China Century Dragon Media (CCDM) 10-Q/A 2010 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

Amendment No. 1

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2010
OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission File No. 000-53021

China Century Dragon Media, Inc.

 (Exact name of Registrant as specified in its charter)

Delaware	26-1583852
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Room 801, No. 7, Wenchanger Road, Jiangbei, Huizhou City, Guangdong Province, China

 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

0086-0752-3138789

 (COMPANY’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark 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 preceding 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 o

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 o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Accelerated filer  ¨
Non-accelerated filer  x	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x

The number of shares outstanding of the registrant’s Common Stock, par value $0.0001 per share, was 25,312,838 as of August 13, 2010.

EXPLANATORY NOTE

China Century Dragon Media, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (“Amendment No. 1”) to amend its Quarterly Report on Form 10-Q for the three and six months ended June 30, 2010, originally filed on August 16, 2010 (the “Original Filing”), to amend in their entirety Items 1, 2 and 4 of Part I and Item 6 of Part II. Subsequent to the filing of the Original Filing and as reported on a Form 8-K filed with the SEC on September 30, 2010, management determined that our financial statements 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. This report contains the restated financial statements as of and for the six months ended June 30, 2010.  Additionally, this report contains a revised management’s evaluation of the Company’s disclosure controls and procedures as of June 30, 2010.

This Amendment No. 1 amends only the items of the Original Filing as specified above and amends those items solely to reflect the changes described above, and all other portions of the Company’s Original Filing remain in effect and have not been amended to reflect events and developments since the original August 16, 2010 filing date.  In accordance with Rule 12b-15 of the Exchange Act, this Amendment No. 1 on Form 10-Q sets forth the complete text of Items 1, 2 and 4 of Part I and Item 6 of Part II of the Registrant’s Form 10-Q for the period ended June 30, 2010, and also includes new Rule 13a-14(a) and Rule 13a-14(b) certifications as Exhibits 31.1, 31.2, and 32.1. 

1

 

CHINA CENTURY DRAGON MEDIA, INC.

FORM 10-Q/A

For the Quarterly Period Ended June 30, 2010

INDEX

Part I	Financial Information
	Item 1.	Financial Statements	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 4.	Controls and Procedures	17
Part II	Other Information
	Item 6.	Exhibits	19
Signatures			20

2

 

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

China Century Dragon Media, Inc. and Subsidiaries

Consolidated Balance Sheets

	June 30, 2010		December 31, 2009
	(Unaudited)
	(Restated)
Assets
Current Assets
Cash and cash equivalents	$	2,586,766	$	654,831
Accounts receivable, net		13,527,382		5,433,776
Accounts receivable – discontinued operations		4,551,041
Advances for advertising slots		7,100,936		7,589,725
Total current assets		27,766,125		13,678,332
Property and equipment, net		29,614		31,900
Capitalized television costs – discontinued operations		-		6,821,550
Total Assets	$	27,795,739	$	20,531,782
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	1,446,716	$	885,013
Customer deposit		389,206		1,776,364
Accrued liabilities		155,210		184,341
Various taxes payable		160,011		320,712
Corporate tax payable		927,590		1,678,069
Total current liabilities		3,078,733		4,844,499
Due to Related parties		735		-
Total current liabilities		3,079,468		4,844,499
Equity
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares outstanding at June 30, 2010 and December 31, 2009, respectively		-		-
Common Stock $0.0001 par value, 100,000,000 shares authorized, 25,312,838 shares issued and outstanding at June 30, 2010 and 19,100,000 shares issued and outstanding at December 31, 2009, respectively		2,531		1,910
Additional paid-in capital		5,165,060		680,440
Accumulated other comprehensive income		444,874		333,533
Statutory surplus reserve fund		790,138		790,138
Retained earnings (unrestricted)		18,313,668		13,881,262
Total stockholders' equity		24,716,271		15,687,283
Total Liabilities & Equity	$	27,795,739	$	20,531,782

See accompanying notes to the Consolidated Financial Statements.

3

 

China Century Dragon Media, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
							(Restated)
Revenue	$	23,765,363		$	12,373,912		$	44,169,980		$	23,759,761
Cost of Goods Sold		(19,128,507	)		(10,062,665	)		(35,394,129	)		(19,393,434	)
Gross Profit		4,636,856			2,311,247			8,775,851			4,366,327
General and administrative
Selling Expenses		744,726			485,391			1,350,724			902,059
General and administrative		1,257,680			122,966			1,438,234			244,256
Depreciation of equipment		2,693			2,188			5,223			4,297
Total operating expenses		2,005,099			610,545			2,794,181			1,150,612
Income from operations		2,631,757			1,700,702			5,981,670			3,215,715
Other expense		(6,331	)		-			(6,331	)		-
Interest income		558			721			891			1,384
Income from continuing operations before income taxes		2,625,984			1,701,423			5,976,230			3,217,099
Income taxes		(929,055	)		(425,356	)		(1,778,775	)		(804,279	)
Income from continuing operations		1,696,929			1,276,067			4,197,455			2,412,820
Income from discontinued operations, net of taxes of $78,317		-			-			234,951			-
Net income	$	1,696,929		$	1,276,067		$	4,432,406		$	2,412,820
Other Comprehensive Income (Loss)
Foreign currency translation adjustment		38,748			(26,209	)		111,341			(34,769	)
Comprehensive Income	$	1,735,677		$	1,249,858		$	4,543,747		$	2,378,051
Earnings per share from continuing operations
Basic earnings per share	$	0.07		$	0.07		$	0.20		$	0.13
Diluted earnings per share	$	0.07		$	0.07		$	0.19		$	0.13
Earnings per share from discontinued operations
Basic earnings per share	$	-		$	-		$	0.01		$	-
Diluted earnings per share	$	-		$	-		$	0.01		$	-
Total earnings per share
Earnings per share - Basic	$	0.07		$	0.07		$	0.21		$	0.13
Earnings per share - Diluted	$	0.07		$	0.07		$	0.20		$	0.13
Weighed-average shares outstanding, Basic		23,332,923			19,100,000			21,228,154			19,100,000
Weighed-average shares outstanding, Diluted		24,752,256			19,100,000			22,647,487			19,100,000

See accompanying notes to the Consolidated Financial Statements.

