8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

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

Date of Report (Date of earliest event reported): November 30, 2009

CHINA MEDIA INC.

(Exact name of registrant as specified in its charter)

Nevada	333-150952	N/A
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

12/F, Block D, Chang An Guo Ji

No. 88 Nan Guan Zheng Street

Beilin District, Xi'An, Shaan'Xi Province

China - 710068

 (Address of principal executive offices)

(86) 298765-1114

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

TABLE OF CONTENTS

Item 2.01 Completion of Acquisition or Disposition of Assets.		2
Item 3.02 Unregistered Sales of Equity Securities		2
	Description of Business	4
	Financial Information	16
	Properties	21
	Security Ownership of Certain Beneficial Owners and Management	21
	Directors and Executive Officers	23
	Executive Compensation	26
	Certain Relationships and Related Transactions, and Director Independence	27
	Legal Proceedings	27
	Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters	27
	Recent Sales of Unregistered Securities	28
	Description of Securities	29
	Indemnification of Directors and Officers	30
	Financial Statements and Supplementary Data	31
	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	32
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year		32
Item 5.06 Change in Shell Company Status		32
Item 9.01 Financial Statements and Exhibits		32

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Item 2.01                      Completion of Acquisition or Disposition of Assets.

Item 3.01                      Unregistered Sales of Equity Securities.

As used in this Current Report on Form 8-K, unless otherwise stated, all references to the “Company”, “we,” “our” and “us” refer to China Media Inc.

Share Exchange

On September 16, 2009 we entered into a share exchange agreement (the “Share Exchange Agreement”) with Vallant Pictures Entertainment Co., Ltd., a company incorporated under the laws of the British Virgin Islands (“Vallant”) and Bin Li, our Director and the former sole shareholder of Vallant.  According to the terms of the Share Exchange Agreement, we agreed to acquire the sole issued and outstanding common share of Vallant from Bin Li in exchange for 7,000 shares of our common stock.

On November 30, 2009 we closed the transactions contemplated by the Share Exchange Agreement and acquired Vallant as our wholly owned subsidiary.  Vallant has entered into a series of contractual obligations with Xi’An TV Media Co., Ltd., a company incorporated under the laws of the People’s Republic of China (“Xi’An TV”) that is engaged in the business of producing and developing television programming for the Chinese market, as well as the holders of 62.61% of the voting shares of Xi’An TV.  A full description of these contractual arrangements is included under the heading “Organization”, below.

We had 39,743,000 shares of our common stock issued and outstanding before the closing of the transactions contemplated by the Share Exchange Agreement.  Upon the closing of the transactions, we issued 7,000 shares of our common stock to Bin Li, our Director and the former sole shareholder of Vallant.  Mr. Li is the beneficial owner of 2,000,000 additional shares of our common stock.  The 7,000 shares were issued in reliance upon an exemption from registration pursuant to Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  As of the filing of this Current Report on Form 8-K there were 39,750,000 shares of our common stock issued and outstanding.

Prior to our entry into the Share Exchange Agreement, Bin Li was our Director and the sole officer, director and beneficial owner of Vallant.  Further details on the transactions contemplated by the Share Exchange Agreement can be found in our Current Report on Form 8-K filed with the Securities and Exchange Commission on September 18, 2009.

Accounting Treatment

The share exchange is being accounted for as a reverse merger, since the former sole shareholder of Vallant, Bin Li, acquired the majority of our common stock with the aim of completing the share exchange with Vallant.  We have now abandoned our original business and adopted the business of Vallant, who is deemed to be the acquirer in the reverse merger.  Consequently, the assets, liabilities and historical operations that will be reflected in the financial statements prior to the closing of the share exchange will be those of Vallant and will be recorded at the historical cost basis of Vallant. The consolidated financial statements after the closing of the share exchange will include the assets and liabilities of us and Vallant, the historical operations of Vallant, and our operations from the closing date of the share exchange.  

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Organization

Our relationship with Xi’An TV and its shareholders is governed by a series of contractual arrangements between Vallant, Xi’An TV and the holders of 62.61% of the share capital of Xi’An TV (the “Xi’An TV Shareholders”).  Under the laws of the People’s Republic of China (“China”), the contractual arrangements constitute valid and binding obligations of the parties of such agreements.  Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of China.  Other than pursuant to the contractual arrangements between Vallant and Xi’An TV described below, Xi’An TV cannot transfer 62.61% of the funds generated from their operations.

On June 20, 2007, Vallant entered into the following contractual arrangements with Xi’An TV and the Xi’An TV Shareholders:

Business Operations Agreement.  Pursuant to this agreement, the Xi’An TV Shareholders must designate the candidates recommended by Vallant as their representatives on the Board of Directors of Xi’An TV, and Vallant acquired the right to appoint the senior executives of Xi’An TV.  In addition, Vallant must guarantee Xi’An TV’s performance under any agreements or arrangements relating to Xi’An TV’s business arrangements with any third party, and upon request from Xi’An TV, Vallant will provide loans to support the operational capital requirements of Xi’An TV and loan guarantees if third party loans are necessary.  In return, Xi’An TV must pledge its accounts receivable and all of its assets to Vallant.  This agreement is effective for an indefinite term and may be terminated by Vallant with 30 days notice.

Business Services Agreement.  Pursuant to this agreement among Vallant and Xi’An TV, Vallant acquired the exclusive rights to provide Xi’An TV with all services required by Xi’An TV in the regular course of business, including services pertaining to administration, human resources, production, screenplay drafting and marketing.  As part of this agreement, Vallant must also undertake the following tasks:

·   develop business opportunities on behalf of Xi’An TV;

·   provide relevant market information research;

·   receive payments from customers on behalf of Xi’An TV;

·   administer staff training and human resources for Xi’An TV; and

·   provide daily accounting and financial services.

In exchange, Xi’An TV must provide Vallant with 62.61% of its income.  This agreement is effective for an indefinite term and may be terminated by Vallant at any time.

Option Agreement.Pursuant to this agreement between the Xi’An TV Shareholders, Xi’An TV and Vallant, the Xi’An TV Shareholders irrevocably granted Vallant or its designees the exclusive option to purchase, to the extent permitted under the laws of China, all or part of their equity interest in Xi’An TV for the cost of the initial contributions to the registered capital or the minimum amount of consideration permitted by applicable Chinese law.  The proceeds of the exercise of the option will be applied to repay loans extended by the Xi’An TV Shareholders to Xi’An TV, unless otherwise agreed.  Vallant or its designees have sole discretion to decide when to exercise the option, whether in part or in full.  This agreement is effective for an indefinite term and may be terminated by Vallant at any time.

Equity Pledge Agreement. Pursuant to this agreement between Xi'An TV, the Xi’An TV Shareholders and Vallant, the Xi’An TV Shareholders pledged all of their equity interests in Xi’An TV to Vallant to guarantee Xi’An TV’s performance of its obligations under the business operations agreement described above.  If Xi’An TV or the Xi’An TV Shareholders breach their respective contractual obligations, Vallant, as the pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests.  The Xi’An TV Shareholders also agreed that upon the occurrence of any event of default, Vallant will acquire an exclusive, irrevocable power of attorney to take actions in the place and stead of the Xi’An TV Shareholders to carry out the security provisions of this agreement and take any action and execute any instrument that Vallant may deem necessary or advisable to accomplish the purposes of this agreement.  The Xi’An TV Shareholders must not to dispose of their pledged equity interests or take any actions that would prejudice Vallant’s interests.  This agreement is effective for an indefinite term and may be terminated by Vallant at any time.

Since the Xi’An TV Shareholders do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for Xi’An TV to finance its activities without additional subordinated financial support from other parties, Xi’An TV’s financial statements become consolidated as our own.  As such, and due to the interest we hold in Xi’An TV through Vallant, the following business description describes the business and operations of Xi’An TV as our own.

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Description of Business

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements.  To the extent that any statements made in this report contain information that is not historical, these statements are essentially forward-looking.  Forward-looking statements can be identified by the use of words such as “expects”, “plans”, “will”, “may,”, “anticipates”, “believes”, “should”, “intends”, “estimates”, and other words of similar meaning.  These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements.  Such risks and uncertainties include, without limitation, our ability to raise additional capital to finance our activities; the effectiveness, profitability and marketability of our products; legal and regulatory risks associated with the share exchange; the future trading of our common stock; our ability to operate as a public company; our ability to protect our proprietary information; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), or otherwise.

Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate.  It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis.  We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this report.  Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services.  We do not undertake any obligation to publicly update any forward-looking statements.  As a result, investors should not place undue reliance on these forward-looking statements.

Overview

We were incorporated under the name Protecwerx Inc. on October 16, 2007 under the laws of the State of Nevada.  On July 7, 2009 we experienced a change of control pursuant to which Fullead Overseas Limited, a company over which our director, Bin Li, has sole voting and investment power, acquired approximately 85% of our common stock.  On August 6, 2009 we filed an amendment to our articles of incorporation to change our name to China Media Inc., and on September 16, 2009 we entered into a share exchange agreement with Vallant, now our wholly owned subsidiary.  The closing of the transactions contemplated by the share exchange agreement occurred on November 30, 2009, at which time we adopted the business of Vallant.  Our principal offices are located at 12/F, Block D, Chang An Guo Ji, No. 88 Nan Guan Zheng Street, Beilin District, Xi'An, Shaan'Xi Province, China 710068.  Our telephone number is (86) 298765-1114.  Our fiscal year end is June 30.

Previous Business

Before we experienced the change of control and closed the transactions contemplated by the share exchange agreement with Vallant, we planned to acquire, develop, manufacture and distribute recreational vehicle protection products through a variety of distribution channels.  Our first product was Ankle Armor.  We intended to patent, manufacture, distribute and sell Ankle Armor through recreational goods retail stores.  We were not able to raise sufficient funds to continue this business and our management consequently began to focus on opportunities for business combinations with revenue-generating companies.

Current Business

Upon acquiring Vallant pursuant to the share exchange, we adopted the business of Vallant.  We are now engaged in the development of films and television series’ for the Chinese market.

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Principal Products

Since our incorporation we have produced or begun to produce one feature-length film, eleven television series’ and one documentary.  All of them have been released and distributed except for one television series that we plan to release in early 2010 and two television series’ in which we recently sold our interest.  Our programming that we have either produced or begun to produce consists of the following:

Name	Programming Type	Status
Invisible Wings	Film	Released and Sold
Special Mission	TV Series	Released
Lotus Lantern Prequel	TV Series	Released
Lucky Chicken	TV Series	Released
Hard Corps	TV Series	Released
Tianshan Urgency Action	TV Series	Released
Drive Dragon Gate	TV Series	Released
Lover’s Grief	TV Series	Released
Plum Blossom Archives	TV Series	Released
Gongtan Ancient Town of China	Documentary	Released
Doctor County Mayor	TV Series	To Be Released
Fox-Hunting	TV Series	Sold
Desert Love Story	TV Series	Sold

Television series’ in China are similar to those in the North American market, but they do not operate on the basis of seasons.  Each series has a definite lifetime of anywhere from 10 to 50 episodes, at which point the series ends and a new one is developed.  The new series may be based on previous ones, but the development of a new series does not follow the same type of recurring seasonal structure as in North America.

