UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended: June 30, 2014.
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended: June 30, 2014.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ____________ to _____________
for the transition period from ____________ to _____________
Commission File No. 000-54769
| ChinAmerica Andy Movie Entertainment Media Co. | |||||
| (Exact name of small business issuer as specified in its charter) | |||||
| FLORIDA | 65-1170540 | ||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Tax. I.D. No.) | ||||
15500 Roosevelt Blvd., Ste. 305, Clearwater, FL 33760 | 34240 | ||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
| (941) 224-6975 | |||||
| (Registrant's Telephone Number, Including Area Code) | |||||
| 6371 Business Blvd., Ste. 200, Sarasota, FL 34240 | |||||
| (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) | |||||
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer.o | Accelerated filer. o |
Non-accelerated filer. o (Do not check if a smaller reporting company) | Smaller reporting company. þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
The number of shares outstanding of each of the issuer's classes of common equity as of July 31, 2014 is as follows:
| Class of Securities | Shares Outstanding |
| Common Stock, $0.01 par value | 125,488,400 |
ChinAmerica Andy Movie Entertainment Media Co.
BALANCE SHEETS
June 30, 2014 (unaudited) | December 31, 2013 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and Cash Equivalents | $ | 1,091,505 | $ | 286,383 | ||||
| Prepaid Expenses | 513 | - | ||||||
| Total and Current Assets | $ | 1,092,018 | $ | 286,383 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | 1,533 | $ | 758 | ||||
| Accrued Taxes | 212,800 | - | ||||||
| Related Party Payables | - | 20,500 | ||||||
| Loans from Shareholders | - | 24,616 | ||||||
| Total and Current Liabilities | 214,333 | 45,874 | ||||||
| Stockholders' Equity: | ||||||||
Common Stock, $.01 per share par value; 5,000,000,000 shares authorized; and 125,488,400 and 123,438,400 shares issued and outstanding, respectively | 1,254,884 | 1,234,384 | ||||||
| Additional Paid in Capital | (924,900 | ) | (924,900 | ) | ||||
| Accumulated Other Comprehensive Income | (15,054 | ) | - | |||||
| (Accumulated deficit) Retained Earnings | 562,755 | (68,975 | ) | |||||
| Total Stockholders' Equity | 877,685 | 240,509 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 1,092,018 | $ | 286,383 | ||||
The accompanying footnotes are an integral part of the statements.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
| Six months Ended June 30 | Three months Ended June 30 | |||||||||||||||
| US Dollars | 2014 (unaudited) | 2013 (unaudited & restated) | 2014 (unaudited) | 2013 (unaudited & restated) | ||||||||||||
| Revenue: | ||||||||||||||||
| Revenue | 983,330 | - | 160,830 | - | ||||||||||||
| Expenses: | ||||||||||||||||
| General and Administrative | 139,767 | 15,501 | 51,090 | 6,855 | ||||||||||||
| Profit (Loss) from Operations | 843,563 | (15,501 | ) | 109,740 | (6,855 | ) | ||||||||||
| Other Income | 967 | - | 738 | - | ||||||||||||
| Income Tax Expense | (212,800 | ) | 61,000 | |||||||||||||
| Net (Loss) Income | 631,730 | (15,501 | ) | 171,478 | (6,855 | ) | ||||||||||
| Foreign Currency Gain (Loss) | (15,054 | ) | - | 1,325 | - | |||||||||||
| Net Comprehensive Income (Loss) | 616,676 | (15,501 | ) | 172,803 | (6,855 | ) | ||||||||||
| Basic and Diluted Net (Loss) per share: | ||||||||||||||||
| Continuing Operations | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | ||||||||||
| Weighted average shares outstanding | 124,945,306 | 5,323,204 | 125,488,400 | 7,126,374 | ||||||||||||
The accompanying footnotes are an integral part of the statements.