4

China Century Dragon Media, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

For the Six Months Ended June 30, 2010

	Capital share				Additional  Paid-in			Statutory  Reserve		Accumulated  Other Comprehensive		Retained  Earnings		Total Stockholders'
	Share		Amount		Capital			Fund		Income		(Unrestricted)		Equity
Balance, December 31, 2009		19,100,000		1,910		630,440			790,138		333,533		13,881,262		15,637,283
Retention of 2,646,000 shares held by original SRKP 25 shareholders		2,646,000		265		(265	)		-		-		-		-
Issuance of 3,566,838 shares at $1.50 per share in private offering, net of offering costs		3,566,838		356		4,534,885			-		-		-		4,535,241
Foreign currency translation adjustment		-		-		-			-		111,341		-		111,341
Net income for the six months ended June 30, 2010 (Unaudited)		-		-		-			-		-		4,432,406		4,432,406
Balance, June 30, 2010 (Unaudited)		25,312,838	$	2,531	$	5,165,060		$	790,138	$	444,874	$	18,313,668	$	24,716,271

See accompanying notes to the Consolidated Financial Statements.

5

China Century Dragon Media, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	For the Six Months Ended June 30,
	2010			2009
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities	(Restated)
Net Income	$	4,432,406		$	2,412,820
Gains from discontinued operations		(313,268	)
Adjustments to reconcile net income to net cash provided by(used in) operating activities:
Depreciation		5,223			4,297
Changes in operating assets and liabilities:
Account receivable-trade		(8,093,606	)		1,386,449
Advances for advertising slots		497,584			2,507,161
Accounts payable and accrued liabilities		370,259			1,463,365
Customer deposits		(1,389,216	)		1,175,611
Corporate income tax payable		(752,424	)		(437,721	)
Cash provided by (used in) operating activities –continued operations		(5,243,042	)		8,511,982
Cash provided by (used in) discontinued operations		2,597,979			(4,090,800	)
Net cash provided by (used in) operating activities		(2,645,063	)		4,421,182
Cash Flows From Investing Activities
Cash paid for equipment additions		(2,902	)		(2,159	)
Net cash used in investing activities		(2,902	)		(2,159	)
Cash Flows From Financing Activities
Net proceeds from sale of common stock		4,535,241			-
Cash received from related parties		525,672			-
Cash paid to related parties		(524,937	)		-
Net cash provided by financing activities		4,535,976			-
Effect of exchange rate changes on cash		43,924			(12,734	)
Net increase (decrease) in cash and cash equivalents		1,931,935			4,406,289
Cash and cash equivalents, beginning of year		654,831			1,219,894
Cash and cash equivalents, end of period	$	2,586,766		$	5,626,183
Supplemental disclosure information:
Income taxes paid	$	929,877		$	1,243,409
Interest paid	$	-		$	-

See accompanying notes to the Consolidated Financial Statements.

6

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of China Century Dragon Media, Inc. (the “Company” or “CD Media”) have been prepared in accordance with accounting principles generally accepted in the United States of America and rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2009 contained in CD Media’s registration statement on Form S-1/A filed with the SEC on June 29, 2010. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements have been omitted.

The financial statements reflect China Century Dragon Media, Inc. (“CD Media”, or “the Company”) and its wholly-owned subsidiaries CD Media (Holding) Co., Limited ("CD Media BVI"); and CD Media (HK) Limited; Huizhou CD Media Co., Ltd ("CD Media HZ") . In addition, Beijing CD Media advertisement Co., Ltd ("CD Media Beijing")  is consolidated as a variable interest entity (VIE) due to certain contracts that convey substantially all of the economic benefits to our wholly-owned subsidiary Huizhou CD Media Co., Ltd. All of the revenue is generated in the People’s Republic of China through this VIE arrangement.

On April 30, 2010, the Company completed the Share Exchange with CD Media BVI, the shareholders of CD Media BVI, CD Media HZ and CD Media Beijing. At the closing, CD Media BVI became a wholly-owned subsidiary of the Company and 100% of the issued and outstanding securities of CD Media BVI were exchanged for securities of the Company. An aggregate of 19,100,000 shares of common stock were issued to the shareholders of CD Media BVI and their designees. Prior to the closing of the Share Exchange, the stockholders of the Company agreed to the cancellation of an aggregate of 4,450,390 shares and 5,677,057 warrants to purchase shares of common stock held by them such that there were 2,646,000 shares of common stock and warrants to purchase 1,419,333 shares of common stock owned by them immediately before the Share Exchange. Each member of the Company’s board of directors prior to the Share Exchange resigned in full and appointed Li Hui Hua and Fu Hai Ming to the board of directors of the Company, with Li Hui Hua serving as Chairman. The Board also appointed Li Hui Hua as the Company’s Chief Executive Officer and Zhang Le as the Company’s Chief Financial Officer and Corporate Secretary. Each of these executives and directors were executives and directors of CD Media BVI and/or its subsidiaries.

The warrants have an exercise price of $0.0001 per share and are currently exercisable. According to the terms of the warrants, the warrants expire on the earlier of December 17, 2017 or five years from the date that the Company consummates a merger or other business combination with an operating business or any other event pursuant to which the Company ceases to be a “shell company,” as defined by Rule 12b-2 under the Securities Exchange Act of 1934 and a “blank check company,” as defined by Rule 419 of the Securities Act of 1933. As a result of the close of the Share Exchange on April 30, 2010, the warrants will expire on April 30, 2015.

