This interpretation requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for the Company on January 1, 2007, with the cumulative effect of the change in accounting principle, if any, recorded as an adjustment to opening retained earnings. The application of this guidance has not had a material effect on the Company’s consolidated financial positions, cash flows and results of operations.
In September 2006, the FASB issued SFAS 157, Fair Value Measurements (“SFAS 157”), which provides guidance about how to measure assets and liabilities that use fair value. SFAS 157 will apply whenever another accounting principles generally accepted in the United States of America (“US GAAP”) requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard will also require additional disclosures in both annual and quarterly reports. SFAS 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007, and will be adopted by us beginning in the first quarter of 2008. The Company does not expect there to be any significant impact of adopting SFAS 157 on its consolidated financial positions, cash flows and results of operations.
In September 2006, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin (“SAB”) 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 was issued to eliminate the diversity of practice in how public companies quantify misstatements of financial statements, including misstatements that were not material to prior years’ financial statements. The Company began to apply the provisions of SAB 108 to its annual financial statements for the year ending December 31, 2006. The application of this guidance has not had a material effect on the Company’s consolidated financial position, cash flows and results of operations.
In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115 (“SFAS 159”), which will be effective for the Company beginning January 1, 2008. This standard permits entities to choose to measure many financial instruments and certain other items at fair value and consequently report unrealized gains and losses on such items in earnings. The Company does not expect there to be any significant impact of adopting this standard on its consolidated financial positions, cash flows and results of operations.
In December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations (“SFAS 141(R)”). SFAS 141 (R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141 (R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141 (R) will be effective for financial statements issued for fiscal years beginning after December 15, 2008, and will be adopted by us beginning in the first quarter of 2009. The Company does not expect there to be any significant impact of adopting SFAS 141 (R) on its consolidated financial position, cash flows and results of operations.
In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 will be effective for financial statements issued for fiscal years beginning after December 15, 2008, and will be adopted by us beginning in the first quarter of 2009. The Company does not expect there to be any significant impact of adopting SFAS 160 on its consolidated financial position, cash flows and results of operations.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force (“EITF”)), the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
CRITICAL ACCOUNTING POLICIES
Our Management's Discussion and Analysis or Plan of Operations section discusses our financial statements, which have been prepared in accordance with US GAAP. This discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements and related notes.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements:
Use of Estimates
The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, 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.
Revenue recognition:
Service fee income from provision of artist management services is recognized when services are rendered. In accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," the Company presents its revenue on a net basis as it acts as an agent for the artists.
Contingencies and litigation:
We may be subject to certain asserted and unasserted claims encountered in the normal course of business. It is our belief that the resolution of these matters will not have a material adverse effect on our financial position or results of operations, however, we cannot provide assurance that damages that result in a material adverse effect on our financial position or results of operations will not be imposed in these matters. We account for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.
The Company has failed to timely comply with its period reporting obligations imposed upon it by the Securities Exchange Act of 1934. As a result, the Company and its officers and directors could be subject to substantial civil and criminal penalties due to such non-compliance. There can be no assurance that substantial civil and criminal penalties will not be imposed.
RESULTS OF OPERATIONS
General results of operations for the three months ended March 31, 2007 compared to March 31, 2006 are summarized as follows:
| Three Months Ended March 31: | | 2007 | | | 2006 | | | Change | |
| Revenue | | $ | 100,175 | | | $ | 581,408 | | | | (82.8) | % |
| General and administrative expenses | | | (260,318 | ) | | | (272,479 | ) | | | (4.5) | % |
| Provisions for impairment of deposits paid | | | | | | | | | | | | |
| and other current assets | | | - | | | | (318,180) | | | | (100.0) | % |
| Loss before income taxes | | | (160,143 | ) | | | (9,251) | | | | 1,631.1 | % |
| Income taxes expenses | | | - | | | | - | | | | - | % |
| Net loss | | $ | (160,143 | ) | | $ | (9,251) | | | | 1,631.1 | % |
REVENUE
Our consolidated revenue decreased 82.8% to $100,175 for the three months ended March 31, 2007 from $581,408 for the same period in 2006. The decrease in revenue was a result of a decrease in the number of contracted artists and decreased performances by our artists. Rampant piracy and the downturn of Hong Kong made movies affected the overall revenue of all movies in Hong Kong. Accordingly, movie investors were more cautious in producing movies, thereby decreasing the opportunities for performances by our artists.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses incurred for the three months ended March 31, 2007 decreased $12,161, or 4.5%, to $260,318 compared to $272,479 for the same period in 2006. General and administrative expenses mainly consisted of management fees, wages, rent, and professional fees. The decrease was due to a decrease in the number of our employees.
