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EX-31 - EXHIBIT 31.2 - Median Group Incex312-123114cmg.htm
EX-32 - EXHIBIT 32.2 - Median Group Incex322-123114cmg.htm
EX-21 - EXHIBIT 21.1 - Median Group Incex211-123114cmg.htm
EX-31 - EXHIBIT 31.1 - Median Group Incex311-123114cmg.htm
EX-32 - EXHIBIT 32.1 - Median Group Incex321-123114cmg.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

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

 

For the fiscal year ended December 31, 2014

 

------------------------------------------------------------

 

( ) 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: 000-50431

 

MEDIAN GROUP INC.

(Formerly Clixster Mobile Group Inc.)

------------------------------------------------------------

 

(Exact name of small business issuer as specified in its charter)

Texas 7310 32-0034926
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or organization)    

 

Level 7, Tower 7, Avenue 5, The Horizon Bangsar South, No.8 Jalan Kerinchi,

59200, Kuala Lumpur, Malaysia

N/A
(Address of Company's principal executive offices) (Zip Code)

 

Tel: +603 2242 3995 Fax: +603 2242 4317

(Company's Telephone Number, Including Area Code)

 

CLIXSTER MOBILE GROUP INC.

No. 18-2, Jalan Sri Hartamas 8, Taman Sri Hartamas

50480 Kuala Lumpur, Malaysia

 

CHINA MEDIA GROUP CORPORATION

No. 55 Jalan Snuker 13/28, Tadisma Business Park,

Section 13, 40100 Shah Alam, Selangor Malaysia

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

 

Securities registered under Section 12(b) of the Act:

 

Title of each class registered:

-------------------------------

None

Name of each exchange on which registered:

------------------------------------------

None

 

Securities registered under Section 12(g) of the Act:

 

Common Stock, No Par Value

(Title of Class)

 


 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[   ] Yes [ x ] No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[   ] Yes [ x ] No

 

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.

[ x ] Yes [   ] No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

[   ]

 

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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

 

[   ] Large accelerated filer [   ] Accelerated filer [   ] Non-accelerated filer (Do not check if a smaller reporting company) [ x ] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

[   ]Yes [ x ] No

 

The aggregate market value of the registrant's voting stock held by non-affiliates (11,307,232,960 shares) of the registrant based upon the per share closing price of $0.01 on December 31, 2014 was approximately $113,072,330.

 

Solely for the purpose of this calculation, shares held by directors and officers of the registrant have been excluded. Such exclusion should not be deemed a determination or an admission by registrant that such individuals are, in fact, affiliates of the registrant.

 

As of December 31, 2015, there were 11,307,232,960 no par value common stock of the Company issued and outstanding.

 

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Exhibits incorporated by reference are referred under Part IV.

 


 

DEFINITIONS AND CONVENTIONS
 
 
References to "China" refer to the Peoples' Republic of China.
 
References to "Common Stock" means the common stock, no par value, of the Company.
 
References to the "Commission" or "SEC" means the U.S. Securities and Exchange Commission.
References to the "Clixster Mobile" means Clixster Mobile Sdn. Bhd., a company incorporated in Malaysia that is a mobile virtual network operator (MVNO) and principally engaged in providing cellular and mobile broadband services in Malaysia.
 
References to "Company", "MGI", "we", "our" means Median Group Inc. (fka Clixster Mobile Group Inc. and China Media Group Corporation) and include, unless the context requires or indicate otherwise, the operation of its subsidiaries (all hereinafter defined).
 
References to "33 Act" or "Securities Act" means the Securities Act of 1933, as amended.
 
References to "34 Act" or "Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

 

FORWARD-LOOKING STATEMENTS

 

 

This Form 10-K report contains forward-looking statements of management of the Company that are, by their nature, subject to risks and uncertainties. Forward-looking statements are statements that estimate the happening of future events are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements appear in a number of places in this Form 10-K report have been formed by our management on the basis of assumptions made by management and considered by management to be reasonable. However, whether actual results and developments will meet the Company's expectations and predictions depends on a number of known and unknown risks and uncertainties and other factors, any or all of which could cause actual results, performance or achievements to differ materially from Company's expectations, whether expressed or implied by such forward looking statements. Our future operating results are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

 

The assumptions used for purposes of the forward-looking statements contained in this Form 10-K report represents estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements in this Form 10-K report are accurate, and we assume no obligation to update any such forward-looking statements. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections with respect to other forward-looking statements.

 


 

PART I      
       
ITEM 1. Business 1  
ITEM 1A. Risk Factors 6  
ITEM 1B. Unresolved Staff Comments 20  
ITEM 2. Properties 20  
ITEM 3. Legal Proceedings 20  
ITEM 4. Mine Safety Disclosures 20  

 

PART II      
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities 21  
ITEM 6. Selected Financial Data 23  
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 24  
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 26  
ITEM 8. Financial Statements and Supplementary Data 27  
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 27  
ITEM 9A Controls and Procedures 27  
ITEM 9B. Other Information 28  

 

PART III      
       
Item 10 Directors, Executive Officers and Corporate Governance 29  
Item 11 Executive Compensation 34  
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 36  
Item 13 Certain Relationships and Related Transactions, and Director Independence 37  
Item 14 Principal Accounting Fees and Services 37  

 

PART IV      

 

ITEM 15 Exhibits, Financial Statement Schedules 38  

 

SIGNATURES   40  

 

 


 

PART I
 
ITEM 1. BUSINESS.

 

DESCRIPTION OF BUSINESS

 

OUR BACKGROUND. The Company was incorporated in Texas on October 1, 2002 and in 2005 changed its business focus to advertising and media in the emerging China market. Under the then new management, the Company commenced to position the Company to capitalize on the growth of the Chinese advertising market where global companies are rushing into China to try to grab and hold the attention of its 1.3 billion citizens.

 

Our mission then was to become one of China's new age media companies through the use of new technologies and devices combined with traditional media of TV, Newspapers, Magazines, Billboards and Internet to reach today's mobile society. In order to facilitate this, the Company established 3 strategic business units being "Advertising", "Telecommunications and Mobile Computing", and "Products and Services".  However due to limited financial resources we were not able to implement our business plans in the China media sector.  

 

In June 2012, the Group acquired A-Team Resources Sdn. Bhd. a company that distributes light appliances products in South East Asia and Middle East to strengthen our Products and Services Business Unit.

 

As announced in a Form 8K filed on October 29, 2013, the Company and Samata Ventures Sdn Bhd (“Samata”) and Clixster Sdn Bhd (“CSB”) (jointly referred to as the “Vendors”) entered into a conditional Sales and Purchase Agreement (“SP Agreement”) for the Company to acquire 63.2% equity interests in Clixster Mobile Sdn Bhd (“CMSB”) from the Vendors.

 

On January 31, 2014 following the fulfillment of all the conditions set forth in and otherwise in accordance with the terms of the SP Agreement, this merger transaction was consummated and CMSB became a subsidiary of the Company.  As a result of the closing of the SP Agreement, we will now focus our business plans to pursue the mobile virtual network operator (“MVNO”) business and to expand our telecommunication business unit with a focus on provision of mobile telecom service through a MVNO platform initially in Malaysia and then to other regions.

 

Upon the closing of the SP Agreement, the Company issued to Samata and CSB 5,760,898,203 shares and 4,432,711,461 shares in the Company, respectively, for a total issuance of 10,193,609,664 shares in the Company, representing approximately 90.15% in the issued share capital of the Company.

 

On January 31, 2014 Samata transferred 4,301,422,970 to CSB and 1,459,475,233 shares to the newly appointed directors of the Company. After the above transfers, Samata did not hold any shares in the Company and CSB held a total of 8,734,134,431 shares, representing approximately 77.24% in the Company, becoming the new controlling shareholder of the Company. On the same date following the completion of the SP Agreement, the changes to the board of directors were announced in the Form 8K filed on February 6, 2014. On June 17, 2014 CSB transferred 550,000,000 shares to one of the Company’s partners and on October 1, 2014 CSB transferred 2,000,000,000 shares to a director of the Company. After these two transfers CSB held 6,184,134,431 shares representing approximately 54.62% in the Company.

 

On January 15, 2014 the Group disposed of its loss making light appliances and advertising operation. The management believes that this transaction affords the Company the opportunity to streamline its trading operation and focus on its Products and Services Business Unit.

 

On July 28, 2015, the Group disposed of its investment in Clixster Mobile Sdn. Bhd. to refocus its MVNO business from pre-paid to post-paid telecom services.    

 

In September, 2015, New China Electronics Limited, a company wholly owned by our director, Mr. Ching Chiat Kwong, acquired a total of 7,130,134,431 shares representing about 63.06% interests in the Company from CSB and all the other directors’ shares to become the controlling shareholder of the Company. On January 8, 2016, New China then transferred 350,000,000 shares to each of Andrew Hwan Lee and Ahmad Shukri Bin Abdul Ghani, both directors of the Company. New China then held 6,430,134,431 shares representing 56.87% in the Company.

 

In December 2015, the Company acquired 51% interests in Naim Indah Mobile Communications Sdn Bhd (“NIMC”). NIMC has entered into an exclusive partnership agreement with MyAngkasa Holdings Sdn Bhd (“MHSB”) for the implementation of the “MyAngkasa” mobile program. Under the agreement, MHSB will undertake to market and sale to its members for NIMC’s post-paid mobile phone services. The Group views this as a strategic anchor customer that will provide the subscriber base to roll out its telecom services, focusing in post-paid customer, .

 

In March 2016, the Company is in advance discussion with a Malaysian telecom operator to roll out these services to the MyAngkasa customers. It is planned that the roll out commencing in July 2016.

 

At the date of this report, the Group will focus on its Telecommunications and Mobile Business Unit and its Products and Services Business Unit. The Group will terminate its adverting business until a viable advertising business opportunity is available.

 

 

- 1 -

 


 

OUR BUSINESS REVIEW AND FUTURE STRATEGY. In 2013, the consumer electronics and light appliances business faced a very competitive environment from other low costs manufacturer. The management took the view to restructure and rationalize the operation so that it can face the challenges ahead.  In early 2014, the Group sold the trading operation for consumer electronics and light appliances products to dispose the loss making operations, and to enter into the communication business.

 

2014 Products & Services Overview

 

We have established 3 business units namely “Advertising”, “Product Services” and “Telecommunication and Mobile”. A brief review and description of these three business units' strategies and operations are described below.

 

Advertising Unit

 

On March 13, 2007, the Company acquired 100% of the issued and outstanding shares of Good World Investments Limited, which owns 50% of the registered capital of Beijing Ren Ren Health Culture Promotion Limited ("BRR"). BRR is working with the Chinese Government on a benevolent project named "Great Wall of China Project" to advertise and promote health education and health awareness in China. We believe BRR provides a strategic advertising platform for us to launch our advertising operations in China as it can advertise in hospitals and districts in China. However the capital requirement to activate this project on the national and provincial level will require us to raise at least US$2 million which was difficult given the financial situation of the Group.  Therefore in 2012, we had determined to defocus from the BRR program and to focus on other advertising activities going forward. During the period, the Company did not derive any advertising income from the BRR project.  In 2014, the Group divested from its investment in BRR and the Group suspended the advertising business unit until other advertising opportunities that are synergistic to the Groups business.  During the year, the Group did not derive any revenue from the business unit.

 

Products Services Units

 

We have commenced a Products Services Unit to build brands recognition and to take advantage of our contacts networks, distribution channel and trading partners. We intended to leverage on our advertising platform to develop our own brands name for select products. This will uniquely position our Product Services for brand awareness as well as develop a long term business unit that will serve both consumers and industries markets. We had a distribution of electronics and light electronics in 2012 but we ran into difficulties and the market conditions changed such that the Company recorded a loss in 2012. In view of our focus on Telecommunications we determined to divest of our investment in Ateam in 2014.  During the year, the Group did not derive any revenue from this business unit.  

 

Telecommunications Unit

 

In 2006, the Company announced the establishment of the Telecommunications and Mobile Computing Division to focus on the new media advertising where we would take advantage of new convergent devices for telecommunications advertising. The business of selling advertising and services through telecommunications media and devices is growing and the Group intends to enter into this business sector. No revenue has been generated from advertising through telecommunications media and devices during this reporting period.

 

Advertising through mobile devices is becoming more prominent to reach the mobile society of today. The goal of the Telecommunications and Mobile Computing Unit is to provide the Company with entry into the new sector of advertising through telecommunication media and devices. Our strategy on gaining access in telecommunication media is through cooperation with existing networks or establishes select networks. However our longer term strategy is to partner with network operators to provide extensive network access for our advertising media. We had secured the distribution rights for M.A.G.I.C. Convergent Device for the territory of China and Hong Kong, and we are still waiting for the delivery of its commercial products in 2013. However, in 2014 we divested from this product and instead we determined to focus on other telecommunication products and services. In October 2013, we entered into a conditional agreement to acquire Clixster Mobile Sdn. Bhd. a Mobile Virtual Network Operator (“MVNO”) operation in Malaysia. This transaction closed on January 31, 2014. Going forward, we will focus on developing the MVNO business and building a brand in Malaysia and then throughout the region. During the year ended December 31, 2014, the Group derived $5,186,766 in telecom services revenue from this business unit.

 

 

- 2 -

 


 

Industry Overview and Competition

 

Telecommunication Market

 

During the first half of 2014, the Malaysia telecommunication subsector increased by 10% (January - June 2013: 9.4%) with the continued increase in the number of cellular phone subscribers as well as higher use of data services. Cellular phone subscriptions grew 2.8% to 43.8 million to reach a penetration rate of 145.5% as at end-June 2014 (end-June 2013: 9.1%; 42.6 million; 143.4%), with the prepaid segment dominating 82% of total subscriptions. Growth was spurred by increased take-up of affordable smartphones and attractive packages offered by service providers. In addition, higher use of data services was supported by increased third-generation (3G) subscriptions which recorded 18 million in 2013 (2012: 14.5 million).²

 

The broadband segment grew 3.1% to 6.4 million subscriptions with a household penetration rate of 67.2% as at end-June 2014 (end-June 2013: 6.9%; 6.2 million; 66.8%). Growth was largely driven by promotional activities and awareness programmes as well as improved network coverage due to offerings of bundled services with attractive pricing plans and improved network coverage. The National Broadband Initiative (“NBI”) which was introduced in March 2010 to increase household broadband penetration, addresses the provision of infrastructure and facilities through the implementation of High-Speed Broadband (“HSBB”) and Broadband to General Population (“BBGP”). Through public-private partnership, the Government has implemented the HSBB project in areas covering inner Klang Valley, Iskandar Malaysia and selected industrial areas. At the same time, under the BBGP initiative, broadband projects will be implemented across the country through various technologies such as Asymmetric Digital Subscriber line (“ADSL”), Hybrid Fibre Coax (“HFC”), High-Speed Downlink Packet Access (“HSDPA”) and Worldwide Interoperability for Microwave Access (“WiMax”). ²

 

In Malaysia, the major mobile network operators (MNOs) are Maxis, Celcom and DiGi. According to RHB Research Institute Sdn Bhd (“RHB Research”), despite the mixed showing in their fourth quarter 2014 reporting, the Big Three will still face challenges. This is especially in terms of effectively monetizing data in the medium term while traditional revenues will continue to suffer from structural pressure. The research house noted that the industry posted a slight contraction in service revenue of 1.1% in 2014, mainly due to the continued erosion in SMS and voice revenues and telco-specific issues. That said, RHB Research noted that mobile internet revenue sustained its double-digit growth trajectory, up 24.9% for the year. Unsurprisingly, it further noted that the traditional SMS and voice revenues continued on their declining trend this quarter, contracting by 27.9% and 5.4% y-o-y respectively in 4Q14. The research house expects the pressure on legacy revenues to continue in 2015, as the industry’s smartphone penetration, currently in the mid-40s, is expected to trend higher on the back of a wider array of affordable smartphones available in the market and the telcos dishing out more data bundled packages to spur data demand. That said, the research house noted the operators are ramping up efforts to better monetise data alongside investments to improve the quality of networks and additional LTE sites.

 

¹ Malaysia Economic Report 2014/2015

² Malaysia’s telco sector still likely to see challenges in the medium term - The Borneo Post Online 16/3/15

 

Subscriber Market

 

Mobile connections in Malaysia has long surpassed the 100% mark and was reported to attain 137% ¹ as at March 2015; putting her as one of the countries in Asia Pacific with penetration rates above 100%. In a statistical report conducted by We Are Social involving 30 countries in the Asia Pacific region, Macau, Hong Kong, Singapore and Thailand attained a mobile subscription rate of 269%, 175%, 152% and 150% respectively compared to their national populations.

 

By 2015, the Malaysian market is expected to reach a mobile subscriber base of over 50 million (as at 2013: 42.6 million¹). Although growth is expected to slow down as the market approaches saturation but it is still expected to register a CAGR of 6.0% from 2011-2015. Riding on increasing demand for internet access, 3G subscriptions reached 14.5 million with an annual growth of 41.0% in 2012 and are expected to cross 18.4 million by December 2013. Broadband internet has also been expanding strongly in recent years and as at first quarter of 2014, reached a 67% household penetration with more than half of households having some form of broadband access.¹ Also from the report by We Are Social, the mobile broadband penetration rate in March 2015 of Macau, Hong Kong, Thailand and Singapore were at 264%, 122%, 112% and 106% respectively whilst Malaysia achieved 78%.¹ The Malaysian Communications and Multimedia Commission reported a rate of 72.2% for the first half of 2015. ²

 

Greater affordability of mobile services, development of platforms and mobile enabled services including mobile payments, information services and educational tools) and entry of non-traditional players into the ecosystem including technology companies and content provider are key indicators to the potential future growth opportunities of the market.

 

 

¹ Digital, Social and Mobile in APAC 2015 – We Are Social Singapore

² MCMC - Pocket Book of Statistics, Q2 2015

 

 

- 3 -

 


 

Mobile Virtual Network Operator Market

 

The explosive growth of wireless is one of the most striking aspects of the telecom industry since the 1990s. Demand for low-cost and high-value cellular service has been driving the mobile industry towards price wars. As the industry continue to mature, Mobile Network Operators (MNO’s) recognize that future growth depends on the pursuit of new markets beyond the conventional method of direct acquisition of new subscribers. The growth driven by bundled service offerings with slashed rates is only a short-term remedy. A new strategic model through alliances with Mobile Virtual Network Operator (MVNO) offered a far sighted solution. The MVNO model is seen as both, a solution as well as an opportunity for MNOs to pursue new markets that present sustainable growth and retention.

