ITEM 1 - BUSINESS
Business Development
ChinAmerica Andy Movie Entertainment Media Co. (CAME) formally known as Court Document Services, Inc., was incorporated under the laws of the State of Florida on September 26, 2002. During our twelve (12) years of operations, we have had both profits and losses. Unfortunately, the lack of improvement in the economy, specifically the legal document preparation services industry, began to be reflected in lower revenues and a reduced shareholder value.
On October 11, 2012, the Board of Directors appointed Mr. Andy Fan, as Chairman of the Board, Director and President of the Company. On that same day, Chairman Andy Fan held a special meeting of the Board of Directors to discuss a change in the business strategy and business model for the Company due to the current economic conditions. The approved strategic direction was changed to focus on Movie, Entertainment and Media Productions.
The Board believed that to protect and increase shareholder value, it would be to the advantage, welfare and best interests of the shareholders for the Company to consider alternative corporate strategies to generate new business revenue for the Company. The approved new strategic direction of the Company was to operate as a Movie, Entertainment, Media Production and Documentary Company. The Board of Directors proposed and the Shareholders approved changing the name to “ChinAmerica Andy Movie Entertainment Media Company.’
To facilitate this new direction, the Board voted to dispose of the Company’s older assets. The disposal of the legal document reporting assets was approved by Shareholders representing 87% of the shares issued and outstanding and was consummated on September 21, 2012.
Our Business
(1) Principal Products or Services and Their Markets
We are working to produce movies that will export the cultural heritage of the People’s Republic of China to other markets in the form of movies and documentaries. Our efforts have been concentrated on pre-production research and strategizing, introduction of American talent and potential partners from Hollywood, California. We are seeking to provide training and global market consulting, production and post-production activities, and particularly the distribution and promotion in the United States market. We currently make use of our own website www.came8.com to target individuals interested in our services for the production of movies, animation entertainment and various media production.
Management is in the process of searching for individuals to become members of our Board of Directors as well as new employees to provide the quality product that we believe we will be offering.
We may raise cash from sources other than our operations. Our only other source for cash at this time is investment by our current Officer and Director or by others in the Company.
(2) Distribution Methods of Our Products
At present we are not actively producing any movies or entertainment films. We are continuing to develop the business model for the distribution of our products when we are in production. Management believes that it will be able to market our films through various Chinese media as well as sources within the continental United States.
(3) Status of Any Publicly Announced New Product or Service.
ChinAmerica was able to enter into a formal agreement with Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as “Zhong Mei Yin Shi”), a Chinese company registered in Beijing, People’s Republic of China, for joint movie projects in both China and the United States. We are in the process of trying to secure a new 8,000 square foot location in the Zhejiang Province of China for our administrative offices and production facilities. This agreement calls for ChinAmerica to provide consulting services as well as talent from the United States during its engagement by Zhong Mei.
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(4) Our Competition
In the People’s Republic of China there are many companies engaged in the production of film, entertainment, animation and media productions. We have chosen to focus on exporting movies, media and documentaries bringing the Chinese heritage to other markets. ChinAmerica believes that instead of action films which are done throughout the movie industry in China, a market exists abroad for various types of media that will present the deep rich cultural heritage of the People’s Republic of China. Many of these companies are more established than we are and most will have better funding and management than we do. Our ability to compete in this industry will be limited for a long time. Until we are able to retain a strong management team and have access to funding and complete production facilities we do not believe we will be able to compete effectively with our competitors.
(5) Sources and Availability of Raw Materials
At this time we do not see a critical dependence on any supplier(s) that could adversely affect our operations. .
(6) Dependence on Limited Clients
We do not have any limitation on clients at this time. If we are able to expand our business we will expand our service area beyond the People’s Republic of China to cover a larger population base. We are looking to export our films through the smaller independent film markets to help us establish a future market and a larger distribution base.
(7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
At the present time we do own the domain name www.came8.com. We may rely on certain proprietary technologies, trade secrets, and know-how that are not patentable. Although we may take action to protect our unpatented trade secrets and our proprietary information, in part, by the use of confidentiality agreements with our employees, consultants and certain of our contractors, we cannot guaranty that:
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These agreements will not be breached;
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We would have adequate remedies for any breach;
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Our actions will be sufficient to prevent imitation or duplication of our products and services by others; or
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Our actions will be sufficient to prevent others from claiming violations of their trade secrets and proprietary rights.
Minimal costs for the website were expensed in the ordinary and normal cost of doing business.
(8) Need for Government Approval of Principal Products or Services
There are no federal or state approvals that are required for the specific services that we offer.
(9) Government Regulation
The People’s Republic of China (“PRC”) requires a yearly business license.
On December 23, 2013, we entered into a Management Agreement with AF Ocean Investment Management (Shanghai) Co., LTD., a Shanghai, China, corporation wholly owned by AF Ocean Investment Management Company (OTCBB:AFAN). The Shanghai corporation qualifies and is recognized by the People’s Republic of China as a wholly foreign-owned entity (“WFOE”). The Management Agreement requires us to pay AF Ocean Shanghai a management fee for the collection and maintenance of funds we receive in the PRC and allows us to operate under AF Ocean Shanghai for PRC business licensing purposes.
We are also subject to extensive federal, state, and local government regulation, including regulations related to the specific requirements of using independent contractors. Typically our business license must be renewed annually with the County of Sarasota, Florida and may be suspended or revoked at any time for cause. The State of Florida also requires annual renewal of our corporation and the filing of annual reports.
ChinAmerica and AF Ocean Shanghai are controlled by the same individual, Andy Z. Fan.
We are not subject to government approval procedures or other regulations for the licensing of our movie, media, or entertainment products. The distribution of movies in the United States is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. Motion picture studios offer and license movies to theatrical exhibitors on a movie-by-movie and theatre-by-theatre basis. Consequently, theatrical exhibitors cannot assure themselves of a supply of movies by entering into long-term arrangements with motion picture studios, but must negotiate for licenses on a movie-by-movie basis.
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(10) Research and Development during Our Last Two Fiscal Years
There has been no research and development during the last two fiscal years.
(11) Cost and Effects of Compliance with Environmental Laws
The nature of our business does not subject us to environmental laws in any material manner.
(12) Our Employees
As of December 31, 2013, there were no full-time employees. This does not include our only officer and director who runs the corporation. All of the functions of the company are being performed by Mr. Fan who is supported by the staff of AF Ocean Investment Management Company that provides management services to ChinAmerica.
Reports to Security Holders
As a fully reporting company, we are required to file reports and other information with the U.S. Securities and Exchange Commission (“SEC”). You may read and copy any document that we file at the SEC's public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC filings are available to you free of charge at the SEC's web site at www.sec.gov, and at our corporate website, www.came8.com.
We are not required by the Florida Revised Statutes to provide annual reports. At the request of a shareholder, we will send a copy of an annual report to include audited financial statements.
ITEM 1A
ITEM 1A - RISK FACTORS
Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial condition and results of operations. We have incurred both profits and losses from inception while realizing our revenues and we may never generate substantially more revenues or be profitable in the future.
Risks Relating to Our Business
We are subject to the reporting requirements of federal securities laws, which can be expensive.
We are a public reporting company in the U.S. and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we remained a privately-held company.
Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly.
It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by Sarbanes-Oxley. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxley’s internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.
Economic events have adversely impacted our business and results of operations and may continue to do so.
Due to the economic turmoil in the People’s Republic of China we believe that these weak general economic conditions will continue through the year 2014 and most likely beyond. The ongoing effects of the housing crisis, inflation and the rising of commodities prices may further exacerbate current economic conditions that will impact our business opportunities in China. As the economy struggles, consumers may become more apprehensive about the economy and/or related factors, and may reduce their level of discretionary spending. A decrease in spending due to lower consumer discretionary income or consumer confidence in the economy could decrease our revenues and negatively affecting our operating results. Additionally, we believe there is a risk that if the current negative economic conditions persist for a long period of time and become more pervasive, consumers might make long-lasting changes to their discretionary spending behavior on a more permanent basis.
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Current general business economic conditions could reduce our client availability which would have an adverse effect on our revenues.