STATEMENTS OF CASH FLOWS
| Six Months Ended June 30, | ||||||||
2014 (unaudited) | 2013 (unaudited and restated) | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income (Loss) | $ | 631,730 | $ | (15,501 | ) | |||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts Payable and Accrued Expenses | 213,575 | 590 | ||||||
| Prepaid and other assets | (513 | ) | - | |||||
| Net Cash Provided by (Used In) Operating Activities | 844,792 | (14,911 | ) | |||||
| Cash Flows From Financing Activities: | ||||||||
Loans from Related Parties | (24,616 | ) | 311,000 | |||||
| Issuance of Common Stock | - | 50,000 | ||||||
| Net Cash (Used In) Provided By Financing Activities | (24,616 | ) | 361,000 | |||||
| Foreign currency translation | (15,054 | ) | - | |||||
| Net Change in Cash and Cash Equivalents: | 805,122 | 346,089 | ||||||
| Cash and Cash Equivalents, beginning of period | 286,383 | 3,641 | ||||||
| Cash and Cash Equivalents, end of period | 1,091,505 | 349.730 | ||||||
| Supplemental Disclosure: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Non-Cash Financing Activities: | ||||||||
| Issuance of Common Stock for converted debt | $ | 20,500 | $ | - | ||||
The accompanying footnotes are an integral part of the statements.
June 30, 2014
(Unaudited)
NOTE 1. BUSINESS DESCRIPTION AND NATURE OF OPERATIONS
Organization
ChinAmerica Andy Movie Entertainment Media Co., was incorporated under the laws of the State of Florida on September 26, 2002. On October 11, 2012, the Company changed its operations to focus on Movie, Entertainment and Media.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Use of Estimates
In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the six month periods ended June 30, 2014 and 2013; (b) the financial position at June 30, 2013; and (c) cash flows for the six month periods ended June 30, 2014 and 2013, have been made. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates
The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information regarding the Company's significant accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 20, 2014.
Our financial statements may not be comparable to companies that comply with public company effective dates. Due to our election not to opt out of the extended transition period that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. All Amounts referenced in these Financial Statements and this Report are in US Dollars unless otherwise stated.
Cash and Cash Equivalents
The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Foreign Currency Translation. The Company addressed the effect of the exchange rate differences resulting from the translation of the financial statements held by AF Ocean Shanghai in China with an accumulated exchange rate adjustment of ($15,054) for the 6 months ended June 30, 2014. The effect of the foreign currency translation is recorded in comprehensive income.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.
Income Taxes
Beginning September 1, 2009, the Company adopted the provisions of ASC 740-10, "Accounting for Uncertain Income Tax Positions." When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of June 30, 2014, tax years 2013, 2012, 2011 and 2010 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.
Effective September 1, 2009, the Company adopted ASC 740-10, "Definition of Settlement in FASB Interpretation No. 48", ("ASC 740-10"), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term "effectively settled" replaces the term "ultimately settled" when used to describe recognition, and the terms "settlement" or "settled" replace the terms "ultimate settlement" or "ultimately settled" when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying consolidated financial statements.
Earnings Per Share
Basic earnings Per Share," per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. At June 30, 2014 and June 30, 2013 there were no potentially dilutive securities.
Recent Accounting Pronouncements
The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to June 30, 2014 through the date these financial statements were issued.
NOTE 3. RELATED PARTY TRANSACTIONS
On January 3, 2014, ChinAmerica Andy Movie Entertainment Media Co. announced that it has finalized the formal contract with Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as "Zhong Mei Yin Shi"), a Chinese company registered in Beijing, People's Republic of China, for joint movie projects in both China and the United States. Zhong Mei Yin Shi agrees to pay a total of $1,000,000 (One Million USD) to ChinAmerica Andy Movie Entertainment Media Co. ("ChinAmerica").
As of June 30, 2014, payments totaling ($983,330) (USD) have been received though AF Ocean Investment Management Company (Shanghai Ltd.)
As of June 30, 2014 ChinAmerica paid out a total of $104,683 in management fees to AF Ocean Investment Management Company (Shanghai Ltd.).
On May 13, 2014 a loan to shareholder was repaid in full in the amount of $24,616. There are no other related party loans.
NOTE 4. COMMITMENTS AND CONTINGENCIES
Legal
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of June 30, 2014 there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations, except as noted.
Other Commitments
The Company has contractual obligations with AF Ocean Investment Management Company, of which a portion of the $6,350 monthly fee goes towards AF Ocean's rent expense.
The Company still rents office space in New York, New York on a month by month basis. The monthly rent is $300.
NOTE 5. STOCKHOLDERS' EQUITY
In January 2012 the authorized amount was increased to 500,000,000 shares of common stock and a stock split was approved at 5,000:1. On October 11, 2012, the Articles of Incorporation were amended as follows: the total authorized capital stock of the corporation was increased to five billion (5,000,000,000) shares.
On January 7, 2014, the Company issued 50,000 shares of stock to Catherine Bradaick, an employee of the company at par value of $0.01 per share in lieu of cash compensation for services rendered.