 

MVNO’s typically do not own a network but lease the network of a service provider that does have a network. An MVNO business consists of managing two key relationships; Mobile Network Operator (MNO) and the end-users. MVNO provides mobile services without owning spectrum and relies on the MNO network infrastructure. Notably, this business arrangement allows smaller service providers to be focused on specific aspects of the mobile business by offering specialized services and enriching the industry service offerings through optimization usage of the network infrastructure.

 

MVNOs provide lower operational costs for mobile operators through billing, sales, customer service, marketing, increase revenue through new applications, value added services and attractive rates. As such, the opportunity for mobile operators to take advantage of MVNOs generally outweighs the competitive threat.

 

Type of MVNO’s

 

Discount Provides very low call rates to market segments for example, the foreign workers market
Lifestyle Focuses on specific niche market demographics for example on the high income executives with specific interests
Advertising-funded Earns advertising revenue in order to provide free voice, SMS and data to its subscribers
Ethnic Provides services to certain ethnic groups in the country. For e.g. XOX caters to the Chinese community in Malaysia, other MVNOs like Lycamobile, Lebara, iCard Mobile, Globalcell Mobile and Dialog Vizz who target ethnic communities by providing inexpensive calls to their home country
Data Focuses on selling data subscriptions to end-users. Amazon in US and Dell in Japan are Data MVNOs. Merchantrade in Malaysia is a Data MVNO.

 

Examples of other MVNO’s in Malaysia

 

Merchantrade A strong presence in the foreign workers’ in the Malaysia on Celcom network
XOX Focus to serve the Chinese community offering services riding on Maxis network
Redtone Serving the small and medium-sized enterprises market segment. A spin-off of Redtone International Bhd riding on Maxis
Tune Talk A lifestyle service offering as sister companies Tune Hotels and Tune Money. Operates on Celcom’s network
Smart Pinoy A service zooming into over 700,000 Filipino migrant workers in Malaysia, a joint venture between Celcom and Philippines Long Distance Telecom (PLDT)
Tron Offering a yearlong validity for Tron user community numerous incentives. Rides on DiGi network
MyEvolution Malaysia’s first Machine-to-Machine (M2M) MVNO service on DiGi network\
Tesco Affinity program via Clubcard (Tesco loyalty card) on Maxis network
SpeakOut Targeting students, youth, business travelers, tourists, migrant workers and telco-blacklisted individuals
Buzz Me A prepaid mobile services operating on U Mobile targeting the urban young market
FRiENDi A joint venture between Virgin Mobile Middle East & Africa and Kumpulan Perangsang Selangor
Altel A MVNO under Puncak Semangat, within the Al-Bukhary group, in collaboration with CELCOM. No clear direction or target market.

 

 

- 4 -

 


 

Plan of operations

 

OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS.

We hope to generate additional revenues in the next twelve months by engaging business operations through internal growth and through strategic acquisitions and cooperative advertising agreements, as described more fully under "Overview" above.

 

We have cash and cash equivalents of $ 21,245 as of December 31, 2014 in our discontinued operation; a decrease of $2,978,165 from the previous period end of December 31, 2013. In the opinion of management, these funds will not satisfy our working capital requirements to operate at our current level of activity for the next twelve months. To effectuate our business plan, during the next twelve months, we must arrange for adequate funding to implement our plans.

 

Financing and funding

 

Management intends to continue to raise additional financing through debt and equity financing or other means and interests that it deems necessary, with a view to implementing our business plan and building a revenue base. We plan to use the proceeds of such financings to provide working capital to our operations and increase our capital expenditure for marketing and working with our co-operative partners. There can be no assurances that sufficient financing will be available on terms acceptable to us or at all. Our forecast for the period for which financial resources will be needed to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors.

 

Specifically, we hope to accomplish the steps as set out in this report to implement our business plan in respect of the new focus, in developing and integrating the MVNO business from prepaid to postpaid services. The success of our plans is subject to our ability to obtain adequate funding. Such additional capital may be raised through public or private equity financing, borrowings, or other sources, such as contributions from our officers and directors. If we are unable to obtain funds necessary to implement our business plan, we may revise or scale back our business plan.

 

We are not currently conducting any research and development activities, other than the continual development of our website. We do not anticipate conducting any other research and development activities in the near future. In the event that we expand our business scope, then we may need to hire additional employees or independent contractors as well as purchase or lease additional equipment and open new office locations.

 

Governmental Regulation

 

We are subject to federal, state and local laws and regulations applied to businesses in general. We believe that we comply with the requirements in Malaysia for any licenses or approvals to pursue our proposed business plan. In locations where we operate, the applicable laws and regulations are subject to amendment or interpretation by regulatory authorities. Generally, such authorities are vested with relatively broad discretion to grant, renew and revoke licensee and approvals, and to implement regulations. Licenses may be denied or revoked for various reasons, including the violation of such regulations, conviction of crimes and the like. Possible sanctions which may be imposed include the suspension of individual employees, limitations on engaging in a particular business for specific periods of time, revocation of licenses, censures, redress to customers and fines. We believe that we are in conformity with all applicable laws in all relevant jurisdictions. We may be prevented from operating if our activities are not in compliance and must take action to comply with the relevant laws and regulations.

 

We have posted our privacy policy and practices concerning the use and disclosure of any consumer information collected on our website, www.mediangroupinc.com. Any failure by us to comply with posted privacy policies, Federal Trade Commission requirements or other domestic or international privacy-related laws and regulations could result in proceedings by governmental or regulatory bodies that could potentially harm our business, results of operations and financial condition. In this regard, there are a large number of legislative proposals before the U.S. Congress and various state legislative bodies regarding privacy issues related to online commerce to which the Group may participate in the future. It is not possible to predict whether or when such legislation may be adopted, and certain proposals, if adopted, could harm our business by causing a decrease in the use of our applications and services by our small business customers and thereby a decrease in our revenues. Such decreases could be caused by, among other possible provisions, the required use of disclaimers or other requirements before consumers can utilize our Internet technology solutions.

 

Employees

 

As of the date of this report, we have 10 full time employees. From time to time, we utilize consultants or contractors for specific assignments. None of our employees are represented by a labor union and we have never experienced a work stoppage. We believe that our relationships with our employees are good.

 

 

- 5 -

 


 

ITEM 1A. RISK FACTORS

 

Risk Factors

 

There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our Common Stock could decline and investors could lose all or part of their investment.

 

Risks Related to Our Business

 

Our business is subject to various risks and uncertainties, including those set forth below. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial may also materially and adversely affect our business operations. If any of the risks set out or referred to below actually occur, our business, financial condition or results of our operations could be materially adversely affected.

 

Our risks for the existing and future business disclosed in this section has included the Mobile Virtual Network Operator (“MVNO”) in Malaysia.

 

RISKS RELATED TO EXISTING AND PROPOSED OPERATIONS

 

If we are unable to obtain additional funds from other financings we may have to curtail the scope of our operations significantly and alter our business model

 

We must achieve profitability for our business model to succeed. Prior to accomplishing this goal, we may need to raise additional funds, from equity or debt sources. Our cash requirements are substantial and our current financial position is insufficient to meet our cash needs in the future. If additional financing is not available when required or is not available on acceptable terms, we may be unable to continue our operations at current or planned levels. In addition, any failure to raise additional funds in the future may result in our inability to successfully secure our business platform, take advantage of business opportunities or respond to competitive pressures, any of which circumstances could have a material adverse effect on our financial condition and results of operations.

 

We do not have substantial cash resources and if we cannot raise additional funds or generate more revenues, we will not be able to pay our vendors and will probably not be able to continue as a going concern

 

We will need to raise additional funds to pay outstanding debts, vendor invoices and execute our business plan. Our future cash flows depend on our ability to enter into, and be paid under, contracts with our distributors for the consumer electronics and light appliances business. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.

 

We may be required to pursue sources of additional capital through various means, including joint venture projects and debt or equity financings. Future financings through equity investments will be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, the issuance of warrants or other convertible securities, which will have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations.

 

Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets and the fact that we have not been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.

 

 

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We have a limited operating history, and it may be difficult for potential investors to evaluate our business

 

The consumer electronics and light appliance business started in early 2013 and the advertising business stated in August 2006 which has been disposed in early 2014.  Currently we are focusing our operation on MVNO business in Malaysia.  Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. We are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a relatively new business. Investors should evaluate an investment in us in light of the uncertainties encountered by such companies in a competitive environment. Our business is dependent upon the implementation of our business plan, as well as the ability of our merchants to enter into agreements with consumers for their respective products and/or services. There can be no assurance that our efforts will be successful or that we will be able to attain profitability.

 

Our limited operating history and rapidly evolving business makes it difficult for us to accurately forecast revenues and expenses

 

We have a limited operating history on which to base an evaluation of our business and prospects. Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our prospects must be considered in light of inherent risks, expenses, and difficulties encountered by companies in their early stages of development, particularly in new and evolving markets.

 

We have generated losses for the past years as our consumer electronics and advertising businesses has come under competitive price pressure which the management is rationalizing the operation in order to be competitive. The advertising and mobile devices operations commenced in April 2006 with a very limited operating history for these operations due to the lack of operating and financial resources. Our operating results to 2013 relate principally to trading in consumer electronics and light appliances, and mobile devices. However in January 2014 these businesses were disposed and we closed the acquisition of the MVNO business. Accordingly, our future prospects are uncertain in light of the risks and uncertainties experienced by early stage companies in evolving industries, and in particular our future MVNO operation in Malaysia. Due to our limited history and limited resources, it is difficult for us to predict future revenues and operating expenses. We based our expense levels, in part, on our expectations of future revenues from anticipated transactions. If our MVNO and mobile device business develops slower than we expect, our losses may be higher than anticipated, we may have to curtail parts of our business plan and to the market price of our stock may decline.

 

Some of the other risks and uncertainties of our business relate to our ability to:

 

  - offer new and innovative products and services to attract and retain a larger consumer base;
  - attract customers;
  - increase awareness of our brand and continue to develop consumer and customer loyalty;
  - respond to competitive market conditions;
  - respond to changes in our regulatory environment;
  - manage risks associated with intellectual property rights;
  - maintain effective control of our costs and expenses;
  - raise sufficient capital to sustain and expand our business;
  - attract, retain and motivate qualified personnel; and
  - upgrade our technology to support increased traffic and expanded services.

 

If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.

 

The development of our business is dependent upon the completion and integration of acquisitions and other transactions that have only recently or not yet closed

 

Our principal focus is on our MVNO and mobile device and products services businesses. We have closed the acquisition of Clixster and other potential acquisitions have not closed to date and may never close. Accordingly, it is difficult to evaluate our business based upon our historical financial results, including those for the year ended December 31, 2013. Even when we close acquisitions like Clixster, our business will not be successful if we are unable to successfully operate and integrate the businesses we acquire. We expect to continually look for new businesses to acquire to maintain and sustain our operations. If we fail to identify such business, are unable to acquire such businesses on reasonable terms, or fail to successfully integrate such businesses, our operating results and prospects could be harmed.  In July 2015, we disposed Clixster and continued the MVNO business under a new platform and business entity.

 

 

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We face significant competition and may suffer from a loss of users and customers as a result

 

We expect to face significant competition in our MVNO and mobile devices businesses, particularly from other companies that seek to provide similar products and services. Many of these competitors have significantly greater financial resources and more personnel than we do. They may also have longer operating histories and more experience in attracting and retaining and managing customers. They may use their experience and resources to compete with us in a variety of ways, including by competing more for users, customers, distributors, media channels and by investing more heavily in research and development and making acquisitions. If we fail to compete effectively, our business, financial condition and results of operation will be adversely affected.

 

Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our business and operating results may be harmed

 

We believe that recognition of our brand will contribute significantly to the success of our business. We also believe that maintaining and enhancing our brand is critical to expanding our base of consumers and customers. As our market becomes increasingly competitive, maintaining and enhancing our brand will depend largely on our ability to fund the advertising and promotion campaigns, which may be increasingly difficult and expensive.

 

We may face intellectual property infringement claims and other related claims that could be time-consuming and costly to defend and may result in our inability to continue providing certain of our existing services

 

Technology and service companies are frequently involved in litigation based on allegations of infringement of intellectual property rights, unfair competition, and invasion of privacy, defamation and other violations of third-party rights. The validity, enforceability and scope of protection of intellectual property, particularly in Malaysia, are uncertain and still evolving. In addition, many parties are actively developing and seeking protection for electronics technologies, including seeking patent protection. There may be patents issued or pending that are held by others that cover significant aspects of our technologies, products, business methods or services. As we face increasing competition and as litigation becomes more common in Malaysia and elsewhere in Asia for resolving commercial disputes, we face a higher risk of being the subject of intellectual property infringement claims.

 

Intellectual property litigation is expensive and time consuming and could divert resources and management attention from the operations of our businesses. If there is a successful claim of infringement, we may be required to pay substantial fines and damages or enter into royalty or license agreements that may not be available on commercially acceptable terms, if at all. Our failure to obtain a license of the rights on a timely basis could harm our business. Any intellectual property litigation could have a material adverse effect on our business, financial condition or results of operations.

 

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud

 

We are subject to reporting obligations under the U.S. securities laws. The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include in its annual report a management report on such company's internal controls over financial reporting which contains management's assessment of the effectiveness of the company's internal controls over financial reporting. In addition, if the Company qualifies under certain revenue or market capitalization test an independent registered public accounting firm must attest to and report on management's assessment of the effectiveness of the company's internal controls over financial reporting.  Our management may conclude that our internal controls over financial reporting are not effective. Moreover, even if our management concludes that our internal controls over financial reporting are effective, our independent registered public accounting firm may still decline to attest to our management's assessment or may issue a report that is qualified if they are not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We are a company with limited accounting personnel and other resources with which to address our internal financial controls and procedures. If we fail to timely achieve and maintain the adequacy of our internal financial controls, we may not be able to conclude that we have effective internal controls over financial reporting at a reasonable assurance level. Moreover, effective internal controls over financial reporting are necessary for us to produce reliable financial reports and are important to help prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the market price of our Common Stock.

 

 

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If we fail to attract customers for our advertising and convergent device business our growth prospects could be seriously harmed

 

Our distributors will not work with us if our products and services offerings do not sell well or do not have adequate sales margin for their sales channels.  In addition, our advertising customers will not maintain their business relationships with us if we cannot secure attractive competitive product and service offerings. Failure to retain customers, distributors or channel partners could seriously harm our business and growth prospects.

 

Because we primarily rely on distributors in distributing MVNO, our failure to retain key distributors or attract additional distributors could materially and adversely affect our business

 

For MVNO operation, we will rely heavily on a nationwide distribution network of third-party distributors for sales to, and collection of payment from, our corporate and consumer customers. If our distributors do not provide quality services to our consumer customers or otherwise breach their contracts with our consumer customers, we may lose customers and our results of operations may be materially and adversely affected. We will sign distributing agreements with our distributors, although we may not sign any long-term agreements with them, but we cannot assure that we can maintain favorable relationships with them. Our distribution arrangements will be non-exclusive. Furthermore, some of our potential distributors may have contracts with our competitors or potential competitors and may not sign distribution agreements with us. If we fail to retain our key distributors or attract additional distributors on terms that are commercially reasonable, our business and results of operations could be materially and adversely affected.

 

We may not be able to manage our expanding operations effectively

 

We commenced our MVNO and mobile device operations in early 2013 and 2006, respectively. We anticipate continuous developing of our business in 2014 as we focus growth in our customer base through expanding our network and channel partners and consumer market opportunities. To manage the potential growth of our operations and personnel, we will be required to improve operational and financial systems, procedures and controls, and expand, train and manage our growing employee base. Furthermore, our management will be required to maintain and expand our relationships with customers. We cannot assure that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations.

 

The recent global economic and financial market crisis has had and may continue to have a negative effect on our business and results of operations

 

Global economic conditions could have a negative effect on our business and results of operations like the global economic downturn in 2008 when economic activity in China, United States and throughout much of the world has undergone a sudden, sharp economic downturn following the recent housing downturn and subprime lending collapse in both the United States and Europe. Since then the global credit and liquidity have tightened in much of the world. Some of our customers in Southeast Asia and Malaysia may face business downturn and credit issues, and could experience cash flow problems and other financial hardships, which could affect timeliness of doing business with us.

 

Changes in governmental banking, monetary and fiscal policies to restore liquidity and increase credit availability may not be effective in alleviating the global economic declines. It is difficult to determine the breadth and duration of the economic and financial market problems and the many ways in which they may affect our customers and our business in general. Nonetheless, continuation or further worsening of these difficult financial and macroeconomic conditions could have a significant effect on our business and results of operations.

 

Capital markets are currently experiencing a period of dislocation and instability, which has had and could continue to have a negative impact on the availability and cost of capital

 

The general disruption in the U.S. capital markets has impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole. These conditions could persist for a prolonged period of time or worsen in the future. Our ability to access the capital markets may be restricted at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions. The resulting lack of available credit, lack of confidence in the financial sector, increased volatility in the financial markets and reduced business activity could materially and adversely affect our business, financial condition, results of operations and our ability to obtain and manage our liquidity. In addition, the cost of debt financing may be materially adversely impacted by these market conditions.

 

 

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Our success depends on the continuing efforts of our senior management team and other key personnel and our business may be harmed if we lose their services

 

Our future success depends heavily upon the continuing services of the members of our senior management. If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and key personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or key personnel, or attract and retain high-quality senior executives or key personnel in the future.

 

In addition, if any member of our senior management team or any of our other key personnel joins a competitor or forms a competing company, we may lose customers, distributors, know-how and key professionals and staff members. Each of our executive officers and key employees has entered into an employment agreement with us which contains confidentiality and non-competition provisions. Legal proceedings to enforce such provisions would be costly in both money and management time and such provisions may not be enforced or enforceable.