We are susceptible to economic slowdowns. In particular, our business is in the beginning stages of creating a movie and production facility. We believe that the majority of our revenues will be derived from businesses with the working capital to retain our services. Accordingly, we believe that our business is particularly susceptible to any factors that cause a reduction in working capital. We also believe that companies generally are more willing to make discretionary decisions, including the retention of outside consultants, during periods in which favorable economic conditions prevail. The changes in working capital, as a result of the current economic slowdown and reduction in consumer confidence will adversely affect our revenues.
The future performance of the U.S. economy and global economies are uncertain and are directly affected by numerous global and national factors, in addition to other factors that are beyond our control. These factors, which also affect discretionary consumer spending, include among other items, international, national, regional and local economic conditions, disposable consumer income, consumer confidence, terrorist attacks and the United States’ participation in military actions. We believe that these factors have adversely impacted our business and, should these conditions continue, worsen or be perceived to be worsening or should similar conditions occur in the future, we would expect them to continue to adversely impact our business.
There are factors both within and without our control that can cause our results of operations to fluctuate significantly.
A number of factors have historically affected, and will continue to affect, our business revenue including, among other factors:
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our ability to execute our business strategy effectively;
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competition;
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consumer trends;
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and general international, national, regional and local economic conditions.
Our results of operations and revenues could be adversely affected by our inability to implement our new business model.
There are factors which may impact the amount of time and money required for the implementation of our new business model, including but not limited to, a change in laws that allow foreign operations in the People’s Republic of China, shortages of skilled labor, delays with our approval to do business within the People’s Republic of China and increased competition.
Our growth depends on our ability to operate profitably.
A substantial majority of our historical growth has been due to a thriving economy. When comparing fiscal 2013 to fiscal 2012, revenues were flat due to the continued recession. Our ability to implement our new business model is dependent upon a number of factors, some of which are beyond our control, including but not limited to our ability to:
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develop additional sources of marketing that are within our budgetary constraints;
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raise, borrow or have available an adequate amount of money for facility and equipment costs;
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hire, train and retain the management and employees necessary to meet staffing needs in a timely manner;
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successfully promote our products and compete in the Chinese markets and beyond.
Our existing senior personnel, management systems, financial controls, information systems and other systems and procedures may be inadequate to support our new business model, which could require us to incur substantial expenditures that could adversely affect our operating results.
Our Company may not be able to compete successfully with other companies offering the same or equivalent services and, as a result, we may not achieve any projected revenue and profitability targets.
If our Company is unable to compete successfully with other businesses in our new market, we may not achieve growth or historical revenue and profitability targets. Our industry is intensely competitive with respect to price, quality of service, and location. Compared to our business, our competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established in the market where our business will be located or may be located should we choose to expand.
Material weaknesses in the financial reporting may cause us to restate our financial statements in the event such weaknesses are determined to not be acceptable to financial reporting requirements.
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We have the responsibility to review the internal controls over financial accounting. During this review material we may discover material weaknesses that could cause us to have to restate our financial statements. This could cause us to expend additional funds that would have a material impact on our ability to generate profits and on the profits of past operations. As of December 31, 2013 we discovered a weakness in control of our bank accounts and the disclosure of funds. This caused us to restate our financials during the year 2013.
Taxing authorities may select to audit our federal or state tax returns from time to time, which may result in tax assessments and penalties that could have an adverse effect on our results of operations and financial condition.
We are subject to federal or state taxes in the U.S. Although we believe that our tax reporting is reasonable, if any taxing authority disagrees with the positions taken by the Company on its tax returns, we could have additional tax liabilities, including interest and penalties, which, if material, could have an adverse impact on our results of operations and financial condition.
We will be subject to any taxation laws in the People’s Republic of China if and when we commence operations there. The addition of compliance with these laws will cause our company significant expense in the future to remain in compliance with the tax laws in China.
We may experience higher operating costs, including payment of employee salaries, wages or benefits, which will adversely affect our operating results if we cannot increase our prices to cover them.
If we hire employees and begin providing compensation or benefits to them, we will have an increase in our operating costs. If we are unable or unwilling to increase our prices or take other actions to offset increased operating costs, our operating results will suffer. Factors that may affect the salaries or benefits that we pay to our existing or future employees include local unemployment rates and changes in minimum wage and employee benefits laws. Other factors that could cause our operating costs to increase include fuel prices, cost of gas and electricity, occupancy and related costs, maintenance expenditures and increases in other day-to-day expenses. In addition, various proposals that would require employers to provide health insurance for all of their employees are being considered from time-to-time in the U.S. Congress and various states. The imposition of any requirement that we provide health insurance to all employees would have an adverse effect on our operating performance.
Our operations in China will cause us to have additional employee costs that will further reduce our earnings.
Our operating results may fluctuate significantly due to the nature of our business and these fluctuations make it more difficult for us to predict accurately and address in a timely manner factors that may have a negative impact on our business.
Our business is subject to fluctuations that may vary greatly depending upon national and international film climate. These fluctuations can make it more difficult for us to predict accurately and address in a timely manner factors that may have a negative impact on our business. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year
Our results of operations are affected by a variety of factors, including increased competition and stock markets, and have fluctuated significantly in the past and can be expected to continue to fluctuate significantly in the future.
Our results of operations have fluctuated significantly in the past and can be expected to continue to fluctuate significantly in the future. Our results of operations are affected by a variety of factors, including:
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the timing of business openings by competitors;
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changes in consumer preferences;
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general economic conditions;
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government regulation;
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Stock market conditions; and
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actions by our competitors.
Negative factors or publicity surrounding our operating in China could adversely affect our business decisions which could make our business less valuable.
We believe that adverse publicity relating to our operating in China will affect us more than it would competitors that compete primarily in the United States. Any shifts in consumer preferences away from the kinds of products that we will be offering, whether because of negative publicity or an improving economy, would make our business less appealing and adversely affect our revenues.
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We may incur additional costs or liabilities and lose revenues impacting operating results as a result of litigation and government regulation affecting the operation of our business.
Our business is subject to extensive federal, state, and local government regulation, including regulations related to the specific requirements of using independent contractors. Typically our business license must be renewed annually with the County of Sarasota, Florida and may be suspended or revoked at any time for cause.
The costs of operating our business may increase if there are changes in laws governing minimum hourly wages, working conditions, overtime, health care, workers’ compensation insurance rates, unemployment tax rates, sales taxes or other laws and regulations such as those governing access for the disabled, including the Americans with Disabilities Act. If any of these costs were to increase and we were unable to offset the increase by increasing our prices or by other means, this could have a material adverse effect on our business and results of operations.
The failure to enforce and maintain our intellectual property rights could enable others to use names confusingly similar to ChinAmerica Andy Movie Entertainment Co. (CAME) and other names and marks used by us, which could adversely affect the value of the CAME’s brand.
We have not registered the “CAME” mark used by us as a trade name in Florida or any state or with the United States Patent and Trademark Office. The success of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness. In that regard, we believe that our trade name is valuable asset that is critical to our success. The unauthorized use or other misappropriation of our trade name could diminish the value of our business and may cause a decline in our revenue.
Any new indebtedness may adversely affect our financial condition, results of operations, limit our operational and financing flexibility and negatively impact our business.
Any revolving credit facility, and other debt instruments we may enter into in the future, may have negative consequences to the Company, including but not limited to the following:
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our ability to obtain financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
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we may use a substantial portion of our cash flows from operations to pay interest on any new indebtedness, which will reduce the funds available to us for operations and other purposes;
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our level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;
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our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and
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our level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business.
We expect that we will depend primarily upon our operations to provide funds to pay our expenses and to pay any amounts that may become due under any new credit facility and any other indebtedness we may incur. Our ability to make these payments depends on our future performance, which will be affected by various financial, business, economic and other factors, many of which we cannot control.
We could face labor shortages that could slow our growth and adversely impact our ability to operate our business.
Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified employees. A sufficient number of qualified individuals of the requisite caliber to fill these positions may be in short supply. Any future inability to recruit and retain qualified individuals may delay our ability to increase the profitability of our business. Any such delays, any material increases in employee turnover rate or any widespread employee dissatisfaction could have a material adverse effect on our business and results of operations.
We depend on the services of a key executive, the loss of whom could materially harm our business and our strategic direction if we were unable to replace them with executives of equal experience and capabilities.