The transaction has been treated as a recapitalization of CD Media BVI and its subsidiaries, with China Century Dragon Media, Inc. (the legal acquirer of CD Media BVI and its subsidiaries, including the consolidation of the VIE Beijing CD Media Advertisement Co., Ltd.) considered the accounting acquiree, and CD Media BVI whose management took control of China Century Dragon Media, Inc. (the legal acquiree of CD Media BVI) considered the accounting acquirer. The Company did not recognize goodwill or any intangible assets in connection with the transaction. All costs related to the transaction are being charged to operations as incurred. The 19,100,000 shares of common stock issued to the shareholders and designees of CD Media BVI in conjunction with the Share Exchange have been presented as outstanding for all periods. The historical consolidated financial statements include the operations of the accounting acquirer for all periods presented.

NOTE 2.

The Company invests in film and television series projects. In March 2010, we sold the two TV series and reported the transactions in our continuing operations. Upon further analysis, we have determined that we have no other investments in television or film projects and we do not plan to invest in any similar projects in the near future. As a result, we have divested this entire component of the company and, consequently, these transactions should have been reported as discontinued operations.  

The accompanying financial statements have been restated to present the revenues and costs associated with the sale of the television and animation series as discontinued operations. In addition, the capitalized television costs and accounts receivable from the sale of the two television series have been reported as assets related to discontinued operation.  Prior year financial statements have been reclassified to be consistent.

 The following table reflects 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 cost - 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

NOTE 3. FOREIGN CURRENCY TRANSLATION

The exchange rates used for foreign currency translation were as follows (USD$1 = RMB):

Period Covered	Balance Sheet  Date Rates		Average  Rates
Year ended December 31, 2009		6.83574		6.82082
Six month ended June 30, 2010		6.80860		6.83474
Six month ended June 30, 2009		6.84480		6.84323

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The exchange rates used for foreign currency translation were as follows (USD$1 = HKD):

Period Covered	Balance Sheet  Date Rates		Average  Rates
Year ended December 31, 2009		7.76759		7.75194
Six month ended June 30, 2010		7.78470		7.77167
Six month ended June 30, 2009		7.75040		7.75304

NOTE 4. DISCONTINUED OPERATION

On March 21, 2010, CD Media Beijing entered into an agreement to sell its entire interest in two television series to an unaffiliated third party for RMB 35,175,000 (approximately $5,145,000). Since we don’t plan to reenter the television series business in short term, we record the transaction as disposal of discontinued operations. The selling price minus the costs and associated taxes is reported as gain from disposal of discontinued operations, net of income taxes.

The prior year cost related to the two television series was capitalized and reclassified as “capitalized television costs – discontinued operation.”

CD Media Beijing evaluated the unamortized film production costs for impairment as of December 31, 2009 and determined that no impairment existed related to capitalized film costs.

NOTE 5. RELATED PARTY BALANCE AND TRANSCATIONS

Ms. Hailan Zhang, a stockholder of the Company, had an ending advance balance to the company of USD735 in the second quarter of 2010. The shareholder loan is free of interest with no maturity date.

NOTE 6. INCOME TAX

CD Media HZ was established in Huizhou, PRC, and was entitled to a preferential Enterprise Income Tax (”EIT”) rate. CD Media HZ had applied for foreign investment Enterprise title, subject to tax at a statutory rate of 25%.

CD Media Beijing is governed by the Income Tax Law of the PRC concerning the private-run enterprises, which are generally subject to tax at a statutory rate of 25%on income reported in the statutory financial statements after appropriate tax adjustments .

The effective tax rate for the Company for the six months ended June 30, 2010 and 2009 was 29.5% and 25%, respectively.

NOTE 7. COMMON STOCK WARRANTS

Since the inception of SRKP 25, the shareholders of SRKP 25 held an aggregate of 7,096,390 warrants. Immediately prior to the closing of the share exchange on April 30, 2010, the shareholders agreed and canceled an aggregate of 5,677,057 warrants. Immediately after the Share Exchange and the cancellation, the shareholders held an aggregate of 1,419,333 warrants.

A summary of the Company’s warrant activities for the six months ended June 30, 2010 and year ended December 31, 2009 is as follows:

	Warrants		Average Exercise Price
Balance December 31, 2009		7,096,390	$	0.0001
Forfeited/canceled		5,677,057	$	0.0001
Balance June 30, 2010		1,419,333		0.0001

NOTE 8. EARNINGS PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of shares outstanding during the period.

8

Diluted net income per share is computed by using the weighted-average number of shares of common stock outstanding and, when dilutive, potential shares from warrants to purchase common stock, using the treasury stock method.

The following table illustrates the computation of basic and dilutive net income per share and provides a reconciliation of the number of weighted-average basic and diluted shares outstanding:

	June 30,  2010		June 30,  2009
Net income attributable to China Century Dragon Media, Inc.	$	4,432,406	$	2,412,820
Denominator:
Basic weighted-average shares outstanding		21,228,154		19,100,000
Effect of dilutive warrants		1,419,333		-
Diluted weighted-average shares outstanding		22,647,487		19,100,000
Net income per share:
Basic	$	0.21	$	0.13
Diluted	$	0.20	$	0.13

9

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion relates to the financial condition and results of operations of China Century Dragon Media, Inc (the “Company”) and its subsidiaries, including its wholly-owned subsidiary, Huizhou CD Media Co., Ltd., a company incorporated under the laws of the People’s Republic of China (“CD Media Huizhou”) and CD Media Advertisement Co., Ltd., a company incorporated under the laws of the People’s Republic of China, (“CD Media Beijing”), which is an entity controlled by CD Media Huizhou, through a series of contractual arrangements.  See the notes to the financial statements of this report for more information on our organization and ownership structure.

Forward-Looking Statements

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes, and the other financial information included in this Quarterly Report.