 

The success of our business depends on the continuing contributions of Andrew Hwan Lee and other key personnel who may terminate their employment with us at any time, and we will need to hire additional qualified personnel

 

We rely heavily on the services of Andrew Hwan Lee, our director and Chief Executive Officer, as well as several other management personnel. Loss of the services of any such individuals would adversely impact our operations. In addition, we believe our technical personnel represent a significant asset and provide us with a competitive advantage over many of our competitors and that our future success will depend upon our ability to retain these key employees and our ability to attract and retain other skilled financial, engineering, technical and managerial personnel. We do not currently maintain any "key man" life insurance with respect to any of such individuals.

 

We rely on highly skilled personnel and if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively

 

Our performance and future success depends on the talents and efforts of highly skilled individuals. We will need to continue to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization. Competition in our industry for qualified employees is intense. Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.

 

As competition in our industry intensifies, it may be more difficult for us to hire, motivate and retain highly skilled personnel. If we do not succeed in doing so, we may be unable to grow effectively.

 

We have no business insurance coverage

 

We do not have any business liability or disruption insurance coverage for our operations in Malaysia. Any business disruption, litigation or natural disaster may result in our incurring substantial costs and the diversion of our resources.

 

We are exposed to risks associated with the ongoing financial crisis and weakening global economy, which increase the uncertainty of consumers purchasing products and/or services

 

The recent severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy are contributing to a decrease in spending by consumers.  If these economic conditions are prolonged or deteriorate further, the market for layaway services will decrease accordingly.

 

 

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Our Company may experience, and continues to experience, rapid growth in operations, which may place, and may continue to place, significant demands on its management, operational and financial infrastructure

 

If the Company does not effectively manage its growth, the quality of its products and services could suffer, which could negatively affect the Company's brand and operating results. To effectively manage this growth, the Company will need to continue to improve its operational, financial and management controls and its reporting systems and procedures. Failure to implement these improvements could hurt the Company's ability to manage its growth and financial position.

 

Our Company's business faces inherent risk in the mobile communication industry

 

Our Group's business is subject to certain risks inherent in the mobile communication industry. Our Group's revenue and operating results could be adversely affect by many factors which include, amongst others, changes in general economic, business and credit conditions, fluctuation in foreign exchange rates, changes in demand for and market acceptance of our products and services, our ability to introduce new products and services and enhancements in a timely manner, rapid technological changes, increase in operating expenses, lower profit margins due to pricing competition and delay in expansion plans.

 

Our Group seeks to limit these business risks through, inter-alia prudent management policies, keeping abreast with new developments and technologies in the relevant industries and maintaining good relationship with customers and suppliers. However there can be no assurance that any changes in these factors will not have any material adverse effect on our Group's business.

 

Our Company's business faces competition from local and foreign competitors

 

Our Group faces competition from both local and foreign competitors which offer similar products that of our Group offerings. Increased competition could result in competitive pricing resulting in lower profit margins. However, our Group believes that we have competitive edge over our competitors; including amongst others, quality products from our suppliers, access to R&D capabilities and technological expertise acquired over the years.

 

Our Group seeks to limit the competitive risks through, inter-alia constant review of our development and marketing strategies to adapt to changes in economic conditions and market demands as well as focusing on certain markets and industries. However, there can be no assurance that our Group will be able to compete effectively against our competitors and that competitive pressure will not materially and adversely affect our Group’s business, operations and results and or financial condition.

 

 

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Risks Relating to Our Organization and Our Common Stock

 

Public company compliance may make it more difficult for us to attract and retain officers and directors

 

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these new rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

 

We may not be able to attract the attention of major brokerage firms

 

Securities analysts of major brokerage firms may not provide coverage of us since there is no incentive to brokerage firms to recommend the purchase of our Common Stock. No assurance can be given that brokerage firms will, in the future, want to conduct any secondary offerings on behalf of our Company.

 

Our stock price may be volatile

 

The market price of our Common Stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

 

  * changes in our industry;
  * competitive pricing pressures;
  * our ability to obtain working capital financing;
  * additions or departures of key personnel;
  * limited "public float" in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our Common Stock;
  * sales of our Common Stock;
  * our ability to execute our business plan;
  * operating results that fall below expectations;
  * loss of any strategic relationship;
  * regulatory developments;
  * economic and other external factors; and
  * period-to-period fluctuations in our financial results.

 

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our Common Stock.

 

We may not pay dividends in the future. Any return on investment may be limited to the value of our Common Stock

 

We do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our Common Stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

 

 

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There is currently no liquid trading market for our Common Stock and we cannot ensure that one will ever develop or be sustained

 

To date there has not been an active trading market for our Common Stock. We cannot predict how liquid the market for our Common Stock might become. As soon as is practicable after becoming eligible, we anticipate applying for listing of our Common Stock on either the NYSE Amex Equities, The Nasdaq Capital Market or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange. We currently do not satisfy the initial listing standards for any of these exchanges, and cannot ensure that we will be able to satisfy such listing standards or that our Common Stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our Common Stock is otherwise rejected for listing and remains quoted on the OTC markets or is suspended from the OTC markets, the trading price of our Common Stock could suffer and the trading market for our Common Stock may be less liquid and our Common Stock price may be subject to increased volatility.

 

Furthermore, for companies whose securities are quoted on the OTC markets, it is more difficult (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies and (iii) to obtain needed capital.

 

Our Common Stock is currently a "penny stock," which may make it more difficult for our investors to sell their shares

 

Our Common Stock is currently and may continue in the future to be subject to the "penny stock" rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose Common Stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. Since our securities are subject to the penny stock rules, investors may find it more difficult to dispose of our securities.  

 

Offers or availability for sale of a substantial number of shares of our Common Stock may cause the price of our Common Stock to decline

 

If our stockholders sell substantial amounts of our Common Stock in the public market, or upon the expiration of any statutory holding period under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our Common Stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

Ching Chiat Kwong, our director beneficially owns or holds the proxies for a substantial portion of our outstanding Common Stock, which enables him to influence many significant corporate actions and in certain circumstances may prevent a change in control that would otherwise be beneficial to our stockholders

 

Ching Chiat Kwong currently beneficially owns and holds the proxies for approximately 79.10% of our outstanding Common Stock. As such, he has a substantial impact on matters requiring the vote of the stockholders, including the election of our directors and most of our corporate actions. This control could delay, defer, or prevent others from initiating a potential merger, takeover or other change in our control, even if these actions would benefit our stockholders and us. This control could adversely affect the voting and other rights of our other stockholders and could depress the market price of our Common Stock.

 

 

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RISKS RELATING TO THE BUSINESS

 

We have a limited operating track record

 

We have a limited operating and financial history in telecom services upon which you may evaluate us. The Clixster MVNO operation commenced operations in 2013 and has only generated revenue since then.  As a result, your evaluation of us and our prospects will be based on a limited operating and financial history.  In addition, most of our products and services have been sold for only a relatively short time, which is since 2013.  Therefore, it is difficult to accurately forecast our future revenue and budget our operating expenses.  

 

There can be no assurance that our business model or any specific products or services will be profitable or competitive in the long term against larger, facilities-based mobile telecommunications operator or other MVNOs.

 

We may experience significant fluctuations in our revenues and cash flows.  We have experienced, and may continue to experience, operating losses.  In the event that we do become profitable, we can provide no assurances that such profitability can or will be sustained in the future.

 

We are highly dependent on Telecom Operator’s core network infrastructure

 

As an MVNO, we do not own or operate our own physical network.  The Group will provide mobile telecommunications services over network infrastructure that relies entirely on our Telecom Operator’s core network infrastructure.  We do not have control over the service provision and is completed dependent on coverage, quality, reliability, service upgrades and network capacity supplied by our host network providers.  Therefore, the provision of our services may be adversely affected by:-

 

(i) Failure or obsolescence of Telecom Operator’s network infrastructure and/or related systems.
(ii) System and network management, modification or maintenance, by Telecom Operator; or
(iii) Damage or interruptions to Telecom Operator’s Digital Network;

 

Notwithstanding the above, our host network provider will provide prior notice to us of any service interruption.  There is also a service level agreement for the MVNO service with the Telecom Operator which provides assurance that service quality to our subscribers will be the same as that provided by Telecom Operator  to its own subscribers.

 

The Telecom Operator, in entering into the MVNO services agreement, intended for the Company to assist in developing its markets and we are bound by the MVNO services agreement not to directly compete with the Telecom Operator for its existing subscribers may inadvertently prefer our services over theirs.  Hence it is not only important that we adhere to the terms and conditions of the MVNO services agreement, such as the minimum value commitment, to avoid legal, operational and/or financial repercussions but imperative for us to work closely with the Telecom Operator to forge and maintain a sound relationship in light of a strategic long term partnership.

 

We may not be able to successfully extend and/or launch existing or new products and services into the market

 

As part of our strategy, we intend to introduce, and to continue to develop, a number of products, services and service experiences for its subscribers, particularly services such as convergence subscription plans, social portal applications and other similar services.  Although we have, in the past year, pioneered and launched innovative mobile services into the market which were well received by our targeted subscriber segments, there is no assurance that we will be able to successfully extend and/or launch existing or new products and services into the market, due to rapid technological changes, shifts in market expectations as well as competitive pressures.

 

There is a risk that we may not identify consumer trends correctly.  Any new product or services we launch may not be provided on a cost-effective or price-competitive basis due to a misreading of consumer demand or trends.  Such misjudgment may adversely affect the operational and financial results of us.

 

 

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We depend significantly on our network of traditional dealers and distributors for sales or our products and services

 

Our mobile services are principally sold through a network of traditional dealers and distributors.  Any dispute with them may disrupt sales and have an adverse effect on our operational and financial results.  

 

Dependence on directors and key personnel

 

The technology industry is growing and fast evolving, and the management and operation of the business requires the employment of highly skilled knowledge workers, whether in technology or non-technology related fields. We recognize and believe that our continuing success depends to a significant extent on the abilities and continuing efforts of its existing Managing and Executive Directors and key personnel, and the ability of our Company to attract new personnel and retain its existing skilled personnel.  The labour market for skilled personnel in this field is highly competitive.  

 

We seek to mitigate this risk by offering its employees competitive salary/remuneration, benefit packages and also to offer internships to undergraduates pursuing tertiary education in the telecommunications field for possible future employment with us.

 

If one or more of these personnel are unable or unwilling to continue in their present positions, or if they join a competitor or form a competing company, we may not be able to replace them easily.  Our business may be significantly disrupted and its financial condition and results of operations may be materially and adversely affected.

 

We may be unable to adequately protect our intellectual property or may face intellectual property claims that may be costly to resolve or may limit our ability to use our intellectual property in the future.

 

The popularity of our products and services is dependent on the goodwill associated with our brand names and logos.  In the case of trademarks and service marks applied and/or registered with the Intellectual Property Corporation of Malaysia, we have a perpetual, royalty-free licence to use such trademarks and service marks in Malaysia.

 

Our MVNO operation relies on a combination of trademarks, service marks and domain name registrations, common law copyright protection and contractual restrictions to establish and protect their intellectual property.  Any third party may challenge our intellectual property.  We may incur substantial costs in defending any claims relating to its intellectual property rights.  

 

Breach of customer data protection could materially affect our reputation and business and subject us to liability

 

We have developed a large database on our subscribers’ information stored in various business systems and used in many business processes.  We are required under our licenses to take all reasonable steps to ensure that parties who have access to our subscribers’ information in the ordinary course of business do not disclose such information without the prior consent of the subscribers.  Under the Malaysian Personal Data Protection Act 2010 (“PDPA”) which regulates the processing of personal data in regards to commercial transaction and safeguard the interests of data subjects, the penalty for non-compliance will be between RM100,000 – RM500,000 (about US$23,365 – US$116,822 at an exchange rate of 4.28) and /or imprisonment between 1-3 years.  

 

 

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RISK RELATING TO THE INDUSTRY

 

We are exposed to competition in the Malaysian mobile telecommunications industry

 

The market for mobile telecommunications services in Malaysia is highly competitive.  Increasing competition in the Malaysian mobile telecommunications industry has had, and is expected to continue to have, significant impact on our financial condition and results of operations.  We directly competes with the incumbent MNOs as well as three (3) main other MVNOs in the market.  Mobile telecommunications service providers compete for subscribers in a number of different areas including the services and features offered customer service and price.  In addition, the mobile telecommunications industry in Malaysia may experience technological changes, evolving industry standards, liberalization and changes in subscribers’ preferences.  Competition in the mobile telecommunications industry in Malaysia may increase as a result of industry consolidation, the entry of new competitors, regulations, foreign investment in existing competitors, and the development of new technologies, products and services.

 

Malaysia recorded a mobile penetration rate of 143.8% in 2013¹.  This penetration rate in Malaysia is not viewed as saturated yet, as Singapore and Hong Kong Special Administrative Region have achieved penetration rates of 154.3%² and 155.1%³ (as of June 2013) respectively.  Nevertheless as consumers become more affluent and also due to the decline in costs of cellular phones, the adoption of multiple SIMs per individual has become more common.

 

Under the current telecommunications laws in Malaysia,  mobile operators are obliged to provide their subscribers with number portability, which allows subscribers of mobile services to retain their existing number when changing from one operator to the other.  Number portability de creases the hurdles for mobile subscribers to switch to another operator and could lead to increased churn rates and increased subscriber acquisition costs.

 

In view of the above, we rely on our competitive strengths to complete effectively in the Malaysian mobile telecommunications industry.  As an MVNO, we rely on our host network provider’s network infrastructure and thus do not need to incur significant amount of capital expenditure to set up network infrastructure.  This in turn translates into lower breakeven for our costs.  In view of lower capital expenditure, we are able to focus our financial resources towards penetrating new market segments faster.  We also have flexibility in pricing and thus are able to respond to changing market demands fast without the need to obtain approvals from our host network providers.

 

Being a new MVNO, the MNP feature may actually help us to acquire relatively more subscribers than other incumbent mobile telecommunications operators as it presents to mobile users a whole new mobile experience and innovation, on top of attractive pricing.  Being a niche market player, we are able to direct all our strengths to our target market segment intensively and aggressively.

 

Nevertheless, there can be no assurance however that these or other strategies will prove effective in avoiding any materials adverse effects on our future growth and profitability, and there can be no assurance that the level of existing and future competition will not adversely affect our results of operations and financial condition.

 

¹ MCMC : Pocket Book of Statistics, Q1 2014

² Office of the Communications Authority, Hong Kong

³ Infocomm Development Authority of Singapore

 

The mobile telecommunications industry is subject to rapid technological changes

 

The mobile telecommunications industry is subject to rapid, ongoing technological changes and has experienced significant changes in recent years, which we expect to continue.

 

Emerging and future technological changes may adversely affect the viability or competitiveness of our MVNO operation.  We continuously evaluates and analyses new and/or suitable technologies to be adopted or assimilated into our business as we strive to keep abreast with the ever changing market trends and demand, increase competitiveness and avoid technological obsolescence timely and cost effectively.

 

However, as an MVNO, we rely on our host network provider’s telecommunications network infrastructure, i.e. DiGi Digital Network.  This frees us from investing in related heavy capital expenditures, maintenance and upgrading of network infrastructure due to technological changes.

 

 

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Shift in business and revenue model

 

The on-going fragmentation of the sector value chain and aggressive moves by competitors in the marketplace is shifting legacy business models and strategies. There is a pivotal challenge to operators to explore new revenue streams in an effort to entice user loyalty. The failure to shift and adapt to changes and trends in the ecosystem can be adversely affect the financial prospects of the company. A pivotal trend in the ecosystem is the migration from charging for minutes to moving rising volumes of data across networks, shifting away from the traditional revenue streams of voice and SMS related charges. Having long-term financial sustainability is dependent on the structural and operational flexibility and ability of the organization to monetize the increase and changes in demand. In order to limit risks, we are constantly investing time and resources in diversifying our revenue mix through research and development, and exploration of data enabled services and new business models. However there can be no assurance that our Group will be able to compete effectively against our competitors.

 

Emergence of Over-The-Top (OTT) Providers taking a share of future expansion of service revenues

 

The explosion of affordable smartphones (often Wi-Fi enabled), coupled with inexpensive and widespread mobile broadband plans have paved the way for a new category of disruptive competitors in the telecom market- OTT players. OTT Voice and Messaging players are the biggest threats for communication service providers. OTT providers have a direct effect on the providers’ core service revenues and margins through substitution of conventional utilization away from the traditional voice, SMS and roaming through Internet Protocol (IP) alternatives. The challenge herein lies with the company to effectively manage the competitive pressures of the market. Adoption of opportunistic and collaborative strategies has its merits in diversification of revenue streams. Embarking on this this approach will generate new revenue streams and balance profit margins, there are however legal limitations to the opportunistic approach following the content of our legal arrangements with the network provide. In order to remain competitive a more collaborative approach needs to be adopted. The company has embarked on this route by exploring new revenue generating streams and balance profit margins through collaborations with other OTT players.

 

Extend of capital expenditure needed to support growth

 

Content streaming players place significant strain on communication service provider networks and resources. Although mobile data revenue growth has helped the industry compensate for voice revenue stagnation, data profitability is lagging. The presence of content streaming players is pushing the envelope with traditional providers. The increased load on the network through transfer of huge amounts of data is forcing providers to make capital investment in network upgrades and operational cost in order to sustain the significant traffic optimization.  As an MVNO we rely on the host network providers telecommunications infrastructure and don’t foresee any heavy capital investment in expenditure, maintenance or upgrading of network infrastructure however this does not eliminate the potential threat and risk that could be associated with the indirect effect of network overload or saturation. Establishing an effective communication channel with our network provider partner to address issues of bandwidth will not be an assurance of material mitigation.

 

Data Security breach or threats and attacks from third parties

 

The profile of digital security has increased in recent years and mainly attributed to headlining news in the media. As global communities become increasingly dependent on computing and networking it is imperative that these systems operate securely.  While standards continue to meet the needs of the industry and end user, the increased use of open interphases and protocols and the sheer diversity of applications and platforms are increasingly raising threats for malicious use of networks. The surge of security violations (such as viruses and breach of confidentiality) have been observed throughout global networks and often resulted in major cost impacts. Keeping abreast rapidly evolving data security threats is a priority for us. In addressing these threats the Company approaches all threats with a comprehensive, up-to-the minute knowledge about information assets, ecosystem threats and vulnerabilities. The company also employs industry standards in data management, storage and handling of information through its systems, processes and management to mitigate any related risk. The Company has deployed all necessary and available resources to ensure competent handling of data and neutralization of threats however this cannot completely eliminate the threat and risk associated with data security breach or threats and attacks from third parties to its systems or data. Breach of data security or threats and attacks on the systems or data of the company could materially affect the reputation of the Company and could be detrimental to the organizations finances.