Our senior executive, Andy Fan is important to our success because he is instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging any necessary financing. Losing the services of Mr. Fan could adversely affect our business until a suitable replacement could be found. Mr. Fan is not bound by employment agreements with us. We do not maintain key person life insurance policies on any of our executives.
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There may be a conflict of interest for our President and sole Director Andy Z. Fan.
Our President and sole Director Andy Z. Fan is also our largest shareholder. Mr. Fan has the ability to control all decisions of the company including agreements with other companies where Mr. Fan is the President and sole Director and the largest shareholder. Decisions made by Mr. Fan may not be in the best interest of individual shareholders and there is a risk that all or a part of any investment in our company could be lost.
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel. We estimate that it will cost approximately $45,000 annually to maintain the proper management and financial controls for our filings. In addition, as a public company we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, so that our management can certify as to the effectiveness of our internal controls and our independent registered public accounting firm can render an opinion on the effectiveness of our internal controls over financial reporting, which requires us to document and test the design and operating effectiveness of our internal controls over financial reporting. If our management is unable to certify the effectiveness of our internal controls or if our independent registered public accounting firm cannot render an unqualified opinion on the effectiveness of our internal controls over financial reporting, or if material weaknesses in our internal controls are identified, or if we fail to comply with other obligations imposed by the Sarbanes-Oxley Act rules relating to corporate governance matters, we could be subject to regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on our business and our stock price. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.
We do not have current insurance policies that may provide adequate levels of coverage against claims and we may incur losses without such insurance.
We do not maintain insurance coverage that is customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure. For example, we believe that insurance covering liability for violations of wage and hour laws is generally not available. These losses, if they occur, could have a material adverse effect on our business and results of operations.
Risks Relating to our Common Stock
Our future results may vary significantly in the future which may adversely affect the price of our common stock.
It is possible that our quarterly revenues and operating results may vary significantly in the future and that period-to-period comparisons of our revenues and operating results are not necessarily meaningful indicators of the future. You should not rely on the results of one quarter as an indication of our future performance. It is also possible that in some future quarters, our revenues and operating results will fall below our expectations or the expectations of market analysts and investors. If we do not meet these expectations, the price of our common stock may decline significantly.
There may be issuances of shares of preferred stock in the future.
Our Amended and Restated Articles of Incorporation provide for one class of blank check preferred stock solely at the discretion of the Board of Directors. Although we currently do not have preferred shares outstanding, the board of directors could authorize the issuance of a series of preferred stock that would grant holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends would be declared to common stockholders, and the right to the redemption of such shares, possibly together with a premium, prior to the redemption of the common stock. To the extent that we do issue preferred stock, the rights of holders of common stock could be impaired thereby, including without limitation, with respect to liquidation.
Shareholders do not have any control regarding the issuance of any shares from this class and may be adversely affected by any such issuance or subsequent sale in the form of dilution, voting, and value of their shares. The preferred shares may also be issued with other preferences or rights that may adversely affect the holders of our common stock.
We do not anticipate paying cash dividends for the foreseeable future, and therefore investors should not buy our stock if they wish to receive cash dividends.
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No dividends were declared during 2013 and 2012. Since our reclassification to a “C” corporation we have not paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
If we fail to continue to comply with the listing requirements of the OTCBB, the price of our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is currently listed on the OTCBB and the OTC Markets. We are subject to certain continued listing standards. We cannot provide any assurance that we will be able to continue to satisfy the requirements of the OTCBB’s and the OTC Market’s continued listing standards. A delisting of our common stock could negatively affect the price and liquidity of our common stock and could impair our ability to raise capital in the future.
Our stock price will be extremely volatile.
The trading price of our common stock will be subject to wide fluctuations in response to announcements of our business developments or those of our competitors, quarterly variations in operating results, and other events or factors. In addition, stock markets have experienced extreme price volatility in recent years. This volatility has had a substantial effect on the market prices of companies, at times for reasons unrelated to their operating performance. Such broad market fluctuations may adversely affect the price of our stock.
Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and experience further dilution.
We are authorized to issue up to 5,000,000,000 shares of common stock, of which 123,438,400 shares of common stock are issued and outstanding as of December 31, 2013. Our board of directors has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.
Since our securities are subject to penny stock rules you may have difficulty selling your shares.
Our shares of common stock are “penny stocks” and are covered by Section 12(g) of the 1934 Securities and Exchange Act which imposes additional sales practices which requires broker/dealers who sell ChinAmerica Andy Movie Entertainment Company’s securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and furnishing monthly account statements. For sales of our securities a broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder’s ability to dispose of his stock.
At the present time our President and sole Director provide his services on an unpaid basis and may not be able to continue his services without pay.
Since our company is not currently operating with earnings and cash flows to support Officer and Director salaries, our Officer and Director works on an unpaid basis. If and when the company has increased its operations to support salaries, we intend for our Officer/Director to be compensated, which compensation will be adjusted annually based on individual performance and performance of the Company. Revenues and earnings, as well as sufficient cash flow, will be considered when determining when salaries may be available to our Officers and directors. Cash flows must be sufficient to meet the monthly cash needs of the business. Earnings are determined quarterly and will be analyzed along with our cash flows to determine if there is sufficient cash remaining after all expenses are paid to commence salaries for the officers and directors. Until then, there is a risk that our Officer and Director may need to find work elsewhere to supplement his income, distracting him from our operations resulting in poor quality control and a loss of clients and business.
Risks relating to doing business in China
Substantially all of our business assets are located in China, and substantially all of our sales will be derived from China. Accordingly, our results of operations, financial position and prospects are subject to a significant degree to the economic, political and legal development in China.
Our operating entity will derive its sales from China.
All sales by the company will be generated primarily from China. We anticipate that sales in China will continue to represent all of our total sales in the future. Any significant decline in the condition of the PRC economy could adversely affect our business and financial condition.
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Changes in the policies of the Chinese government could have a significant impact upon the ability to sustain growth.
Since 1978, the PRC government has promulgated various reforms of its economic system and government structure. These reforms have resulted in significant economic growth and social progress for China in the last two decades. Many of the reforms are unprecedented or experimental, and such reforms are expected to be modified from time to time. Although we cannot predict whether changes in China’s political, economic and social conditions, laws, regulations and policies will have any materially adverse effect on our company currently or in the future, our results of operation or financial condition could be negatively impacted.
Our ability to do business depends on a number of factors, including general economic and capital market conditions in China and credit availability from banks and other lenders in China. Recently, the PRC government has implemented various measures to control the rate of economic growth and tighten its monetary policies. Slower economic growth rate may in turn have an adverse effect on the ability to sustain growth and our ability to remain in business.
Fluctuation in the value of the RMB may have a material adverse effect on your investment.
The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Our revenues and costs will be mostly denominated in RMB. Any significant fluctuation in value of RMB may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of our stock in U.S. dollars. For example, an appreciation of RMB against the U.S. dollar would make any new RMB denominated investments or expenditures more costly, to the extent that the operating entities need to convert U.S. dollars into RMB for such purposes. In addition, the depreciation of significant U.S. dollar denominated assets could result in a charge to our income statement and a reduction in the value of the assets of the operating entities.
We transact business in China, therefore, fluctuation in Foreign Exchange Rates may adversely affect our earnings.
The Company transacts business globally and is subject to risks associated with changing foreign currency exchange rates. The Company does not have a foreign exchange risk management program that is intended to reduce these earnings fluctuations associated with foreign currency exchange rate changes. The Company has significant operations in China, and accordingly, we may experience gains or losses due to foreign exchange fluctuations.
We must comply with the Foreign Corrupt Practices Act.
We are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Although we will inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.
Because assets and operations of the company will be located outside the United States and a majority of our officers and directors may be non-United States citizens living outside of the United States, investors may experience difficulties in attempting to enforce judgments based upon United States federal securities laws against us and our directors. United States laws and/or judgments might not be enforced against us in foreign jurisdictions.