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. All statements other than historical facts contained in this report, including statements regarding our future financial position, capital expenditures, cash flows, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “anticipated,” “believe,” “expect, “plan,” “intend,” “seek,” “estimate,” “project,” “could,” “may,” and similar expressions are intended to identify forward-looking statements.  Such statements reflect our management’s current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation: our dependence on China Century Television (“CCTV”); our ability to continue obtaining advertising time slots aired on CCTV; the continued strong market position and national coverage of CCTV channels; CCTV’s continuing to use third party agencies to sell advertising time; our dependence on a limited number of suppliers for our advertising time; our lack of long-term contracts with our customers; our ability to adapt to changing advertising trends and preferences of advertisers, television channels and viewers; our limited ability to adjust the fees we charge for our services; our ability to purchase advertising time from satellite and regional television networks; our ability enter into new advertising media platforms; exposure to People’s Republic of China (the “PRC”) governmental actions regarding the advertising content of our clients; exposure to intellectual property claims from third parties; our ability to raise additional capital to fund our operations; expected growth in consumer spending, average income levels and advertising spending levels; changes in the laws of the PRC that affect our operations and our corporate structure; inflation and fluctuations in foreign currency exchange rates; our ability to obtain all necessary government certifications, approvals, and/or licenses to conduct our business; and the cost of complying with current and future governmental regulations and the impact of any changes in the regulations on our operations. Many of these risks and uncertainties are beyond our control. Actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated should one or more of these risks or uncertainties occur or if any of the risks or uncertainties described elsewhere in this report occur. Consequently, all of the forward-looking statements made in this filing are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Overview

Through CD Media Beijing, we are engaged in the promotion, sale and marketing of advertising packages on China television stations. We typically purchase advertising time packages that air on CCTV-1, CCTV-2 and CCTV-3, three of the main channels of CCTV, the state television station of the PRC, which we repackage and sell to our customers.  Currently we obtain almost all of our advertising time from third parties that act as agents for the sale of advertising time slots by CCTV.  During the six months ended June 30, 2010, we obtained a very small amount of advertising time directly from CCTV.

Our advertising business includes securing all or a portion of advertising time and other advertising rights, which include soft advertising, such as sponsorship, on a specific television channel or program.  We derive revenues in these cases from selling the advertising media resources that we have acquired to advertisers. 

10

Recent Events

Share Exchange

We entered into an amended and restated share exchange agreement effective April 23, 2010, with CD Media BVI, CD Media Huizhou, CD Media Beijing, and the shareholders of CD Media BVI pursuant to which the shareholders of CD Media BVI would transfer all of the issued and outstanding securities of CD Media BVI to us in exchange for 19,100,000 shares of our common stock (the “Share Exchange”).  On April 30, 2010, the Share Exchange closed and CD Media BVI became our wholly-owned subsidiary.  Upon the closing of the Share Exchange, we immediately changed our name from “SRKP 25, Inc.” to “China Century Dragon Media, Inc.” A total of 19,100,000 shares were issued to the former shareholders of CD Media BVI and their designee.  Prior to the closing of the Share Exchange and the closing of the Private Placement (described below), the our stockholders prior to the Share Exchange (the “Original Stockholders”) agreed to the cancellation of an aggregate of 4,450,390 shares and 5,677,057 warrants to purchase shares of common stock held by them such that there were 2,646,000 shares of common stock and warrants to purchase 1,419,333 shares of common stock owned by them immediately after the Share Exchange and Private Placement. The warrants are currently exercisable and expire on April 30, 2015.  We paid a $215,750 success fee to WestPark Capital for services provided in connection with the Share Exchange, including coordinating the share exchange transaction process, interacting with principals of the shell corporation and negotiating the definitive purchase agreement for the shell, conducting a financial analysis of CD Media BVI, conducting due diligence on CD Media BVI and its subsidiaries and managing the interrelationships of legal and accounting activities.  

Pursuant to the terms of the Share Exchange and a Registration Rights Agreement entered into with each of the Original Stockholders, we agreed to register all of the 2,646,000 shares of common stock and all of the 1,419,333 shares of common stock underlying the 1,419,333 warrants held by the Original stockholders, all of which were outstanding immediately prior to the closing of the Share Exchange.  These shares will be included in a subsequent registration statement (the “Subsequent Registration Statement”) that we intend to file on or about November 24, 2010 (the “Required Filing Date”).  We agreed to use reasonable efforts to cause the Subsequent Registration Statement to become effective within one hundred fifty (150) days after the Required Filing Date or the actual filing date, whichever is earlier, or one hundred eighty (180) days after the Required Filing Date or the actual filing date, whichever is earlier, if such Subsequent Registration Statement is subject to a full review by the SEC (the “Required Effectiveness Date”). If we fail to file the Subsequent Registration Statement by the Required Filing Date or if it does not become effective on or before the Required Effectiveness Date we are required to issue, as liquidated damages, to each of the original SRKP 25 stockholders shares (the “Penalty Shares”) equal to a total of 0.0333% of their respective shares for each calendar day that the Subsequent Registration Statement has not been filed or declared effective by the SEC (and until the Subsequent Registration Statement is filed with or declared effective by the SEC), as applicable.   However, no Penalty Shares shall be due to the Original Stockholders if we are using our best efforts to cause the Subsequent Registration Statement to be filed and declared effective in a timely manner.

Private Placement

In addition, on April 30, 2010, concurrently with the close of the Share Exchange, we closed a private placement of shares of our common stock.  Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 3,566,838 shares of common stock at $1.50 per share (the “Private Placement”).  As a result, we received gross proceeds in the amount of approximately $5.35 million.

Factors Affecting Our Results of Operations

Material underlying drivers of our ability to maintain and increase our level of revenues include the unit advertising price that we are able to charge our customers, the overall volume of advertising time sold, and enhancement of our portfolio of advertising time.  Our business, results of operations and financial condition are significantly affected by a number of factors and trends, including:

Ability to Obtain High Quality Advertising Time Slots on Favorable Terms

We depend on the high quality advertising time slots we obtain from third party providers for airing on CCTV for our advertising services. Most of our revenues for our advertising services are derived from the advertising time slots we obtain from these providers. Our ability to continue to obtain our existing advertising time slots and to add additional high quality advertising time slots will have a significant effect on our results of operations.