 

Regulated relationship between MVNO and MNO

 

The relationship between the Company and its Telecom Operator, a Malaysia Network Operator (“MNO”) is defined in great length through its engagement contract. The Company purchases airtime and bandwidth at wholesale rates and resells them to the market offering value added services and package bundles to attract the pool of potential subscribers in the market. At the same time the loose ended agreement does not restrict the MNO from offering the similar bundles and value added services at a lower rate, due to its lower cost price to the same pool of potential subscribers. Some may argue that this arrangement of good faith is done in market competitiveness however this form of non-regulated relationship in terms of product offerings can adversely affect the current and future prospects of the Company.

 

 

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MVNO’s business is subject to extensive regulation

 

The provision of telecommunications services in Malaysia are subject to extensive regulation and supervision by the MCMC under the ambit of the Ministry of energy, Green Technology and Water (formerly known as Ministry of Energy, Water and Communications Malaysia).  We are further governed by the Malaysian Communications and Multimedia Act, 1998 (“CMA”) pursuant to which our NSP-I was granted.  While we strongly believe that our NSP-I licence and approvals and in good standing and expect to be able to continue to fulfill our licence and approval terms to the satisfaction of the MCMC, there is no assurance that renewals will be on the same terms as the existing licences.

 

Any inability to obtain new licences, or delay in the renewal of existing licences, could impede our provision of services and could therefore have a material adverse effect on our business and results of operations.  Our operational and financial results could also be adversely affected if adverse fee charges, such as the establishment of regulated pricing, are introduced by the MCMC.

 

Changes in laws, regulations or MCMC policy affecting our business activities and those of its competitors could adversely affect our financial condition or results of operations.  In particularly, decision by the MCMC in the areas of the grant, amendment or renewal of licenses to us or third parties, if unfavourable to us, could adversely affect our financial condition and results of operations.  There can be no assurance that the Minister will not issue new or additional telecommunications licences to new or existing mobile operators whose services will compete with those offered by us.

 

We may be liable for our distributors’ actions

 

As our distributors are third parties, we have no control over their operations but we may be held accountable for their actions as they are deemed to be our agents or representatives.

 

Currently, liability for agent actions is limited to prepaid registration which is governed by MCMC’s guidelines on Registration of End-Users of Prepaid Public cellular Services (No. 1 and No. 2) and the Guidelines on Prepaid Registration (collectively “Prepaid Guidelines”). There is no guarantee that liabilities for agent actions will not be extended to other areas since the Minister has the power to impose additional conditions.

 

However, all our distributors and their dealers are required to follow strictly to our standard operating procedures for prepaid registration to minimize non-compliance and possible fines by MCMC.  

 

We are exposed to risks relating to content downloaded or uploaded by its subscribers

 

Mobile communications providers may be subject to third party allegations of intellectual property rights infringement with regards to content downloaded or uploaded by its subscribers.  There can be no assurance that our subscribers do not and will not infringe the intellectual property rights of others.

 

In some instances, these third party allegations may have progressed to lawsuits alleging infringement of patent and other rights.  Any such allegations, whether or not meritorious, could result in costly litigation and divert the efforts of our personnel.  While we continuously seek appropriate assurances and indemnification from vendors, if it is ultimately determined that a third party has enforceable intellectual property rights with respect to our products and services, it may adversely affect our results of operations or prevent us from offering our services.

 

If we are found liable for infringement, we may be required to other into licensing agreements (if available on acceptable terms or at all) or pay damages and cease selling certain products and services.  In addition, we may need to redesign some of our product and service offerings to avoid future infringement liabilities.  

 

Concerns about alleged mobile telecommunications health risk

 

Certain reports, albeit not conclusive, indicate that radio frequency emissions from mobile handsets and other mobile equipment may have an adverse effect on the health of mobile telephone users and others.  The issuances of such reports in the future could adversely affect the market price of the shares of mobile telecommunications service providers, including ours, and the actual or perceived risk of mobile telecommunications devices could adversely affect mobile operators such as ours through reduced subscriber growth, reduction in subscribers or reduced usage per subscriber.

 

 

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RISKS RELATING TO MALAYSIA

 

Developments in Asia and globally may negatively impact our MVNO operation

 

The global economy though expanded at a modest pace in 2013 was riled with the increase in payroll tax and the automatic government spending cuts in US and the uncertainties emanating from the crisis in Cyprus. To a certain extent, the Malaysian economy was affected but was driven by the continued strong growth in domestic demand. The Malaysian economy expanded by 4.7% in 2013 (2012: 5.6%) with GDP recorded at 4.7% (2012: 5.6%).¹  Further adverse economic developments globally and in Asia could have a material adverse effect on Clixster’s financial condition and results of operation.

 

¹ Bank Negara Malaysia Annual Report 2013

 

Political, economic and social developments or other changes in tax law or other regulations in Malaysia may adversely affect our MVNO operation

 

Our business, prospects, financial condition and results of operations may be adversely affected by political, economic, social and legal developments in Malaysia.  Such political and economic uncertainties include, but are not limited to, the risks of war, terrorism, nationalism or nullification of contract, changes in interest rates and methods of taxation.  Negative developments in Malaysia’s socio-political environment may adversely affect our business, financial condition and results of operations.  In addition, changes in tax laws or other regulations or actions taken by the Government to partially or wholly nationalize our operation or our operating assets could adversely affect our results of operations and financial condition.

 

 

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ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

PROPERTY HELD BY US. Neither the Company nor its subsidiaries own any properties or facilities.

 

During the year under review, we lease and occupy 5,000 square feet of office space in Kuala Lumpur for our executive and administrative office at a cost of about RM12,000 or about US$3,429 per month.

 

At the date of this report, we are operating at Level 7, Tower 7, Avenue 5, The Horizon Bangsar South, No.8 Jalan Kerinchi, 59200, Kuala Lumpur, Malaysia with an area of 200 square feet at no costs.  We use this premises on a monthly basis and pay no rent.  We believe we will be able to obtain additional space, as needed, on commercially reasonable terms.

 

ITEM 3. LEGAL PROCEEDINGS

 

There are no legal actions pending against us nor are any legal actions contemplated by us at this time.

 

 

ITEM 4. MINE SAFETY DISCLOSURES
 
Not applicable.

 

 

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PART II
 
ITEM 5. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

 

 

MARKET INFORMATION

 

Our shares are quoted and traded from time to time on the OTC Markets under the symbol "CHMD". Although trading in our Common Stock has occurred on a relatively consistent basis, the volume of shares traded has been limited; the quotations are limited and sporadic at times.

 

The following table shows the reported quarterly high and low closing sales price for our shares within the last two fiscal years on the OTC Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. Investors should not rely on historical prices of our Common Stock as an indication of its future price performance. The closing price of our Common Stock on December 31, 2014 was $0.01 per share.

 

 

  Quarter High Low
  ------------------------ ------------- --------------
  Fourth Quarter 2014 $0.020 $0.001
  Third Quarter 2014 $0.027 $0.010
  Second Quarter 2014 $0.019 $0.008
  First Quarter 2014 $0.025 $0.010
       
  Fourth Quarter 2013 $0.028 $0.010
  Third Quarter 2013 $0.020 $0.009
  Second Quarter 2013 $0.030 $0.001
  First Quarter 2013 $0.0228 $0.0125
       

 

HOLDERS

 

The number of record holders of our common stock as of December 31, 2015, was 87 based on information received from our transfer agent. This amount excludes an indeterminate number of shareholders whose shares are held in "street" or "nominee" name.

 

DIVIDENDS

 

There have been no cash dividends declared on our Common Stock since inception. It is the present policy of the Company to retain earnings to finance the growth and development of the business and, therefore, the Company does not anticipate paying dividends on its common stock in the foreseeable future.

 

The holders of our Common Stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of our directors or any other matter. Therefore, the holders of more than 50% of the shares voted for the election of those directors can elect all of the directors. The holders of our Common Stock are entitled to receive dividends when, as and if declared by our Board of Directors from funds legally available therefore. Cash dividends are at the sole discretion of our Board of Directors. In the event of our liquidation, dissolution or winding up, the holders of Common Stock are entitled to share ratably in all assets remaining available for distribution to them after payment of our liabilities and after provision has been made for each class of stock, if any, having any preference in relation to our Common Stock. Holders of shares of our Common Stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to our Common Stock.

 

 

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STOCK OPTIONS

During the year, we had one effective equity compensation plan. The detail of the equity compensation plan is set out below.

 

2007 Stock Incentive Plan

 

On February 19, 2007, our Board of Directors authorized and approved the adoption of the 2007 Stock Incentive Plan effective the same date (the "2007 Stock Incentive Plan").

 

The purpose of the 2007 Stock Incentive Plan is to enhance our long-term stockholder value by offering opportunities to our directors, officers, employees and eligible consultants to acquire and maintain stock ownership in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in our service.

 

The 2007 Stock Incentive Plan is to be administered by our Board of Directors or a committee ("Plan Administrator") appointed by and consisting of two or more members of our Board of Directors, which shall determine (i) the persons to be granted stock options under the 2007 Stock Incentive Plan; (ii) the number of shares subject to each option, the exercise price of each stock option; and (iii) whether the stock option shall be exercisable at any time during the option period of ten years or whether the stock option shall be exercisable in installments or by vesting only. The 2007 Stock Incentive Plan provides authorization to the Board of Directors to grant stock options to purchase a total number of shares, not exceed 38,400,000 shares as at the date of adoption by the Board of Directors. At the time a stock option is granted under the 2007 Stock Incentive Plan, the Board of Directors shall fix and determine the exercise price at which shares of our Common Stock may be acquired.

 

In the event an optionee ceases to be employed by or to provide services to us for reasons other than cause, retirement, disability or death, any stock option that is vested and held by such optionee generally may be exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. The Plan Administrator shall have complete discretion either at the time an option is granted or at any time while the option remains outstanding, to i) extend the period of time which the option is to be exercisable following the optionees cessation of service, but not beyond the expiration of the option term and/or ii) permit the option to be exercised after the cessation of employment of both vested and unvested options at the time of cessation of employment.

 

No stock options granted under the 2007 Stock Incentive Plan will be transferable by the optionee other than by will or by the laws of descent and distribution following the optionee's death, and each stock option will be exercisable during the lifetime of the optionee subject to the option period of ten years or limitations described above. The options can be assigned in whole or in part during the Optionee's lifetime to one or more members of the optionee's immediate family, provided the assignment is connected to estate planning or pursuant to a domestic relations order.

 

The exercise price of a stock option granted pursuant to the 2007 Stock Incentive Plan shall be paid in full to us by delivery of consideration equal to the product of the number of shares multiplied by the exercise price. Any stock option settlement, including payment deferrals or payments deemed made by way of settlement of pre-existing indebtedness from the Company may be subject to such conditions, restrictions and contingencies as may be determined by the Plan Administrator.

 

The 2007 Stock Incentive Plan further provides that, subject to the provisions of the 2007 Stock Incentive Plan and prior Stockholder approval, the Board of Directors may grant to any key individuals who are our employees eligible to receive options, one or more incentive stock options to purchase the number of shares of Common Stock allotted by the Board of Directors (the "Incentive Stock Options"). The option price per share of Common Stock deliverable upon the exercise of an Incentive Stock Option shall be at least 100% of the fair market value of the Common Shares of the Company and in the case of an Incentive Stock Option granted to an optionee who owns more than 10% of the total combined voting power of all classes of our stock, shall not be less than 110% of the fair market value of our Common Stock. The option term of each Incentive Stock Option shall be determined by the Plan Administrator, which shall not commence sooner than from the date of grant and shall terminate no later than ten years from the date of grant of the Incentive Stock Option, except for optionee who owns more than 10% of the total combined voting power of all classes of our stock whom shall terminate no later than five year from the date of grant of the Incentive Stock Option.

 

On March 8, 2007, we registered 38,400,000 shares underlying stock options under the 2007 Stock Incentive Plan with the SEC pursuant to a registration statement on Form S-8.

 

From 2007 to 2013 the Company issued a total of 6,522,309 shares under the 2007 Stock Incentive Plan.

 

In 2014, the Company did not issue any shares under the 2007 Stock Incentive Plan.

 

In summary, as of December 31, 2014, (i) the Company has issued 6,522,309 shares under the 2007 Stock Incentive Plan, (ii) there are no outstanding stock options to purchase our Common Stock under the 2007 Stock Incentive Plan and, (iii) there are still 31,877,691 shares issuable under the 2007 Stock Incentive Plan.

 

 

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ISSUER PURCHASES OF EQUITY SECURITIES

 

No repurchases of our Common Stock were made during the fourth quarter and during our fiscal year ended December 31, 2014.

 

PENNY STOCK REGULATIONS

 

Shares of our Common Stock are subject to rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in "penny stocks". Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system).

 

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which contains the following:

 

-   a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

-   a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities' laws;

-   a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the "bid" and "ask" price;

-   a toll-free telephone number for inquiries on disciplinary actions;

-   definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and

-   such other information and is in such form (including language, type, size and format), as the Securities and Exchange Commission shall require by rule or regulation

 

Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:

-   the bid and offer quotations for the penny stock;

-   the compensation of the broker-dealer and its salesperson in the transaction;

-   the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

-   monthly account statements showing the market value of each penny stock held in the customer's account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our Common Stock may have difficulty selling those shares because our Common Stock will probably be subject to the penny stock rules.

 

ITEM 6. SELECTED FINANCIAL DATA

 

A registrant that qualifies as a smaller reporting company is not required to provide the information required by this item.

 

 

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion of our financial condition and our subsidiaries and our results of operations should be read together with the consolidated financial statements and related notes that are included later in this Annual Report on Form 10- K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Risk Factors or in other parts of this Annual Report on Form 10-K.

 

Year ended December 31, 2014 compared with year ended December 31, 2013

 

Results of Operations

 

REVENUES

 

For the year ended December 31, 2014, the Group has realized revenue of $4,216 and no cost of revenue, achieving a gross profit of $4,216 from its continuing operations. For the year ended December 31, 2013 there was no revenue, costs of sales and gross profit from the continuing operations. For the year ended December 31, 2014, the Group has realized revenue of $5,186,766 and a cost of revenue of $4,136,723 and sales discount of $851,916 achieving a gross profit of $198,127 from its business operations held for sale (Note 6). For the year ended December 31, 2013, Group has realized revenue of $2,660,292 and a cost of revenue of $1,439,211 and sale discount of $683,087 achieving a gross profit of $537,994 from its business operations held for sale (Note 6).

 

OPERATING EXPENSES

 

For the year ended December 31, 2014, from our continuing operations, our gross profit was $4,216 and our total operating expenses were $135,383, all of which were selling, general and administrative expenses. We also had $400,050 in write back of liabilities, $420,362 in gain from disposal of subsidiaries, $146,667 in interest expenses and loss from our operations held for sales of $4,002,463 so that the net loss to our shareholders before non-controlled interests for the year ended December 31, 2014 was $3,459,885. This was in comparison to the year ended December 31, 2013 where we had no gross profit, $95,847 in administration expenses and a loss from our operations held for sales of $1,741,741 so that the net loss to our shareholders before non-controlled interest for the year ended December 31, 2103 was $1,764,185.

 

For the year ended December 31, 2014, from our operation held for sale, our gross profit was $198,127 and our total operating expenses were $3,285,725, all of which were general and administrative expenses. We also had $345,000 in interest expenses, loss on foreign exchange of $583,712 and other income of $13,847 so that the net loss from our operations held for sale for the year ended December 31, 2014 was $4,002,463 (Note 6). This is in comparison to the year ended December 31, 2013 from operations held for sale, where our gross profit was $537,994 and our total operating expenses were $2,181,255, all of which were selling, general and administrative expenses.  We also had $5,921 in interest expenses, $1,770 in bank charges, $93,779 in loss on foreign exchange and $2,990 in other income, so that the net loss from our operations held for sale for the year ended December 31, 2013 was $1,741,741 (Note 6).    

 

Liquidity and Capital Resources

 

As at December 31, 2014, the Company had cash and cash equivalents totaling $21,245 in operations held for sale. Also as at December 31, 2014, the Company’s current and total assets was $7,393,956 consisting of deposits and prepayments of $4,538 and assets of operations held for sale of $7,389,418. We also had current liabilities of $13,075,651 which were represented by $146,667 in amounts due to related parties, $639,248 in other payables and accruals, and $12,289,736 in operations held for sale as of December 31, 2014. We also had $2,000,000 in long-term shareholders loan as of December 31, 2014, making our total liabilities $15,075,651.

 

At present the Company does not have sufficient cash resources to provide for all general corporate operations in the foreseeable future. The Company will be required to raise additional capital in order to continue and expand its operations in fiscal 2014.

 

 

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Liquidity and Capital Resources

 

There were no net cash provided by investing activities and financing activities in 2014 and 2013 from continuing operations. The Company intends to monitor the monthly cash outlays in the coming months and conserve cash until additional financing can be received through other funding. The net loss for the year was $3,459,885 compared to net loss of $1,764,185 in the prior year.

 

At present the Company does not have sufficient cash resources, receivables and cash flow to provide for all general corporate operations in the foreseeable future. In 2015 the Company changed its focus from a prepaid MNVO business model to refocus to a post-paid business model This new MVNO business models requires injection of funds for the development of its postpaid business model.  The Company will be required to raise further funds to meet its other liabilities and operation requirements to continue to operation in the future by i) selling its Common Stock ii) raise from the capital markets, or iii) sell additional assets.

 

Going Concern

 

The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

 

As of December 31, 2014, the Company has an accumulated deficits totaling $9,140,232 and its current liabilities exceed its current assets by $5,681,695. The Company has also experienced a significant loss in 2014 of $3,459,885 (2013:$1,764,185).

 

The Company's ability to continue as a going concern is contingent upon its ability to secure additional financing and attain profitable operations. In addition, the Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in developing markets and the competitive environment in which the Company operates.

 

The Company is pursuing financing for its operations and seeking additional investments. In addition, the Company is seeking to in develop the MVNO business in Malaysia. Failure to secure such financing, to raise additional equity capital and to develop its operations may result in the Company depleting its available funds and not being able pay its obligations.