All of our holdings are held through our corporation organized and located in the United States, and all the assets of our company will be located outside the United States. In addition, a majority of our officers and directors may be foreign citizens. As a result, it may be difficult or impossible for U.S. investors to enforce judgments made by U.S. courts for civil liabilities against the individual directors or officers who are non-citizens of the U.S. In addition, U.S. investors should not assume that courts in the countries in which our operations are or where the assets of our company will be located (i) would enforce judgments of U.S. courts obtained in actions against us or our subsidiary based upon the civil liability provisions of applicable U.S. federal and state securities laws or (ii) would enforce, in original actions, liabilities against us or our subsidiary based upon these laws.
The legal system in China has inherent uncertainties that may limit the legal protections available in the event of any claims or disputes with third parties.
The legal system in China is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, the central government has promulgated laws and regulations dealing with economic matters such as
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foreign investment, corporate organization and governance, commerce, taxation and trade. As China’s foreign investment laws and regulations are relatively new and the legal system is still evolving, the interpretation of many laws, regulations and rules is not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit the remedies available in the event of any claims or disputes with third parties. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.
The Chinese government exerts substantial influence over the manner in which we the operating entities must conduct their business activities.
Operating entities in China depend on their relationships with the local governments in the province in which they operate. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Operations in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters. We believe that our company will be in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
We may have difficulty establishing adequate management, legal and financial controls in the PRC.
The PRC historically has been deficient in Western style management and financial reporting concepts and practices, as well as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.
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 our services could potentially decrease accordingly.
Our Company could potentially experience rapid growth in operations, which would place significant demands on the Company’s 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.
The brand identity that the Company is developing we believe will contribute to the success of its business. Maintaining and enhancing the Company’s brand image is critical to expanding the Company’s base of customers and members.
The Company believes that the importance of brand recognition will increase due to the relatively low barriers to entry in the market. If the Company fails to maintain and enhance the Company’s brand, or if it incurs excessive expenses in this effort, the Company’s business, operating results and financial condition will be materially and adversely affected. Maintaining and enhancing the Company’s brand will depend largely on the Company’s ability to continue to provide high-quality products and services.
ITEM 2
ITEM 2 - PROPERTIES
The Company rents corporate office space at 6371 Business Boulevard, Suite 200, Sarasota, Florida 34240 and in New York at 501 Madison Ave, 14th Floor, New York, New York 10022, as well as 7095 Hollywood Boulevard, Suite 306, Hollywood, CA 90028. Our corporate phone number is (941) 224-6975 and our corporate website is www.came8.com.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
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There is no pending litigation by or against us.
ITEM 4
ITEM 4 - MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is currently quoted on the Over the Counter Bulletin Board (OTCBB) under the symbol “CAME.” In the first week of 2013 light trading began in our common stock. The price of the last sale of our stock at market closing occurred on January 17, 2014 and was $2.00 per share.
As the market for our shares develops, the trading price of the common stock is likely to be highly volatile and could be subject to wide fluctuations in response to factors such as actual or anticipated variations in quarterly operating results, announcements of technological innovations, new sales formats, or new services by us or our competitors, changes in financial estimates by securities analysts, conditions or trends in Internet or traditional retail markets, changes in the market valuations of other consulting services or accounting related business services, announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, capital commitments, additions or departures of key personnel, sales of common stock and other events or factors, many of which are beyond our control. In addition, the stock market in general, and the market for business services in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. These broad market and industry factors may materially adversely affect the market price of the common stock, regardless of our operating performance.
Consequently, future announcements concerning us or our competitors, litigation, or public concerns as to the commercial value of one or more of our products or services may cause the market price of our common stock to fluctuate substantially for reasons which may be unrelated to operating results. These fluctuations, as well as general economic, political and market conditions, may have a material adverse effect on the market price of our common stock.
Cash dividends have not been paid during the last three (3) years. In the near future, we intend to retain any earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. The declaration and payment of cash dividends by us are subject to the discretion of our board of directors. Any future determination to pay cash dividends will depend on our results of operations, financial condition, capital requirements, contractual restrictions and other factors deemed relevant at the time by the board of directors. We are not currently subject to any contractual arrangements that restrict our ability to pay cash dividends.
During the year ended December 31, 2013, the Company issued an additional 119,938,400 shares stock to our President and sole Director, Andy Z. Fan.
During the period ended December 31, 2013, the Company issued 100,000,000 shares of common stock to an officer for the $100,000 that represented loans converted to equity in the Company. The stock was issued at the value of $0.001 per share.
During the period ended September 30, 2013, the Company issued 14,938,400 shares of common stock to an officer for $149,384.00 that represented loans converted to equity in the Company. The stock was issued at par value of $0.01 per share.
During the period ended June 30, 2013, the Company issued 5,000,000 shares of common stock to an officer for $50,000 that represented loans converted to equity in the Company. The stock was issued at par value of $0.01 per share.
We had seventy-six (76) stockholders of record of our common stock as of December 31, 2013. The CUSIP number for our common stock is 16952K 109.
The Company has no options or warrants issued or outstanding.
No preferred shares have been issued.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA
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We are a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K and as such, are not providing the information contained in this item pursuant to Item 301 of Regulation S-K.
ITEM 7
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with our financial statements and the notes thereto.
Forward-Looking Statements
This annual report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China's legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.
Use of Certain Defined Terms
Except as otherwise indicated by the context, references in this report to “CAME” “we,” “us,” or “our” and the “Company” are references to the business of ChinAmerica Andy Movie Entertainment Company.
Use of GAAP Financial Measures
We use GAAP financial measures in the section of this quarterly report captioned “Management’s Discussion and Analysis or Plan of Operation.” All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.
Overview
This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.
General
ChinAmerica Andy Movie Entertainment Media Co., formally known as Court Document Services, Inc., is an operating company that is focusing its efforts in movie projects, including pre-production research and strategizing, introduction of American talent and potential partners from Hollywood, California. We are seeking to provide training and global market consulting, production and post-production activities, and particularly the distribution and promotion in the United States market. We have an operating history and have generated revenues that have produced both net incomes and losses in the periods in which we have been fully operational. We are currently in discussion with parties to begin pre-production on a project utilizing facilities that are already in production mode.
We are looking to establish a CAME presence in Hengdian, China which is deemed to be the “Hollywood of China”. Our President is working to secure a new location in Building 12, 2/F, Hengdian Industrial Park for Movie and TV Businesses, Hengdian, Zhejiang Province, China. Mr. Fan travels in various parts China extensively for both business and pleasure and has been working on securing the new location.
Our Board of Directors believes that we can operate as a Movie, Entertainment, Media and Documentary production company during the next twelve months to increase revenues for the company. However, the production of a movie, documentary or animated film may take years to complete and future cash flows, if any, are impossible to predict at this time. The value of any revenue and potential profits from any production or animated film is largely dependent on factors beyond our control such as the market for our films.
We may raise cash from sources other than our operations. Our only other source for cash at this time is investment by others in the Company.
Subsequent Events - New Business
On December 23, 2013, ChinAmerica Andy Movie Entertainment Media Co and AF Ocean Investment Management (Shanghai) Co., LTD., entered into a management agreement. AF Ocean Investment Management (Shanghai) Co., LTD is a Shanghai, China, corporation wholly owned by AF Ocean Investment Management Company. This corporation qualifies and is recognized by the People’s Republic of China as a wholly foreign-owned entity (“WFOE”). . This agreement calls for ChinAmerica to pay AF Ocean
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Shanghai a management fee for the collection and maintenance of the funds received in the People’s Republic of China for ChinAmerica.
On December 31, 2013 ChinAmerica Andy Movie Entertainment Media Co received a Twenty Thousand Five Hundred Dollars ($20,500 USD) referral fee for the negotiations between ChinAmerica Andy Movie Entertainment Media Co and Zhong Mei Yin Shi.
On January 3, 2014, ChinAmerica Andy Movie Entertainment Media Co. announced that it has finalized the formal contract with Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as “Zhong Mei Yin Shi”), a Chinese company registered in Beijing, People’s Republic of China, for joint movie projects in both China and the United States. Zhong Mei Yin Shi agrees to pay a total of $1,000,000 (One Million USD) to ChinAmerica Andy Movie Entertainment Media Company (“ChinAmerica”).