The quality of advertising time slots available to us is measured based on the perceived effectiveness of advertisements placed during such time slots, which is in turn affected by the ratings and the geographical and demographic coverage of the relevant television programs. Our results of operations will be affected by any changes with respect to the popularity, rating or coverage of the television programs during which our advertising time slots occur.

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           Our profitability also depends on the price of advertising time slots charged to us by these third party providers. These providers have been increasing the prices for many of their advertising time slots in recent years, and we expect that they will continue to raise such prices in the future. Our profit margin may be affected if we are not able to obtain the rights to these advertising time slots on favorable terms or pass on the increasing costs to our clients. If any other advertising agency is able to obtain such high quality advertising time slots on terms more favorable than ours, we may lose our clients and our revenues may decline.

Ability to Increase the Size, Quality and the Level of Diversification of Our Advertising Client Base

We compete for the advertising spending of advertisers with other advertising agencies, including both international advertising agencies and domestic Chinese advertising agencies, some of which are also our clients. From time to time these agencies introduce their clients to us, primarily due to our rights over certain advertising time slots on CCTV. We plan to continue to attract new business from potential clients, as well as to gain more business from our existing corporate clients, by increasing our sales efforts and by seeking opportunities to provide these clients with additional services. We will continue to improve the size, quality and level of diversification of our client base, leveraging the high quality advertising time slots we have obtained.

Level of Advertising Spending

Demand for our services and, as a result, growth in our revenues are driven by overall advertising spending in China, which is influenced by the pace of overall economic growth. We expect that the overall economic growth in China will contribute to an increase in advertising spending by international and domestic brand names looking to reach a growing consumer market.

In addition, the demand for our services is affected by the level of television advertising spending in China, which is in turn affected by the popularity of television programs in China and advertisers’ perceptions regarding the effectiveness of television advertising.  Television advertising also competes with other advertising media, such as billboards, Internet, mobile phones and out-of-home advertising networks. 

Aside from fluctuations in the level of advertising spending resulting from changes in the overall economic and market conditions in China, our revenues are affected by seasonal fluctuations in consumer spending that also affect the level of advertising spending over time in China. The first and forth quarters of each year are expected to be stronger seasons for the Chinese advertising industry in general. As a result, our quarterly results of operations may fluctuate significantly from period to period.

Revenues

Substantially all of our revenues are derived from reselling blocks (or slots) of advertising time on several popular television channels of CCTV. We typically acquire this advertising time in large blocks from certain advertising agencies that work directly with CCTV. We repackage these large blocks into smaller time slots and sell these smaller slots to advertising agencies or other companies. Our pricing depends on the quality, ratings and target audience of the relevant television programs where the advertisements will be broadcast, the sales prices of our competitors, general market conditions and market demand. We recognize the revenue ratably over the broadcast period, which is normally one to three weeks.

Cost of Revenues

We purchase blocks of advertising time on certain CCTV programs for a negotiated fee. Part or all of the fees is paid in advance and we recognize this cost, as our cost of goods sold, at the same time that we recognize the related revenue, which is ratably over the broadcast periods. The broadcast period typically ranges from one to three weeks and represents substantially all of our cost of goods sold.

Sales and Marketing Expenses

Our sales and marketing expenses consist primarily of salaries and benefits for our sales and marketing personnel, office rental expenses directly related to our sales and marketing activities, traveling expenses incurred by our sales personnel and promotional and entertainment expenses. Our sales personnel receive performance-based compensation and we market our services primarily through the efforts of our sales and marketing personnel. We expect selling and marketing expenses to increase as we expand our sales force.

 

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General and Administrative Expenses

Our general and administrative expenses primarily consist of salaries and benefits for our management, accounting and administrative personnel, professional service fees, office rental and maintenance expenses directly related to our general office administration activities, depreciation of office equipment, other administrative expenses and allowances for doubtful accounts. We expect our general and administrative expenses to increase as we hire additional personnel, improve our corporate infrastructure and incur additional costs to meet the requirements of being a public company in the U.S.

PRC Business Tax and Related Surcharges

Our PRC subsidiaries, CD Media Huizhou and CD Media Beijing, are required to pay business tax at a rate of 5.0%, and related surcharges at a rate of approximately 3.0%, on our gross profit from providing advertising services. Under the PRC tax law, business tax is levied on the net amount of total advertising revenues less media fees paid to the media providers.

Critical Accounting Policies and Estimates

We prepare our combined financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities as of the date of our financial statements and our revenues and expenses during the financial reporting period. Our estimates and assumptions are based on available information and our historical experience, as well as other estimates and assumptions that we believe to be reasonable. The estimates and assumptions that form the basis for our judgments may not be readily apparent from other sources. We continually evaluate these estimates and assumptions based on the most recently available information, our own experience and other assumptions that we believe to be reasonable. Our actual results may differ significantly from estimated amounts as a result of changes in our estimates or changes in the facts or circumstances underlying our estimates and assumptions. Some of our accounting policies require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our financial statements as their application places the most significant demands on our management’s judgment. When reviewing our combined financial statements, you should take into account:

· the related judgments made by our management and other uncertainties affecting the application of these policies;

· the sensitivity of our reported results to changes in prevailing facts and circumstances and our related estimates and assumptions; and

· the risks and uncertainties described under “Risk Factors.”