In 2007, our television series Special Mission received a viewership rating of 4% of the entire Chinese market when it was broadcast on China Central Television (“CCTV”), Channel 8.  In the same year Invisible Wings received the Outstanding Children’s Film and Outstanding Young Actress awards during the 12th Film Ornamental Column Awards, the Golden Elephant Award during the Indian International Film Festival, the Golden Angel Award during the Hollywood China-USA Film Festival, and was featured as the opening film of Beijing International Sport Film Week.

Our revenue sources include sales of broadcast rights for television series’, sales of broadcast rights for films, and advertising and title sponsorship sales for television series’. Our revenues for the fiscal years ended June 30, 2009 and 2008 were as follows:

	Year Ended June 30
	2009		2008
Invisible Wings	$	452,180	$	75,056
Special Mission		-	$	1,955,198
Lotus Lantern Prequel	$	1,223,275		-
Total Revenues	$	1,675,455	$	2,030,254

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Below is a summary of some of our more successful programming that we have already released:

Invisible Wings – A 90 minute feature film, this motivational drama describes the story of a 15-year old Chinese girl who lost her arms in an accident, and whose mother was diagnosed with schizophrenia and anxiety.  The young girl’s love for her mother motivates her to apply herself diligently to her studies and athletics.  She also takes care of her mother while battling her disabilities.  The girl overcomes all odds and wins a medal in the Chinese national games for the disabled and represents her country at the Paralympics.

In 2007, Invisible Wings received the Outstanding Children’s Film and Outstanding Young Actress awards during the 12th Film Ornamental Column Awards, the Golden Elephant Award during the Indian International Film Festival, the Golden Angel Award during the Hollywood China-USA Film Festival, and was featured as the opening film of Beijing International Sport Film Week.

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Special Mission – A 40-episode television series with each episode lasting 40 minutes, Special Mission is a war drama that focuses on the actions of members of the Chinese military intelligence community as they fight against the Japanese army which invaded China.  The series describes various characters who sacrificed their lives in order to protect their country and uncover the plans of the Japanese forces.

The program was very successful upon its release.  After being broadcast on CCTV-8 in October of 2007, Special Mission achieved a record-breaking first-run audience rating of 4% in prime time and was then broadcasted by over 20 regional Chinese television stations.

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Lotus Lantern Prequel – A 46 episode television series with each episode lasting 52 minutes, Lotus Lantern Prequel is a drama based on traditional Chinese mythology that describes the story of God Erlang, a popular mythological figure, who battles through adversity and many enemies to reunite with his mother and younger sister.

After being broadcast on CCTV-8 in April 2009, Lotus Lantern Prequel achieved a first-run audience rating of 3.9% during prime time and was syndicated on many Chinese regional television stations.

We plan to invest approximately $8,650,000 in producing and distributing one new film and eight new television series’ over the next two years, including Doctor County Mayor, which we plan to release on CCTV in 2010.  We anticipate raising sufficient capital for these expenditures through debt or equity financing as well as engaging in joint venture productions with other established production companies.

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The following table summarizes the approximate quarterly calendar periods during which we anticipate our planned programming will undergo various stages of production:

Television Series	Development	Pre-Production	Production	Post-Production	Distribution
Doctor County Mayor	Q1, 2009	Q2, 2009	Q3, 2009	Q4, 2009	Q1, 2010
Song of Old People Home	Q2, 2009	Q3, 2009	Q4, 2009	Q1, 2010	Q2, 2010
Returning Silly Girl	Q3, 2009	Q4, 2009	Q2, 2010	Q3, 2010	Q4, 2010
Infinitude Sky	Q3, 2009	Q4, 2009	Q2, 2010	Q3, 2010	Q4, 2010
Justice of Guangong	Q4, 2009	Q1, 2010	Q3, 2010	Q4, 2010	Q1, 2011
Orphan of the Zhao Family	Q1, 2010	Q2, 2010	Q3, 2010	Q4, 2010	Q1, 2011
Third Sister Liu	Q1, 2010	Q2, 2010	Q3, 2010	Q4, 2010	Q1, 2011
Six Men’s Disasters in Tang Dynasty	Q1,2010	Q3, 2010	Q4, 2010	Q1, 2011	Q2, 2011
Pantaloon is a Tree	Q1, 2010	Q3, 2010	Q4, 2010	Q1, 2011	Q2, 2011

This one film and eight television series’ will require an approximate total investment of $23,150,000, of which we plan to contribute approximately $8,650,000.  We anticipate that we will cooperate with other investors to secure the remaining funding in order to limit our financial participation and risk exposure.  We also plan on raising additional financing through the sale of our debt or equity securities in order to meet our obligations with respect to these projects.  The following is a summary of the estimated expenditures involved in producing our planned programming and our anticipated financial contribution to each project:

Television Series	Number of Episodes	Total Investment ($)	Percentage Involvement	Amount of our Financial Contribution ($)
Doctor County Mayor	35	3,000,000	25	750,000
Song of Old People Home	1 (Film)	750,000	100	750,000
Returning Silly Girl	30	3,000,000	25	750,000
Infinitude Sky	TBD	3,000,000	25	750,000
Justice of Guangong	TBD	3,000,000	50	1,500,000
Orphan of the Zhao Family	TBD	3,000,000	25	750,000
Third Sister Liu	TBD	3,000,000	50	1,500,000
Six Men’s Disasters in Tang Dynasty	TBD	2,200,000	53	1,167,000
Pantaloon is a Tree	TBD	2,200,000	33	733,000

As described above, we plan to undertake the development and production of our programming through a series of different stages from development to post-production.  The process can be summarized as follows:

Development Stage

This is the initial stage during which we develop and research a concept.  We undertake market research and hold focus groups to establish whether demand exists for a particular type of programming.  Once we receive positive feedback on a concept we instruct our writers to produce a plot of the program based on suggestions from the focus groups and the results of our market research.  Alternatively, we can acquire original works or rights to adapt classic works, both from China and abroad, that we believe will be marketable to the Chinese market.  If we complete any such acquisition, we generally produce a plot based on the work which may be further revised as we continue developing the project.  The plot provides a basic outline of the program and provides a foundation upon which our writers can produce a screenplay or script.

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Our plot is then reviewed by our development committee.  This committee is made up of recognized television and film professionals in China as well as members of our local Shaan’Xi Province Administration of Radio, Film and Television (“ARFT”) agency, who are responsible for approving the programming for distribution to television stations.  By having a development committee in place, we hope to avoid producing works that will either not be granted government approval for distribution, will be too difficult to produce or will not be attractive to television stations and viewers.

Once we have decided upon the basic plot for a project, we determine its production schedule, a rough budget and terms of financing.  We may provide the financing directly or through a joint venture with one or more third parties interested in participating in the project.  Potential investors include advertisers and distributors, home vide publishers and private investors.  Currently, we partner primarily with such investors to provide the financing required to develop our television programming, but we also plan on raising capital through the sale of our debt or equity securities.

The development stage usually takes six months to several years, subject to our market research, co-production negotiations and script judgment from focus groups and the development committee.

Pre-Production Stage

The next stage involves developing a detailed script or screenplay based on the basic plot outline produced in the first stage of the process.  The script generally incorporates all of the themes and major characteristics of the outline while taking into account production scenarios.  Our scripts and screenplays are based on our own original work as well as adaptations of books, musical works, folklore and classic Chinese or international stories.

We hire part-time writers who work out of our offices to create the screenplays and scripts for our television series’ and films.  Occasionally, we also purchase completed screenplays and scripts from suppliers such as professional writers, other film producers or the general public.

After the screenplay or script is finalized, our financial department plans the investment budget and our film and television series production center prepares a detailed production plan and  searches for a suitable director, production manager and executive producer, as well as actors and crew.  The production manager is responsible for executing all facets of production, the executive producer supervises the production process and the director is responsible for the actors, crew and cinematography.

This part of the process generally takes one to two months depending on the complexity of the script and the production.

Production Stage

This stage deals with the actual filming of the television series or film.  The director, actors and crew gather at a studio at our offices, at a sound stage we rent out or that is provided by one of the production partners, or at another location to film a particular scene or scenes.  Our involvement in this stage is minimal unless modifications to the script or screenplay must be made.  Currently, we outsource the principal photography and filming of the various scenes to the Xi’An Television Production Center.  We do not directly employ any directors, actors or crew.

Depending on the complexity of the project, the production stage can last up to six months for a television series and up to three months for a film.

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Post-Production Stage

Once production has wrapped up, we are responsible for coordinating all of the tasks required to produce a finished product for television or the cinema.  We assign an editor to assemble the various pieces of film and determine scene transitions, and we add musical elements, subtitles, visual and/or digital effects to the television series or film.  Once the editing process is complete, which takes up to three months, the director provides input on any changes and a final version of the program or film is produced.

Markets

According to an article titled “China Film Industry Development Status” on www.chinafilm.com, the Chinese film industry generated revenues of approximately 8.4 billion Chinese Yuan Renminbi (“RMB”), or $1.2 billion, from film sales during 2008.  This represents an increase of 25% over sales numbers in 2007 and includes 7.15 million film screenings to an audience of 1.6 billion people.  Sixty percent of the films were produced domestically in China.

During early 2009, the television series department of the National Administration of Radio, Film and Television agency completed a review of the television series industry in China.  They found that Chinese television stations invested approximately 5.5 billion RMB, or $800 million, into the production and purchase of television series’ in 2008.  This represents an increase of 38% compared to the amounts spent in 2007.

Additionally, according to www.people.com.cn, Chinese film and television series producers generated revenue of approximately 3 billion RMB, or $440 million, by exporting their productions outside of China.

The Chinese government has also provided figures on the type of programming that is popular in China.  Below is a table, gathered from www.china.com, comparing the types of programming shown on Chinese television during the specified years as well as the percentage of total viewership per program type:

	2006				2007				To June 30, 2008
	% of Total Programs Aired		% of Total Viewership		% of Total Programs Aired		% of Total Viewership		% of Total Programs Aired		% of Total Viewership
Series		24		33.48		23.371		33.52		23.29		33.24
News/Current Affairs		7.1		12.57		6.84		11.44		8.76		14.99
Variety Shows		6.37		8.81		6.13		8.41		4.13		7.65

The major purchasers of television series’ are regional and national television stations.  The demand for such programming from other media providers, such as internet television stations who distribute programs through an internet connection or directly onto a client’s mobile phone, is limited, and as such we have not considered producing programs intended for these types of media.

Since the major regional and national television networks are subject to heavy government influence, we develop our television series’ and films with this consideration in mind.  Generally, we plan to focus on topics that the government supports, such as revolutionary history or modern Chinese culture, which will make our programming more attractive for networks such as CCTV to broadcast and release through their stations.