As of January 28, 2014, payments totaling Three Hundred Thirty Thousand Six Hundred Dollars ($330,600 USD) have been received though AF Ocean Investment Management (Shanghai) Co., LTD. The funds were deposited into the AF Ocean Shanghai bank account for the benefit of ChinAmerica under our management agreement.
Employees
As of December 31, 2013, there were no paid employees. This includes our Officers and Director who run the corporation.
Critical Accounting Policies
The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Our actual results could differ from those estimates. To be as accurate with our estimates as possible, we use our historical data to forecast our future results. Deviations from our projections are addressed when our financials are reviewed on a monthly basis. This allows us to be proactive in our approach to managing our business. It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.
Management does not believe that our actual results are related to any sensitivity in estimates made by management. The year-end consistency of our results has shown that our prior year’s historical data is the best projector of our future results.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.
In July 2006, the Financial Accounting Standards Board (“FASB”) issued Financial Interpretation (“FIN”) 48, “Accounting for Uncertainty in Income Taxes” (codified primarily in FASB ASC Topic 740, Income Taxes) which clarifies the accounting for uncertainty in income taxes recognized in the financial statements in accordance with Statement of Financial Accounting Standards (“SFAS”) 109, “Accounting for Income Taxes” (codified primarily in FASB ASC Topic 740, Income Taxes). FIN 48 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We adopted FIN 48 effective January 1, 2007. As a result of the implementation of FIN 48, the Company recognized no increase in the liability for unrecognized tax benefits.
Results of Operations
General
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Summary of results of operations is as follows:
The following tables set forth key components of our results of operations and revenue for the periods indicated in dollars.
Table 2.0 Comparison of our Statement of Operations for the Years Ended December 31, 2013 and 2012
Income from Operations. For the year ended December 31, 2013, we had no operational revenue. We showed a loss from operations while we continue to focus on developing operations in the People’s Republic of China.
Operating Expenses. Expenses were $49,534 for the year ended December 31, 2013 as compared to $14,380 for the year ended December 31, 2012. This difference is primarily due to a change in operations and all expenses for the year ended December 31, 2012 were attributable to discontinued operations. Our current expenses are directly attributable to our professional expenses for legal and accounting services. Management believes that our expenses have remained constant relative to the level of expenditures while we continue to concentrate our efforts on developing operations in the People’s Republic of China.
Net Income (Loss). As a result of the factors described above, we show a net loss of $(49,516) for the year ended December 31, 2013. We believe the loss from operations is related to the company developing an operational business in the People’s Republic of China. In addition, we have entered into discussions for a new location in Hengdian Industrial Park for Movie and TV Businesses, Hengdian, Zhejiang Province, China. Management believes that with the new contract agreement between CAME and “Zhong Mei Yin Shi” we will begin to see an increase in expenses therefore will continue to see a net loss in the next fiscal year.
Liquidity and Capital Resources
General. As of December 31, 2013 we had cash and cash equivalents of $286,383, which was an increase of $282,742. We have historically met our cash needs through a combination of cash flows from operating activities, which have been discontinued. Our cash requirements are generally for general and administrative activities. We have raised capital through officer loans during the current fiscal year. We believe that our cash balance is sufficient to finance our cash requirements for expected operational activities, capital improvements and partial repayment of debt through the next 12 months. On October 11, 2013, the Company changed direction to the current concentration of Movies, Documentaries and Films.
Our operating activities used cash of $28,258 for the year ended December 31, 2013 as compared to $20,163 for the year ended December 31, 2012. We received additional funding through loans from the Majority Shareholder. Prior to the end of our fiscal year 2013 the majority of the loans we received from our President and sole Director were converted to Equity in the Company.
Cash generated in our financing activities was $311,000 for the year ended December 31, 2013, compared to $23,000 during the comparable period in 2012. There was a total of $11,616 in loans from the Majority Shareholder for the year ended December 31, 2013 which will be converted into equity in the first fiscal quarter of 2014. The Company converted a loan in the amount of $100,000 and issued stock to the Majority Shareholder at the par value of $.001.
As of December 31, 2013, current assets exceeded current liabilities.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had no sales and a net loss of ($49,516) for the year ended December 31, 2013 compared to net loss of ($16,218) for the year ended December 31, 2012. These factors raise doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company has retained its first client as of January 3, 2014. Payment for services to be rendered will begin the fourth week in January.
Inflation
Inflation does not materially affect our business or the results of our operations.
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Recent Accounting Pronouncements
The Company has carefully considered the new pronouncements that altered generally accepted accounting principles. The Company does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term, other than the following as reported in our financial statements:
Share-based Compensation
The Company may issue stock options whereby all share-based payments to employees, including grants of employee stock options are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company had no common stock options or common stock equivalents granted or outstanding for all periods presented.
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.
The Company may issue restricted stock for various business and administrative services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.
Off-Balance Sheet Arrangements
We do not have any off-balance arrangements.
Recently Adopted Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued authoritative guidance regarding Accounting Standards Codification 926 (ASC 926) to address topics related to the film entertainment industry. As modern films today can cost and return revenues in the millions of dollars, each one needs to be accounted for with care. Further, as there are a multitude of ways films are distributed today, different rules may apply as to when revenue may be recognized for each.
The Company may enter into arrangements with third parties to co-produce many of its theatrical productions. These arrangements, which are referred to as co-financing arrangements, take various forms. The parties to these arrangements could include studio and non-studio entities, both domestic and foreign. In several of these agreements, other parties control certain distribution rights. The Filmed Entertainment segment records the amounts received for the sale of an economic interest as a reduction of the cost of the film, as the investor assumes full risk for that portion of the film asset acquired in these transactions. The substance of these arrangements is that the third-party investors own an interest in the film and, therefore, receive a participation based on the respective third-party investor's interest in the profits or losses incurred on the film. Consistent with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 926 “Entertainment-Films” (“ASC 926”), the estimate of a third-party investor's interest in profits or losses on the film is based on total estimated ultimate revenues as provided below:
Unamortized film costs shall be tested for impairment whenever events or changes in circumstances indicate that the fair value of the film may be less than its unamortized costs. The following are examples of events or changes in circumstances that indicate that an entity shall assess whether the fair value of a film (whether completed or not) is less than its unamortized film costs:
·
An adverse change in the expected performance of a film prior to release
·
Actual costs substantially in excess of budgeted costs
·
Substantial delays in completion or release schedules
·
Changes in release plans, such as a reduction in the initial release pattern
·
Insufficient funding or resources to complete the film and to market it effectively
·
Actual performance subsequent to release failing to meet that which had been expected prior to release.
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ASC p. 926- 20-35-12 (Transition Date: December 15, 2013).
ITEM 7A
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following discussion about the Company’s market rate risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.
In general, business enterprises can be exposed to market risks, including fluctuation in the unemployment rate, foreign currency exchange rates, and interest rates that can adversely affect the cost and results of operating, investing, and financing.
In seeking to minimize the risks and/or costs associated with such activities, the Company manages exposure to changes in the unemployment rate, interest rates and foreign currency exchange rates through its regular operating and financing activities. The Company does not utilize financial instruments for trading or other speculative purposes, nor does the Company utilize leveraged financial instruments or other derivatives.
Our operations are conducted primarily in the People’s Republic of China however we are not subject to foreign currency exchange rate risk due to the fact that we are currently not generating any revenues or direct expenses from our work in the People’s Republic of China.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See the index to our financial statements in Item 15 and the financial statements and notes that are filed as part of this Annual Report on Form 10-K following the signature page and incorporated herein by this reference.
ITEM 9
ITEM 9 - CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On March 1, 2012, we engaged Drake & Klein, C.P.A.’s, as our independent auditors. They are our first auditors and we have had no disagreements with Drake & Klein on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, in connection with its reports.
On December 17, 2012, the audit firm of Drake & Klein CPA’s changed its name to DKM Certified Public Accountants. The change was reported to the PCAOB as a change of name. This is not a change of auditors for the Company.
ITEM 9A
ITEM 9A - CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
We conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as of December 31, 2013.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective, at the reasonable assurance level, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Principal Executive Officer, as appropriate, to allow timely discussions regarding required disclosure due to the material weaknesses described below.
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In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure that our consolidated financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the consolidated financial statements included in this Amended Annual Report fairly present in all material respects, our financial condition, results of operations, and cash flows as of and for the year presented.