On February 19, 2014, the Company issued 2,000,000 shares of Company stock to our President in lieu of cash compensation for services rendered at par value of $0.01 per share.
As of June 30, 2014, there were 125,488,400 shares issued and outstanding.
NOTE 6. INCOME TAX
As of June 30, 2014 we had a net income before income taxes of $844,530 for the six month ended. We have accrued an estimated tax liability in the amount of $212,800. The actual amount will be determined at year ending December 31, 2014. All net operating carry forwards have been utilized.
Property consists of equipment purchased for the production of revenues:
| For the Periods Ended | ||||||||
June 30, 2014 (unaudited) | December 31, 2013 (audited) | |||||||
| Property and Equipment | $ | 2,020 | $ | 2,020 | ||||
| Less Accumulated Depreciation | $ | (2,020 | ) | $ | (2,020 | ) | ||
| Property and Equipment, Net | $ | - | $ | - | ||||
Assets are depreciated over their useful lives when placed in service. Depreciation expense was $0 for the period ended June 30, 2014 as compared to $0 for the period ended June 30, 2013.
NOTE 8 SUBSEQUENT EVENTS
As of July 17, 2014 the Company officially moved their office from Sarasota, FL to Clearwater, FL The office space is rented by AF Ocean Investment Management Company, and ChinAmerica Andy Movie Entertainment Media Co. pays a monthly management fee to AF Ocean for services provided which includes the Company's rent.
The Company has evaluated subsequent events through the date the financial statements were issued to assess the need for potential recognition or disclosure in this report. Based upon this evaluation, management determined that all subsequent events that require recognition in the financial statements have been included.
RESULTS OF OPERATION
The following discussion should be read in conjunction with our financial statements and the notes thereto.
Forward-Looking Statements
This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: , changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks," and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.
Use of Certain Defined Terms
Except as otherwise indicated by the context, references in this report to "ChinAmerica ." "we," "us," "our" and the "Company" are references to the business of ChinAmerica Andy Movie Entertainment Media Co.
Use of GAAP Financial Measures
We use GAAP financial measures in the section of this quarterly report captioned "Management's Discussion and Analysis and Results of Operation." All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.
Overview
This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.
ChinAmerica Andy Movie Entertainment Media Co., is an operating company that is focusing its efforts in movie projects, including pre-production research and strategizing, introduction of American talent and potential partners from Hollywood, California. ChinAmerica Andy Movie Entertainment Media Co. and Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as "Zhong Mei Yin Shi"), a Chinese company registered in Beijing, People's Republic of China, are working together to create movie projects in both China and the United States. We have an operating history and have generated revenues that have produced both net incomes and losses in the periods in which we have been fully operational. We are currently in discussion with parties to begin pre-production on a project utilizing facilities that are already in production mode.
We are looking to establish a CAME presence in Hengdian, China which is deemed to be the "Hollywood of China", as well as Hollywood, California. Our President, Mr. Fan, travels to various parts China and the United States of America extensively for both business and pleasure and has been working on securing the new locations. Our Board of Directors believes that we can operate as a Movie, Entertainment and Documentary Company during the next 12 months increasing revenues of the Company. However, the production of our documentaries or animated films may take years to complete and future cash flows, if any, are impossible to predict at this time. The realization value from any production or animated film is largely dependent on factors beyond our control such as the market for our films.
We may raise cash from sources other than our operations.
As of June 30, 2014, there is one (1) officer who oversees the operations of the corporation.
Critical Accounting Policies
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Our actual results could differ from those estimates.
To be as accurate with our estimates as possible, we use our historical data to forecast our future results. Deviations from our projections are addressed when our financials are reviewed on a monthly basis. This allows us to be proactive in our approach to managing our business. It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.
Management does not believe that our actual results are related to any sensitivity in estimates made by management. The year-end consistency of our results has shown that our prior year's historical data is the best projector of our future results.
Film Industry Accounitng
The Financial Accounting Standards Board (FASB) issued authoritative guidance regarding Accounting Standards Codification 926 (ASC 926) to address topics related to the film entertainment industry. As modern films today can cost and return revenues in the millions of dollars, each one needs to be accounted for with care. Further, as there are a multitude of ways films are distributed today, different rules may apply as to when revenue may be recognized for each.