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Results of Operations

The following table sets forth information from our statements of operations for the three and six months ended June 30, 2010 and 2009 (unaudited) in dollars and as a percentage of revenue:

	Three Months Ended June 30,										Six Months Ended June 30,
	2010					2009					2010					2009
Revenue	$	23,765		100	%	$	12,374		100	%	$	44,170		100	%		23,760		100	%
Cost of Goods Sold		(19,128	)	80.5	%		(10,063	)	81.3	%		(35,394	)	80.1	%		(19,394	)	81.6	%
Gross Profit	$	4,637		19.5	%	$	2,311		18.7	%	$	8,776		19.9	%		4,366		18.4	%
General and administrative
Selling Expense		745		3.1	%		485		3.9	%		1,351		3.1	%		902		3.8	%
General and administrative		1,257		5.3	%		123		1.0	%		1,438		3.3	%		244		1.0	%
Depreciation of equipment		3		*			2		*			5		*			4		*
Total operating expenses	$	2,005		8.4	%	$	610		4.9	%	$	2,794		6.3	%		1,150		4.8	%
Income from operations	$	2,632		11.1	%	$	1,701		13.7	%	$	5,982		13.5	%	$	3,216		13.5	%
Other income (expenses)		(6	)	*			-		-			(6	)	*			-		-
Interest income		*		*			*		*			*		*			1		*
Income from continuing operations before income taxes	$	2,626		11.0	%	$	1,701		13.8	%		5,976		13.5	%	$	3,217		13.5	%
Income taxes		(929	)	3.9	%		(425	)	3.4	%		(1,779	)	4.0	%		(804	)	3.4	%
Income from continuing operations	$	1,697		7.1	%	$	1,276		10.4	%	$	4,197		9.5	%		2,413		10.1	%
Income from discontinued operations		-		-			-		-			235		0.5	%		-		-
Net Income	$	1,697		7.1	%	$	1,276		10.4	%		4,432		10.0	%		2,413		10.1	%
Earnings per share from continuing operations
Basic earnings per share	$	0.07				$	0.07				$	0.20				$	0.13
Diluted earnings per share	$	0.07				$	0.07				$	0.19				$	0.13
Earnings per share from discontinued operations
Basic earnings per share	$	-				$	-				$	0.01				$	-
Diluted earnings per share	$	-				$	-				$	0.01				$	-
Total earnings per share
Earnings per share - Basic	$	0.07				$	0.07				$	0.21				$	0.13
Earnings per share - Diluted	$	0.07				$	0.07				$	0.20				$	0.13
Weighted average shares outstanding – basic		23,332,923					19,100,000					21,228,154					19,100,000
Weighted average shares outstanding – diluted		24,752,256					19,100,000					22,647,487					19,100,000

*Less than 1,000 or 0.1%

Three months ended June 30, 2010 and 2009

Revenues were $23.8 million for the three months ended June 30, 2010, an increase of $11.4 million, or 92.1%, compared to $12.4 million for the same period in 2009.  The revenue increase can be attributed to a few key factors. The general economic conditions in China improved in the second quarter of 2010 compared to the same period in 2009, which spurred our customers to spend more on television advertising time and resulted in greater demand for our advertising time on CCTV during the quarter ended June 30, 2010 as compared to the quarter ended June 30, 2009.  We sold a total of 2,821 minutes of advertising time during the three months ended June 30, 2010, as compared with 2,516 minutes in second quarter of 2009, an increase of 305 minutes or 12%. In addition, the average price per minute of the time sold in the second quarter of 2010 was $7,959, or 62% greater than the average price per minute of time sold of $4,902 in second quarter of 2009.  The increase in the average price per minute of advertising sold is due to higher demand for advertising time on CCTV channels, including an increased demand from our clients for advertising time on programs with higher viewerships for which we were able to charge more per minute sold.  During the quarter ended June 30, 2010, we expanded our client base, which resulted in purchases of approximately $18.6 million from new clients.  This increase in revenues from new clients was partially offset by the decision by some of our existing clients not to purchase advertising time in the three months ended June 30, 2010.

Cost of goods sold mainly includes the purchase price we paid for the commercial time slots on CCTV channels. For the three months ended June 30, 2010, cost of goods sold amounted to $19.1 million or 80.5% of revenues, as compared to $10 million or 81.3% of revenues, for the same period in 2009. The increase of cost of goods sold is the combined result of our sale of 305 more advertising minutes during the three months ended June 30, 2010 as compared to the three months ended June 30, 2009 and a 69.5% increase in the average cost per minute of the advertising time we purchased on CCTV, due to our vendors’ increase in the prices for advertising time charged purchased by us and to our clients’ purchase of more sought-after advertising time slots during the three months ended June 30, 2010, which are generally more expensive for us to obtain from our vendors. For the most part, we believe that we can pass the increase in prices charged by our vendors for our advertising time to our clients, however, there is no guarantee that we will able to do so in the future.

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Gross profit for the three months ended June 30, 2010 was $4.6 million, or 19.5% of revenues, an increase of $2.3 million or 100% compared to $2.3million, or 18.7% of revenues, for the comparable period in 2009. The increase in our gross profit margin for the three months ended June 30, 2010 is primarily due to the fact that we were able to pass more of the full cost of the increase in our costs to purchase advertising time to our clients. The strong demand for CCTV commercial time slots from our clients helped us maintain our margin in second quarter of 2010, as our clients were willing to pay higher prices for our advertising time as the cost of the advertising time increased.

Selling expenses were $0.7 million or the three months ended June 30, 2010, an increase of $0.2 million, or 53.4%, compared to $0.5 million for the same period in 2009.  The increase in selling expenses is mainly attributable to increased sales commission expenses of approximately $132,000, which increased along with the increase in our revenues, and the expansion of our sales force to expand our sales efforts and development of new clients. Selling-related travel expenses also increased approximately $74,000 due to our increase in selling activities to new clients during the three months ended June 30, 2010.

General and administrative expenses were $1.3 million for the three months ended June 30, 2010, an increase of $1.2 million, compared to $0.1 million for the same period in 2009. The significant increase in general and administrative expenses was largely due to expenses related to the Share Exchange and Private Placement of shares of common stock which each closed on April 30, 2010.  Due to the Share Exchange and Private Placement, we incurred increased legal fees of approximately $250,000 and accounting fees of approximately $228,000 during the three months ended June 30, 2010. In addition, we incurred increased consulting fees of $630,000 related to Share Exchange and Private Placement in the three months ended June 30, 2010. Excluding the expenses related to the Share Exchange and Private Placement, the our general and administrative expenses in the three months ended June 30, 2010 were relatively flat with general and administrative expenses in the comparable period in 2009.