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Distribution Methods

After we complete the production and editing of a film or television series, we must file an application for approval to broadcast the program with the State Administration of Radio, Film and Television of China (“SARFT”), a government agency.  Once we are granted approval and provided with a broadcasting permit for the film or series, we are free to distribute the program, which, in the case of a television series, we normally begin following the completion of one or two episodes.

Our main customers include the following networks:

·   CCTV;

·   Hunan Satellite Television;

·   Jiangsu Satellite Television;

·   Zhejiang Satellite Television;

·   Jiangxi Satellite Television;

·   Anhui Satellite Television; and

·   all the other provincial broadcast television networks in China.

CCTV is the major state television broadcaster in mainland China.  It has a network of 19 channels that broadcast different programs and is accessible to more than one billion viewers.  The programming on Channels 1 and 8 of the CCTV network is most closely aligned with the characteristics of our films and television series’.  Once our programming is televised on CCTV, regional television networks regularly purchase the same programming to use for their television stations.

We distribute our films and television series’ primarily through our direct sales channel.  Occasionally, we may also use the services of an outside distributor to facilitate sales to a wider range of customers.  However, even though we devote a significant amount of our resources to ensuring that the programming we produce appeals to our customers and have had success distributing it in the past, there can be no assurance that any film or television series we produce will be purchased by any distributors or television networks.

Competition

We face competition from various television and film production companies ranging from small, private businesses to large, state-sponsored enterprises.  Some of our major competitors include China Film Group, Huayi Brothers Media Group and PolyBona Film Distribution Co.

Many of our competitors have longer operating histories, better brand recognition and greater financial resources than we do.  In order for us to successfully compete in our industry we will need to:

·   develop highly marketable programming;

·   continue developing our relationships with major television networks; and

·   increase our financial resources.

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However, there can be no assurance that even if we do these things we will be able to compete effectively with the other companies in our industry.

As of December 2008, there were approximately 300 film and television producers registered in China, with approximately 270 operated by the private sector and 30 that were state-owned.  Among these, approximately one-third had not produced any films or television series’ between 2006 and 2008, and the majority of the others only produced an average of two to three films or series’ per year.  The film and television industry in China is highly de-centralized and there are no truly dominant producers with whom we must compete.

We believe that we will be able to compete effectively in our industry because of a successful product development strategy that we have already used to produce profitable programming.  Our past productions have been successful due to the detailed production process and strategy described above as well as the strong relationships we have forged with television networks.

We also attempt to increase the probability that our programming will be profitable and will be purchased by television networks by having all of our concepts vetted by our programming committee.  This committee is comprised of established professionals in the Chinese film and television industry as well as members of the examination team of the Shaan’Xi Province ARFT agency, which provides approval for programming to be distributed to television networks.  We believe that having our programming vetted by this committee increases our competitiveness in the industry and the chance that any television series or film we produce will be approved by the government and subsequently purchased by one or more television networks.

Additionally, we have established relationships with actors, directors and production agencies through previous collaborations, and have created cooperative relationships with the major television station in the city of Xi’An and the Xi’An television series center that have provided us with access to partners of theirs as well as major television networks throughout the country.  This resulted in our television series, Special Mission, being distributed to over 90% of the television stations throughout China.

Intellectual Property

We have not filed for any protection of our name or trademark.  Since we produce film and television scripts and screenplays, we develop and sell intellectual property for these productions.  The following is a list of films and television series’ in which we hold, or used to hold, intellectual property rights:

Name	Programming Type	Current Intellectual Property Ownership
Special Mission	TV Series	Yes
Invisible Wings	Film	No (Sold)
Doctor County Mayor	TV Series	Yes
Lotus Lantern Prequel	TV Series	Yes
Fox-Hunting	TV Series	No (Sold)
Lucky Chicken	TV Series	Yes
Hard Corps	TV Series	Yes
Tianshan Urgency Action	TV Series	Yes
Drive Dragon Gate	TV Series	Yes
Lover’s Grief	TV Series	Yes
Desert Love Story	TV Series	No (Sold)
Gongtan Ancient Town of China	Documentary	Yes
Song of Old People Home	Film Screenplay	Yes
Six Men’s Disasters in Tang Dynasty	TV Series Script	Yes
Pantaloon is a Tree	TV Series Script	Yes

We also own the copyright of our logo and all of the contents of our website, www.xatvm.com.

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Research and Development

We did not incur any research and development expenses during the years ended June 30, 2009 and 2008.  All costs incurred in connection with the development of our film and television series’ were capitalized as film costs on our balance sheet.  Our total film costs were $1,767,152 (of which $1,172,240 was held for sale) and $2,557,583 at June 30, 2009 and 2008, respectively.

Reports to Security Holders

We are subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year.

The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  The address of that site is www.sec.gov.

Government Regulations

Regulation on Screenplay (Outline) Keeping On Record and Film Management enacted by the SARFT on April 3, 2006

This regulation affects the following two procedures we undertake:

·   before producing a film, the producer of the film is required to submit the screenplay to the local Provincial AFRT for backup and record keeping, and if the film deals with subjects pr themes of historical or revolutionary importance, the screenplay must be supervised and approved by the SARFT; and

·   each film produced in China must be submitted to the examination committee of SARFT, which examines the film’s content and decides whether the film should be allowed to be broadcast in China.  Films that receive approval receive a Film Public Show Permit and Film Examination Written Decision designation, and without this designation, a film cannot be aired on television in China and will therefore not be distributed.

Effect on our operations.  We need to submit any films we produce to the SARFT for approval prior to their distribution and broadcasting.  It generally takes approximately two or three months to complete the examination, and it may take longer if we receive comments that we must revise the film in some way.  Since we work with a number of individuals who form part of the SARFT examination group, we limit the risk of not receiving broadcast approval or being required to revise our scripts and screenplays.  However, if revisions are required or a screenplay is rejected, this could increase our costs of production and impact our profitability.

Regulations on Radio and Television Program Production and Operation Management enacted by the SARFT on June 15, 2004

This regulation states that all Chinese enterprises operating in the business of radio and television program production must acquire a Permit Certificate of Radio and Television Program Production and Operation.  The regular term of this license is two years and it may be renewed every two years.  Additionally, the regulation specifies that television series’ may only be produced by companies or entities that have received a Permit Certificate distributed by the SARFT.

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Effect on our operations.  We currently hold the appropriate Permit Certificate, and as such we are qualified to operate a film and television program production business in China.  Renewing the Permit Certificate is a very straightforward process and we do not anticipate that it will cost us much or have a significant effect on our operations.

Regulation on Radio Television Management enacted by the State Council on August 1, 1997

This regulation was enacted to provide guidance on establishing Chinese radio and television stations as well as planning and constructing radio and television networks under the supervision of the SARFT.  The regulation also states that radio and television programs may not be produced by companies or entities that do not hold the relevant Permit Certificate, that radio and television programs may not be broadcasted without the approval of the SARFT and that any companies or entities that act in violation of these regulations will face regulatory action.

Effect on our operations.  This is a general administrative regulation relating to all radio and television programming companies.  We currently comply with all of the requirements of the regulation and if at any time we do not possess any specific permits that may be required, we plan to locate cooperative companies that do and partner with them to produce of our films and television series’.

Environmental Regulations

We are not aware of any material violations of environmental permits, licenses or approvals that have been issued with respect to our operations.  We expect to comply with all applicable laws, rules and regulations relating to our business, and at this time, we do not anticipate incurring any material capital expenditures to comply with any environmental regulations or other requirements.

While our intended projects and business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs or decreasing demand for our products or services, which could have a material adverse effect on our results of operations.

Employees

We currently have 47 employees including our Chief Financial Officer and Chief Executive Officers.  We engage seven of the employees on a full-time basis and 40 on a part-time basis.

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Financial Information

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of Vallant’s financial statements for the quarterly period ended September 30, 2009 and for the years ended June 30, 2009 and 2008.  As described above, the financials of Vallant will be our financials going forward due to the reverse take-over accounting treatment of the share exchange transaction.  Pro-forma financial statements which combine both our financial statements and Vallant’s financial statements for the quarterly period ended September 30, 2009 are filed as Exhibit 99.1 to this Current Report on Form 8-K.

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this report.  The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.  All references to currency in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section are to U.S. dollars, unless otherwise noted.

Liquidity and Capital Resources

For the three months ended September 30, 2009

As of September 30, 2009 we had $5,284 in cash, current assets of $4,901,827, current liabilities of $382,927 and a working capital surplus of $4,518,900.  As of September 30, 2009 we had total assets of $6,903,261.

During the three months ended September 30, 2009 we spent net cash of $21,866 on operating activities, compared to net cash spending of $39,563 on operating activities during the same period in 2008.  The decrease in expenditures on operating activities for the three months ended September 30, 2009 was primarily due to a decrease in our net operating loss.

During the three months ended September 30, 2009 we spent net cash of $3,370,190 on investing activities, all of which was on loans made to others. We did not engage in any investing activities during the same period in 2008.

During the three months ended September 30, 2009 we received net cash of $21,980 from financing activities, compared to net cash received of $45,908 from financing activities during the same period in 2008.  All of our receipts from financing activities during the three months ended September 30, 2009 and 2008 were in the form of proceeds from related parties.

During the three months ended September 30, 2009 we recognized a loss of $89 due to the effect of exchange rates on our cash, compared to a loss of $6,022 due to the same effect during the same period in 2008.  Our net cash decreased by $3,370,165 during the quarterly period ended September 30, 2009, compared to a net cash increase of $323 during the same period in 2008. The decrease in cash during the three months ended September 30, 2009 was largely a result of the $3,370,190 loan we made to Shaan’Xi Railroad Transportation Trading Ltd. on July 12, 2009 under a six month term note.  The maturity date of the note is January 11, 2010 and the note bears interest at an annual rate of 2%.  We entered into this loan to use excess cash which we had on hand, as we did not anticipate requiring the cash for any film or television series development.

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For the years ended June 30, 2009 and June 30, 2008

As of June 30, 2009 we had $3,375,449 in cash, current assets of $4,901,946, current liabilities of $361,211 and a working capital surplus of $4,540,735.  As of June 30, 2008 we had $26,243 in cash, current assets of $3,146,083, current liabilities of $355,951 and a working capital surplus of $2,790,132. As of June 30, 2009 we had total assets of $6,918,980, compared to total assets of $5,972,096 as of June 30, 2008.

During the year ended June 30, 2009 we received net cash of $574,764 from operating activities, compared to net cash received of $1,347,836 from operating activities during the year ended June 30, 2008.  The decrease in receipts from operating activities during the year ended June 30, 2009 was primarily due to an increase in our accounts receivable and a decrease in our net income.  These changes were somewhat offset by increases in our cost or revenues and accounts payable and a decrease in our accrued interest on notes receivable during the same year.

During the year ended June 30, 2009 we received net cash of $2,801,324 from investing activities, including $2,156,892 from collecting notes receivable and $644,432 from collecting notes receivable from related parties.  We did not spend any cash on any investing activities during that year.  During the year ended June 30, 2008 we spent net cash of $1,319,806 on investing activities, including $1,015,812 on film costs, $53,091 on the purchase of fixed assets, $1,459,500 on loans and $240,818 on loans to related parties, but we also received $1,434,820 from collecting notes receivable.