The Company may enter into arrangements with third parties to co-produce many of its theatrical productions. These arrangements, which are referred to as co-financing arrangements, take various forms. The parties to these arrangements could include studio and non-studio entities, both domestic and foreign. In several of these agreements, other parties control certain distribution rights. The Filmed Entertainment segment records the amounts received for the sale of an economic interest as a reduction of the cost of the film, as the investor assumes full risk for that portion of the film asset acquired in these transactions. The substance of these arrangements is that the third-party investors own an interest in the film and, therefore, receive a participation based on the respective third-party investor's interest in the profits or losses incurred on the film. Consistent with the requirements of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 926 "Entertainment-Films" ("ASC 926"), the estimate of a third-party investor's interest in profits or losses on the film is based on total estimated ultimate revenues.
926-20-35-12 Unamortized film costs shall be tested for impairment whenever events or changes in circumstances indicate that the fair value of the film may be less than its unamortized costs. The following are examples of events or changes in circumstances that indicate that an entity shall assess whether the fair value of a film (whether completed or not) is less than its unamortized film costs:
| · | An adverse change in the expected performance of a film prior to release |
| · | Actual costs substantially in excess of budgeted costs |
| · | Substantial delays in completion or release schedules, Changes in release plans, such as a reduction in the initial release pattern. |
| · | Insufficient funding or resources to complete the film and to market it effectively |
| · | Actual performance subsequent to release failing to meet that which had been expected prior to release. |
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.
In July 2006, the Financial Accounting Standards Board ("FASB") issued Financial Interpretation ("FIN") 48, "Accounting for Uncertainty in Income Taxes" (codified primarily in FASB ASC Topic 740, Income Taxes) which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with Statement of Financial Accounting Standards ("SFAS") 109, "Accounting for Income Taxes" (codified primarily in FASB ASC Topic 740, Income Taxes). FIN 48 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We adopted FIN 48 effective January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no increase in the liability for unrecognized tax benefits.
Share-based Compensation
The Company may issue stock options whereby all share-based payments to employees, including grants of employee stock options are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company had no common stock options or common stock equivalents granted or outstanding for all periods presented.
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.
The Company may issue restricted stock for various business and administrative services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.
Results of Operations
The following tables provide a summary of the results of operations for the three and six months ended June 30, 2014 compared to the three and six months ended June 30, 2013 as well as the results of discontinued operations.
Results of Operations for the Six Months Ended June 30, 2014 and 2013
The following tables set forth key components of our results of operations and revenue for the periods indicated in dollars.
Table 1.0 Comparison of our Statement of Operations for the Six Months Ended June 30, 2014 and 2013 (unaudited)
| For the Six Months Ended June 30, | ||||||||||||
| 2014 | 2013 | % Change | ||||||||||
| Revenue | $ | 983,330 | $ | - | 100 | % | ||||||
| General and Administrative Expense | $ | 139,767 | $ | 15,501 | 8 | % | ||||||
| Income (Loss) from Operations | $ | 843,563 | $ | (15,501 | ) | (55 | %) | |||||
| Interest Income | $ | 967 | $ | - | 100 | % | ||||||
| Tax provision | $ | (212,800 | ) | $ | - | (100 | %) | |||||
| Net Income (Loss) | $ | 631,730 | $ | (15,501 | ) | (42 | %) | |||||
| Foreign Currency Gain | $ | (15,054 | ) | $ | - | (100 | %) | |||||
| Net Comprehensive Income | $ | 616,676 | $ | (15,501 | ) | (41 | %) | |||||
| Income (Loss) per share: basic and diluted | $ | 0.00 | $ | (0.00 | ) | - | ||||||
Revenue.
For the six months ended June 30, 2014, total revenue was $983,330 resulting from the contract we entered into on January 3, 2014 with Zhong Mei Yin Shi for the joint movie projects in both China and the United States as compared to $0 for the six months ended June 30, 2013.
Operating Expenses
During the six months ended June 30, 2014 operating expenses were $139,767, compared to $15,501 for the six months ended June 30, 2013. The additional expenses are due to our management agreement with AF Ocean Investment Management Company (Shanghai Ltd.) that we entered into on December 23, 2013. We pay AF Ocean Investment Management Company (Shanghai Ltd.) a management fee of ten percent (10%) of all deposits for the collection and maintenance of the funds received in the People's Republic of China on our behalf. We have contractual obligations with AF Ocean , of which a portion of the $6,350 monthly fee goes towards AF Ocean's rent expense.
Net Income (Loss).