Income taxes for the three months ended June 30, 2010 were $0.9 million, an increase of $0.5 million, or 118.4%, over income taxes of $0.4 million for the three months ended June 30, 2009. The increase in income taxes was primarily a result of an increase in our taxable income.  Our subsidiaries located in China, namely CD Media Huizhou and CD media Beijing, pay 25% statuary income tax on income before tax. While our other subsidiaries outside of China only incurred expenses and generated no revenue, we cannot claim any tax benefits from these expenses outside China. We paid an effective tax rate of 35.4% for the three months ended June 30, 2010 as compared to an effective tax rate of 25% during the three months June 30, 2009.

As a result of these factors, we reported net income of $1.7 million for the three months ended June 30, 2010, as compared to net income of $1.3 million for the same period in prior year, an increase of $0.4 million, or 33%.

Six Months Ended June 30, 2010 and 2009

Revenues were $44.2 million for the six months ended June 30, 2010, an increase of $20.4 million, or 85.9%, compared to $23.8 million for the same period in 2009.The increase in revenue can be attributed to few key factors. The general economic conditions in China improved in the first half of 2010 compared to the same period in 2009, which spurred our customers to spend more on television advertising time and resulted in greater demand for our advertising time on CCTV during the six months ended June 30, 2010 as compared to the six months ended June 30, 2009.  We sold a total of 5,313 minutes of advertising time during the six months ended June 30, 2010, as compared with 4,905 minutes in six months ended June 30, 2009, an increase of 408 minutes or 8.3%. In addition, the average price per minute of the time slot sold in the first six months of fiscal 2010 is $8,074, or 65.6% greater than the average price per minute of time sold of $4,875 sold in the first six months of fiscal 2009. The sale price increase in the average price per minute of advertising sold is due to higher demand for advertising time on CCTV channels, including an increased demand from our clients for advertising time on programs with higher viewerships for which we were able to charge more per minute sold.  During the six months ended June 30, 2010, we expanded our client base, which resulted in purchases of approximately $31.4 million from new clients.  This increase in revenues from new clients was partially offset by the decision by some of our existing clients not to purchase advertising time in the six months ended June 30, 2010.

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Cost of goods sold was $35.4 million for the six months ended June 30, 2010, an increase of $16 million, or 82.5%, compared to $19.4 million for the same period in 2009. Cost of goods sold mainly includes the purchase price we paid for the commercial time slots on CCTV channels.  The increase of cost of goods sold is the combined result of our sale of 408 more advertising minutes during the six months ended June 30, 2010 as compared to the six months ended June 30, 2009 and a 65.9% increase in the average cost per minute of the advertising time we purchased on CCTV, due to our vendors’ increase in the prices for advertising time purchased by us and to our clients’ purchase of more sought-after advertising time slots during the six months ended June 30, 2010, which are generally more expensive for us to obtain from our vendors.  

Gross profit for the six months ended June 30, 2010 was $8.8 million, or 19.9% of revenues, an increase of $4.4 million or 101% compared to $4.37 million, or 18.4% of revenues, for the comparable period in 2009. The increase in our gross profit margin for the six months ended June 30, 2010 is primarily due to the fact that the demand of CCTV commercial time slots is strong. We were able to increase the selling price of the time slots sold during the period at a rate slightly higher than the increased costs to obtain the commercial time.

Selling expenses were $1.4 million for the six months ended June 30, 2010, an increase of $0.4 million, or 50%, compared to $0.9 million for the same period in 2009. The increase primarily resulted from our increased sales efforts.  Sales commission and bonus expenses increased $0.2 million in the six months ended June 30, 2010 as compared to the comparable period in 2009.  Selling-related travel expenses increased $0.1 million due to our development of new clients during the six months ended June 30, 2010.

General and administrative expenses were $1.4 million for the six months ended June 30, 2010, an increase of $1.2million, or 489%, compared to $0.2 million for the same period in 2009. The significant increase in general and administrative expenses was largely due to expenses related to the Share Exchange and Private Placement of shares of common stock which each closed on April 30, 2010.  Due to the Share Exchange and Private Placement, we incurred increased legal fees of approximately $250,000 and accounting fees of approximately $228,000 during the six months ended June 30, 2010. In addition, we incurred increased consulting fees of $630,000 related to Share Exchange and Private Placement in the six months ended June 30, 2010.

Income taxes for the six months ended June 30, 2010 were $1.9 million, an increase of $1.1 million, or 130%, over income taxes of $0.8 million for the six months ended June 30, 2009. The increase in income taxes was primarily a result of an increase in our taxable income. Our subsidiaries located in China pay 25% statuary income tax on income before tax. While our other subsidiaries outside of China only incurred expenses and generated no revenue, we cannot claim any tax benefits from these expenses outside China. We paid an effective tax rate of 29.5% for the six months ended June 30, 2010 as compared to an effective tax rate of 25% during the six months June 30, 2009.

We sold our entire interest in two television series in March 2010, which resulted in a gain of $0.2 million net of applicable taxes.

Net income for the six months ended June 30, 2010 was $4.4 million, an increase of 83.7% over net income of $2.4 million for the six months ended June 30, 2009, based on the factors described above.

Liquidity and Capital Resources

We had cash and cash equivalents of approximately $2.6 million as of June 30, 2010, as compared to $0.7 million as of December 31, 2009. Our funds are kept in financial institutions located in the PRC, which do not provide insurance for amounts on deposit. Moreover, we are subject to the regulations of the PRC which restrict the transfer of cash from the PRC, except under certain specific circumstances. Accordingly, such funds may not be readily available to us to satisfy obligations which have been incurred outside the PRC.