During the year ended June 30, 2009 we spent net cash of $27,353 on financing activities, compared to net cash spending of $338,733 on financing activities during the year ended June 30, 2008.  The decrease in net cash spending on financing activities during the year ended June 30, 2009 was primarily due to decreases in proceeds from short term debt and principal payments both on short term debt and to related parties.  During the year ended June 30, 2009 we spent $73,265 on payments on short term debt and we did not spend any cash on payments to related parties, whereas we spent $291,900 and $265,758, respectively, on such payments during the year ended June 30, 2008.

During the year ended June 30, 2009 we recognized a gain of $471 due to the effect of exchange rates on our cash, compared to a gain of $138,359 due to the same effect during the year ended June 30, 2008.  Our net cash increased by $3,349,206 during the year ended June 30, 2009, compared to a net cash decrease of $172,344 during the year ended June 30, 2008.  The increase in cash for the year ended June 30, 2009 was largely the result of our investing activities, and specifically the collection of notes receivable.

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

We estimate that our expenses over the next 12 months (beginning December 2009) will be approximately $11,150,000 as described in the table below.  These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.

Description	Estimated Completion Date	Estimated Expenses  ($)
Legal and accounting fees	12 months	300,000
Film and television series development costs	12 months	8,500,000
Marketing and advertising	12 months	300,000
Investor relations and capital raising	12 months	150,000
Management and operating costs	12 months	250,000
Salaries and consulting fees	12 months	100,000
Fixed asset purchases	12 months	1,500,000
General and administrative expenses	12 months	50,000
Total		11,150,000

We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements.  We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings.  If we are not able to successfully complete any private placement financings, we plan to cooperate with film and television producers or obtain shareholder loans to meet our cash requirements. However, there is no assurance that any such financing will be available or if available, on terms that will be acceptable to us.  We may not raise sufficient funds to fully carry out our business plan.

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Share Cancellations

On July 7, 2009 we entered into an agreement with Fullead Overseas Limited, a company over which Bin Li, our Director, has sole voting and investment power, to issue Fullead 32,500,000 shares of our common stock at a price of $0.002 for cash proceeds of $65,000.  Pursuant to the terms of this agreement, we were required to enter into share cancellation agreements with holders of 30,800,000 shares of our issued and outstanding common stock and appoint new directors and officers to serve as our Board of Directors and management.  The details of the share cancellations were disclosed in a Current Report on Form 8-K filed with the SEC on July 7, 2009.

Subsequent Events

On September 16, 2009 we entered into a share exchange agreement with Vallant. The transaction was closed on November 30, 2009.  According to the terms of the share exchange agreement, Vallant agreed to sell its sole issued and outstanding common share in exchange for 7,000 shares of our common stock.  Therefore, Vallant became our wholly owned subsidiary.

On October 16, 2009 we loaned Shanxi Goethe Business Trading Ltd., a company unrelated to us, $1,078,245 under a three month term note.  The maturity date of the note is January 15, 2010 and the note bears interest at a three month rate of 1%.  We entered into this loan to use excess cash which we had on hand, as we did not anticipate requiring the cash for any film or television series development.

On October 25, 2009 we entered into a sales agreement to transfer our interest in Fox-Hunting for approximately $878,000.

On October 27, 2009 we entered into a sales agreement to transfer our interest in Desert Love Story for approximately $293,000.

Results of Operations

For the three months ended September 30, 2009 and September 30, 2008

Revenues

During the three months ended September 30, 2009 we did not earn any revenues, we incurred an operating loss of $40,271 and we incurred a net loss of $25,213.  During the three months ended September 30, 2008 we did not earn any revenues, we incurred an operating loss of $63,948 and we incurred a net loss of $40,038.

Expenses

During the three months ended September 30, 2009 we incurred $24,671 in general and administrative expenses and $15,600 in depreciation and amortization expenses, compared to $45,203 in general and administrative expenses and $18,745 in depreciation and amortization expenses during the same period in 2008.

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For the years ended June 30, 2009 and June 30, 2008

Revenues

During the year ended June 30, 2009 we generated $1,675,455 in revenues, compared to revenues of $2,030,254 during the year ended June 30, 2008.  Our cost of revenues increased from $486,914 to $800,431 from the year ended June 30, 2008 to June 30, 2009.  As a result, our gross profit decreased from $1,543,340 during the year ended June 30, 2008 to $875,024 during the year ended to June 30, 2009.

We also generated interest income of $278,331 during the year ended June 30, 2009 and $197,283 during the year ended June 30, 2008.

Expenses

For the years ended June 30, 2009 and June 30, 2008 our expenses were as follows:

Type of Expense	June 30, 2009 ($)		June 30, 2008 ($)
Cost of revenues		800,431		486,914
Selling, general and administrative		153,098		295,956
Depreciation and amortization		92,860		92,660
Impairment loss		-		41,169

For the year ended June 30, 2009 our total expenses were $1,046,389 including cost of revenues, compared to total expenses of $916,699 during the year ended June 30, 2008.  Not accounting for cost of revenues, our total expenses during the year ended June 30, 2009 were $245,958 compared to total expenses of $429,785 during the year ended June 30, 2008.

Net Income

For the year ended June 30, 2009 we generated net income of $907,397 before minority interest, compared to net income before minority interest of $1,310,838 for the year ended June 30, 2008.

Off-Balance Sheet Arrangements

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

Inflation

The effect of inflation on our revenues and operating results has not been significant.

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Critical Accounting Policies

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation.  A complete listing of these policies is included in Note 2 of the notes to our financial statements for the years ended June 30, 2009 and 2008.  We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

Principles of Consolidation

Our consolidated financial statements include our accounts and the accounts of Xi’An TV Media, which is a variable interest entity with us as the primary beneficiary. In accordance with Financial Accounting Standards Board Interpretation No. 46 (Revised) (“FIN46R”), Consolidation of Variable Interest Entities, we identify entities for which control is achieved through means other than through voting rights (a "variable interest entity" or "VIE") and determine when and which business enterprise, if any, should consolidate the VIE.

We evaluated our participating interest in Xi’An TV Media and concluded we are the primary beneficiary of Xi’An TV Media, a variable interest entity as defined under FIN46R.  We consolidated Xi’An TV Media and all significant intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television product, estimates of product sales that will be returned and the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in our financial statements and loss contingencies.  Actual results could differ from those estimates.  To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected.  Estimates are based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis.

Earnings Per Share

We calculate net income per share in accordance with FASB ASC 260 “Earnings Per Share”. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period.  Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

Costs of Revenues

Film Costs – We capitalize film costs in accordance with FASB ASC 926, “Accounting by Producers or Distributors of Films”. Film costs are stated at the lower of cost, less accumulated amortization, or fair value.  Production overhead, a component of film costs, includes allocable costs of individuals or departments with exclusive or significant responsibility for the production of films.  Substantially all of our resources are dedicated to the production of our films.  Capitalized production overhead does not include selling, general and administrative expenses.  Interest expense on funds invested in production is capitalized into film costs until production is completed.  In addition to the films being produced, costs of productions in development are capitalized as development film costs in accordance with the provisions of ASC 926 and are transferred to film production costs when a film is set for production.  In the event a film is not set for production within three years from the time the first costs are capitalized or the film is abandoned, all such costs are generally expensed.

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Film Cost Amortization – Once a film is released, film costs are amortized and participations and residual costs are accrued on an individual film basis in the proportion that the revenue during the period for each film (“Current Revenue”) bears to the estimated remaining total revenue to be received from all sources for each film (“Ultimate Revenue”) as of the beginning of the current fiscal period as required by ASC 926.  The amount of film costs that is amortized each period will depend on the ratio of Current Revenue to Ultimate Revenue for each film for such period.  We make certain estimates and judgments of Ultimate Revenue to be received for each film based on information received from our distributor and our knowledge of the industry.  Ultimate Revenue does not include estimates of revenue that will be earned beyond ten years of a film’s initial theatrical release date.

Unamortized film production costs are evaluated for impairment each reporting period on a film-by-film basis in accordance with the requirements of ASC 926.  If estimated remaining net cash flows are not sufficient to recover the unamortized film costs for that film, the unamortized film costs will be written down to fair value determined using a net present value calculation.

Description of Property

We currently rent two offices totaling 1,321 square meters in area, each of which serves a different business purpose:

·   Production Center: Room B 2802, Yiyuange Building B, Huashuo Garden, No. 190, Wenyi Road, Yanta District, Xi’An, Shaan’Xi Province, China, with an area of 209 square meters.  We rent this office from our shareholder Zheng Shao Kang at a cost of approximately $1,000 per month; and

·   Corporate Office: 12/F Building D, Chang An International Plaza, No. 88 Nanguanzheng Street, Beilin District, Xi’An, Shaan’Xi Province, China, with an area of 1,112 square meters.  We rent this office at a cost of approximately $18,300 per month.

For the year ended June 30, 2009 our total rent expenses were $48,204 for all our office space, including a temporary accounting office at Room 1102, Building B, Prince Chamber, South 2nd Cycle, Yanta District, Xi’An, Shaan’Xi Province, P.R. China, with an area of 144 square meters that we no longer use and that was provided to us free of charge.  All of our rental arrangements are on a month-to–month basis.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the ownership, as of November 30, 2009, of our common stock by each of our directors, by all of our executive officers and directors as a group and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of November 30, 2009, there were 39,750,000 shares of our common stock issued and outstanding. All persons named have sole or shared voting and investment control with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Form 8-K.

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Title of Class	Name and Address of Beneficial Owner	Amount and Nature of  Beneficial Ownership	Percent of Class (5)
Common  Stock	Bin Li (1) 12/F, Block D, Chang An Guo Ji No. 88 Nan Guan Zheng Street Beilin District, Xi’An Shaan’Xi Province, China	2,007,000	5.0
Common  Stock	Dean Li (2) 5/F, Huaxing Building No. 57 Keji 3 Road Gaoxing District, Xi'An Shaan'Xi Province, China	0	0
Common  Stock	Shengli Liu (3) 4/F, Building A No. 12 Xiangzimiao Street Nanmenli District, Xi'An Shaan’Xi Province, China	0	0
Common  Stock	Ying Xue (4) Room 705, 7/F, Shiguang 2000 Building No. 8 Wu Xing Street Lianhu District, Xi'An Shaan'Xi Province, China	0	0
	All Officers and Directors as a Group	2,007,000	5.0
Common  Stock	Chen Tao Room 502, Unit 2, 8/F, Xiying Village Yanta District, Xi’An Shaan’Xi Province, China	2,005,000	5.0
Common  Stock	Jing Mu Room 11, Building 1 No. 62 Daxing Road Lianhu District, Xi’An Shaan’Xi Province, China	11,500,000	28.9
Common Stock	Hao Sun No. 201 Shangqin Road Xincheng District, Xi’An Shaan’Xi Province, China	10,000,000	25.2
Common Stock	Wenqian Shen 12/F, Chang An International Plaza No. 88 Nanguanzheng Street Beilin District, Xi’An Shaan’Xi Province, China	5,000,000	12.6
Common Stock	Zhongchi Li Room 106 2/F No. 1 Xisi Road Xincheng District, Xi’An Shaan’Xi Province, China	3,000,000	7.5
	All Others as a Group	31,505,000	79.3

(1) Bin Li is our Director.