PROVISIONS FOR IMPAIRMENT OF DEPOSITS PAID AND OTHER CURRENT ASSETS
There were no provisions for impairment of deposits paid and other current assets for the three months ended March 31, 2007. The provisions for impairment of deposits paid and other current assets for the same period in 2006 represented certain of the artist management contracts which expired and the Company had made provisions for impairment of deposits paid in the amount of approximately $318,000.
INCOME TAX
The income tax represents the aggregate taxes provided on the assessable profits for the consolidated entities. No income taxes expense was provided for the three months ended March 31, 2007 and March 31, 2006 because the Company incurred tax losses for the periods.
NET LOSS
Net loss for the three months ended March 31, 2007 increased $150,892, or 1,631.1%, to $160,143 compared to $9,251 for the same period in 2006. The increase in net loss was due to an 82.8% decrease in revenues offset by a 4.5% decrease in general and administrative expenses.
FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES
| | | 2007 | | | 2006 | | | Change | |
| Net cash (used in) provided by operating activities | | $ | (106,743) | | | $ | 161,030 | | | | (166.3 | )% |
| | | | | | | | | | | | | |
| Net cash used in investing activities | | $ | - | | | $ | - | | | | 0.0 | % |
| | | | | | | | | | | | | |
| Net cash provided by financing activities | | $ | 38,611 | | | $ | 387,064 | | | | (90.0 | )% |
LIQUIDITY
We had negative working capital as at March 31, 2007 of $1,276,918. We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash on hand, cash provided by operations, deposits received and possible future public and private equity offerings. We evaluate possible acquisitions of, or investments in, businesses that our complementary to ours, which transactions may require the use of cash. We believe that our cash, other liquid assets, operating cash flows, credit arrangements, access to equity capital markets, taken together, provide adequate resources to fund ongoing operating expenditures. In the event that they do not, we may require additional funds in the future to support our working capital requirements or for other purposes and may seek to raise such additional funds through the sale of public or private equity as well as other sources.
CASH FLOWS FROM OPERATING ACTIVITIES:
For the three months ended March 31, 2007, net cash flows used in operating activities was $106,743 primarily resulting from a increase in net loss and decrease in accounts payable, accrued liabilities, other liabilities and deposits received offset by decrease in deposits paid, prepaid expenses and other current assets. For the three months ended March 31, 2006 net cash flows provided by operating activities was $161,030 primarily resulting from a decrease in deposits paid and a decrease in accrued expenses, other liabilities and deposits received.
CASH FLOWS FROM INVESTING ACTIVITIES:
For the three months ended March 31, 2007, there were no investing activities.
CASH FLOWS FROM FINANCING ACTIVITIES:
For the three months ended March 31, 2007, net cash flows provided by financing activities was $38,611as compared to $387,064 for the same period in 2006. The cash inflows were mainly provided by advances from certain affiliates.
EXPECTED MATERIAL CAPITAL COMMITMENTS
The Company has no material commitments for capital expenditures and has no plans or intention to purchase or sell any plant and/or other significant equipment.
EXPECTED SIGNIFICANT CHANGES IN NUMBER OF EMPLOYEES
The Company does not anticipate any significant changes in its number of employees, other than the changes that may arise during the course of normal business operations.