 

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

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

 

Capital Expenditure Commitments

 

We had no material capital expenditures for the year ended December 31, 2014. However we expect to invest, subject to availability of funding, approximately $2,500,000 in capital expenditure over the next 12 month for the MVNO business.

 

 

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Critical Accounting Policies

 

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States, and make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, and the related disclosures of contingent liabilities. We base our estimates on historical experience and other assumptions that we believe are reasonable in the circumstances. Actual results may differ from these estimates.

 

The following critical accounting policies affect our more significant estimates and assumptions used in preparing our consolidated financial statements.

 

Stock-Based Compensation

 

The Company accounts for equity instruments issued to employees for services based on the fair value of the equity instruments issued and accounts for equity instruments issued to other than employees based on the fair value of the consideration received or the fair value of the equity instruments, whichever is more reliably measurable.

 

The Company accounts for stock based compensation in accordance with ASC 718 “Compensation – Stock Compensation” which, prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights, may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 “Equity –Based Payments to Non-Employees”. Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.

 

Recently Issued Accounting Pronouncements

 

Recently issued accounting pronouncements and their effect on us are discussed in the notes to the consolidated financial statements in our December 31, 2014 audited financial statements.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

A smaller reporting company is not required to provide the information required by this Item.

 

 

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Consolidated Financial Statements

 

Please see page F-1 through F-18 of this Form 10-K.

 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

During the reports for the two most recent fiscal years, there were no disagreements with HKCMCPA Company Limited on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure as covered by Item 304 (a)(1)(iv) of Regulation S-K, which disagreements, if not resolved to the satisfaction of HKCMCPA Company Limited would have caused them to make reference thereto in their report on the financial statements for such years.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our then Chief Executive Officer, Noor Azlan Khamis and our current Chief Executive Officer, Andrew Hwan Lee, and our Chief Financial Officer, Mohd Suhaimi bin Rozali, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of a date (the "Evaluation Date") within ninety (90) days prior to the filing of our December 31, 2014 Form 10-K.

 

Based upon that evaluation, our Management has concluded that, as of December 31, 2014, our disclosure controls and procedures were not effective in timely alerting management to the material information relating to us (or our consolidated subsidiaries) required to be included in our periodic filings with the SEC.

 

Internal Control over Financial Reporting

 

(a) Management’s Annual Report on Internal Control Over Financial Reporting.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

 

 

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A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

Our management, with the participation of its CEO and President, assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of The Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based on that assessment under such criteria, management concluded that our internal controls over financial reporting were not effective as of December 31, 2014 due to control deficiencies that constituted material weaknesses. A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

 

In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified one material weakness in our internal control over financial reporting. This material weakness consisted of inadequate staffing within the accounting operations of our Company. The small number of employees who are responsible for accounting functions (more specifically, two in our subsidiary accounting department) prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.

 

We are in the process of developing and implementing remediation plans to address our material weaknesses.

 

Management has identified specific remedial actions to address the material weaknesses described above:

 

*  Improve the effectiveness of the accounting group by continuing to augment our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures. We plan to mitigate the segregation of duties issues by hiring additional personnel in the accounting department once we have achieved positive cash flow from operations, and/or have raised significant additional working capital.

*  Improve segregation procedures by strengthening cross approval of various functions including cash disbursements and quarterly internal audit procedures where appropriate.

 

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

Changes in Controls and Procedures

 

There were no significant changes made in our internal controls over financial reporting as of December 31, 2014 that have materially affected or are reasonably likely to materially affect these controls. Thus, no corrective actions with regard to significant deficiencies or material weaknesses were necessary.

 

Attestation Report of the Registered Public Accounting Firm

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

 

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERANCE.

 

Executive Officers and Directors. Our directors and principal executive officers during year 2014 and to the date of this report are as specified on the following table:

 

NAME POSITION APPOINTED  / RESIGNED DURING THE PERIOD
Andrew Hwan LEE Non Executive Director Appointed on January 31, 2014
CHING Chiat Kwong Non Executive Director Appointed on January 31, 2014 and resigned on February 5, 2015, and re-appointed on October 21, 2015
Abdul Fattah Abdullah Non Executive Director Appointed on October 21, 2015
Ahmad Shukri Abdul Ghani Non Executive Director Appointed on October 21, 2015
Mohd Suhaimi Bin ROZALI   Chief Financial Officer Appointed on June 8, 2012
Megat Radzman MEGAT
KHAIRUDDIN
Executive Chairman Appointed on January 31, 2014 and resigned on May 12, 2015
Noor Azlan KHAMIS

Chief Executive Officer, President

and Executive Director

Appointed on January 31, 2014 and resigned on October 21, 2015

Azrinaz Mazhar HAKIM

MAZHAR

Non Executive Director Appointed on January 31, 2014 and resigned on October 21, 2015
Mohd Mahyudin Bin ZAINAL Non Executive Director Appointed on June 8, 2012 and resigned on April 15, 2014
Norlizah Binti Zainal Executive Director Resigned on January 31, 2014
Mohd Khairudin Bin Ramli Non-executive Director Resigned on January 31, 2014

 

Our directors hold office until the earlier of their death, resignation or removal by stockholders or until their successors have been qualified. Our officers are elected annually by, and serve at the pleasure of, our board of directors.

 

Biographies

 

Directors and Officers

 

Andrew Hwan Lee. Andrew Lee, aged 53, was appointed to be the Non-Executive Director on January 31, 2014 and the President and Chief Executive Officer on October 21, 2015. He is a Korean American with an extensive international work experience. His first job stint started in 1987 at Trustbank Savings in Virginia, USA where he was the Assistant Manager of its Computer Department. Later in 1990, he joined International Computer Consulting (ICC) Corp., also in Virginia as the IS Manager before joining the Clinton-Gore Presidential Campaign team in Washington DC in October 1991 for 13 months as the System Manager, responsible for data communications and was tasked with designing the LAN and WAN infrastructure to support the presidential campaign and its subsequent testing and implementation.

 

He later joined Hughes Communication in December 1992, under the National Rural Telecommunication Cooperative as the Head of DBS Billing Applications where he was responsible for the selection, specification, development, implementation and operations of the billing system.

 

In early 1995, he was appointed as the Chief Information Officer of MEASAT Broadcast Network Systems in Malaysia (“MBNS”). Operating under the brand ASTRO, MBNS is an integrated electronic media enterprise offering a wide-range of multimedia broadcasting services and one of the largest broadcasting companies in Asia, offering 100 television and 8 radio channels in digital format. During his 5 years tenure, Andrew played a pivotal role to develop and maintain an efficient telecommunication infrastructure and to design and establish a scalable and robust networking infrastructure, which would transparently integrate various critical broadcasting-related sub-systems and administrative system using leading edge technology with a centralised data centre for the operations and management of these systems. His expertise and knowledge were not confined to the Company alone as he was also involved in the Group’s activities as Chairman of the Group’s IT Committee, Technical Advisor for the Binariang’s (a sister company of MBNS) satellite systems and Advisor/Consultant/Project Manager for the Group’s regional call centre in Philippines.

 

Subsequently in 2000, Mr. Lee was appointed as the Group CEO of DataOne Group Ltd, a wholly owned subsidiary of KEPPEL T&T, which is in the business of building and operating world class Internet Data Center in Singapore, Malaysia, Philippines and Thailand, managing an operating budget of over S$500 million.

 

In July 2007 till now, he is the Chief Strategy Officer of HUB Technologies Sdn Bhd, an aerosol fire suppression systems provider serving both the domestic and international scenes. Its product under the brand name of Aerohub is known as the only organic aerosol fire suppression solution in the world and recognized by the Government of Malaysia as a National Product. HUB Technologies was awarded a Central Contract from the Ministry of Finance of Malaysia worth RM2 billion.

 

Andrew Lee studied computer engineering at University of Missouri in 1985. He is not a director or officer of any other reporting company.

 

 

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Ching Chiat Kwong. Ching, aged 50, was appointed as the Non-Executive Director of the Company on January 31, 2014 and resigned on February 5, 2015. Mr Ching rejoined the Board on October 21, 2015. Mr. Ching is the Executive Chairman and CEO of Oxley Holdings Limited, a company listed on the Singapore Stock Exchange (“SGX”).  He is responsible for the overall performance as well as for the formulation of corporate strategies, and the future direction of the Oxley Group.  Ching also serves as a Non-Executive Director of Artivision Technologies Ltd, a SGX Catalist-listed company.

 

Ching possesses more than 15 years of experience in real estate development and telecommunications in Asia.  Prior to establishing the Oxley Group, he invested in, developed and successfully launched 13 residential property projects in various parts of Singapore. His ability to identify market trends and business opportunities has enabled him to chart the course for the Oxley Group’s expansion towards the development of industrial and commercial projects in addition to residential properties. Under Mr. Ching’s leadership, the Oxley Group completed its initial public offering (IPO) on the SGX Catalist in October 2010. Oxley’s IPO was then the largest offering ever made on SGX Catalist.

 

Apart from his commitments at Oxley, Ching is also an active supporter of programmes that benefit the elderly and socially disadvantaged. Ching graduated with a Bachelor of Arts degree and a Bachelor of Social Sciences (Hons) degree from the National University of Singapore in 1989 and 1990, respectively.  He is not a director or officer of any other reporting company.

 

 

Abdul Fattah Abdullah. Mr. Abdul Fattah Abdullah, aged 56, was appointed as non-executive director on October 21, 2015. He is currently the President of the National Cooperative Movement of Malaysia or Angkasa, which is the defacto body of the cooperatives’ movement in Malaysia. Appointed since June 2013, he plays an important role in driving Angkasa in providing high quality products and services as well as protecting the interests and championing the rights of the cooperative movement through professional management.

 

He is also the President of ASEAN Cooperative Organisation (ACO) until his term expires in 2018. He also sits as Board member in Cooperative College of Malaysia and the Federal Land Consolidation and Rehabilitation Committee (“FELRA”), a Government-linked company involved in rehabilitation and consolidation of rural lands through re-planting and helping its community participate in national economy activities. In addition, he is chairman of 2 subsidiaries under FELCRA namely Felcraniaga Pte Ltd and Felcra Training and Consultancy Pte Ltd.

 

He graduated from Universiti Putra Malaysia with a Bachelor in Communication in 2004 and a Professional Diploma in Entrepreneurship and Business Management from Universiti Malaya in 2003. He is not a director or officer of any other reporting company.

 

 

Ahmad Shukri Abdul Ghani. Mr. Ahmad Shukri Abdul Ghani, aged44, was appointed as non-executive director on October 21, 2015. He graduated with his law degree from University of Wales, Cardiff, Wales in 1996 and then in 1997, obtained his Barrister at Law from the Honourable Society of Gray’s Inn. In 2011, he pursued and obtained his Certificate of Usuluddin from Universiti Malaya.

 

Mr. Ahmad Shukri currently is a partner of Messrs. Aziz Hon Annuar. For the past 10 years he has been with PGN Link Sdn Bhd. He worked in various industries including being the General Manager for EH Auto Link (Asia) Sdn Bhd, a company in the business of importing and producing automotive parts and Managing Director of PGN Link Sdn Bhd, which deals in the trading of used automotive parts. As a result of his many years in automotive sector, he was involved in the negotiation with the Malaysia Automotive Institute in drawing up the National Automotive Policy. He was also invited to the British Standard Office in London for a discussion in the formation of a new standard for used automotive parts.

 

Besides being a member of the Malaysian Bar Council, England and Wales Bar Council and The Honourable Society of Gray’s Inn, Mr. Ahmad Shukri is the secretary of the Parent-Teachers Association of Hira’ Educational Institution and the Seri Banang, Taman Seri Andalas Residents’ Association and a working committee for End of Life of Vehicles at Standards and Industrial Research Institute of Malaysia (“SIRIM”). He is not a director or officer of any other reporting company.

 

 

Mohd Suhaimi Bin Rozali.  Mohd Suhaimi, aged 54, was appointed as an officer of the Company on June 8, 2012 holding the position of Secretary, Treasurer and Chief Financial Officer of the Company.

 

Mohd Suhaimi graduated from Universiti Teknologi Mara and started his career with Bank Bumiputra Malaysia Berhad, serving at its branches and in the commercial banking division. He later joined the public listed company, Idris Hydraulic (Malaysia) Bhd ("IHMB") in November 2000 and was part of the white knight's team that undertook the comprehensive corporate debt restructuring exercise of IHMB. Upon the completion of the restructuring exercise of IHMB, the white knight company, Idaman Unggul Berhad ("IUB") assumed the listing status of IHMB and was listed on the Main Board of Bursa Malaysia on November 2003. Mohd Suhaimi left IUB to join Transmission Resources Sdn. Bhd. in November 2005, before leaving Transmission Resources Sdn. Bhd. to set up his own company in February 2007. He joined ECE Technologies in December 2009. Mohd Suhaimi is not an officer or director of any other reporting company.

 

 

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Ir. Dr Megat Radzman Megat Khairuddin, Ph.D. Megat Radzman, aged 48, was appointed as Chairman and Executive Director on January 31, 2014 and he resigned on May 12, 2015.  Megat Radzman is an Engineer by training, a graduate of University of British Columbia, Vancouver, Canada with a Degree in Electronics Engineering specializing in Data Communication.

 

Megat Radzman is a serial entrepreneur with a penchant interest in technology. He had successfully created several ventures over the last 15 years, most notably when he co-founded the largest mobile-phone manufacturer and supplier in Malaysia with offices in Singapore, Indonesia, Bangladesh and China. His profound understandings of the mobile consumer market and astute business skills led his venture to become the largest mobile phones distribution network in Malaysia with over 4000 authorized distributors, resellers and specialized mobile retail stores nationwide, and over 17 distributors in countries within the region.

 

He began his career as a Consultant & Business Partner for Siemens & Ericsson and subsequently for the Hungarian Telecommunication Association. He then worked as Designer & Technical Consultant for RISTI (R&D division of PT Telekom, Indonesia based in Bandung). He left to set-up and build CSL Group of Companies, the largest mobile-phone manufacturer and supplier in Malaysia with businesses in Singapore, Indonesia, Bangladesh and China. He served as the Vice Chairman of CSL and consequently departed from the Group after the CSL brand was acquired by S i2i Limited (formerly known as Spice i2i Limited), one of the largest Mobile Internet companies in ASEAN region which is headquartered in Singapore.

 

Megat Radzman received his doctorate in International Marketing from National University of Malaysia in 2010.

 

 

Noor Azlan Khamis. Noor Azlan aged 42, was appointed as Chief Executive Officer, President and Executive Director of the Company on January 31, 2014.  He resigned as a director, Chief Executive Officer and President on October 21, 2015. Noor Azlan holds an MBA in Strategic Marketing from Maastricht School of Management (Holland) with 15 years of technology and marketing experience in both enterprise and service provider networking.

 

He began his career with Asia Connect (1994) under the STI group of companies which was one of the first Internet companies in South East Asia that provided such services as email addresses, domain name registration and even streaming internet radio broadcasts. From October 2007 until May 2010 he led the turnaround exercise for Konsortium Multimedia Swasta Sdn Bhd (KOMMS) as its Director of Business Development and Strategic Planning. He was later appointed as the Chief Executive Officer at Myputralink Group of Companies, a Wireless solution provider and data networking systems company which is part of Zenith Capital Sdn Bhd, a company linked to Oilcorp Berhad.

 

Noor Azlan was also involved with Medical Online Sdn Bhd during the introduction of MSC 7 flagship in the end-90s, where he was responsible for Strategic Planning and Marketing of Malaysian Telehealth Project. Subsequently, Noor Azlan led an initiative to deploy private sector telemedicine project with Malaysian Medical Association and Association of Private Hospital of Malaysian under Open Net System Inc. Noor Azlan was also the co-founder of Giro Mobile Payment Sdn Bhd, whose principal activities were in the telecommunications, ICT and its related business services.

 

 

Azrinaz Mazhar Hakim Mazhar. Azrinaz Mazhar, aged 36, was appointed as the Non-Executive Director of the Company on January 31, 2014.  She resigned as a director on October 21, 2015. Miss Hakim Mazhar started work as a broadcast journalist with Malaysia’s number one private television station TV3 in 1997. She was a graduate from Malaysia Institute of Integrative Media (MIIM) in broadcasting and appeared on TV3’s Buletin Pagi, Berita Terkini and Bulletin 1.30 news segments. She won several accolades throughout her career with TV3 including TV3’s "Most Promising Journalist" award in 2000 and received the MIIM Alumni Award in 2002. During her broadcasting stints, she completed numerous assignments including covering several government and business conferences, as well as interviewing world government leaders and business personalities. She left the TV station in May 2005 to venture into other undertakings.

 

Hakim Mazhar, who is the former wife of the Sultan of Brunei, is also active in social and community work and currently the Patron of the Drug Free Youths Association of Malaysia, an NGO that promotes 'tobacco-alcohol-drug' free lifestyle amongst the youths. She also sits on the board of directors of BACA, an NGO that promotes literacy among the rural communities. Previously, she was the Patron of the Brunei Breast Cancer Awareness Association for three years.

 

 

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Mohd Mahyudin Bin Zainal. Mohd Mahyudin was appointed as Director and President and Chief Executive Officer of the Company on June 8, 2012. He resigned as President and Chief Executive Officer on January 31, 2014 and as director on April 15, 2014. Since August 2008, Mohd Mahyudin has been the Chief Executive Officer of ECE Technologies Sdn. Bhd which was a major shareholder of the Company. Mohd Mahyudin obtained a Bachelor of Law Degree LLB (Hons) from Universiti Kebangsaan Malaysia and has been admitted as Advocate & Solicitor of High Court Of Malaya in 1994. He has extensive experience in many spheres of law including commercial litigation, conveyancing and corporate legal practice. He has been involved in large scale corporate restructuring exercises involving corporate restructuring, mergers and acquisitions of public listed companies locally in Malaysia and also acquisitions of foreign companies in South East Asia. He was directly involved in the listing of Mutiara Goodyear Development Berhad on the Main Board of Bursa Malaysia and the restructuring of Idaman Unggul Berhad (formerly known as Idris Hydraulic (M) Berhad). He was also directly involved in the establishment of Tahan Insurance Berhad via the merger of three insurance companies namely Talasco Insurance Berhad, Tenaga Insurance Berhad and People Insurance Berhad.