Management Report on Internal Control Over Financial Reporting
The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is a process designed to provide reasonable assurance to management and to the board of directors regarding the preparation and fair presentation of published financial statements.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Corporation; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on our financial statements.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework - Guidance for Smaller Public Companies (the COSO criteria). Based on our assessment, management identified material weaknesses related to: (i) our internal audit functions and (ii) a lack of segregation of duties within accounting functions. Based on this evaluation, our management concluded that as of December 31, 2013, we did not maintain effective internal control over financial reporting.
Because of 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 any policies and procedures may deteriorate. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. To the extent possible, we will implement procedures to assure that the initiation of transactions, the custody of assets and the recording of transactions will be performed by separate individuals. With proper funding we plan on remediating the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.
A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 5) or combination of control deficiencies, that results in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Auditor Attestation
This annual report does not include an attestation report of the Corporation’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report..
Changes in Internal Control over Financial Reporting
There was a change in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 that occurred during the year ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Management determined that there was a weakness in the reporting of our bank account balances. Management instituted a new policy to have the President review all bank statements at the end of each month to correctly report all cash balances.
ITEM 9B
ITEM 9B - OTHER INFORMATION
There is no information required to be disclosed in a report on Form 8-K during the fourth quarter of 2013 but not reported, whether or not otherwise required by this Form 10-K.
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PART III
ITEM 10.
ITEM 10.-DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The names and ages of our directors and executive officers are set forth below. Our By-Laws provide for not less than one and not more than fifteen directors. All directors are elected annually by the stockholders to serve until the next annual meeting of the stockholders and until their successors are duly elected and qualified.
As reported in our Current Report on Form 8-K filed on December 6, 2013, at the December 5, 2013 special meeting of shareholders, Mr. Michael J Daniels resigned his position as Secretary and Mr. Fan accepted the additional offices placed by his name as provided in Table 5.0 below.
As reported in our Current Report on Form 8-K filed March 10, 2014, the Board of Directors appointed Tina Donnelly as corporate secretary
Table 3.0 Directors and Executive Officers
*As of December 31, 2013, Mr. Fan was Secretary; Ms. Donnelly subsequently replaced Mr. Fan upon her appointment as Secretary on March 7, 2014.
Background of Executive Officers and Directors
Andy Z. Fan
Mr. Fan was appointed as Director and President on October 1, 2012.
Mr. Andy Z. Fan is a prominent Chinese-American businessman with outstanding connections with the Chinese government, long standing relationships with Chinese media, and has a strong fan base in China where he has appeared in various forms of media over the past few years. He was once the interpreter for China's Head of State, Prime Minister Li Peng. Later, he was awarded a full scholarship to study on the graduate level in the U.S., and was introduced to former U.S. President Bill Clinton by the University President and served as Clinton's Chinese interpreter.
Mr. Fan is currently President, Chief Executive Officer, and Chairman of the Board of AF Ocean Investment Management Company [OTCBB:AFAN]. AF Ocean Investment Management Company is dedicated to providing the company’s Clients the best consulting and business services in mergers, acquisitions and investments.
Mr. Fan is currently Chief Executive Officer, Principal Financial Officer, and Director of Sichuan Leaders Petrochemical Company [OTCBB:SLPC]. Sichuan Leaders Petrochemical Company has determined that the various opportunities in the petrochemical field in Asia are expanding. To take advantage of this opportunity the company will be exploring the acquisition of companies that are wholesaling and retailing petroleum based products to be used in the automotive industry and beyond.
Mr. Fan is currently President and Director of Top To Bottom Pressure Washing, Incorporated [OTCBB: TOPW]. The primary focus of Top To Bottom Pressure Washing is the understanding the importance and value of maintaining a clean environment. The cleanliness of your home or office can speak volumes about you and leave a lasting impression on friends, family, clients and coworkers. Top To Bottom Pressure Washing uses the latest technology and pressure cleaning equipment to provide unparalleled cleaning results, guaranteed to leave your roofs and driveways looking revived and refreshed.
Tina Donnelly
Ms. Donnelly was appointed as Secretary on February 24, 2014.
Since June 12, 2012, Ms. Donnelly, age 38, has been employed by AF Ocean Investment Management Company as its Accounting Supervisor. She has over fifteen (15) years of accounting experience. Her skills include working with financial professionals such as C.P.A.’s and Public Company Accounting Oversight Board (PCAOB) Auditors. She was also appointed corporate secretary of AF Ocean Investment Management Company [OTC:AFAN] on February 24, 2014, Sichuan Leaders Petrochemical Company [OTC:SLPC] on February 24, 2014, and Top to Bottom Pressure Washing Inc. [OTC:TOPW]on March 7, 2014, . Prior to June 12,
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2012, Ms. Donnelly ran the accounting departments for the following private companies: Wave, LLC, Tags4Fun, LLC, and Sarasota Business Rentals.
Section 16(a) Beneficial Owner Reporting Compliance for the year ended December 31, 2013
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and any persons who beneficially own more than 10% of our capital stock to file with the Commission (and, if such security is listed on a national securities exchange, with such exchange), various reports as to ownership of such capital stock. Such persons are required by Commission regulations to furnish us with copies of all Section 16(a) forms they file. Based solely upon reports and representations submitted by the directors, executive officers and holders of more than 10% of our capital stock, Forms 3, 4 and 5 showing ownership of and changes of ownership in our capital stock during 2013 were not timely filed with the Commission.
Code of Ethics
The Company has adopted a code of ethics that applies to its Chief Executive Officer and other senior financial officers, which group includes the Company’s principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics is accessible at our Internet website, www.came8.com. The Company intends to disclose future amendments to, or waivers from, certain provisions of its code of ethics, if any, on the above website within four business days following the date of such amendment or waiver.
Audit Committee
We do not have an audit committee that is comprised of any independent director. As a company with less than $2,000,000 in revenue we rely on our President and Director, Andy Z Fan, for our audit committee financial expert as defined in Item 407(d) of Regulation S-X. Our Board of Directors acts as our audit committee. Mr. Fan has a complete understanding of GAAP and financial statements; the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves in a fair and impartial manner; has experience analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to or exceed the breadth and complexity of issues that can reasonably be expected to be raised by the small business issuer’s financial statements; an understanding of internal control over financial reporting; and an understanding of audit committee functions. Mr. Fan has gained this expertise through his experience as our President and sole Director and through his formal education. He has specific experience coordinating the financials of the Company with public accountants with respect to the preparation, auditing or evaluation of the Company’s financial statements.
ITEM 11.
ITEM 11.-EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Company’s compensation arrangements with its named executive officers are designed to attract and retain the best available personnel for positions of substantial responsibility with the Company. In addition, these arrangements have been developed to provide additional incentive to the Company’s key employees and promote the success of the Company’s business.
The compensation arrangements consist of two components. The first component is base compensation (or “salary”) and the second component is the stock option plan.
Base Compensation
The following table sets forth information concerning the compensation of our President and Secretary/Treasurer, and the most highly compensated employees and/or executive officers who served at the end of the fiscal years December 31, 2013 and 2012, and whose salary and bonus exceeded $100,000 for the fiscal years ended December 31, 2013 and 2012, for services rendered in all capacities to us. The listed individuals shall be hereinafter referred to as the “Named Executive Officers.”
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Table 5.0 Summary Compensation
The base compensation for the Named Executive Officers is reviewed every two years and adjustments are made based upon performance.
Equity Based Compensation
The following table sets forth the unexercised options; stock that has not vested; and equity incentive plan awards for each named executive officer outstanding as of the end of December 31, 2013:
Table 6.0 Outstanding Equity Awards at December 31, 2013
Compensation of Directors
The compensation of directors for the last completed fiscal year is provided below:
Table 7.0 Director Compensation
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Board of Directors and Committees
Currently, our Board of Directors consists of Andy Z. Fan. We are seeking additional board members. At present, the Board of Directors has not established any standing committees. Former Director Michael J. Daniels resigned his positions effective December 5, 2013.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of all the members of the Board. No Director is a paid officer of the Company. Board members participated in the consideration of the Director compensation and no compensation was granted. At this time, the Compensation Committee does not have a charter.
