UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,September 30, 2015

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number: 333-150952

China Media Inc.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (86) 298765-1114

Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days    [X] Yes    [ ] No

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-K (§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). [X] Yes    [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a 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   [X] No

As of May 14,November 16, 2015, the registrant had 39,750,000 shares of common stock outstanding.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

The unaudited interim consolidated financial statements of China Media Inc. (the “Company”, “China Media”, “we”, “our”, “us”) follow. All currency references in this report are to U.S. dollars unless otherwise noted.

CHINA MEDIA INC.

MARCH 31,SEPTEMBER 30, 2015

(UNAUDITED)

Financial Statement Index

CHINA MEDIA INC

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CHINA MEDIA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31,September 30, 2015

NOTE 1.Description of Business

China Media Inc. (the “Company”, “China Media”), formerly Protecwerx Inc., was incorporated in the State of Nevada on October 16, 2007.Nevada.

The Company does not conduct any substantive operations of its own, rather, it conducts its primary business operations through Vallant Pictures Entertainment Co., Ltd. (“Vallant”) was, its wholly owned subsidiary incorporated inunder the laws of the British Virgin Islands, on May 23, 2007.

Xi’Anwhich in turn, conducts its business through Xi’an TV Media Co. Ltd. (“Xi’An TV”). Effective control over Xi’An Media was transferred to the Company through the series of contractual arrangements without transferring legal ownership in Xi’An Media. As a result of these contractual arrangements, the Company maintained the ability to approve decisions made by Xi’An Media and was entitled to substantially all of the economic benefits of Xi’An Media.

Xi’An TV was incorporated in Xi’An, Shaan’Xi Province, People’s Republic of China (“PRC”) on March 9, 2005. Xi’An TVand is in the businessesbusiness of producing and developing television programming for the Chinese market.

On July 7, 2009, Fullead Overseas Limited, a company incorporated under the laws of the British Virgin Islands (the “Buyer”), entered into a share purchase agreement (the “Share Purchase Agreement”), pursuant to which the Buyer agreed to purchase a total of 32,500,000 shares of the Company’s common stock, representing 85% of the total issued and outstanding shares of common stock of the Company on a fully-diluted basis. Bin Li, the Company’s Director, is the owner and sole Director of the Buyer.

On September 16, 2009, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Vallant and Bin Li, the Company’s Director and the former sole shareholder of Vallant. According to the terms of the Share Exchange Agreement, the Company agreed to acquire the sole issued and outstanding common share of Vallant from Bin Li in exchange for 7,000 shares of the Company’s common stock.

On November 30, 2009, the Company closed the transactions contemplated by the Share Exchange Agreement and acquired Vallant as its wholly owned subsidiary. Vallant has entered into a series of contractual obligations with Xi’An TV as well as the holders of 62.61% of the voting shares of Xi’An TV. In December 2009, the former shareholders of Xi’An TV transferred all of their equity interests in the entity to three individuals, as a result of this change of control, Vallant and the new shareholders amended the series of contractual obligations in December 2009.

On September 17, 2010, Vallant and the holders of 100% of the voting shares of Xi’An TV further amended the various consulting agreements and equity pledge agreement dated December 28, 2009. According to the amended agreements, Xi’An TV will provide Vallant with 100% of its income. Xi’An TV shareholders now pledged 100% of their equity interests in Xi’An TV to Vallant to guarantee Xi’An TV’s performance of its obligations under the Business Operations Agreement.

In compliance with the PRC’s laws and regulations, Vallant conducts all of the business in China through Xi’An TV, a domestic Variable Interest Entity (“VIE”). It does this by controlling Xi’An TV through various consulting agreements and equity pledge agreement dated June 20, 2007, as amended on December 28, 2009 and September 17, 2010, respectively.