 

Prior to joining ECE Technologies in August 2008, he was the Chief Executive Officer/President of WWCable Berhad (company listed in Bursa Malaysia). He was involved in various industries such as manufacturing, property development, construction, financial and insurance and also an executive director and director of several public listed companies listed in Bursa Malaysia namely Idaman Unggul Berhad, Idris Hydraulic Berhad, Mutiara Goodyear Development Berhad, Sern Kou Resources Berhad, Tap Resouces Berhad. He was also Director of Talasco Insurance Berhad, People Insurance Berhad and Tahan Insurance Berhad. Mohd Mahyudin is not an officer or director of any reporting company.

 

 

NORLIZAH BINTI ZAINAL. Ms. Zainal was appointed as Director and Chief Technology Officer of the Company on June 8, 2012 and resigned as Director and Chief Technology Officer on January 31, 2014. Ms. Zainal graduated with a Degree in Electrical Engineering (Hons) from Universiti Teknologi Malaysia in 1989 and obtained a Diploma in Translation (Science and Technical) from Dewan Bahasa dan Pustaka Malaysia in 1990. She was attached to Muhibbah Engineering CMS Berhad as a consultant engineer before joining Ericsson Telecommunications, Malaysia in 1990. During her eleven years at Ericsson, she was responsible for local and international tenders as well as conducting training for local and international staff and clients. In 2002, she joined Unique Network Sdn Bhd. and later joined ECE Technologies Sdn. Bhd. on August 1, 2008 as Chief Technical Officer. Ms. Zainal is not an officer nor a director of any reporting company.

 

 

MOHD KHAIRUDIN BIN RAMLI. Mr. Ramli was appointed to be our Director on March 9, 2012 and resigned on January 31, 2014. Mr. Ramli is a seasoned businessman with over 15 years of experience in Malaysia and South East Asia.  Mr. Ramli has broad experience and proven ability to execute and deliver successful business operations and proven his entrepreneurship skills For the past 5 years, Mr. Ramli has been doing trading business in Malaysia. Mr. Ramli is not an officer or director of any reporting company.

 

There are no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony. Nor are any of the officers or directors of any corporation or entity affiliated with us so enjoined.

 

There are no family relationships among any of our officers and directors, other than Mohd Mahyudin bin Zainal and Norlizah binti  Zainal are siblings.

 

 

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AUDIT COMMITTEE AND FINANCIAL EXPERT. The Committee has adopted regulations relating to audit committee composition and functions, including disclosure requirements relating to the presence of an "audit committee financial expert" serving on its audit committee. In connection with these requirements, our Board of Directors examined the Committee’s definition of "audit committee financial expert" and concluded that we do not currently have a person that qualifies as such an expert. Presently, there are only five directors serving on our Board of which two are in the audit committee, and we are not in a position at this time to attract, retain and compensate additional directors in order to acquire a director who qualifies as an "audit committee financial expert", but we intend to retain an additional director who will qualify as such an expert, as soon as reasonably practicable. While neither of our current audit committee members meet the qualification of an "audit committee financial expert", each of our audit committee members, by virtue of his past employment experience, has considerable knowledge of financial statements, finance, and accounting, and has significant employment experience involving financial oversight responsibilities. Accordingly, we believe that our current audit committee members capably fulfill the duties and responsibilities of an audit committee in the absence of such an expert.

 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of the Securities Act of 1934 requires our directors, executive officers, and any persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. SEC regulation requires executive officers, directors and greater than 10% stockholders to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended December 31, 2014 our executive officers, directors, and greater than 10% stockholders complied with all applicable filing requirements.

 

CODE OF ETHICS. We have adopted a corporate code of ethics that applies to the Company's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The full text of our Code of Conduct is published on our website at www.mediangroupinc.com. The Company shall disclose any substantive amendments to the Code of Ethics or any waivers from a provision of the code on its website at  www.mediangroupinc.com or in a report on Form 8-K.

 

 

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ITEM 11. EXECUTIVE COMPENSATION.

 

Any compensation received by our officers, directors, and management personnel will be determined from time to time by our Board of Directors. Our officers, directors, and management personnel will be reimbursed for any out-of-pocket expenses incurred on our behalf.

 

COMPENSATION FOR DIRECTORS AND EXECUTIVES.

 

The following table sets forth the annual and long-term compensation for services in all capacities to the Company for its fiscal year ended December 31, 2014 paid to our directors and executive officers who earned more than $100,000 per year at the end of the last completed fiscal year. We refer to all of these officers collectively as our "named executive officers."

 

 

SUMMARY COMPENSATION TABLE
Name and principal position Year (1) Salary ($)(13) Bonus ($)

Stock Awards

($)

Option Awards

($)

Non-Equity Incentive Plan Compensation

($)

Nonqualified Deferred Compensation Earnings

($)

All Other Compensation ($) Total ($)
---------------------- ------- ------------- ------------ --------- ---------- --------------- ------------------ --------------- --------------

Megat Radzman

Megat Khairuddin (2)

2014 - - - - - - - -
2013 - - - - - - - -
Noor Azlan Khamis (3) 2014 - - - - - - - -
2013 - - - - - - - -
Andrew Hwan Lee (4) 2014 - - - - - - - -
2013 - - - - - - - -

Azrinaz Mazhar

Hakim Mazhar (5)

2014 - - - - - - - -
2013 - - - - - - - -
Ching Chiat Kwong (6) 2014 - - - - - - - -
2013 - - - - - - - -
Mohd Mahyudin Bin Zainal (7) 2014 - - - - - - - -
2013 - - - - - - - -
Norlizah Binti Zainal (8) 2014 - - - - - - - -
2013 - - - - - - - -
Mohd Suhaimi Bin Rozali (9) 2014 - - - - - - - -
2013 - - - - - - - -
Mohd Khairudin Bin Ramli (10) 2014 - - - - - - - -
2013 - - - - - - - -
Pui Kit Lam (11) 2014 n/a n/a n/a n/a n/a n/a n/a n/a
2013 - - - - - - - -
Con Unerkov (12) 2014 n/a n/a n/a n/a n/a n/a n/a n/a
2013 - - - - - - - -

 

(1) Figures represent the year ended December 31 for the indicative years.
(2) Megat Radzman was appointed as Executive Chairman and Director of the Company on January 31, 2014 and he resigned from both positions on May 12, 2015.
(3) Noor Azlan was appointed as Director and Chief Executive Officer of the Company on January 31, 2014 and he resigned on October 21, 2015.
(4) Andrew Hwan Lee was appointed as Non-Executive Director of the Company on January 31, 2014.
(5) Azrinaz Mazhar was appointed as Non-Executive Director of the Company on January 31, 2014 and she resigned on October 21, 2015.
(6) Ching Chiat Kwong was appointed as non-Executive Director of the Company on January 31, 2014 and he resigned on February 5, 2015 and was reappointed on October 21, 2015.
(7) Mohd Mahyudin has been the Company CEO, President and Director since June 8, 2012, and he resigned from CEO and President positions on January 31, 2014, and he resigned as a director on April 15, 2014.
(8) Norlizah Binti Zainal was appointed as CTO and Director on June 8, 2012 and she resigned from both positions on January 31, 2014.
(9) Mohd Suhaimi has been the CFO, Treasurer and Secretary from June 8, 2012 to present.
(10) Mohd Khairudin was appointed as Director on March 9, 2012 and resigned as Director on January 31, 2014.
(11) Pui Kit Lam was a Director from April 8, 2011 to February 25, 2013.
(12) Con Unerkov was a Director in 2013 until he resigned on January 25, 2013.
(13) Salary paid in Malaysian Ringgit (RM). Exchange rate at USD1=RM3

 

 

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The following table sets forth certain information concerning stock option awards granted to our executive officers and our directors. No options were issued and exercised by our executive officers or directors during the year ended December 31, 2014 and 2013.

 

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2014
------------------------------------------------------------------------------------------------------------------------------------------------------
OPTION AWARDS STOCK AWARDS
                   
Name Number of securities underlying unexercised options (#) Exercisable

Number of securities underlying unexercised options (#)

Unexercisable

Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested (#) Market value of shares or units of stock that have not vested ($) Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested (#)
  ---------- ------------ ----------- -------- --------- --------- ---------- ---------- ----------
Megat Radzman Megat Khairuddin (1) - - - - - - - - -
Noor Azlan Khamis (2) - - - - - - - - -
Andrew Hwan Lee (3) - - - - - - - - -
Azrinaz Mazhar Hakim Mazhar (4) - - - - - - - - -
Ching Chiat Kwong (5) - - - - - - - - -

Mohd Mahyudin Bin

Zainal (6)

- - - - - - - - -
Mohd Suhaimi bin Rozali (7) - - - - - - - - -
Mohd Khairudin Bin Ramli (8) - - - - - - - - -
Norlizah Binti  Zainal (9) - - - - - - - - -
                     

 

(1) Megat Radzman was appointed as Executive Chairman and Director of the Company on January 31, 2014 and he resigned from both positions on May 12, 2015.
(2) Noor Azlan was appointed as Director and Chief Executive Officer of the Company on January 31, 2014.
(3) Andrew Hwan Lee was appointed as Non-Executive Director of the Company on January 31, 2014.
(4) Azrinaz Mazhar was appointed as Non-Executive Director of the Company on January 31, 2014.
(5) Ching Chiat Kwong was appointed as non-Executive Director of the Company on January 31, 2014 and he resigned on February 5, 2015.
(6) Mohd Mahyudin has been the Company CEO, President and Director since June 8, 2012, and he resigned from CEO and President positions on January 31, 2014, and he resigned as a director on April 15, 2014.
(7) Mohd Suhaimi has been the CFO, Treasurer and Secretary from June 8, 2012 to present.
(8) Mohd Khairudin was appointed as Director on March 9, 2012 and resigned as Director on January 31, 2014.
(9) Norlizah Binti Zainal was appointed as CTO and Director on June 8, 2012 and she resigned from both positions on January 31, 2014.

 

Employment Agreements

 

In 2014 and 2013, all the directors did not receive any salaries and did not have any employment contracts with the Group other than the directors indicated below.

 

Megat Radzman Megat Khairuddin, Noor Azlan Khamis and Azrinaz Mazhar Hakim Mazhar received monthly pay per their employment.

 

 

- 35 -

 


 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT RELATED STOCKHOLDER MATTERS

 

The following table sets forth information regarding shares of our common stock beneficially owned as of December 31, 2014 by: (i) each of our officers and directors; (ii) all officers and directors as a group; and (iii) each person known by us to beneficially own five percent or more of the outstanding shares of our common stock.

 

  Name/Address(1)

Common

Stock

Common Stock

Options

Exercisable

Within

60 Days

Common Stock

Purchase

Warrants/

Convertible Note

Exercisable

Within 60 Days

Total Stock

and Stock

Based

Holdings (1)

%

Ownership (2)

 
  --------------------------- ------------------ ----------------- -------------------- ------------------ -----------------  
 

Khamis, Noor Azlan (3) (5) (9) (10)

No. 30, Jalan Damai Perdana 9/2H, Bandar Damai Perdana, Cheras, Kuala Lumpur, Malaysia

3,810,480,659 - - 3,810,480,659 33.70%  
  Megat Radzman Megat Khairuddin (1)(3)(6)(9) (10) 2,573,653,772 - - 2,573,653,772 22.76%  
  Andrew Hwan, Lee(3) (10) (11) - - - - -  
 

Hakim Mazhar, Azrinaz Mazhar (3)(9)(10)

No.30 Jalan Damai Perdana 9/2H,

Bandar Damai,

Perdana, Kuala Lumpur, 56000, Malaysia

550,000,000 - - 550,000,000 4.86%  
 

Chiat Kwong Ching (3)(10) (11)

103, Sophia Road, Suites@Sophia, Singapore

2,709,475,233 - - 2,709,475,233 23.96%  
 

Rozali, Mohd Suhaimi (4)

Lot 2158, Jalan Hassan, Kg Sungai Udang, 41250 Klang, Selangor, Malaysia

- - - - -  
 

All officers and directors as a group

(6 persons)

9,643,609,664 - - 9,643,609,664 85.28  
  Clixster Sdn Bhd (1)(7)(8)(10) 6,184,134,431 - - 6,184,134,431 54.69%  
 

Nik Nurwanis Nik Ahmad Azman (7)(10)

No. 30, Jalan Damai Perdana 9/2H, Bandar Damai Perdana, Cheras, Kuala Lumpur, Malaysia

3,710,480,659 - - 3,710,480,659 33.00%  
  Tengku Ayufeira Tg. A.A. Hood (1)(8)(10) 2,473,653,772 - - 2,473,653,772 22.76%  
  New China Electronics Limited (1) (10) 6,430,134,431 - - 6,430,134,431 56.87%  
                       

 

Notes:
 (1) Except as otherwise indicated, based on information furnished by the owners, we believe that the beneficial owners listed above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated, the address of the beneficial owner is c/o Median Group Inc. at Level 7, Tower 7, Avenue 5, the Horizon Bangsar South, No. 8 Jalan Kerinchi, 59200, Kuala Lumpur, Malaysia.
(2) For purposes of computing the percentage of outstanding Common Stocks held by each person or group of persons named above, any shares that such person or group has the right to acquire within 60 days are deemed outstanding but are not deemed to be outstanding for purposes of computing the percentage ownership of any other person or group. As of the date of the table above, there were 11,307,232,960 outstanding shares of our common stock and there was no options, warrants, and convertible notes outstanding entitling the holders to purchase any shares of our Common Stock owned by officers and/or directors of the Company.
(3) A director of Company as at December 31, 2014.
(4) An officer of Company as at December 31, 2014.
(5) Noor Azlan Khamis holds directly 100,000,000 shares of Common Stock and indirectly 3,810,480,659 shares of Common Stock through his spouse, Nik Nurwanis Nik Ahmad Azman, 60% holding in Clixster Sdn Bhd (“CSB”).  CSB owns 6,384,131,431 shares of Common Stock.
(6) Megat Radzman Megat Khairuddin holds directly 100,000,000 shares of Common Stock and indirectly 2,573,653,772 shares of Common Stock through his spouse, Tengku Ayufeira Tg. A.A. Hood, 40% holding in CSB.
(7) Nik Nurwanis Nik Ahmad Azman, the spouse of our Director Noor Azlan Khamis, holds 60% interests in CSB.
(8) Tengku Ayufeira Tg. A.A. Hood, the spouse of our Director Megat Radzman Megat Khairuddin, holds 40% interests in CSB
(9) Resigned as a director in 2014
(10) In September 2015, New China Electronics Limited (“New China”) a company wholly owned by Ching Chiat Kwong purchased 6,384,134,431 shares of Common Stock from CSB, 550,000,000 shares of Common Stock from Azrinaz Mazhar Hakim, 100,000,000 shares of Common Stock each from Noor Azlan Khamis and Megat Radzman Megat Khairuddin.  After the purchase, (i) CSB, Azrinaz Mazhar Hakim, Noor Azlan Khamis and Megat Radzman Megat Khairuddin all held no shares of Common Stock and (ii) New China and Ching Chiat Kwong held 7,130,134,431 and 2,513,475,233 shares of Common Stock, respectively.  On January 8, 2016, New China sold 350,000,000 shares of Common Stock each to our Directors Andrew Hwan Lee and Ahmad Shukri Bin Abdul Ghani.  As at date of this report, New China held 6,430,134,431 and Ching Chiat Kwong held 2,513,475,233 for a combined holding of 8,943,609,664 shares or about 79.10% of Common Stock.
(11) As of the date of this report, our board of directors and officer consist of our directors Andrew Hwan Lee, Ching Chiat Kwong, Abdul Fattah Abdullah, and Ahmad Shukri Abdul Ghani and our officer Mohd Suhaimi Rozali. On this date, Andrew Hwan Lee held a total of 592,000,000 shares or about 5.24% of Common Stock, Ahmad Shukri Bin Abdul Ghani held a total of 500,000,000 shares or about 4.42% of the Common Stock, Ching Chiat Kwong held a total interests of 8,943,609,664 shares or about 79.10% of Common Stock (note 10 above), and Abdul Fattah Abdullah and Mohd Suhaimi Rozali each held no shares of Common Stock.  Combined, the board of directors at the date of this report, held a total of 10,035,609,664 shares or about 88.75% of Common Stock.

 

 

- 36 -

 


 

Changes in Control

 

As announced in the Form 8K on October 30, 2013, the Company on October 29, 2013 entered into a conditional agreement to acquire 63.2% equity interests in Clixster Mobile for the purchase consideration of the issuance of 10,193,609,664 Common Stock representing approximately 90% of the enlarged issued share capital of the Company. This transaction closed on January 31, 2014 and the Vendors became the new controlling shareholder of the Company. In September 2015, New China Electronic Limited, a company owned and controlled by Mr. Ching Chiat Kwong, acquired 7,130,134,431 shares of Common Stock to become the controlling shareholder. Except for the transaction noted above, we are unaware of any contract, or other arrangement or provisions, the operation of which may at a subsequent date result in a change of control of the Company.

 

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Other than disclosed below or under the caption entitled "Executive Compensation and Other Matters", since the beginning of the Company's last fiscal year, the Company was not a participant in any transaction in which a director, officer or stockholder of the Company, or any family member of any such person, had a direct or indirect material interest where the amount involved exceeded $120,000.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who beneficially own more than 10% of our Common Stock to file with the SEC initial statements of beneficial ownership and reports of changes in beneficial ownership. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

 

Based solely on our review of such statements and reports furnished to us and written representations from certain reporting persons, we believe that our executive officers, directors and greater-than-10% stockholders were complied with the beneficial ownership reporting requirements of Section 16(a).

 

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 
AUDIT FEES. The aggregate fees billed in each of the fiscal years ended December 31, 2014 and 2013 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements as well as registration statement filings for those fiscal years were $20,000 and $20,000 respectively.
 
AUDIT-RELATED FEES. There aggregate fees billed for services reasonably related to the performance of the audit or review of the financial statements outside of those fees disclosed above under "Audit Fees" for fiscal years 2014 and 2013 were $6,000 and $6,000 respectively.
 
TAX FEES. For the fiscal years ended December 31, 2014 and December 31, 2013, our principal accountants did not render any services for tax compliance, tax advice, and tax planning work.
 