During the six months ended June 30, 2014, we had Net Comprehensive Income of $616,676, which includes an estimated tax provision for the year ending December 2014 of $212,800 compared to a foreign currency translation loss of ($15,501) for the six months ended June 30, 2013, with no tax provision or benefit.
Table 2.0 Comparison of our Statement of Operations for the Three Months Ended June 30, 2014 and 2013 (unaudited)
| Three Months Ended June 30, | ||||||||||||
| 2014 | 2013 | % Change | ||||||||||
| Revenue | $ | 160,830 | $ | - | 100 | |||||||
| General and Administrative Expense | 51,090 | 6,873 | 6 | % | ||||||||
| Interest Income | 738 | 18 | 40 | % | ||||||||
| Income (Loss) from Operations | $ | 110,478 | $ | (6,855 | ) | (17 | %) | |||||
| Loss from Discontinued Operations | - | (6,855 | ) | 100 | % | |||||||
| Income Tax Expense | 61,000 | - | (100 | %) | ||||||||
| Net Income (Loss) | $ | 171,478 | $ | - | 100 | % | ||||||
| Income (Loss) Per Share: Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||||||
Revenue
For the three months ended June 30, 2014 total revenue was $160,830, as compared to $0 for the three months ended June 30, 2013.
Operating Expenses
During the three months ended June 30, 2014, as compared to 2013 operating expenses were $51,090 and $6,873, respectively which consist of expenses related to the current operations of the Company and the new monthly management fee payable to AF Ocean in the amount of $6,350.
Net Income (Loss)
As a result of the factors described above, we had net income of $171,478 and net loss of ($6,855) for the three months ended June 30, 2014, and 2013, respectively. Net losses for the three months ended June 30, 2013, include expenses related to discontinued operations of the retail wall bed store in 2013.
Liquidity and Capital Resources
General. As of the six months ended June 30, 2014 we had cash and cash equivalents of $1,091,505 which was an increase of $741,775 from the six months ended June 30, 2013. We believe that our cash balance is sufficient to finance our cash requirements for expected operational activities, and capital improvements through the next 12 months.
Our operating activities provided cash of $844,792 for the six months ended June 30, 2014 as compared to ($14,911) for the six months ended June 30, 2013. We received additional funding through loans from the majority shareholder. Prior to the end of our fiscal year 2013 the majority of the loans we received from our President and sole director were converted to equity in the Company and all loans to date have been repaid in full.
Cash generated in our financing activities was ($24,616) for the six months ended June 30, 2014, as compared to $361,000 during the six months ended June 30, 2013. The outstanding loan to the majority shareholder in the amount of $24,616 was repaid in full. There was a total of $20,500 in loans from related parties that was converted into common stock during the six months ended June 30, 2014.
As of June 30, 2014, current assets exceeded current liabilities.
Inflation
Inflation does not materially affect our business or the results of our operations.
Recent Accounting Pronouncements
The Company has carefully considered the new pronouncements that altered generally accepted accounting principles. The Company does not believe that any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term, other than the following as reported in our financial statements:
Off-Balance Sheet Arrangements
We do not have any off-balance arrangements.
The following discussion about the Company's market rate risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.
In general, business enterprises can be exposed to market risks, including fluctuation in the unemployment rate, foreign currency exchange rates, and interest rates that can adversely affect the cost and results of operating, investing, and financing.
In seeking to minimize the risks and/or costs associated with such activities, the Company manages exposure to changes in the unemployment rate, interest rates and foreign currency exchange rates through its regular operating and financing activities. The Company does not utilize financial instruments for trading or other speculative purposes, nor does the Company utilize leveraged financial instruments or other derivatives.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company's management, as appropriate, to allow timely decisions regarding required disclosure.
The Company's management, with the participation of our principal executive and principal financial officer evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive and principal financial officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were not effective.
Changes in Internal Controls over Financial Reporting
There was no change in the Company's internal control over financial reporting during the quarterly period covered by this report that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting.
| Exhibit No. | Description |
| 101 | Financial statements from the quarterly report on Form 10-Q of ChinAmerica Andy Movie Entertainment Media Co. for the quarter ended June 30, 2014, formatted in XBRL: (i) the Balance Sheet, (ii) the Statement of Income, (iii) the Statement of Cash Flows and (iv) the Notes to the Financial Statements. Filed herewith |
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.
| CHINAMERICA ANDY MOVIE ENTERTAINMENT MEDIA CO. | |
| Dated: July 31, 2014 | /s/ Andy Fan |
| Andy Z. Fan | |
| Principal Executive Officer |