According to the Business Services Agreement, Vallant has the exclusive right to provide services required in the regular course of business to Xi’An TV, effectively restricting and controlling the operations of Xi’An TV. In exchange, Xi’An TV will provide Vallant with 100% (62.61% prior to September 17, 2010) of its income. Furthermore, the Business Operations agreement also states that Vallant has the right to control the appointment of the board members and senior executives of Xi’An TV.

According to the Option Agreement, Vallant has the exclusive and irrevocable right to acquire 100% of the equity interests of Xi’An TV if permitted under the PRC law. In the Equity Pledge Agreement, Xi’An TV shareholders also pledged 100% (62.61% prior to September 17, 2010) of their equity interests in Xi’An TV to Vallant to guarantee Xi’An TV’s performance of its obligations under the Business Operations Agreement.

In light of the above, Vallant has a controlling interest in Xi’An TV based on the fact that:

Upon executing the above agreements, Xi’An TV is considered a VIE and Vallant is its primary beneficiary. Xi’An TV is consolidated into the Vallant under the guidance of FASB Accounting Standards Codification (ASC) 810, Consolidation.

The Company had 39,743,000 shares of our common stock issued and outstanding before the closing of the transactions contemplated by the Share Exchange Agreement. Upon the closing of the transactions, we issued 7,000 shares of our common stock to Bin Li, our Director and the former sole shareholder of Vallant. Mr. Li is the beneficial owner of 2,000,000 additional shares of our common stock. The 7,000 shares were issued in reliance upon an exemption from registration pursuant to Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”). Upon the closing of the Share Exchange, there were 39,750,000 shares of our common stock issued and outstanding.

The share exchange is being accounted for as a reverse merger, since the former sole shareholder of Vallant, Bin Li acquired the majority of the Company’s common stock with the aim of completing the share exchange with Vallant, and Vallant is deemed to be the accounting acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the consolidated financial statements for periods prior to the Share Exchange Agreement will be those of Vallant and will be recorded at the historical cost basis. After the completion of the Share Exchange Agreement, the Company’s consolidated financial statements will include the assets and liabilities of Vallant, the historical operations of Vallant and its subsidiaries from the closing date of the Share Exchange Agreement.

NOTE 2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited interim consolidated financial statements of China Media, Inc. (“We” or the “Company”), have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual financial statements for the year ended June 30, 2014.2015 contained in the Company’s Form 10-K field on September 25, 2015. 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 for the year ended June 30, 20142015 included in this document have been omitted.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television products, estimates of product sales that will be returned and the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements and loss contingencies.

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Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are made based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis.

Recent Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis”. The amendments in the ASU provide an additional requirement for a limited partnership or similar entity to qualify as a voting interest entity and also amend the criteria for consolidating such an entity. In addition, the new guidance amends the criteria for evaluating fees paid to a decision maker or service provider as a variable interest and amends the criteria for evaluating the effect of fee arrangements and related parties on a variable interest entity primary beneficiary determination. This standard is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

NOTE 3. Related Party Transactions

Mr. Dean Li, the President and ShareholderChief Executive Office of China Media Inc.,the Company, had advanced $1,002,476 and $1,049,454$1,012,703 to the Company at March 31,June 30, 2015 and June 30, 2014, respectively.the loan was fully repaid by the Company in July 2015. The shareholder loan discussed above isloans borrowed from Mr. Dean Li are non-secured, free of interest with no specified maturity date. The imputed interests are assessed as an expense to the business operation and an addition to the paid-in-capital and calculated based on annual interest rate in the range of 5.94-6.56% with reference to one-year loan.

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On June 16, 2014, the Company and Hangzhou Yanse Advertising Production Company (“Hangzhou Yanse”) entered into an agreement in production and distribution of the film “Dan Ta”. In July 2015, the cooperation between the Company and Hangzhou Yanse was terminated. Hangzhou Yanse refunded RMB 10 million (approximately $1,643,466) to the Company for part of its investments on July 30, 2015. The remaining investment of RMB 5 million (approximately $791,402) was subsequently made to Mr. Dean Li on behalf of the Company, which was presented as Due from related party as of September 30, 2015, and received by the Company as of the filing date.