ALL OTHER FEES. None
 
PRE-APPROVAL POLICIES AND PROCEDURES. Prior to engaging its accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed. All of the services described above were approved by the board of directors in accordance with its procedures.

 

 

- 37 -

 


 

PART IV

 

 

ITEM 15. EXIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) Index to Financial Statements and Financial Statement Schedules

 

Table of Contents
 
Report of Independent Registered Public Accounting Firm  
 
Consolidated Balance Sheets  
 
Consolidated Statements of Operations  
 
Consolidated Statement of Comprehensive Income
 
Consolidated Statements of Stockholders' Deficits  
 
Consolidated Statements of Cash Flows  
 
Notes to Consolidated Financial Statements

 

 

- 38 -

 


 

(c) Exhibits.
 

 

   
2.1 Shareholders’ Agreement between Good World Investments Limited, Advance Tech Communications Sdn. Bhd. And ATC Marketing Limited(7)
2.2 Sale and Purchase Agreement entered by Good World Investments Limited to acquire 5% equity interest in Advance Tech Communications Sdn. Bhd. (8)
2.3 Sale and Purchase Agreement between Good World Investments Limited and ECE Technologies Sdn. Bhd. (9)
2.4 Sale and Purchase Agreement between the Company and Samata Ventures Sdn Bhd and Clixster Sdn Bhd. (10)
2.5 Sale and Purchase Agreement between the Company and KR Global Ventures Sdn Bhd. (11)
2.6 Sale and Purchase Agreement between the Company and Mohamad Puzi Bin Khalid, and the brand licensing agreement between the Company and Mohamad Puzi Bin Khalid(12)
3.1 Articles of Incorporation (1)
3.1.1 Certificate of Amendment to Articles of Incorporation (2)
3.1.2 Certificate of Amendment to Articles of Incorporation, as amended.(3)
3.1.3 Certificate of Amendment to Articles of Incorporation, as amended.(4)
3.1.4 Certificate of Amendment to Articles of Incorporation, as amended.(5)
3.2 Bylaws (1)
10.1 2007 Stock Incentive Plan (4)
21.1* List of Subsidiaries
31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

   
1. Incorporated by reference to our Registration Statement on Form SB-2 as filed with the SEC on April 15, 2003.
2. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on February 3, 2005.
3. Incorporated by reference to our Registration Statement on Form SB-2 as filed with the SEC on September 26, 2005.
4. Incorporated by reference to our Registration Statement on Form S8 as filed with the SEC on March 8, 2007.
5. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on April 7, 2014.
6. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on October 12, 2015.
7. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on May 26, 2009.
8. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on February 22, 2011.
9. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on March 16, 2012.
10. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on February 6, 2014.
11. Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on January 16, 2014.
12 Incorporated by reference to our Current Report on Form 8-K as filed with the SEC on December 16, 2015

 

* Filed herewith.

 

 

 

- 39 -

 


 

SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 34, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Median Group Inc.
  a Texas corporation
   
    /s/  Andrew Hwan Lee
  ---------------------------------------
  Andrew Hwan Lee
 

Chief Executive Officer

 

 

 

   
    /s/ Mohd Suhaimi bin Rozali
  ---------------------------------------
  Mohd Suhaimi bin Rozali
 

Chief Financial Officer

 

 

 

 

   

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

By:   /s/  Dato Haji Abdul Fattah Abdullah March 23, 2016
  -----------------------------------------------------  
  Dato Haji Abdul Fattah Abdullah  
Its: Director  

 

 

By:   /s/  Andrew Hwan Lee March 23, 2016
  -----------------------------------------------------  
  Andrew Hwan Lee  
Its: President, Chief Executive Officer, Director  

 

 

By:   /s/  Ahmad Shukri Abdul Ghani March 23, 2016
  -----------------------------------------------------  
  Ahmad Shukri Abdul Ghani  
Its: Director  

 

 

By:   /s/ Ching Chiat Kwong March 23, 2016
  -----------------------------------------------------  
  Ching Chiat Kwong  
Its: Director  

 

 

By:   /s/ Mohd. Suhaimi bin Rozali March 23, 2016
  -----------------------------------------------------  
  Mohd Suhaimi bin Rozali  
Its: Chief Financial Officer, Company Secretary, Treasurer  

 

 

- 40 -

 


 

 
Median Group Inc. and Subsidiary
Index to Consolidated Financial Statements
For the Years Ended December 31, 2014 and 2013
 

 

Table of Contents Page
   
   
Report of Independent Registered Public Accounting Firm   F-2  
   
Consolidated Balance Sheets   F-3
   
Consolidated Statements of Operations   F-4
   
Consolidated Statement of Comprehensive Loss F-5
   
Consolidated Statement of Stockholders' Equity F-6
   
Consolidated Statements of Cash Flows   F-7
   
Notes to Consolidated Financial Statements F-8 to F-18

 

 

F-1

 


 

 

HKCMCPA

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Stockholders and Board of Directors
Median Group Inc. (formerly Clixster Mobile Group Inc. and China Media Group Corporation) and its subsidiaries

 

We have audited the accompanying consolidated balance sheets of Median Group Inc. (formerly Clixster Mobile Group Inc. and China Media Group Corporation) and its subsidiaries (the "Company") as of December 31, 2014 and 2013 (restated), and the related consolidated statements of operations, stockholders' deficits and cash flows for the years ended December 31, 2014 and 2013 (restated). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Median Group Inc. (formerly Clixster Mobile Group Inc. and China Media Group Corporation) and its subsidiaries as of December 31, 2014 and 2013 (restated), and the results of its operations and its cash flows for the years ended December 31, 2014 and 2013 (restated), in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred substantial losses this year, all of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ HKCMCPA Company Limited
CERTIFIED PUBLIC ACCOUNTANTS
 
Hong Kong, China
March 23, 2016
 

 

 

 

 

 

15th Floor, Aubin House, 171-172 Gloucester Road, Wan Chai, Hong Kong    
Tel: (852) 2573 2296    Fax: (852) 3015 3860   http://www.hkcmcpa.us

 

F-2

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc.)

(Formerly China Media Group Corporation)
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2014 AND DECEMBER 31, 2013 (Restated)

 

 

     

December 31

2014

 

December 31

2013

  Notes       (Restated)
      US$   US$
ASSETS          
Current assets:          
Prepayments and deposits     4,538   -
Assets of operations held for sale 6   7,389,418   9,834,050
      7,393,956   9,834,050
           
           
Total current assets     7,393,956   9,834,050
           
LIABILITIES AND STOCKHOLDERS' DEFICITS          
Current liabilities:          
Other payables and accruals 7   639,248    924,243
Amounts due to related parties 8   146,667   -
Liabilities of operations held for sale 6   12,289,736   11,542,902
Total current liabilities     13,075,651   12,467,145
           
Long-term debts:          
Shareholder loan 9   2,000,000   2,000,000
Total non-current liabilities     2,000,000   2,000,000
           
Total liabilities     15,075,651   14,467,145
           
Commitments and contingencies 12        
           
Stockholders' deficits:          
Common stock, no par value, 85,000,000,000 shares authorized, 11,307,232,960 (2013: 1,113,623,296) shares issued and outstanding 4   2,775,230   2,775,230
Accumulated deficits     (9,140,232)   (7,153,255)
Accumulated other comprehensive income     414,748   238,554
Total Median Group Inc. stockholders' deficits     (5,950,254)   (4,139,471)
Non-controlling interest     (1,731,441)   (493,624)
Total stockholders’ deficits     (7,681,695)   (4,633,095)
           
Total liabilities and stockholders’ deficits     7,393,956   9,834,050

 

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

 

 

F-3

 


 

MEDIAN GROUP INC
(Formerly Clixster Mobile Group Inc.)
(Formerly China Media Group Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

 

      2014   2013
  Notes   US$   US$
          (Restated) 
Net revenue     4,216   -
Cost of revenue     -   -
           
Gross profit     4,216   -
           
Operating expenses:          
Administration expenses     (135,383)   (95,847)
Selling and distribution expenses     -   -
Total operating expenses     (135,383)   (95,847)
           
Operating loss from continuing operations     (131,167)   (95,847)
           
Other income / (expenses)          
Other income     400,050   -
Gain on disposal of subsidiaries     420,362   -
Write off of option liability     -   236,504
Interest expenses     (146,667)   (163,101)
           
Income/(loss) from continuing operations     542,578   (22,444)
           
Discontinued operations, net of tax 6   (4,002,463)   (1,741,741)
           
Net loss     (3,459,885)   (1,764,185)
           
Less: Net (loss)/income attributable to non-controlling interests     (1,472,908)   619,678
           
Net loss attributable to Median Group Inc.     (1,986,977)   (1,144,507)
           
Net loss per share attributable to Median Group Inc. shareholders – Basic and diluted          
Continuing operations     (0.00)   (0.00)
Discontinued operations     (0.00)   (0.00)
      (0.00)   (0.00)
           
Basic and diluted weighted average number of common shares *     10,441,474,331   1,113,623,296

 

* Weighted average number of shares used to compute basic and diluted loss per share for the year ended December 31, 2014 and 2013 are the same since the effect of dilutive securities are anti-dilutive.

 

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

 

 

F-4

 


 

MEDIAN GROUP INC
(Formerly Clixster Mobile Group Inc.)
(Formerly China Media Group Corporation)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013 (Restated)
(UNAUDITED)

 

 

      2014   2013
  Notes   US$   US$
          (Restated) 
Net loss     (3,459,885)   (1,764,185)
           
Other comprehensive income (loss), net of tax          
Foreign currency translation gain     409,041   67,217
Release of exchange reserve arising from disposal of subsidiaries     (82,615)   -
Total comprehensive loss     (3,133,459)   (1,696,968)
Less: Net (loss) income attributable to non-controlling interests     (1,472,908)   619,678
Less: Other comprehensive income attributable to non-controlling interests - foreign currency translation gain     150,232   12,946
Total comprehensive loss attributable to Median Group Inc.     (1,810,783)   (2,329,592)

 

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

 

 

F-5

 


 

MEDIAN GROUP INC
(Formerly Clixster Mobile Group Inc.)
(Formerly China Media Group Corporation)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

 

 

 

Number of Shares   Common Stock Amount   Accumulated Other Comprehensive Income / (Loss)   Accumulated Deficits   Non-controlling Interest   Total Stockholders' Equity
      US$   US$   US$   US$   US$
                       
Balance at January 1, 2013 (Restated) 10,193,609,664    181,740   (6)    (367)    126,304    307,671 
                       
Issuance of shares for acquisition of legal acquirer 1,113,623,296   2,580,543   203,382   (6,110,891)   (36)   (3,327,002)
                       
Other comprehensive income:                      
Foreign currency translation loss -   -   35,178   -   -   35,178
                       
Net loss for the year -   -   -   (1,041,996)   (606,946)   (1,648,942)
                       
Balance at December 31, 2013 (Restated) 11,307,232,960   2,775,230   238,554   (7,153,255)   (493,624)   (4,633,095)
                       
Other comprehensive income:                      
Foreign currency translation loss -   -   258,809   -   150,232   409,041
Release of exchange reserves arising from disposal of subsidiaries -   -   (82,615)   -   84,859   2,244
  -   -   176,194   -   235,091   411,285
Net loss for the year -   -   -   (1,986,977)   (1,472,908)   (3,459,885)
Total comprehensive loss for the year -   -   176,194   (1,986,977)   (1,237,817)   (3,048,600)
                       
Balance at December 31, 2014 11,307,232,960   2,775,230   414,748   (9,140,232)   (1,731,441)   (7,681,695)

 

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

 

 

F-6

 


 

MEDIAN GROUP INC
(Formerly Clixster Mobile Group Inc.)
(Formerly China Media Group Corporation)
CONSOLIDATED STATEMENTS OF CASHFLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

      2014   2013
      US$   US$
          (Restated)
Cash flows from operating activities:          
Net loss     (3,459,885)   (1,764,185)
Changes in asset and liabilities          
Increase in assets:          
Prepayments and deposits     (4,538)   -
Increase in liabilities:          
Asset of operations held for sale – net liabilities     3,191,466   1,743,682
Other payables and accruals     (284,995)   224,968
Option liabilities     -   (236,504)
Amounts due to related parties     146,667   -
Net cash used in operating activities     (411,285)   (32,039)
           
Cash flows from investing activities     -   -
           
Cash flows from financing activities :     -    -
           
Effect of exchange rate in comprehensive income     411,285   32,039
Net increase in cash and cash equivalents     -   -
Cash and cash equivalents - net, beginning     -   -
           
Cash and cash equivalents - net, ending     -   -
           
Supplemental disclosure of cash flow information:          
Interests paid     -    -
           
Income tax paid     -   -
           

 

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

 

 

F-7

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 1 ORGANIZATION

 

Median Group Inc. (formerly known as Clixster Mobile Group Inc. with effect from April 3, 2014 to October 7, 2015 and prior to this period known as China Media Group Corporation) (the "Company") is a Texas corporation, incorporated on October 1, 2002.

 

In January 2006, the Company established a wholly owned subsidiary Ren Ren Media Group Limited, a company incorporated in Hong Kong, as its operating company in Hong Kong. In March 2007, the Company acquired all the outstanding shares of Good World Investments Limited, a British Virgin Islands corporation that holds 50% of Beijing Ren Ren Health Culture Promotion Limited, a company incorporated in China in the advertising and media business in China.

 

In May 2009, the Group established a 50/50 joint venture company, ATC Marketing Limited, which is to be in the business of marketing and distributing of convergent multimedia communication and internet devices.

 

In June 2012, the Company acquired 100% equity interests of A-Team Resources Sdn. Bhd. (“A-Team”), a distributor of electronics and light appliances, at a consideration price of $2,011,607 by the issuance of 558,779,837 shares, at a price of $0.0036 per share.

 

The Group is engaged in the distribution of electronics and light appliances and the marketing and distribution of convergent devices and the consultancy of resources management. During the period, the Group derived its revenue from consultancy services and in the distribution of electronic products.

 

On January 15, 2014, the Company sold its subsidiaries namely Ren Ren Media Group Limited, A-Team Resources Sdn Bhd, Good World Investments Limited and Beijing Ren Ren Health Culture Promotion Limited (the “Disposed Subsidiaries”) containing its light appliances distribution business and advertising business in China.

 

On January 31, 2014, the Group closed the transaction to acquire 63.2% of Clixster Mobile Sdn. Bhd. (“CMSB”), a company incorporated in Malaysia by the issuance of 10,193,609,664 in the Company at a price of at a price of $0.025 per share. CMSB is a mobile virtual network provider and principally engaged in providing cellular and mobile broadband services in Malaysia. CMSB was treated as the acquirer for accounting purpose since the original stockholders of CMSB owned a majority (85%) of the shares of the Company’s common stock immediately following the completion of the transaction. CMSB was the legal acquiree but deemed to be the accounting acquirer. The Company was the legal acquirer but deemed to be the accounting acquiree in the reverse merger. The historical financial statements prior to the acquisition are those of the accounting acquirer (CMSB). Historical stockholders’ equity of the acquirer prior to the merger are retroactively restated (a recapitalization) for the equivalent number of shares received in the merger. Operations prior to the merger are those of the acquirer. After completion of the transaction, the Company’s consolidated financial statements include the assets and liabilities, the operations and cash flow of the Company and its subsidiaries.

 

Subsequent to the period end, on July 28, 2015, the Company disposed of its 63.2% of CMSB to refocus the business of the Group to sell post-paid rather than prepaid telecom services for the mobile network virtual operator (“MNVO”) operation, with a gain of approximately $5 million. Also, on December 11, 2015 the Company acquired shares in Naim Indah Mobile Communication Limited (“NIMC”), a company engaged in providing mobile communication services through MVNO platform. NIMC has an exclusive agreement with MyAngkasa Holdings Sdn. Bhd. for the provision of telecom services to Angkasa members. Further details can be found in Note 13 of the financial statements enclosed herein this report. The Company intends to focus on post-paid customers in working with Angkasa.

 

NOTE 2 UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN

 

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of December 31, 2014, the Company has an accumulated deficits totaling $9,140,232 and its current liabilities exceed its current assets by $5,681,695. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Management has taken steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is actively pursuing additional funding and potential merger or acquisition candidates and strategic partners, which would enhance stockholders' investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.

 

 

F-8

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

Median Group Inc. (fka Clixster Mobile Group Inc. and China Media Group Corporation) ("MGI" or the "Registrant"), a public traded and holding company was incorporated under the laws of the State of Texas in October 2002.  

 

All references that refer to (the "Company" or "MGI" or "we" or "us" or "our") are to MGI, and its wholly or majority owned subsidiaries unless otherwise differentiated.  The Company was engaged in the business of distributing telecom services and consultancy services.

 

These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”), and are expressed in U.S. dollars. The Company's fiscal year end is December 31.

 

At the date of this report, the Company filed Form 8-K to effect a reverse merger between the Company and CMSB at January 31, 2014. The Company’s consolidated financial statements include the assets and liabilities, the operations and cash flows of CMSB before the transaction and the Company and its subsidiaries after the transaction.

 

Subsequent to the reporting period, on July 28, 2015 and August 3, 2015 we completed the sale of our pre-paid telecom operation and the electronics trading operation (the “Disposed Business”) (Note 14(a)).  As a result in this year, we reported the operating results of the Disposed Business as Discontinued Operations – Net of Tax in the consolidated statement of income in all periods presented.  In addition, the assets and liabilities associated with these businesses are reported as Asset of Operations Held for Sale and Liabilities of Operations Held For Sale in the consolidation balance sheets (refer to Note 6).

 

Principles of Consolidation

 

The consolidated financial statements for the year ended December 31, 2014 include the financial statements of the Company and its wholly owned subsidiary Qultec Sdn. Bhd. (formerly known as CMG Resources Sdn. Bhd.), its 50% equity interest subsidiary ATC Marketing Limited (“ATC”) and its 63.2% equity interest subsidiary Clixster Mobile Sdn. Bhd. (“CMSB”). The Company consolidated the 50% subsidiary ATC during the period as it controls the board of director of this ATC. Subsequent to the period of this report, in July and August 2015, the Company disposed its subsidiary companies namely its 63.2% subsidiary in CMSB and its 50% subsidiary ATC (collectively the “Disposed Companies”). Accordingly the operating results of the Disposed Companies are disclosed as Discontinued Operations - Net of Tax in the consolidated statement of operation for all period presented. In addition, the assets and liabilities of these Disposed Companies are reported as Assets of Operations Held for Sale and Liabilities of Operations Held for Sale, as appropriate, in the consolidated balance sheet.