(2) Dean Li is our President, Chief Executive Officer, Secretary and Director.

(3) Shengli Liu is our Director.

(4) Ying Xue is our Chief Financial Officer, Principal Accounting Officer and Treasurer.

(5) Based on 39,750,000 issued and outstanding shares of our common stock as of November 30, 2009.

Changes in Control

As of November 30, 2009 we had no pension plans or compensatory plans or other arrangements which provide compensation in the event of termination of employment or a change in our control.

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Directors and Executive Officers

Directors and Officers

Our Articles state that our authorized number of directors shall be not less than one and shall be set by resolution of our Board of Directors.  Our Board of Directors has fixed the number of directors at three, and we currently have three directors.

Our current directors and officers are as follows:

Name	Age	Position
Dean Li	46	President, Chief Executive Officer, Secretary and Director
Ying Xue	38	Chief Financial Officer, Principal Accounting Officer and Treasurer
Bin Li	41	Director
Shengli Liu	38	Director

Our Directors will serve in that capacity until our next annual shareholder meeting or until their successors are elected and qualified.  Officers hold their positions at the will of our Board of Directors.  There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.

Dean Li, President, Chief Executive Officer, Secretary and Director

Dean Li has served as our President, Chief Executive Officer, Secretary and Director since July 7, 2009.  Mr. Li has significant experience in China’s capital markets and corporate management.  He received his Bachelor’s degree in radio engineering technology from the Chinese People’s Liberation Military Academy in 1985, and was awarded the military rank of Technical Captain in 1987.  After ending his military career in 1993, Mr. Li was appointed as the General Manager of the Shanghai Branch Company of Shaan’Xi Province International Trust Investment Holding Co., where he remained until 1998.

From 1998 to 2001, Mr. Li worked as the Assistant to the General Manager of Wuhan International Financial Leasing Co., and he also held the position of General Manager of Wuhan Zhongnan Securities Corp..  From 2001 to 2005, Mr. Li served as the Northern Area General Manager of Wuhan Securities Co.. Ltd.  From 2000 to 2001, he also served as a Director in a Chinese publicly listed company, Dalian Thermoelectricity Holding Ltd.  

Mr. Li earned a Master’s degree of enterprise culture from the Central China Normal University in 2004.  Since 2006 he has served on the board of directors of Xi’An TVMEDIA Co., Ltd. and Shaan’Xi Western Capital Investment Management Co., Ltd.

Ying Xue, Financial Officer, Principal Accounting Officer and Treasurer

Ying Xue has served as our Chief Financial Officer, Principal Accounting Officer and Treasurer since July 7, 2009.  Ms. Xue has 18 years of experience in accounting and financial management.  She earned a Bachelor’s degree in economic management from Shaan’Xi Provincial Administrative College in 2001.  From 1991 to 1992, she worked as an accountant for Xi’An City Mechanism Research Institute., and from 1992 to 2006 she worked as an accounting officer for Xi’An International Economic Technical Trading Co.

In 2006, Ms. Xue joined Xi’An TVMEDIA Co., Ltd. as a financial manager.  She acquired an intermediate accountant certificate in 2002 and a Chinese CPA certificate in 2005.

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Bin Li, Director

Bin Li has served as our Director since July 7, 2009.  Mr. Li has 18 years of experience in the movie and TV industry in China.  In 2006, Mr. Li invested in Xi’An TVMEDIA Co., Ltd. and became one of its major shareholders.  From 1987 to 1990, he served in the 77th unit of the Chinese People’s Liberation Army, and since 1991 he has worked for Xi’An Movie Studio, one of the most famous movie studios in China.

Shengli Liu, Director

Shengli Liu has served as our Director since July 7, 2009.  Mr. Liu has over 10 years of experience in business management.  He was one of the founders of Shaan’Xi Li Bao Ecological Technology Stock Co., Ltd. and has served as the company’s as Chairman since 2002.

In 1998, Mr. Liu acted as the manager of the Xi’An Railroad Bureau, a position he left in the same year before founding Shaan’Xi Heng Li Da Real Estate Co. Ltd., with whom he is currently engaged in various aspects of the real estate business and serves as its Chairman and General Manager. In 2001, Mr. Liu founded Shaan’Xi Henglida Commercial Co., Ltd., a company of which he is also the Chairman and General Manager.  From 2000 to 2002, Mr. Liu was in charge of the reorganization of the ZhongShanMen Printing Factor in Xi’An, where he facilitated an asset acquisition valued at approximately $1,250,000.

Other Directorships

None of our directors hold any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

Board of Directors and Director Nominees

Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination.  The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted.  Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders.  If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission.  The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board, as well as a list of references.

The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders.  Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation.  If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.

Some of the factors which the Board considers when evaluating proposed nominees include their knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions.  The Board may request additional information from each candidate prior to reaching a determination, and it is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

Conflicts of Interest

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses.  In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty.  As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.  They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.

In general, officers and directors of a corporation are required to present business opportunities to the corporation if:

·   the corporation could financially undertake the opportunity;

·   the opportunity is within the corporation’s line of business; and

·   it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.

We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.

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Significant Employees

Other than as described above, we do not expect any other individuals to make a significant contribution to our business.

Legal Proceedings

None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:

·   any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

·   any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

·   being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

·   being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, where the judgment has not been reversed, suspended, or vacated.

Audit Committee

We do not currently have an audit committee or a committee performing similar functions. The Board of Directors as a whole participates in the review of our financial statements and disclosure.

Family Relationships

There are no family relationships among our officers, directors, or persons nominated for such positions.

Code of Ethics

We have not yet adopted a code of ethics that applies to our officers, directors and employees.  When we do adopt a code of ethics, we will disclose it in a Current Report on Form 8-K.

25

Executive Compensation

The following summary compensation table sets forth the total annual compensation paid or accrued by us to or for the account of our principal executive officer during the last completed fiscal year and each other executive officer whose total compensation exceeded $100,000 in either of the last two fiscal years:

Summary Compensation Table (1)

Name and Principal Position	Year	Salary ($)	Total ($)
Darrin Zinger (2)	2008	1,600 (3)	1,600 (3)

(1) We have omitted certain columns in the summary compensation table pursuant to Item 402(a)(5) of Regulation S-K as no compensation was awarded to, earned by, or paid to any of the executive officers or directors required to be reported in that table or column in any fiscal year covered by that table.

(2) Darrin Zinger served as our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director from September 13, 2008 to July 7, 2009.

(3) Consisted of a monthly fee of $400 for management services paid pursuant to the terms of a consulting agreement.

Option Grants

As of November 30, 2009 we had not granted any options or stock appreciation rights to our named executive officers or directors.

Management Agreements

We have not yet entered into any consulting or management agreements with any of our current executive officers or directors.

Compensation of Directors

Our directors did not receive any compensation for their services as directors from our inception to November 30, 2009.  We have no formal plan for compensating our directors for their services in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers.  We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

Compensation Committee

We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions.  The Board of Directors as a whole participates in the consideration of executive officer and director compensation.

26

Certain Relationships and Related Transactions, and Director Independence

Dean Li, our President, Chief Executive Officer, Secretary and Director, advanced $21,893 to us during the year ended June 30, 2008.  This shareholder loan is interest-free and has no maturity date.  For the years ended June 30, 2009 and 2008 this shareholder loan had outstanding balances of $21,980 and $21,893, respectively.

Bin Li, our Director, advanced $45,907 to us during the year ended June 30, 2009.  This shareholder loan is interest-free and has no maturity date.  For the year ended June 30, 2009 this shareholder loan had an outstanding balance of $45,907.

On July 7, 2009 we issued 32,500,000 shares of our common stock to Fullead Overseas Limited, a company controlled by our director Bin Li, at a price of $0.002 for aggregate proceeds of $65,000.

There have been no other transactions since the beginning of our last fiscal year or any currently proposed transactions in which we are, or plan to be, a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.

Director Independence

Our securities are quoted on the OTC Bulletin Board which does not have any director independence requirements.  Once we engage further directors and officers, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition.

Legal Proceedings

We are not aware of any material pending legal proceedings to which we are a party or of which our property is the subject.  We also know of no proceedings to which any of our directors, officers or affiliates, or any registered or beneficial holders of more than 5% of any class of our securities, or any associate of any such director, officer, affiliate or security holder are an adverse party or have a material interest adverse to us.

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Market Information

Our common stock is not traded on any exchange.  Our common stock is quoted on OTC Bulletin Board, under the trading symbol “CHND.OB”.   We cannot assure you that there will be a market in the future for our common stock.

OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange.  Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers.  OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.

Since our securities were approved for quotation on the OTC Bulletin Board on September 19, 2008 there have been no trades in our stock.

27

Holders

As of November 30, 2009 there were 67 holders of record of our common stock.

Dividends

To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future.  The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.

Equity Compensation Plans

As of November 30, 2009 we did not have any equity compensation plans.

Recent Sales of Unregistered Securities

During the last three years, we completed the following sales of unregistered securities:

·   On October 17, 2007 we issued 30,000,000 shares of our common stock to our former sole officer and director at a price of $0.002 per share for cash proceeds of $60,000.

·   On October 17, 2007 we issued 5,000,000 shares of our common stock to the spouse of our former sole officer and director at a price of $0.002 per share for cash proceeds of $10,000.

·   On October 30, 2007 we issued 3,000,000 shares of our common stock to an investor at a price of $0.004 per share for cash proceeds of $12,000.

·   In December 2007 we issued 12,000 shares of our common stock to various investors at a price of $0.25 per share for cash proceeds of $3,000.

·   On March 1, 2008 we issued 16,500 shares of our common stock to various investors at a price of $0.25 per share for cash proceeds of $4,125.

·   On April 9, 2008 we issued 12,000 shares of our common stock to various investors at a price of $1.00 per share for cash proceeds of $12,000.

·   On April 10, 2008 we issued 2,000 shares of our common stock to an investor at a price of $0.25 per share for cash proceeds of $500.  These shares were subscribed and paid for on December 7, 2007, but were not issued at that time due to an administrative delay.

·   On July 7, 2009 we issued 32,500,000 shares of our common stock to Fullead Overseas Limited, a company over which Bin Li, our Director, has sole voting and investment power, at a price of $0.002 for cash proceeds of $65,000.

These shares were issued without a prospectus pursuant to Regulation S under the Securities Act.  Our reliance upon Rule 903 of Regulation S was based on the fact that the sales of the shares were completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. Each investor who relied on Regulation S was not a U.S. person, as defined in Regulation S, and was not acquiring the securities for the account or benefit of a U.S. person.