NOTE 4. Film Costs

Film costs consist of the following:

The decrease of film costs is primarily due to the termination of film “Dan Ta” that was discussed in Note 3.

NOTE 5. Notes Receivable

On March 20, 2013, the Company lent RMB 946,500 (approximately $155,000) in the form of an interest free loan to ZhongshiChina Fengde Movie and TV Copyright Agency (“Zhongshi Fengde”), one of the Company’s business partners. The Company collected RMB 530,000 ($86,305)(approximately $86,305) as of June 30, 2014. No repayment was collected during the nineyear ended June 30, 2015 and the three months ended March 31, 2015 and theSeptember 30, 2015. The outstanding balance was RMB 416,500 (approximately $68,177)$65, 551) as of March 31,September 30, 2015.

On June 13, 2014, the Company lent RMB 18M (approximately $2,931,119) to Shaan’Xi Hushi Culture Communication Company (SHCC), a company owned by a business friend of Dean Li, the President and ShareholderChief Executive Officer of China media Inc.the Company. Based on the agreement, the Company will waive interest on the loan if SHCC repays the loan within 30 days; the Company will charge interest rate at 200% of the prevailing PRC prime rate if SHCC repays the loan after 30 days. During the nine months ended March 31, 2015,In July 2014, the Company received repayment of RMB 11M (approximately $1,786,410) and Shaanxi HushiSHCC orally promised to pay off the remaining balance no later than June 30,December 31, 2015. On January 8, 2015, the Company received interest of RMB 455,000 (approximately $74,165) on the loan. The

Outstanding balance was RMB 7M (approximately $1,101,703) as of September 30, 2015.

On July 1, 2014, the Company lent an additional RMB 3M (approximately $487,203) to SHCC with three months term. Based on the agreement, the Company will waive interest on the loan if SHCC repays the loan within 30 days; the Company will charge interest rate at four times of the current bank loan rate if SHCC repays the loan after 30 days. No collection has been received as of the filing date and Shaanxi HushiSHCC orally promised to pay off the loan before June 30,December 31, 2015. On January 19, 2015, the Company received interest of RMB 360,000 (approximately $58,694) on the loan. The outstanding balance was RMB 3M (approximately $472,158) as of September 30, 2015.

On November 30, 2012, the Company entered into an agreement with Zhongshi Fengde to co-purchase copyrights of two TV series with the Company’s total investment is RMB18RMB 18 million (approximately $2.86 million)million at the time of investment). On January 28, 2015, both parties agreed to transfer the Company’s payment in these two TV series to a short-term loan to Zhongshi Fengde as the copyrights purchase was not successfully completed. Zhongshi Fengde promisedAs a result, film costs of approximately $2.83 million were reclassified to pay offnotes receivable as of September 30, 2015. No collection has been received as of the loan no later than June 30, 2015.filing date.

NOTE 6. CommitmentsInterest income for the three months ended September 30, 2015 and Contingencies2014 was 62,299 and nil, respectively, for the notes discussed above.

On January 1, 2015, the Company renewed the lease for its main office for another three years with the rent remaining unchanged. The monthly rent is RMB 11, 167 (approximately $1,816) and the lease will expire on

December 31, 2017.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.

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Results of Operations

Comparison of the ninethree months ended March 31,September 30, 2015 and 2014:

RevenuesRevenue and Cost

We had no revenuesales and cost for the ninethree months ended March 31,September 30, 2015 and 2014.

Cost of revenues

We had $0 cost of sales for the nine months ended March 31, 2015, compared to $1,614 in the same period in 2014.

Gross profit

We had a negative gross profit for the nine months ended March 31, 2014, mainly due to conversion from Business Tax to Value Added Tax (“VAT”) in Shaanxi province.  The Company reported its advertising revenue based on net amount retained as an agent, which is after VAT deduction.