The Company’s Compensation Committee of the Board of Directors (the “Compensation Committee”) has submitted the following report for inclusion in this filing on Form 10-K:
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this filing on Form 10-K with management. Based on the Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for filing with the SEC.
MEMBERS OF THE COMPENSATION COMMITTEE
Andy Z. Fan, Director
Employment Agreements
Currently, we have no employment agreements with any officer.
ITEM 12.
ITEM 12.-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK HOLDER MATTERS
The following table sets forth information concerning the beneficial ownership of shares of our common stock with respect to stockholders who were known by us to be beneficial owners of more than 5% of our common stock as of December 31, 2013, and our officers and directors, individually and as a group. Unless otherwise indicated, the beneficial owner has sole voting and investment power with respect to such shares of common stock.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (“SEC”) and generally includes voting or investment power with respect to securities. In accordance with the SEC rules, shares of our common stock which may be acquired upon exercise of stock options or warrants which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed beneficially owned by the optionees, if applicable. Subject to community property laws, where applicable, the persons or entities named in Table 8.0 have sole voting and investment power with respect to all shares of our common stock indicated as beneficially owned by them.
Table 8.0 Beneficial Ownership
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ITEM 13.
ITEM 13.-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Subsequent Events - New Business
On December 23, 2013, ChinAmerica Andy Movie Entertainment Media Co and AF Ocean Investment Management (Shanghai) Co., LTD., entered into a management agreement. AF Ocean Investment Management (Shanghai) Co., LTD is a Shanghai, China, corporation wholly owned by AF Ocean Investment Management Company. This corporation qualifies and is recognized by the People’s Republic of China as a WOFE. This agreement calls for ChinAmerica to pay AF Ocean Shanghai a management fee for the collection and maintenance of the funds received in the People’s Republic of China for ChinAmerica.
On January 3, 2014, ChinAmerica Andy Movie Entertainment Media Co. announced that it has finalized the formal contract with Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as “Zhong Mei Yin Shi”), a Chinese company registered in Beijing, People’s Republic of China, for joint movie projects in both China and the United States. Zhong Mei Yin Shi agrees to pay a total of $1,000,000 (One Million USD) to ChinAmerica Andy Movie Entertainment Media Company (“ChinAmerica”).
As of January 28, 2014, payments totaling Two Hundred Fifty Thousand Dollars and NO/ ($250,000) (USD) have been received though AF Ocean Investment Management (Shanghai) Co., LTD. The funds were deposited into the AF Ocean Shanghai bank account for the benefit of ChinAmerica under our management agreement.
On February 24, 2014, Tina M. Donnelly was appointed as corporate secretary.
Certain Relations and Related Transactions:
To the best of our knowledge, during the fiscal year ended December 31, 2013, there were no transactions of an amount exceeding $120,000 involving any director, executive officer, or any security holder who is a beneficial owner or any member of the immediate family of the officers and directors other than the following;
On December 23, 2013, ChinAmerica Andy Movie Entertainment Media Co and AF Ocean Investment Management (Shanghai) Co., LTD., entered into a management agreement. AF Ocean Investment Management (Shanghai) Co., LTD is a Shanghai, China, corporation wholly owned by AF Ocean Investment Management Company. This corporation qualifies and is recognized by the People’s Republic of China as a WOFE. This agreement calls for ChinAmerica to pay AF Ocean Shanghai a management fee for the collection and maintenance of the funds received in the People’s Republic of China for ChinAmerica.
ChinAmerica and AF Ocean Shanghai are controlled by the same individual, Andy Z. Fan our President and sole Director.
Director Independence
In accordance with the rules of the Commission, the Board of Directors has evaluated each of its directors’ independence from the Company based on the definition of “independence” established Item 407(a) of Regulation S-K. In its review of each director’s independence from the Company, the Board of Directors reviewed whether any transactions or relationships exist currently or, during the past year existed, between each director and the Company and its subsidiaries, affiliates, equity investors or independent registered public accounting firm. The Board of Directors also examined whether there were any transactions or relationships between each director and members of the senior management of the Company or their affiliates.
Based on the Board of Director’s review and the Commission’s definition of “independence,” the Board of Directors has determined we currently have no independent directors. Andy Z. Fan is fulfilling the audit, nominating and compensation committee functions.
ITEM 14
ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES
On March 1, 2012, we engaged Drake & Klein, C.P.A.’s, as our independent auditors. They are our first auditors and we have had no disagreements with Drake & Klein on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, in connection with its reports.
On December 17, 2012, the audit firm of Drake & Klein CPA’s changed its name to DKM Certified Public Accountants. The change was reported to the PCAOB as a change of name. This is not a change of auditors for the Company.
The following table sets forth the aggregate fees billed by our auditors and accountants for fiscal 2013 and 2012:
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Table 9.0 Accounting Fees and Services
(1)
Audit related fees for the Registration Statement on Form S-1.
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PART IV
ITEM 15
ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1. Index to Financial Statements
The following financial statements of CHINAMERICA ANDY MOVIE ENTERTAINMENT CO. are included in this report immediately following the signature page:
·
Report of Independent Registered Public Accounting Firm
·
Balance Sheets at December 31, 2013 and December 31, 2012
·
Statements of Operations for the years ended December 31, 2013 and December 31, 2012
·
Statements of Stockholders’ Deficit for the years ended December 31, 2013 and December 31, 2012
·
Statements of Cash Flows for the years ended December 31, 2013 and December 31, 2012
·
Notes to the Financial Statements
2. Index to Financial Statement Schedules
Financial statement schedules are omitted because they are either not required or the required information is provided in the consolidated financial statements or notes thereto.
3. Index to Exhibits
The exhibits filed herewith or incorporated by reference are set forth on the Exhibit Index below and attached hereto.
Table 10.0 Index to Exhibits
*Pursuant to Rule 406T of Regulation S-T, the interactive XBRL files contained in Exhibit 101 hereto are deemed “not filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under that section.
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SIGNATURES
Pursuant to the requirements of section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHINAMERICA ANDY MOVIE ENTERTAINMENT COMPANY
Dated: March 20, 2014
/s/ANDY Z. FAN
Andy Z. Fan
Chief Executive Officer, President, Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
CHINAMERICA ANDY MOVIE ENTERTAINMENT COMPANY
Dated: March 20, 2014
/s/ANDY Z. FAN
Andy Z. Fan
Chief Executive Officer, Chief Financial Officer, President, Chairman of the Board of Directors
Dated: March 20, 2014
/s/TINA M. DONNELLY
Tina M. Donnelly
Corporate Secretary, Accounting Supervisor
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FINANCIAL STATEMENTS
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2451 N. McMullen Booth Road
Suite 308
Clearwater, FL 33759
Toll fee: 855.334.0934
Fax: 800.581.1908
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
ChinAmerica Andy Movie Entertainment Media Co.
We have audited the accompanying balance sheets of ChinAmerica Andy Movie Entertainment Media Co. as of December 31, 2013 and 2012, and the related statement of operations, stockholders’ deficiency, and cash flows for the years then ended. 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 audit.
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 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 financial statements referred to above present fairly, in all material respects, the financial position of ChinAmerica Andy Movie Entertainment Media Co. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has significant net losses and cash flow deficiencies. Those conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ DKM Certified Public Accountants
DKM Certified Public Accountants
Clearwater, Florida
March 19, 2014
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PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
ChinAmerica Andy Movie Entertainment Media Co.
BALANCE SHEETS
For the Years Ended December 31,
The accompanying footnotes are an integral part of the statements.
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ChinAmerica Andy Movie Entertainment Media Co.
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
The accompanying footnotes are an integral part of the statements.
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ChinAmerica Andy Movie Entertainment Media Co.
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
*A stock split authorized on January 30, 2012 was retroactively applied to all years presented.
See accompanying notes and accountant’s report.
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ChinAmerica Andy Movie Entertainment Media Co.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
The accompanying footnotes are an integral part of the statements.
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ChinAmerica Andy Movie Entertainment Media Co.
Notes to Financial Statements
December 31, 2013
NOTE 1.
BUSINESS DESCRIPTION AND NATURE OF OPERATIONS
ChinAmerica Andy Movie Entertainment Media Co., formerly known as Court Document Services, Inc. (the “Company”), was incorporated under the laws of the State of Florida on September 26, 2002. On October 11, 2012, the Company changed its operations to focus on Movie, Entertainment and Media.