28

Description of Registrant’s Securities to be Registered

Our authorized capital stock consists of 180,000,000 shares of common stock, $0.00001 par value and 20,000,000 shares of preferred stock, $0.00001 par value.

Common Stock

As of November 30, 2009 we had 39,750,000 shares of our common stock issued and outstanding.

Holders of our common stock have no preemptive rights to purchase additional shares of common stock or other subscription rights.  Our common stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions.  All shares of our common stock are entitled to share equally in dividends from sources legally available, when, as and if declared by our Board of Directors, and upon our liquidation or dissolution, whether voluntary or involuntary, to share equally in our assets available for distribution to our security holders.

Our Board of Directors is authorized to issue additional shares of our common stock not to exceed the amount authorized by our Articles of Incorporation, on such terms and conditions and for such consideration as our Board may deem appropriate without further security holder action.

Voting Rights

Each holder of our common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote.  Since the shares of our common stock do not have cumulative voting rights, the holders of more than 50% of the shares voting for the election of directors can elect all the directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to our Board of Directors.

Dividend Policy

Holders of our common stock are entitled to dividends if declared by our Board of Directors out of funds legally available for the payment of dividends.  From our inception to November 30, 2009 we did not declare any dividends.

We do not intend to issue any cash dividends in the future.  We intend to retain earnings, if any, to finance the development and expansion of our business.  However, it is possible that our management may decide to declare a stock dividend in the future.  Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, our capital requirements, general business conditions and other factors.

Preferred Stock

We are authorized to issue up to 20,000,000 shares of preferred stock, par value $0.00001.  As of November 30, 2009, we did not have any issued and outstanding shares of preferred stock.  Under our Articles of Incorporation, our Board of Directors has the power, without further action by the holders of common stock, to determine the relative rights, preferences, privileges and restrictions of the preferred stock, and to issue the preferred stock in one or more series.  The designation of rights, preferences, privileges and restrictions could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of our common stock.

29

Indemnification of Directors and Officers

The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of us is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows:

·   Article VII of our Bylaws, filed as Exhibit 3.2 to this Prospectus; and

·   Chapter 78 of the Nevada Revised Statutes (the “NRS”).

Nevada Revised Statutes

Section 78.138 of the NRS provides for immunity of directors from monetary liability, except in certain enumerated circumstances, as follows:

“Except as otherwise provided in NRS 35.230, 90.660, 91.250, 452.200, 452.270, 668.045 and 694A.030, or unless the Articles of Incorporation or an amendment thereto, in each case filed on or after October 1, 2003, provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that:

(a) his act or failure to act constituted a breach of his fiduciary duties as a director or officer; and

(b) his breach of those duties involved intentional misconduct, fraud or a knowing violation of law.”

Section 78.5702 of the NRS provides as follows:

1. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:

(a) is not liable pursuant to NRS 78.138; or

(b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

2. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he:

(a) is not liable pursuant to NRS 78.138; or

(b) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.

To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

Our Bylaws

Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law.

The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.

30

Financial Statements and Supplementary Data

VALLANT PICTURES ENTERTAINMENT CO., LTD.

Consolidated Financial Statements

(Expressed in US dollars)

Unaudited Consolidated Balance Sheets as of September 30, 2009 and June 30, 2009	F-1
Unaudited Consolidated Statements of Income for the three month periods ended September 30, 2009 and 2008	F-2
Unaudited Consolidated Statements of Cash Flows for the three month periods ended September 30, 2009 and 2008	F-3
Notes to the Unaudited Consolidated Financial Statements	F-4
Report of Independent Registered Public Accounting Firm	F-6
Consolidated Balance Sheets as of June 30, 2009 and 2008	F-7
Consolidated Statements of Income for the years ended June 30, 2009 and 2008	F-8
Consolidated Statement of Stockholders’ Equity for the years ended June 30, 2009 and 2008	F-9
Consolidated Statements of Cash Flows for the years ended June 30, 2009 and 2008	F-10
Notes to the Consolidated Financial Statements	F-11

31

F-1

F-2

F-3

Vallant Pictures Entertainment Co., Ltd.

Notes to the Unaudited Consolidated Financial Statements

Three month period ended September 30, 2009

(Expressed in US dollars)

1. Organization, Basis of Presentation and Significant Accounting Policies

The accompanying unaudited interim financial statements of Vallant Pictures Entertainment have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Vallant Pictures Entertainment's annual financial statements for the years ended June 30, 2009 and 2008 included in this Form 8-K.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the years ended June 30, 2009 and 2008 included in this document have been omitted. 

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and Xi’An TV, which is a variable interest entity with the Company as the primary beneficiary. . In accordance with Financial Accounting Standards Board Interpretation No. 46 (Revised) (“FIN46R”), “Consolidation of Variable Interest Entities”, the Company identifies entities for which control is achieved through means other than through voting rights (a "variable interest entity" or "VIE") and determines when and which business enterprise, if any, should consolidate the VIE.

The Company evaluated its participating interest in Xi’An TV Media and concluded it is the primary beneficiary of Xi’An TV Media, a variable interest entity as defined under FIN46R. The Company consolidated Xi’An TV Media and all significant intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television product, estimates of product sales that will be returned and the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements and loss contingencies. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued new standards setting forth a single source of authoritative GAAP for all non-governmental entities (“Codification”). The Codification, which commenced July 1, 2009, changes the referencing and organization of accounting guidance. The Codification is effective for the Company beginning the quarter ended September 30, 2009. The Codification does not change GAAP and only affects how specific references to GAAP literature are disclosed in the notes to the Company’s consolidated financial statements.

F-4

2. Related Party Transactions

Mr. Dean Li, President and General Manager, had advanced $21,980 to the Company during the three month period ended September 30, 2009. The shareholder loan is free of interest with no maturity date.

The Company leased an office space from a related party with a monthly rent of approximately $950. The contributed rent for the three month period ended September 30, 2009 was $2,925.

3. Notes Receivable

On July 12, 2009, the Company loaned Shaan’Xi Railroad Transportation Trading Ltd. $3,370,190 under a six month term note. The note matures on January 11, 2010 and has an annual interest rate of 2%.

4. Subsequent Events

On September 16, 2009 the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with China Media Inc. and Bin Li, the Company’s sole shareholder. The transaction was closed on November 30, 2009. According to the terms of the Share Exchange Agreement, Mr. Li agreed to sell the sole issued and outstanding common share of the Company in exchange for 7,000 shares of China Media’s common stock. Therefore, the Company has become the wholly owned subsidiary of China Media Inc.

On October 16, 2009, the Company loaned Shaan’Xi Goethe Business Trading Ltd. $1,078,245 under a three month term note. The note matures on January 15, 2010 and has an annual interest rate of 4%.

On October 25, 2009, the Company entered into a film sales agreement to transfer its interest in Fox-Hunting for approximately $878,000.

On October 27, 2009, the Company entered into a film sales agreement to transfer its interest in Desert Love Story for approximately $293,000.

The Company has evaluated all subsequent events through November 30, 2009, the date of this filing.

F-5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Vallant Pictures Entertainment Co., Ltd.

British Virgin Islands

We have audited the accompanying consolidated balance sheets of Vallant Pictures Entertainment Co., Ltd. (the “Company”) as of June 30, 2009 and 2008, and the related consolidated statements of income, changes in stockholders’ equity 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 audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 of the Company referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2009 and 2008 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.

/s/ MALONE & BAILEY, PC 

MALONE & BAILEY, PC

www.malone-bailey.com

Houston, Texas

November 30, 2009

F-6

F-7

F-8

F-9

F-10

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

1. Description of Business

Vallant Pictures Entertainment Co., Ltd. (“Vallant”, the “Company”) was incorporated in the British Virgin Islands on May 23, 2007.

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

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

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

According to the Option agreement, Vallant has the exclusive and irrevocable right to acquire 100% of the equity interests of Xi’An TV. In the Equity Pledge agreement, Xi’An TV shareholders also pledged all of their equity interests in Xi’An TV to Vallant to guarantee Xi’An TV’s performance of its obligations under the Business Operations agreement.

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

·   Vallant has the ability to absorb 62.61% of the expected residual return from Xi’An TV, which makes Vallant the primary beneficiary of Xi’An TV. In the event Xi’An TV fails to pay any required amounts, Vallant could exercise its right to acquire certain pledged shares in Xi’An TV pursuant to a equity pledge agreement executed by and between Vallant and Xi’An TV which guarantee all required payment;

·   Vallant has the exclusive right to purchase all of the outstanding interests in Xi’An TV, which would make Xi’An TV a wholly-owned subsidiary of Vallant when it’s allowable under the PRC regulation; and

·   Vallant could exercise absolute influence over Xi’An TV through overseeing the board and senior executives of Xi’An TV.

Upon executing the above agreements, Xi’An TV is considered a VIE and Vallant is its primary beneficiary. Xi’An TV is consolidated into the Company under the guidance of FIN46R.

F-11

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and Xi’An TV, which is a VIE with the Company as the primary beneficiary. In accordance with Financial Accounting Standards Board Interpretation No. 46 (Revised) (“FIN46R”), “Consolidation of Variable Interest Entities”, the Company identifies entities for which control is achieved through means other than through voting rights and determines when and which business enterprise, if any, should consolidate the VIE.

The Company evaluated its participating interest in Xi’An TV Media and concluded it is the primary beneficiary of Xi’An TV Media, a VIE as defined under FIN46R. The Company consolidated Xi’An TV Media and all significant intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television product, estimates of product sales that will be returned and the amount of receivables that ultimately will be collected, the potential outcome of future tax consequences of events that have been recognized in the Company’s financial statements and loss contingencies. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or results of operations will be affected. Estimates are based on past experience and other assumptions that management believes are reasonable under the circumstances, and management evaluates these estimates on an ongoing basis.

Concentration of Credit Risk

The Company maintains cash balances at various financial institutions in the PRC which do not provide insurance for amounts on deposit. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.

The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.

Fair Value of Financial Instruments

The carrying amount reported in the balance sheet for current assets and current liabilities, such as cash, accounts receivables, notes receivables, related party notes receivables, prepaid and other current assets, accounts payable, accrued liabilities, short term debt and due to related parties, approximate fair value due to the short-term nature of these financial instruments.

F-12

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

Foreign Currency Translation

The Company’s functional currency is Chinese currency Renminbi (“RMB”) and its reporting currency is the U.S. dollar.  Transactions denominated in foreign currencies are translated into U.S. dollar at exchange rate in effect on the date of the transactions. Exchange gains or losses on transactions are included in earnings.

The financial statements of the Company are translated into United States dollars in accordance with Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation”, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for the equity. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. At June 30, 2009 and 2008, the cumulative translation adjustment of $749,609 and $731,484 were classified as an item of accumulated other comprehensive income in the stockholders’ equity section of the balance sheet respectively. For the years ended June 30, 2009 and 2008, other comprehensive income was $18,125 and $492,492, respectively.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances.  Management provides for probable uncollected amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of individual accounts.  Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for bad debts and a credit to accounts receivable. There is no bad debt expense recorded for the years ended June 30, 2009 and 2008.