Operating expenses

DuringFor the ninethree months ended March 31,September 30, 2015, our total operating expenses were $204,390,$37,021, a slight decrease of $32,288$10,395 as compared to $236,678$47,416 for the ninethree months ended March 31,September 30, 2014. The changes are relevant to payroll expenses, transportation fee, amortization expenses, etc.

Net income (loss)

Net loss8

For the ninethree months ended March 31,September 30, 2015 we incurredearned a net lossincome of $67,177.$25,278. During the same period inof 2014 we incurred a net loss of $105,614.$98. This increase was the result of decrease was primarilyin interest expense of due to the decreaserelated parties, which recorded in government subsidy income, offset by a net increase in interest income received.other expense.

Comparison of the three months ended March 31, 2015 and 2014:

Revenues and cost of revenues

We had no revenue and cost of revenue for the three months ended March 31, 2015 and 2014.

Operating expenses

During the three months ended March 31, 2015 our total operating expenses were $50,978, a decrease of $5,185 as compared to $56,163 for the three months ended March 31, 2014.

Net loss

For the three months ended March 31, 2015 we incurred a net loss of $8,284. During the same period in 2014 we incurred a net loss of $38,177.

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Liquidity and Capital Resources

The following table sets forth a summary of our cash flows for the periods indicated:

As of March 31,September 30, 2015 we had cash of $100,465$106,126 in our bank accounts and a working capital surplus of $4,879,126.$6,369,646.

For the ninethree months ended March 31,September 30, 2015, we usedreceived net cash of $1,778,434$842,420 in operating activities, compared to net cash used of $133,3751,762,734 in operating activities during the same period in fiscalof 2014. The increase in net of cash of $1,645,059$2,605,154 was mainly due to the decreasesincreases in cash paidreceived for film costs.

DuringFor the ninethree months ended March 31,September 30, 2015, we received net cash of $0 in investing activities, compared to net cash received of $1,299,207 from investing activities during the same period in fiscal 2014, including $1,786,410 collection of notes receivable and $487,203 loan made to other third party – Shann’Xi- Shaan’Xi Hushi Culture Communication Company. During the nine months ended March 31, 2014, we collected $1,022,511 of notes receivable and paid $1,022,511 as a loan to others.

During the ninethree months ended March 31,September 30, 2015, we used net cash of $54,593$799,386 in financing activities, compared to net cash received of $72,095$0 in financing activities during the same period in fiscal 2014. The decrease was mainly due to decrease in short-term loan from arepayment made to related party.parties.

Our cash level decreasedincreased by $532,781$30,514 during the ninethree months ended March 31,September 30, 2015, compared to a decrease of $60,604$463,659 in the same period of 2014.

We anticipate that we will meet our ongoing cash requirements by retaining income as well as through equity or debt financing. We plan to cooperate with various individuals and institutions to acquire the financing required to produce and distribute our products and anticipate this will continue until we accrue sufficient capital reserves to finance all of our productions independently.

We intend to meet our cash requirements for the next 12 months through retaining income generated from daily operations and partnerships with finance groups on television and movie projects.

Critical Accounting Policies and Estimates

Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 20142015 10-K for disclosures regarding our critical accounting policies and estimates. The interim financial statements follow the same accounting policies and methods of computations as those for the year ended June 30, 2014.2015.

Off-Balance Sheet Arrangements

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We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Audit Committee

The functions of the audit committee are currently carried out by our Board of Directors, who has determined that we do not have an audit committee financial expert on our Board of Directors to carry out the duties of the audit committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert on the audit committee.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act 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 and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31,September 30, 2015. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

 Management Report on Internal Control Overover Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the evaluation performed, our management concluded that during the period covered by this report, our internal controls over financial reporting were effective.

During the nine months ended March 31,2015,quarterly period, we implemented the following measures to improve our internal control over financial reporting:

(1).

Engaged outside consultants to assist in our assessment of the effectiveness of the company’s internal controls over financial reporting; and

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