 

The results of subsidiaries acquired or sold during the year are consolidated from their effective dates of acquisition or through their effective dates of disposition, respectively.

 

All significant inter-company transactions and balances have been eliminated on consolidation.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the years presented. Actual results could differ from those estimates.

 

Net Income (Loss) per Share

 

Basic earnings per share were computed by dividing net loss or net profit by the weighted average number of shares of common stock outstanding during the year. Diluted loss and profit per common share for the years ended December 31, 2014 and 2013, respectively are not presented as it would be anti-dilutive.

 

 

F-9

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Fair Value Measurements and Disclosures

 

ASC 820 "Fair Value Measurements and Disclosures" applies to all entities, transactions, and instruments that require or permit fair value measurements, with specific exceptions and qualifications. The Company is required to disclose estimated fair values of financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments, none of which are held for trading purposes, approximate are carrying values of such amounts.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

 

Trade Receivables

 

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on managements’ assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. The Company recorded no (2013: Nil) allowance for doubtful accounts for the years presented.

 

Income Taxes  

 

The Company accounts for income taxes under ASC 740 “Income Taxes”. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

(a) Current Tax
 

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

 

Current taxes are recognized in the statement of income except to the extent that the tax relates to items recognized outside the statement of income, either in other income or directly in equity.

 

(b) Deferred Tax
 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records a valuation allowance for deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

 

F-10

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS (Continued)

 

Contingent Liabilities

 

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Company. It can also be a present obligation arising from past events that is not recognized because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

 

The Company has acted as guarantor for bank loans granted to certain local authorities and certain business associates. The Company assessed its obligation under this guarantee pursuant to the provision of ASC 460 “Guarantee”.

 

Stock-Based Compensation

 

ASC 718 "Compensation – Stock Compensation" prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. , may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 “Equity –Based Payments to Non-Employees”. Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.

 

Employees' Pension Obligations

 

Contributions to retirement schemes (which are defined contribution plans) are charged to general and administrative expenses in the statements of operation and comprehensive income as and when the related employee service is provided.

 

The Company is required to make contribution under a defined contribution pension scheme for all of its eligible employees in Malaysia and Hong Kong. The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level.

 

Revenue

 

The Company recognizes its revenue in accordance with the Securities and Exchange Commissions ("SEC") Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements" ("SAB 104"). Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The recognition of revenues involves certain management judgments. The amount and timing of our revenues could be materially different for any period if management made different judgments or utilized different estimates.

 

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.

 

Prepaid telecom revenues are collected by its distributors and/or resellers through the sale of “Clixster” prepaid or reload cards, which are sold in a form of SIM/reload cards to its final customers through its distributors and/or resellers. The sale of Sim, prepaid or reload cards is recognized as revenue when the products are delivered to its distributors and/or resellers, based upon their request. Prepaid cards will expire two years after the date of card production if they have never been activated. The proceeds from the expired cards are recognized as revenue upon expiration of cards.

 

Cost of revenue

 

Cost of revenue consists primarily of cost of SIM and prepaid/reload cards, telecommunication services and traffic charges which are directly attributable to the delivery of telecom service upon the activation of prepaid and/or reload cards.

 

 

Foreign Currency Translation

 

The accounts of the Company's Hong Kong, China and Malaysia subsidiaries are maintained, in the local currencies of their respective countries namely Hong Kong dollars (HK), Chinese Renminbi (RMB) and Malaysia Riggnet (RM), respectively. Such financial statements are translated into U.S. Dollars (USD) in accordance with ASC 830 “Foreign Currency Translation” with the respective currency as the functional currency. According to the Statement, all assets and liabilities were translated at the exchange rate on the balance sheet date, stockholder's equity are translated at the historical rates and statement of operations items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC 220 “Comprehensive Income”. As of December 31, 2014 and 2013, the accumulated comprehensive income was $414,748 and $238,554, respectively.

 

 

F-11

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS (Continued)

 

Comprehensive Income

 

ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

 

Segment Reporting

 

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in one reportable operating segment in Malaysia during the years ended December 31, 2014 and 2013.

 

Related Parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Reclassifications

 

Certain comparative amounts have been reclassified to conform to the current year’s presentation.

 

Recent Pronouncements

 

Recently Implemented Standards

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

 

In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). This standard requires companies to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, companies are required to present, either on the face of the statement where net income is presented or in the accompanying notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, companies are required to cross-reference to other disclosures that provide additional detail on those amounts. ASU 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this pronouncement will not have a material impact on the Company’s consolidated financial statements.

 

 

F-12

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 4 STOCKHOLDERS’ EQUITY

 

Common Stock

 

On January 31, 2014, the Company issued 10,093,609,664 shares of its common stock in consideration of the acquisition of 63.2% equity interests in Clixster Mobile Sdn. Bhd. (Note 1).

 

As at December 31, 2014 and 2013 the Company had a total of 11,307,232,960 and 1,113,623,296 shares, respectively, of its common stock issued and outstanding.

 

NOTE 5 STOCK OPTIONS

 

Stock Options

 

The Company adopts ASC 718 “Compensation – Stock Compensation” and requires companies to measure and recognize the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value.

 

 

2007 Stock Incentive Plan

 

On February 19, 2007, the Company adopted the 2007 Stock Incentive Plan (the "2007 Plan") allowing for the awarding of options to acquire shares of common stock. This plan provides for the grant of incentive stock options to key employees, directors and consultants. Options issued under this plan will expire over a maximum term of ten years from the date of grant.

 

On March 8, 2007, the Company registered 38,400,000 shares underlying stock options under the 2007 Stock Incentive Plan with the SEC pursuant to a registration statement on Form S-8.

 

During the year 2007 to 2013, the Company had issued a total of 6,522,309 shares to its staff and consultants for their service provided.

 

As at December 31, 2014, there were i) no outstanding stock options and ii) 31,877,691 shares available to be issued under the 2007 Stock Incentive Plan.  

 

 

F-13

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 6 DISCONTINUED OPERATIONS HELD FOR SALE
 
Subsequent to the period end, the Company sold its subsidiaries namely its 63.2% subsidiary Clixster Mobile Sdn. Bhd. on July 28, 2015 and its 50% subsidiary ATC Marketing Limited on August 3, 2015 (the “Disposed Subsidiaries”) containing its MVNO business and electronics trading company (Note 14). As a result of the sale, the historical activities and balances of these operations are reported as discontinued operations held for sale in the accompanying consolidated financial statements for all periods presented.

 

The following table provides the components of Discontinued operations – net of tax:

      Year ended December 31
      2014   2013
      US$   US$
           
Net revenue     5,186,766   2,660,292
Less: sales discount     (851,916)   (683,087)
Cost of revenue     (4,136,723)   (1,439,211)
Gross profit     198,127   537,994
Administrative expenses     (3,285,725)   (2,181,255)
Selling and distribution expenses     -   -
Loss from operations     (3,087,598)   (1,643,261)
Other income / (expenses)          
   Foreign exchange gain     (583,712)   (93,779)
   Bank charges     -   (1,770)
   Other income     13,847   2,990
   Interest expenses     (345,000)   (5,921)
Loss from discontinued operations before taxation     (4,002,463)   (1,741,741)
Taxation     -   -
Loss from discontinued operations     (4,002,463)   (1,741,741)
           

 

The following table provides the components of assets and liabilities of operations held for sale:      
     

December 31

2014

 

December 31

2013

 
      US$   US$  
Current assets:            
Cash and cash equivalents     21,245   3,001,991  
Trade receivables     445,959   986,768  
Prepayments, deposit and other receivables      801,721   2,976,955  
Due from related parties     5,764,813   2,461,997  
Inventories     32,007   76,188  
Property and equipment, net     313,673   330,151  
Intangible assets     -   -  
Assets of operations held for sale     7,389,418   9,834,050  
             
Bank overdraft     -   41,358  
Trade payables     1,214,890   735,245  
Other payables and accruals     480,130   5,468,113  
Due to related parties     1,555,907   670,409  
Short term debt     -   271,590  
Trade finance payables     -   79,816  
Taxation payables     -   115,554  
Obligations under finance lease     -   86,757  
Term loans – non-current     9,038,809   4,074,060  
Liabilities of operations held for sale     12,289,736   11,542,902  
             
 

The net cash flows of our discontinued operations for each of the categories of operating, investing and financing activities are not significant for any years presented.

               

 

F-14

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 7 OTHER PAYABLES AND ACCRUALS

 

Other payables and accruals consist of the following:

 

   

 

2014

 

 

2013

    US$   US$
         
Potential tax penalty liability   410,000   360,000
Other payables and accruals   229,248   564,243
    639,248   924,243
          

 

NOTE 8 AMOUNTS DUE TO RELATED PARTIES

 

   

 

2014

 

 

2013

    US$   US$
         
Amounts due to related parties:        
- Trade   -   -
- Non-trade   146,667   -
    146,667   -
          

 

The amounts due to related parties are unsecured, non-interest bearing and repayable on demand. Imputed interest on these amounts is considered insignificant.

 

NOTE 9 SHAREHOLDER LOAN

 

   

 

2014

 

 

2013

    US$   US$
         
Shareholder loan   2,000,000   2,000,000
         

 

This long term shareholder loan is due to Central High Limited, a major shareholder of the Company. This loan is unsecured and repayable on November 25, 2015, and bears interest of 8% per annum. The accrued interest for the year ended December 31, 2014 was $146,667.

 

 

F-15

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 10 RELATED COMPANY TRANSACTIONS

 

For the year ended December 31, 2014, the Company paid $161,965 (2013: Nil) to its directors and its officers remuneration for their services provided to the Company.

 

For the year ended December 31, 2014 the Company sold $1,222,967 (2013: Nil) telecom SIM/reload cards through two distributors that are owned and controlled by the directors of the Company. The terms of trade with these distributors are similar to the other third-party distributors of the Company.

 

For the year ended December 31, 2014 the Company purchased $3,334,313 (2013: Nil) of telecom services from a related company. The terms of trade was negotiated at arms-length.

 

A Group company has $8,000,000 promissory notes from a company that is beneficially owned by directors of the Company. The promissory note bears interest at a rate of 4.5% per annum, and $4,000,000 is payable in November 2018 and the remaining $4,000,000 is payable in February 2019. During the year ended December 31, 2014 the Group company recorded $345,000 (2013: Nil) in interests expenses relating to these promissory notes. Subsequent to this fiscal year, on July 28, 2015, this Group company was disposed together with these these promissory notes and the Group was no longer liable for these promissory notes as a result.

 

NOTE 11 INCOME TAXES

 

No provision was made for income tax for the year ended December 31, 2014, since the Company and its subsidiaries had significant net operating loss. The Company made an income tax provision under Malaysian tax jurisdiction while Malaysian operation generates an operating profit.

 

For the years ended December 31, 2014 and 2013, the Company and its subsidiaries incurred net operating results for tax purposes of approximately loss of $247,609 and a gain of $23,800, respectively. Total net operating losses carry forward as at December 31, 2014 and 2013, (i) for Federal and State purpose were $11,478,825 and $11,284,883, respectively and (ii) for its entities outside of the United States $16,620 and nil, respectively. The net operating loss carry-forwards may be used to reduce taxable income through the year 2025. The availability of the Company's net operating loss carry-forwards are subject to limitation if there is a 50% or more change in the ownership of the Company's stock.

 

There was no significant difference between reportable income tax and statutory income tax. The gross deferred tax asset balance as at December 31, 2014 and 2013 was approximately $4,913,524 and $4,826,860, respectively. A full valuation allowance has been established against the deferred tax assets, as the utilization of the loss carry-forwards cannot reasonably be assured.

 

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has not concluded all U.S. federal income tax matters for the years through fiscal 2014, with remaining fiscal years subject to income tax examination by federal tax authorities.

 

The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were material to its results of operations for the years ended December 31, 2014 and 2013. The Company has adopted ASC 740-10 “Accounting for Income Taxes” and recorded a liability for an uncertain income tax position, tax penalties and any imputed interest thereon. The amount, recorded as an obligation, is $410,000 at December 31, 2014 (2013: $360,000).

 

A reconciliation between the income tax computed at the Malaysia and Hong Kong statutory rate and the Company’s provision for income tax is as follows:

 

    2014   2013
         
Malaysia statutory rate   25%   25%
Tax allowance   -   -
Valuation allowance – Loss carryforward under Malaysia rate   (25%)   (25%)
         
Provision for income tax   -   -

 

As of December 31, 2014 and 2013, there were no material deferred tax assets or liabilities to be recognized.

 

 

F-16

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013 (Restated)

 

NOTE 12 CONCENTRATIONS OF RISK

 

The Company is exposed to the following concentrations of risk:

 

(a) Major customers

 

For the years ended December 31, 2014 and 2013 the customer who accounted for 10% or more of the Company’s revenues is presented as follows:

 

  2014   2014   2014   2013   2013   2013
  Revenue   Percentage of Revenue   Trade accounts Receivable   Revenue   Percentage of Revenue   Trade accounts Receivable
  US$       US$   US$       US$
Customer A 4,216   100%   -   -   -   -
Total: 4,216   100%   -   -   -   -

 

(b) Major vendors

 

During the year, the Group was a provider of consulting services.  In the opinion of the Board, it is therefore of no value to disclose details of the Group’s vendors.

 

(c) Credit risk

 

Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

 

(d) Exchange rate risk

 

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in MYR. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and MYR. If MYR depreciates against US$, the value of MYR revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

 

(e) Economic and political risks

 

Substantially all of the Company’s services are conducted in Malaysia. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in Malaysia. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations in Malaysia.

 

(f) Interest rate risks

 

As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

 

The Company’s interest-rate risk arises from shareholder loans. The Company manages interest rate risk by varying the issuance and maturity dates variable rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. As of December 31, 2014 and 2013, shareholder loan was at fixed interest rate.

 

 

F-17

 


 

MEDIAN GROUP INC

(Formerly Clixster Mobile Group Inc. and China Media Group Corporation)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Restated)

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

 

NOTE 13 COMMITMENTS AND CONTINGENCIES

 

The Company’s commitments and contingencies are set out below as follows:-

 

(a) The Company leases office premises for its operations in Malaysia under operating leases. As of December 31, 2014 the future minimum rental payments under non-cancelable operating leases in the next 12 months are $27,336.

 

NOTE 14 SUBSEQUENT EVENTS

 

The Group has evaluated all subsequent events through the date these consolidated financial statements were issued, and determined that, other than as disclosed below, there were no subsequent events or transactions that require recognition or disclosures in the financial statements.  

 

(a)

On August 3, 2015 the Company sold its 50% interests in ATC Marketing Limited (“ATC”) for a nominal cash consideration and it resulted in a nominal loss on the disposal of this subsidiary.

 

(b)

As announced in a Form 8K on December 16, 2015 the Company finalized in a series of transactions the disposal of the rights to the Clixster brand name in the sale of its 63.2% subsidiary in Clixster Mobile Sdn Bhd (“CMSB”) to Zainal Abidin bin Zohdi (“Purchaser”) for a total cash consideration of $8,500 and the assumption of certain debts pursuant to a sale and purchase agreement (“SP Agreement”) and entered into a two year licensing agreement for the Clixster brand form the Purchaser for the China market for a fee of US$5,000 to be paid at the commencement of the second year of the licensing agreement. The company and the Clixster brand sold were engaged in the distribution of prepaid mobile services under the MVNO platform.

 

(c)

As announced in a Form 8K on December 16, 2015 on December 11, 2015 the Company agreed to acquire and hold a 51% interests in Naim Indah Mobile Communication Sdn. Bhd. (“NIMC”), a company engaged in providing mobile communication services through MVNO platform. NIMC has a registered capital of RM2,000,001 (or about US$480,000) of which the Company is required to pay RM1,000,001 (or about US$240,000) for its 51% interests. Our director Ahmad Shukri Abudl Ghani is a 30% shareholder of NIMC.

 

NIMC has an exclusive business partnership agreement (“Exclusive Agreement”) with MyAngkasa Holdings Sdn. Bhd. (“MyAngkasa”), a wholly owned company of the National Cooperative Malaysia Bhd and known as Angkatan Koperasi Kebangsaan Malaysia Berhad (“Angkasa”). MyAngkasa is the business development and sales/marketing entity of Angkasa which is the representative of 12,000 cooperatives with 7.4 million active members in Malaysia. MyAngkasa owns and operates a network of payment terminals that offer services and products to subscribers and customers for the purchase of prepaid top-ups, postpaid ticketing, online transaction services, registration, loyalty point programs and bill payment collections via internet banking, mobile banking, mobile payment and electronic data capture (EDC) terminals. Under this contract, both parties agree to implement the brand “MyAngkasa” mobile telecommunications program based on NIMC’s Mobile Virtual Network Aggregator (MVNA) platform that includes the provision of mobile telecommunication services to co-operative and members of the co-operatives under Angkasa as registered Pre/Post-Paid subscribers of NIMC services.

 

The Exclusive Agreement has a fix term of 5 years ending in August 2020 and subject to renewal by mutual consent. Pursuant to this agreement, MyAngkasa agrees to use NIMC’s services under the trade name of “Median Mobile” products to co-operatives and members of the co-operatives under Angkasa and to exclusively appoint NIMC as the official mobile telecommunication services based on MVNA platform to Angkasa members. MyAngkasa agrees to undertake to deliver certain number of subscribers for pre/post-paid services (“Targeted Subscribers”) for each year. In return, NIMC agrees to a profit share scheme whereby MyAngkasa will receive RM100,000 (or about US$24,000) for the first financial year of the contract, and for each financial year thereafter the higher of RM500,000 (or about USD120,000) and a set percentage of NIMC’s net annual profit after tax, less any unapplied accumulative losses brought forward from previous years. If the Targeted Subscribers are not achieved for any each then the set percentage to be applied will be the pro-rate of the actual subscribers to the Targeted Subscribers for that year.

 

MyAngkasa is a shareholder of the Company holding 50 million shares or about 0.44% of the issued share capital of the Company.

 

(d) On September 27, 2015 the Board approved the change of company name from Clixster Mobile Group Inc. to Median Group Inc. and the name change was effected on October 7, 2015.

 

 

F-18