Fixed Assets

Fixed assets are recorded at cost and depreciated using the straight-line method, with an estimated 5% salvage value of original cost, over the estimated useful lives of the assets as follows:

Asset Category	Estimated Useful Life
Electronic Equipment	5 years
Communication Equipment	3 years
Machinery Equipment	5 years
Automobiles	10 years
Office Furniture	5 years

Leasehold improvements are amortized using the straight-line method over the life of the asset, not to exceed the length of the lease. Repairs and maintenance costs are expensed as incurred.

Intangible Assets

The Company has the following intangible assets:

Intangible Asset Category	Estimated Useful Life
3D TV series Production Right	4 years
TV series Production Right	10 years

SFAS No. 142, “Goodwill and Other Intangible Assets”, requires that intangible assets with finite lives are amortized over their estimated useful life to a company and are reviewed for impairment in accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets”. Finite-lived intangible assets are amortized on a straight-line basis and the amortization for the years ended June 30, 2009 and 2008 is $21,334 and $23,063, respectively.

F-13

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

Impairment of Long-Lived Assets

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company evaluates for impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. The Company recognized $41,169 in impairment loss on the TV series Lover’s Grief in fiscal 2008.

Revenue Recognition

The Company’s revenue comes from the distribution of film and TV series’ broadcasting rights and investment return from the collectively produced film and TV series.

In accordance with Statement of Position 00-2, “Accounting by Producers or Distributors of Films”, issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (the “SOP”), revenue from sale or licensing arrangements of a film shall be recognized when the following five revenue criteria are met: persuasive evidence of an arrangement exists, the film is completed and delivery has occurred, the license period of the arrangement has begun, the selling price is fixed or determinable, and collectability is reasonably assured.  

Costs of Revenues

Film Costs - The Company capitalizes film costs in accordance with SOP 00-2. Film costs are stated at the lower of cost, less accumulated amortization, or fair value. Production overhead, a component of film costs, includes allocable costs of individuals or departments with exclusive or significant responsibility for the production of films. Substantially all of the Company’s resources are dedicated to the production of its films. Capitalized production overhead does not include selling, general and administrative expenses. Interest expense on funds invested in production is capitalized into film costs until production is completed. In addition to the films being produced, costs of productions in development are capitalized as development film costs in accordance with the provisions of the SOP and are transferred to film production costs when a film is set for production. In the event a film is not set for production within three years from the time the first costs are capitalized or the film is abandoned, all such costs are generally expensed.

Film Cost Amortization - Once a film is released, film costs are amortized and participations and residual costs are accrued on an individual film basis in the proportion that the revenue during the period for each film (“Current Revenue”) bears to the estimated remaining total revenue to be received from all sources for each film (“Ultimate Revenue”) as of the beginning of the current fiscal period as required by the SOP. The amount of film costs that is amortized each period will depend on the ratio of Current Revenue to Ultimate Revenue for each film for such period. The Company makes certain estimates and judgments of Ultimate Revenue to be received for each film based on information received from its distributor and its knowledge of the industry. Ultimate Revenue does not include estimates of revenue that will be earned beyond ten years of a film’s initial theatrical release date.

Unamortized film production costs are evaluated for impairment each reporting period on a film-by-film basis in accordance with the requirements of the SOP. If estimated remaining net cash flows are not sufficient to recover the unamortized film costs for that film, the unamortized film costs will be written down to fair value determined using a net present value calculation.

Income Taxes

The Company accounts for income tax under the provisions of SFAS No.109 "Accounting for Income Taxes", which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities.  Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. There are no deferred tax amounts at June 30, 2009 and 2008.

F-14

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

Comprehensive Income

Comprehensive income consists of two components, net income and other comprehensive income/(loss). Other comprehensive income refers to revenue, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of stockholders’ equity but are excluded from net income. During the periods presented, other comprehensive income (loss) includes changes in cumulative translation adjustment from foreign currency translation.

Earnings Per Share

The Company calculates net income per share in accordance with SFAS No. 128, “Earnings Per Share”. Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. At June 30, 2009 and 2008, respectively, the Company had no common stock equivalents that could potentially dilute future earnings per share. 

Recent Accounting Pronouncements

Effective July 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements”, which provides guidance on how to measure assets and liabilities that use fair value. SFAS No. 157 applies whenever another U.S. GAAP standard requires (or permits) measurement of assets or liabilities at fair value, but does not expand the use of fair value to any new circumstances. The Company also adopted Financial Accounting Standards Board (“FASB”) Staff Position ("FSP") No. FAS 157-2, “Effective Date of FASB Statement No. 157”, which allows the Company to partially defer the adoption of SFAS No. 157. This FSP defers the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Nonfinancial assets and nonfinancial liabilities include all assets and liabilities other than those meeting the definition of a financial asset or financial liability as defined in paragraph 6 of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. The adoption of SFAS No. 157 and FSP No. FAS 157-2 had no impact on our financial statements.

In December 2007, the FASB issued SFAS No. 141R, "Business Combinations", which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and for disclosure to enable evaluation of the nature and financial effects of the business combination. SFAS No. 141R is effective for the Company beginning in fiscal 2010. The Company adopted this standard as of July 1, 2009 and does not expect it to have an impact on the Company’s financial statements.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements”, an amendment of Accounting Research Bulletin No. 51. SFAS No. 160 introduces significant changes in the accounting and reporting for business acquisitions and noncontrolling interest in a subsidiary. SFAS No. 160 also changes the accounting and reporting for the deconsolidation of a subsidiary. Companies are required to adopt the new standard for fiscal years beginning after January 1, 2009. The Company adopted this standard effectively July 1, 2009 and does not expect it to have an impact on the Company’s financial statements.

In April 2008, the FASB issued Staff Position FSP FAS 142-3, "Determination of the Useful Life of Intangible Assets". The FSP amends the factors considered in developing renewal or extension assumptions for determining the useful life of a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets". The FSP's intent is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under other accounting principles generally accepted in the U.S. Companies must adopt the FSP for fiscal years and interim periods beginning after December 15, 2008. Early adoption is prohibited. Companies must apply the guidance for determining the useful life of a recognized intangible asset prospectively to intangible assets acquired after the effective date. Companies must also apply certain disclosure requirements prospectively to all intangible assets recognized as of, and subsequent to, the effective date. The Company adopted this standard effectively July 1, 2009 and does not expect it to have an impact on the Company’s financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”, which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS No. 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. SFAS No. 165 is effective for interim and annual periods ending after June 15, 2009. Since SFAS No. 165 at most requires additional disclosures, the adoption did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

F-15

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

3. Notes Receivable

Notes receivable at June 30, 2008 consists of the following:

Notes receivable	$	2,148,355
Accrued interest		210,176
	$	2,358,531

The notes receivables are unsecured and due on demand. Interest rate is charged at 20% over the term of the notes. Interest income for the years ended June 30, 2009 and 2008 was $220,322 and $157,504 for the notes above. All of the notes receivables were collected during fiscal 2009 and there are no outstanding notes receivables at June 30, 2009.

4. Fixed Assets

Fixed assets consist of the following:

	Year Ended June 30,
Asset Category	2008			2009
Electronic Equipment	$	147,887		$	148,474
Communication Equipment		625			627
Machinery Equipment		85,226			85,565
Automobiles		46,580			46,765
Office Furniture		1,022			1,026
Leasehold improvement		49,127			49,323
		330,467			331,780
Less: Accumulated depreciation		(150,428	)		(222,567	)
Fixed assets, net	$	180,039		$	109,213

Depreciation expense for the years ended June 30, 2009 and 2008 was $71,526 and $69,597, respectively.

5. Film Costs and Assets Held for Sale

Film costs consist of the following:

	June 30,
	2009		2008
In release, net of amortization:
TV Series	$	1,759,825	$	2,482,610
Documentary		7,327		7,297
Film		-		67,676
		1,767,152		2,557,583
Held for sale		1,172,240		-
Film costs	$	594,912	$	2,557,583

F-16

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

Amortization of film cost was included in cost of revenues. See Note 8 for details.

The Company anticipates that approximately all “in release” film costs as of June 30, 2009 will be amortized over the next 12 months.

In October 2009, the Company negotiated with third party buyers to sell two of its TV series’ at the historical costs. See Note 11 for details.  As of June 30, 2009, the costs related to these two TV series were classified as “assets held for sale” on the balance sheet.

6. Short Term Debt

Short term debt consists of the following:

	June 30,
	2009		2008
Loan from individual	$	-	$	72,975
Loan from an unrelated company		117,224		116,760
Total short term debt	$	117,224	$	189,735

The short term debts are unsecured, due on demand and non-interest bearing.

7. Related Party Transactions

The Company advanced $511,571 and $200,896, including accrued interest to two related companies, Xi’An Zhengnuo TV Media Ltd. and Shaan’Xi Western Capital Investment Management Ltd., respectively, during fiscal 2008. The notes are unsecured and due on demand. Interest is charged at 20% over the term of the notes. Interest income for the years ended June 30, 2009 and 2008 was $58,009 and $39,779, respectively. The notes receivables were collected during fiscal 2009 and there are no outstanding related party notes receivables at June 30, 2009.

Mr. Dean Li, President and General Manager, had advanced $21,893 to the Company during the year ended June 30, 2008. The shareholder loan is free of interest with no maturity date. For the years ended June 30, 2009 and 2008, the shareholder loan has an outstanding balance of $21,980 and $21,893, respectively.

Mr. Bin Li, Director, had advanced $45,907 to the Company during the year ended June 30, 2009. The shareholder loan is free of interest and no maturity date. For the year ended June 30, 2009, the shareholder loan has an outstanding balance of $45,907.

The Company also leased an office space from a related party with a monthly rent of approximately $950. (Note 10)

F-17

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

8. Revenues and Cost of Revenues

The Company’s revenues by film and TV series are as follows:

	Year Ended June 30
	2009		2008
Invisible Wings - Film	$	452,180	$	33,273
Awards of Invisible Wings - Film		-		41,783
Special Mission - TV series		-		1,955,198
Lotus Lantern Prequel - TV series		1,223,275		-
Total Revenues	$	1,675,455	$	2,030,254

The Company’s cost of revenues by film and TV series are as follows:

	Year Ended June 30
	2009		2008
Invisible Wings - Film	$	67,931	$	4,999
Special Mission - TV series		-		481,915
Lotus Lantern Prequel - TV series		732,500		-
Total Cost of Revenues	$	800,431	$	486,914

9. Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes”, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.

In March 2007, the Chinese government enacted the Corporate Income Tax Law, and promulgated related regulations, which were effective January 1, 2008. The Corporate Income Tax Law, among other things, imposes a unified income tax rate of 25% for both domestic and foreign invested enterprises. The previous income tax laws and rules, which stipulated income tax rates for domestic and foreign invested enterprises at different rates, expired upon the effectiveness of the Corporate Income Tax Law.