EFFECTS OF INFLATION
The Company believes that the effect of inflation has not been material during the periods presented. The countries in which the Metrolink Group conducts the majority of its operations, which include Hong Kong, PRC and the United States, were subject to moderate degree of inflations.
EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES
All of the Company's revenues are denominated either in U.S. dollars, Renminbi or Hong Kong dollars, while its expenses are denominated primarily in Hong Kong dollars. The value of the Hong Kong dollar-to-United States dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Although a devaluation of the Hong Kong dollar relative to the United States dollar would likely reduce the Company's expenses (as expressed in United States dollars), any material increase in the value of the Hong Kong dollar relative to the United States dollar would increase the Company's expenses, and could have a material adverse effect on the Company's business, financial condition and results of operations. The Company has never engaged in currency hedging operations but will continue to monitor its foreign exchange exposure and market conditions to determine if hedging is required.
| ITEM 3. | CONTROLS AND PROCEDURES |
(a) Evaluation of disclosure controls and procedures. We maintain controls and procedures designed to ensure that information required to be disclosed in the 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 Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed as of the period covered by this report, our chief executive officer and the principal financial officer concluded that our disclosure controls and procedures were inadequate to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. We are developing a plan to ensure that all information will be recorded, processed, summarized and reported on a timely basis. This plan is dependent, in part, upon reallocation of responsibilities among various personnel, possibly hiring additional personnel and additional funding. It should also be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
(b) Changes in internal controls. Other than as mentioned above, there were no changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief executive officer and principal financial officer.
PART II -- OTHER INFORMATION
Lang, et al. v. Welch, et al. (China Entertainment Group, Inc.) (United States District Court, Central District California, Case No. CV 07-1068-GHK-PJWx). On December 20, 2006, plaintiffs Sanford Lang and Martin Goldrod (collectively, “Plaintiffs”) initiated a lawsuit in the Los Angeles Superior Court, Central District, alleging claims for fraud, breach of contract, violations of RICO, and civil conspiracy against several parties, including the Company. The Company was provided with a copy of Plaintiffs’ Complaint on or about February 28, 2007, after the matter was removed to United States District Court. According to the Complaint, the Company is “a nominal Defendant” as Plaintiffs purport to assert claims derivatively on its behalf. Accordingly, it appears that no relief is being sought against the Company itself. On or about January 31, 2008, Plaintiffs and Defendants, including the Company, entered into a confidential settlement agreement to resolve all claims pending between them. . Subject to satisfactory discharge of certain obligations as set forth in the confidential settlement agreement, it is anticipated that a dismissal of the action will be filed no later than early January 2009.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS |
None.
There were no changes to the procedures by which security holders may recommend nominees to our board of directors.
Exhibit Number | Description |
| 2.1 | Share Exchange Agreement dated November 17, 2004 by and among, inter alia, the Registrant, Metrolink Pacific, and the shareholders of Metrolink Pacific (1) |
| 3.1(i) | Certificate of Amendment to Articles of Incorporation (1) |
| 3.1(ii) | Articles of Amendment of Articles of Incorporation(2) |
| 3.1(iii) | Articles of Incorporation (3) |
| 3.1(iv) | Articles of Merger (3) |
| 3.2 | Bylaws(3) |
| 31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Chief Accounting Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of the Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(1) Incorporated by reference from the Company's Schedule 14C Information Statement filed on November 30, 2004.
(2) Incorporated by reference from the Company's Form 10-QSB Quarterly Report filed on October 23, 2001.
(3) Incorporated by reference from the Company's Registration Statement on Form 10-SB filed on January 19, 2000.
[SIGNATURES PAGE FOLLOWS]
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | CHINA ENTERTAINMENT GROUP, INC. | |
| | | | |
| By: | /s/ Tang Chien Chang | |
| | | Tang Chien Chang | |
| | | Chief Executive Officer | |