On April 30, 2010, we received gross proceeds of approximately $5.35 million in the closing of a private placement transaction (the “Private Placement”). Pursuant to subscription agreements entered into with the investors, we sold an aggregate of 3,566,838 shares of our common stock at $1.50 per share. We paid WestPark Capital, Inc., the placement agent for the Private Placement, a commission equal to 10.0% with a non-accountable fee of 4.0% of the gross proceeds from the Private Placement. We are also retaining WestPark Capital for a period of five months following the closing of the Private Placement to provide us with financial consulting services for which we will pay WestPark Capital $4,000 per month. Out of the proceeds of the Private Placement, we paid $300,000 to Keen Dragon Group Limited, a third party unaffiliated with CD Media BVI, the Company, or WestPark Capital for services as an advisor to the Company, including assisting in preparations for the Share Exchange and the Company’s listing of securities in the United States.

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During the quarter ended March 31, 2010, Hailan Zhang, one of our stockholders loaned a total of HKD 4,063,187 ($523,333) to us.  The loan was made to provide one of our subsidiaries with working capital. We repaid the loan in full prior to June 30, 2010.  The loan was non-interest bearing and had no maturity date.  Also during the quarter ended March 31, 2010, Huabiao Lin, the legal representative of CD Media Huizhou, loaned a total of RMB 15,954 ($2,341) to us.  The loan was made to provide one of our subsidiaries with working capital. We repaid the loan in full prior to June 30, 2010.  The loan was non-interest bearing and had no maturity date.  We do not intend to engage in any related party financing in the future.

Net cash used in operating activities was $2.6 million for the six months ended June 30, 2010 compared to net cash provided by operating activities of $4.4 million for the comparable period in 2009.  The decrease in cash provided by operating activities was primarily due to an increase of accounts receivable in the amount of $8.1 million. Our payment term with our clients typically requires payment in three parts.  We require one part of the payment before the airing of the commercial, one part in the month the commercial airing is completed and the final portion in the month after the commercial is aired. The due date generally is at the end of a month. The accounts receivable balance at December 31, 2009 is lower than it is during other periods because our vendors required timely payment at the year-end for their accounting closing and we in turn required timely payment from our clients. The increased accounts receivable as of June 30, 2010 is due to an increase in monthly sales. Our sales of television advertising time almost doubled during the six months ended June 30, 2010, as compared to the six months ended June 30, 2009, with sales increasing steadily month over month in 2010.  We would expect a normal increase in our accounts receivables at June 30, 2010 to be approximately double as compared with the six months ended June 30, 2009, of approximately $5.5 million, which results in an expected increase of approximately $5.5 million in outstanding accounts receivable. Based on our collection experience, we have noticed some delays in payments at June 30, 2010.  However, this does not appear to be a general trend. In summary, the increase in accounts receivable is a combination of a sales increase and slightly late payments by our customers.

Corporate tax payable was $0.8 million lower and customer deposits fell $1.4 million during the six months ended June 30, 2010. The balance for customer deposits had a higher balance at year-end of 2009 because CCTV demanded a deposit before airing commercials and we in turn required our customers to place deposits with us. We also sold our interest in two television series during the six months ended June 30, 2010. The sales have an installment payment term that last for a year and we have been collecting these payments on time according to the schedules specified by the sale agreements. The outstanding accounts receivable balance from discontinued operations is $4.6 million as of June 30, 2010.

We did not have significant cash used in investing activities for the six months ended June 30, 2010 and June 30, 2009, as we are not a capital intensive business.

Net cash provided by financing activities was $4.5 million for the six months ended June 30, 2010 as compared to $0 during the six months ended June 30, 2009, which was largely due to the Private Placement transaction that closed during the six months ended June 30, 2010.

Based upon our present plans, we believe that our working capital together with cash flow from operations and funds available to us through financing will be sufficient to fund our capital needs for at least the next 12 months.

Seasonality

Our business is seasonal in nature with the first and fourth quarters being the stronger quarters, because consumers tend to increase their spending during Chinese New Year, which occurs during the first quarter, and advertisers desire to reach consumers during that time.  But we strive to reduce the impact from seasonality by diversifying our client base and reaching out to more new clients.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 4.            CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosure.

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Based on an evaluation carried out as of the end of the period covered by this quarterly report, under the supervision and with the participation of our management, including our CEO and CFO, our CEO and CFO have concluded that, as of the end of such period, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were ineffective as of June 30, 2010 due our accounting staff’s inability to speak or read English.

Changes in internal control over financial reporting

Effective April 23, 2010, we entered into a share exchange agreement with CD Media BVI, CD Media Huizhou, CD Media Beijing, and the shareholders of CD Media BVI pursuant to which the shareholders of CD Media BVI would transfer all of the issued and outstanding securities of CD Media BVI to us in exchange for 19,100,000 shares of our common stock (the “Share Exchange”). The Share Exchange closed on April 30, 2010. Following the Share Exchange, the sole business conducted by our company is the business conducted by CD Media BVI and it subsidiaries, including CD Media Huizhou, which controls CD Media Beijing, and receives the benefits of CD Media Beijing, through a series of contractual arrangements, and certain of the officers and directors of CD Media BVI and/its subsidiaries became officers and directors of our company. Also, as a result of the Share Exchange, the internal control over financial reporting utilized by CD Media BVI prior to the Share Exchange became the internal control over financial reporting of our company.

To prevent a recurrence of the deficiency in our disclosure controls and procedures, we hired a new Chief Financial Officer on July 28, 2010 who can speak and read English fluently.

Based on the evaluation of our management as required by paragraph (d) of Rule 13a-15 of the Exchange Act, we believe that, other than the changes described above, there were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.         OTHER INFORMATION

ITEM 6.             EXHIBITS

(a) Exhibits

Exhibit Number	Description of Document
31.1	Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

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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, thereunto duly authorized.

	China Century Dragon Media, Inc.
Dated: September 29, 2010	/s/	Fu Haiming
	By:	Fu Haiming
	Its:	Chief Executive Officer
	/s/	Duan Dapeng
	By:	Duan Dapeng
	Its:	Chief Financial Officer

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