UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 27, 2010
China Century Dragon Media, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 000-53021 | 26-1583852 |
| (Commission File Number) | (IRS Employer Identification No.) |
| Delaware | 000-53021 | 26-1583852 |
| (State or Other Jurisdiction | Commission File Number) | (IRS Employer Identification No.) |
Room 801, No. 7, Wenchanger Road, Jiangbei, Huizhou City, Guangdong Province, China
(Address, including zip code, off principal executive offices)
Registrant’s telephone number, including area code 0086-0752-3138789
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On September 27, 2010, the management of China Century Dragon Media, Inc. (the “Company”) determined that the Company’s financial statements as of and for the three months ended March 31, 2010 and as of and for the six months ended June 30, 2010 should no longer be relied upon due to an accounting error in such financial statements.
In March 2010, the Company sold its entire interest in two television series and, as a result, divested this entire component of its business. Consequently, these transactions should have been accounted for as discontinued operations. The Company’s unaudited interim financial statements as of and for the three months ended March 31, 2010 and as of and for the six months ended June 30, 2010 are being restated to present the revenues and costs associated with the sale of the television series as discontinued operations and to report the capitalized television costs and accounts receivable from the sale of the television series as assets related to discontinued operations.
The following tables reflect the impact of this restatement:
| Consolidated Balance Sheet | | | | | | | | | |
| As of June 30, 2010 | | As Reported | | | Adjustment | | | As Restated | |
| Accounts receivable, net | | $ | 18,078,423 | | | $ | (4,551,041 | ) | | $ | 13,527,382 | |
| Accounts receivable - discontinued operations | | | - | | | | 4,551,041 | | | | 4,551,041 | |
| | | | | | | | | | | | | |
| Consolidated Statements of Operations and Comprehensive Income | | | | | | | | | | | | |
| For the Six Months Ended June 30, 2010 | | As Reported | | | Adjustment | | | As Restated | |
| Revenue | | $ | 51,774,512 | | | $ | (7,604,532 | ) | | $ | 44,169,980 | |
| Cost of Goods Sold | | | (42,685,393 | ) | | | 7,291,264 | | | | (35,394,129 | ) |
| Gross Profit | | | 9,089,119 | | | | (313,268 | ) | | | 8,775,851 | |
| Income from operations | | | 6,294,938 | | | | (313,268 | ) | | | 5,981,670 | |
| Income before income taxes | | | 6,289,498 | | | | (6,289,498 | ) | | | - | |
| Income from continuing operations before income taxes | | | - | | | | 5,976,230 | | | | 5,976,230 | |
| Income taxes | | | 1,857,092 | | | | (78,317 | ) | | | 1,778,775 | |
| Income from continuing operations | | | - | | | | 4,197,455 | | | | 4,197,455 | |
| Income from discontinued operations, net of taxes of $78,317 | | | - | | | | 234,951 | | | | 234,951 | |
| Consolidated Statements of Cash Flows | | | | | | | | | |
| For the Six Months Ended June 30, 2010 | | As Reported | | | Adjustment | | | As Restated | |
| Gains from discontinued operations | | $ | - | | | $ | (313,268 | ) | | $ | (313,268 | ) |
| Accounts receivable – trade | | | (6,555,615 | ) | | | (1,537,991 | ) | | | (8,093,606 | ) |
| Capitalized television costs - discontinued operations | | | 746,720 | | | | (746,720 | ) | | | - | |
| Cash provided by (used in) - continuing operations | | | - | | | | (5,243,042 | ) | | | (5,243,042 | ) |
| Cash provided by (used in)- discontinued operations | | | - | | | | 2,597,979 | | | | 2,597,979 | |
| Consolidated Balance Sheet | | | | | | | | | |
| As of March 31, 2010 | | As Reported | | | Adjustment | | | As Restated | |
| Accounts receivable, net | | $ | 12,922,084 | | | $ | (6,077,787 | ) | | $ | 6,844,297 | |
| Accounts receivable - discontinued operations | | | - | | | | 6,077,787 | | | | 6,077,787 | |
| Consolidated Statements of Operations and Comprehensive Income | | | | | | | | | | | | |
| For the Three Months Ended March 31, 2010 | | As Reported | | | Adjustment | | | As Restated | |
| Revenue | | $ | 28,009,149 | | | $ | (7,604,532 | ) | | $ | 20,404,617 | |
| Cost of Goods Sold | | | (23,556,886 | ) | | | 7,291,264 | | | | (16,265,622 | ) |
| Gross Profit | | | 4,452,263 | | | | (313,268 | ) | | | 4,138,995 | |
| Income from operations | | | 3,663,181 | | | | (313,268 | ) | | | 3,349,913 | |
| Income before income taxes | | | 3,663,514 | | | | (3,663,514 | ) | | | - | |
| Income from continuing operations before income taxes | | | - | | | | 3,350,246 | | | | 3,350,246 | |
| Income taxes | | | 928,037 | | | | (78,317 | ) | | | 849,720 | |
| Income from continuing operations | | | - | | | | 2,500,526 | | | | 2,500,526 | |
| Income from discontinued operations, net of taxes of $78,317 | | | - | | | | 234,951 | | | | 234,951 | |
| | | | | | | | | | | | | |
| Consolidated Statements of Cash Flows | | | | | | | | | | | | |
| For the Three Months Ended March 31, 2010 | | As Reported | | | Adjustment | | | As Restated | |
| Gains from discontinued operations | | $ | - | | | $ | (313,268 | ) | | $ | (313,268 | ) |
| Capitalized television costs - discontinued operations | | | 739,280 | | | | (739,280 | ) | | | - | |
| Cash provided by (used in) - continuing operations | | | - | | | | (1,815,826 | ) | | | (1,815,826 | ) |
| Cash provided by (used in) - discontinued operations | | | - | | | | 1,052,548 | | | | 1,052,548 | |
The management of the Company has discussed with the Company’s independent registered public accounting firm the matters disclosed in this Item.
The Company intends to amend its Quarterly Report on Form 10-Q filed with the SEC on August 16, 2010 and the Current Report on Form 8-K filed with the SEC on May 6, 2010 as a result of the restatement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | CHINA CENTURY DRAGON MEDIA, INC. | |
| | | |
| | | | |
| Date: September 30, 2010 | By: | /s/ Duan Dapeng | |
| | | Name: Duan Dapeng | |
| | | Title: Chief Financial Officer | |