NOTE 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Use of Estimates
In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the years ended December 31, 2013 and 2012; (b) the financial position at December 31, 2013; and (c) cash flows for the year ended December 31, 2013 and 2012, have been made. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates
Our financial statements may not be comparable to companies that comply with public company effective dates. Due to our election not to opt out of the extended transition period that allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had no sales for the year end and net loss of ($49,516) for the year ended December 31, 2013 compared to the net loss of ($16,218) for the year ended December 31, 2012. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company is somewhat dependent on its ability to obtain clients and investment capital from future funding opportunities to fund the current and planned operating levels. No assurance can be given that the Company will be successful in these efforts.
Cash and Cash Equivalents
The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.
Income Taxes
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Beginning September 1, 2009, the Company adopted the provisions of ASC 740-10, ”Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of September 30, 2013, tax years 2012, 2011 and 2010 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.
Effective September 1, 2009, the Company adopted ASC 740-10, “Definition of Settlement in FASB Interpretation No. 48”, (“ASC 740-10”), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement” or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying consolidated financial statements.
Net Earnings (Loss) Per Share
Basic earnings Per Share,” per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. At December 31, 2013 and December 31, 2012 there were no potentially dilutive securities.
Recent Accounting Pronouncements
The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to December 31, 2013 through the date these financial statements were issued.
Foreign Currency Translation.
The Company will use FASB ASC 830 to address the effect of the exchange rate differences resulting from the translation of the financial statements of its business matters with AF Ocean Investment Management (Shanghai) Co., LTD., into the corporate statements on the Balance Sheet. The effect of the foreign currency translation will be recorded in comprehensive income.
NOTE 3.
RELATED PARTY TRANSACTIONS
The Company had the following related party transactions:
On December 23, 2013, ChinAmerica Andy Movie Entertainment Media Co. (“ChinAmerica”) and AF Ocean Investment Management (Shanghai) Co., LTD., entered into a management agreement. AF Ocean Investment Management (Shanghai) Co., LTD
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is a Shanghai, China, corporation wholly owned by AF Ocean Investment Management Company. This corporation qualifies and is recognized by the People’s Republic of China as a WFOE. This agreement calls for ChinAmerica to pay AF Ocean Shanghai a management fee for the collection and maintenance of the funds received in the People’s Republic of China for ChinAmerica.
On December 31, 2013 ChinAmerica received Twenty Thousand Five Hundred Dollars ($20,500 USD) as a referral fee for the negotiations between ChinAmerica and Zhong Mei Yin Shi. Common stock was issued in lieu of cash compensation for these services rendered, at par value ($0.01) in 2014 as noted in the Subsequent Events and Equity notes.
On January 3, 2014, ChinAmerica announced that it finalized the formal contract with Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as “Zhong Mei Yin Shi”), a Chinese company registered in Beijing, People’s Republic of China, for joint movie projects in both China and the United States. Zhong Mei Yin Shi agrees to pay a total of $1,000,000 (One Million USD) to ChinAmerica.
As of January 28, 2014, payments totaling Two Hundred Fifty Thousand Dollars ($250,000 USD) have been received though AF Ocean Investment Management (Shanghai) Co., LTD. The funds were deposited into the AF Ocean Shanghai bank account for the benefit of ChinAmerica under our management agreement.
NOTE 4.
COMMITMENTS AND CONTINGENCIES
Legal
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2013, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations, except as noted.
Other Commitments
The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments. There are no firm commitments as of December 31, 2013.
The Company rents office space in Sarasota, Florida on a month by month basis. The monthly rent is $300.
The Company rents office space in New York, New York on a month by month basis. The monthly rent will be $300, starting January 1, 2014.
NOTE 5.
STOCKHOLDERS’ EQUITY
In January 2012 the authorized amount was increased to 500,000,000 shares of common stock and a stock split was approved at 5,000:1. On October 11, 2012, the Articles of Incorporation were amended as follows: the total authorized capital stock of the corporation was increased to five billion (5,000,000,000) shares.
During the period ended June 30, 2013, the Company issued 5,000,000 shares of common stock to an officer for $50,000 that represented loans converted to equity in the Company. The stock was issued at par value of $0.01 per share.
During the period ended September 30, 2013, the Company issued 14,938,400 shares of common stock to an officer for $149,384 that represented loans converted to equity in the Company. The stock was issued at par value of $0.01 per share.
During the period ended December 31, 2013, the Company issued 100,000,000 shares of common stock to an officer for the $100,000 that represented loans converted to equity in the Company. The stock was issued at the value of $0.001 per share.
The Company issued a total of 119,938,400 shares stock to our President and sole Director, Andy Z. Fan during the year ended December 31, 2013.
On January 7, 2014, the Company issued 50,000 shares of Company stock for equal consideration at par value ($0.01 per share).
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On February 19, 2014, the Company issued 2,000,000 shares of Company stock at par value ($0.01 per share) to our President in lieu of cash compensation for services rendered.
The Company has no options or warrants issued or outstanding.
No preferred shares have been issued.
NOTE 6.
INCOME TAX
As of December 31, 2013 and December 31, 2012, the Company has net operating losses from operations. The carry forwards expire through the year 2022. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.3% to income before taxes), as follows:
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
As of December 31, 2013 and December 31, 2012, the Company has net operating losses from operations. The carry forwards expire through the year 2023. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.
The Company’s net deferred tax asset as of December 31, 2013 and December 31, 2012 is as follows:
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The tax returns for 2013 through 2010 remain open for inspection by federal and state taxing authorities.
NOTE 7
DISCONTINUED OPERATIONS AND CHANGE IN DIRECTION
On October 11, 2012, the Board of Directors appointed Mr. Andy Z. Fan as Director and Chairman of the Board. On September 21, 2012, Chairman Andy Fan held a special meeting of the Board of Directors to discuss a change is business strategy and business model for the Company due to the current economic conditions. The legal liabilities and the strong competition in the legal services industry did not provide the necessary climate for building the former business model.
The Board believed that to continue to protect and increase shareholder value, it would be to the advantage, welfare and best interests of the shareholders for the Company to consider alternative corporate strategies to generate new business revenue for the Company. The Board of Directors and the Shareholders approved moving in a new direction and changing the name of the Company to reflect
the direction and mission. The approved strategic direction of the Company will be focusing on producing Movie, Entertainment and Media projects.
The new business model is to produce or facilitate projects in the entertainment business in and about the Peoples’ Republic of China.
To facilitate this new direction, the Board voted to the disposal of the Company assets which was approved by Shareholders representing 87% of the shares issued and outstanding.
Summary of results of discontinued operations is as follows:
Summary of Results of Discontinued Operations
NOTE 8.
PROPERTY AND EQUIPMENT
Property consists of equipment purchased for the production of revenues:
Assets are depreciated over their useful lives when placed in service. There were no depreciation expenses for the years ended December 31, 2013 and 2012, respectively.
NOTE 9.
SUBSEQUENT EVENTS
On January 3, 2014, ChinAmerica Andy Movie Entertainment Media Co., announced that it has finalized the formal contract with
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Zhong Mei An Di Yin Shi Wen Hua Chuan Mei Ltd., Co. (hereinafter referred to as “Zhong Mei Yin Shi”), a Chinese company registered in Beijing, People’s Republic of China, for joint movie projects in both China and the United States. Zhong Mei Yin Shi agrees to pay a total of $1,000,000 (One Million USD) to ChinAmerica Andy Movie Entertainment Media Company (“ChinAmerica”).
On January 7, 2014, the Company issued 50,000 shares of stock at par value of $0.01 per share in lieu of cash compensation for services rendered.
As of January 28, 2014, payments totaling Two Hundred Fifty Thousand Dollars ($250,000) (USD) have been received though AF Ocean Investment Management (Shanghai) Co., LTD. The funds were deposited into the AF Ocean Shanghai bank account for the benefit of ChinAmerica under our management agreement.
On February 19, 2014, the Company issued 2,000,000 shares of Company stock to our President in lieu of cash compensation for services rendered at par value of $0.01 per share.