According to regulation of Cai Shui (2005) No. 2 issued by the China State Taxation Administration, the Chinese government exempted enterprise income tax for new established culture enterprises during the period of three years from the date of incorporation. The Company was incorporated in 2005 and received tax exemptions for two years in 2006 and 2007, and will be charged income taxes from 2008. Due to the Company’s net loss, there was no provision for income taxes. The Company’s effective tax rate for the years ended June 30, 2009 and 2008 was 0% and 0%, respectively, due to the net loss position in both years.

F-18

Vallant Pictures Entertainment Co., Ltd.

Notes to the Consolidated Financial Statements

Years ended June 30, 2009 and 2008

(Expressed in US dollars)

The Company’s taxes were subject to a full valuation allowance as follows:

	Year ended  June 30, 2009			Year ended June 30, 2008
Computed tax benefit at statutory rate	$	(141,752	)	$	(205,179	)
Change in valuation allowance		141,752			205,179
Income tax expense (benefit)	$	-		$	-

The net deferred tax asset of $1,277,295 generated by the loss carry-forward has been fully reserved.

The tax authority of the PRC conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises had completed their relevant tax filings, hence the Company’s tax filings may not be finalized. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings which may lead to additional tax liabilities.

The Company has no United States corporate income tax liability as of June 30, 2009 and 2008.

10. Commitments and Contingencies

The Company occupies two office spaces in Xi’An, China during fiscal 2009 and 2008. One was leased from a related party with a monthly rent of approximately $950 and the other one was leased from a third party with a monthly rent of $7,300. The lease with the third party was terminated in December 2009. Rent expense for the years ended June 30, 2009 and 2008 was $106,827 and $48,204, respectively. Currently, the Company leases its office spaces on month-to-month basis, thus there are no outstanding commitments with respect to operating lease at June 30, 2009.

11. Subsequent Events

On July 12, 2009, the Company loaned Shaan’Xi Railroad Transportation Trading Ltd. $3,370,190 under a six month term note. The note matures on January 11, 2010 and has an annual interest rate of 2%.

On September 16, 2009 the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with China Media Inc. and Bin Li, the Company’s sole shareholder.  The transaction was closed on November 30, 2009. According to the terms of the Share Exchange Agreement, Mr. Li agreed to sell the sole issued and outstanding common share of the Company in exchange for 7,000 shares of China Media’s common stock. Therefore, the Company has become the wholly owned subsidiary of China Media Inc.

On October 16, 2009, the Company loaned ShaanXi Goethe Business Trading Ltd. $1,078,245 under a three month term note. The note matures on January 15, 2010 and has an annual interest rate of 4%.

On October 25, 2009, the Company entered into a film sales agreement to transfer its interest in Fox-Hunting for approximately $878,000.

On October 27, 2009, the Company entered into a film sales agreement to transfer its interest in Desert Love Story for approximately $293,000.

The Company has evaluated all subsequent events through November 30, 2009, the date of this filing.

F-19

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

We have not had any changes in or disagreements with our independent public accountants during the last two fiscal years.

Item 5.03 Change in Fiscal Year

In connection with the closing of the share exchange, on November 30, 2009 we changed our fiscal year end to June 30.  The share exchange is deemed to be a reverse acquisition for accounting purposes, with Vallant, the acquired entity, regarded as the predecessor entity as of November 30, 2009.  Starting with the periodic report for the quarter in which the share exchange was completed, we will file annual and quarterly reports based on the June 30 fiscal year end of Vallant.  Such financial statements will depict the operating results of Vallant, including the acquisition of China Media Inc., from Vallant’s inception on May 23, 2007.

In reliance on Section III F of the SEC’s Division of Corporate Finance: Frequently Requested Accounting and Financial Reporting Interpretations and Guidance dated March 31, 2001, we do not intend to file a transition report covering the period from January 31, 2009 through July 1, 2009 to reflect the change in fiscal year end.

Item 5.06 Change in Shell Company Status

As a result of the consummation of the share exchange described in Item 2.01 of this Current Report on Form 8-K, we believe that we are no longer a “shell company”, as that term is defined in Rule 405 under the Securities Act and Rule 12b-2 under the Exchange Act.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired.

In accordance with Item 9.01(a), the audited financial statements of Vallant for the last two fiscal years ended June 30, 2009 and 2008 are filed in this Current Report on Form 8-K under the heading “Financial Statements and Supplementary Data”.

(b) Pro Forma Financial Information.

In accordance with Item 9.01(b), our pro forma financial statements are filed with this Current Report on Form 8-K as Exhibit 99.1.

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(d) Exhibits.

The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K:

Exhibit No.	Description
2.1	Share Exchange Agreement with Bin Li and Vallant Pictures Entertainment Co., Ltd., dated September 16, 2009 (1)
3.1	Articles of Incorporation of China Media Inc. (formerly Protecwerx Inc.) (2)
3.2	Certificate of Amendment filed with the Nevada Secretary of State on August 6, 2009 (3)
3.3	Bylaws of China Media Inc. (formerly Protecwerx Inc.) (2)
10.1	Technical Consultancy and Services Agreement between Vallant Pictures Entertainment Co., Ltd. and Xi’An TV Media Inc. dated May 23, 2007
10.2	Business Operating Agreement between Vallant Pictures Entertainment Co., Ltd., Xi’An TV Media Ltd. and the Shareholders of 62.16% of Xi’An TV Media Inc. dated May 23, 2007
10.3	Equity Pledge Agreement between Vallant Pictures Entertainment Co., Ltd. and  each of the Shareholders of Xi’An TV Media Inc. dated May 23, 2007
10.4	Exclusive Option Agreement between Vallant Pictures Entertainment Co., Ltd., Xi’An TV Media Inc. and each of the Shareholders of Xi’An TV Media Inc. dated May 23, 2007
21	List of Subsidiaries: Vallant Pictures Entertainment Co., Ltd.
99.1	Unaudited Pro Forma Balance Sheet as of September 30, 2009, and Unaudited Pro Forma Statements of Operations for the period ended September 30, 2009.

(1)           Included as an exhibit to our Current Report on Form 8-K filed on September 18, 2009.

(2)           Included as an exhibit to our Registration Statement on Form S-1 filed on May 16, 2008.

(3)           Included as an exhibit to our Current Report on Form 8-K filed on August 14, 2009.

33

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  November 30, 2009	CHINA MEDIA INC.
	By:	/s/  Dean Li
		Dean Li
		President, Chief Executive Officer, Secretary and Director

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EX-10.1

TECHNICAL CONSULTANCY & SERVICES AGREEMENT

[translation]

THIS TECHNICAL CONSULTANCY & SERVICES AGREEMENT (this “Agreement”) is dated May 23, 2007, and is entered into in Xi’an City of China

BETWEEN

(1)           Vallant Pictures Entertainment Co., Ltd., with a registered address at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands (“ Party A ”),

AND

(2) Xi’an TV Media Inc., with a registered address at Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei Road, Xi’an City, China (“Party B ”),.

Party A and Party B are referred to collectively in this Agreement as the “Parties”.

RECITALS

（1）Party A, a company limited by shares and incorporated under law of British Virgin Islands and has the expertise in providing consultancy advice and services in relation to the production of television mini-series, features and commercials;

（2）Party B, a private-owned limited company incorporated in Xi’an City of China and is engaged in the business of (1) production and distribution of television mini-series, features and commercials; (2) production and agency service of printed and outdoor advertisements; (3) planning and organization cultural events and arts performance; (4) agency and training of artists; (5) design and production of stage performance; (6) leasing of lightings, sound and filming facilities; (7) information technology network construction, operation and maintenance; (8) development and construction of studios as tourism facilities (the “Business”);

（3）The Parties desire that Party A provide to Party B technical consultancy and services in relation to production and distribution of television mini-series, features and commercials; and Party A is entitled to a compensation that is equivalent to the net profit of Party B as audited under US GAAP;

（4）In order to ensure that Party B will perform its obligations under this Agreement, and in order to provide an additional mechanism for the Party A to enforce its rights to collect the Consulting Services Fees from Party B, over a simple majority of the shareholders of Party B agree to pledge their equity interest in Party B as security for the performance of the obligations of Party B under this Agreement and the payment of Consulting Services Fees under this Agreement;

（5）The Parties are entering into this Agreement to set forth the terms and conditions under which Party A shall provide consultancy and related services to Party B and hence to ensure that the wholly-owned shareholder of Party A may enforce its rights to control the business of Party B.

1

NOW THEREFORE, the Parties agree as follows:

1. DEFINITIONS

1.1 Unless otherwise stipulated in this Agreement, the following terms shall have the following meanings:

“Business Day,” shall mean the part of a day during which the businesses of banks in China are operating, usually from 9 am to 6 pm Monday through Friday;

“China Laws” shall means the laws and regulations promulgated by the National People’s Congress, State Council, State Commissions of the People’s Republic of China, including all the interim measures, regulations and notices.

“Force Majeure Events” shall mean causes beyond a party's reasonable control and occurring without its fault or negligence, including, without limitation, Acts of God, wars, insurrections and/or any other cause beyond the reasonable control of the party whose performance is affected

“PRC” means the People’s Republic of China and excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan;

“US GAAP” shall be the Generally Accepted Accounting Principle of the United States of America;

1.2 Representation and Warranties.  All the Parties represent to the other party that:

1.2.1   it is incorporated in accordance with the law in its respective incorporation place;

1.2.2   it is legally capable to enter into this Agreement and perform the obligation hereto;

1.2.3   its signing party is fully authorized;

1.2.4   execution of this Agreement shall not violate any of its business license, article of association, by-laws, or any laws and regulations, or other contracts;

1.2.5   to its best knowledge, there is no court notice, orders or suggestions that may adversely affect its performance of its obligation under this Agreement

1.2.6   it has fully disclosed to the other party with respect to any governmental policy that may adversely affect its performance of its obligation under this Agreement;

1.2.7   it has not become bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution;

2. RETENTION AND SCOPE OF SERVICES

2.1 Exclusive Services Provider. During the term of this Agreement, Party A shall be the exclusive provider of the services set forth below. Party B shall not seek or accept similar services from other providers unless the prior written approval is obtained from Party A.

2.2 Services. Party B hereby agrees to retain the services of Party A, and Party A accepts such appointment, to provide to Party B services in relation to the current and proposed operations of Party B’s business in the PRC upon the terms and conditions of this Agreement. The services subject to this Agreement shall include, without limitation: (a) market intelligence and audience preference research to support the production of movie and television mini-series; (b) advisory and assistance relating to films investment; (c) advisory on mini-series and film screenplay creation, principle photography and other related production and planning; (d) collect sales income and service fees on behalf of Party B; (e) advice and assistance in relation to the staffing of Party B, including assistance in the recruitment, employment, training and secondment of management personnel, administrative personnel and staff of Party B; (f) advice and assistance relating to development of technology and provision of consultancy services, particularly as related to the television mini-series production technology; and (g) such other advice and assistance as may be agreed upon by the Parties.

2.3 For the purpose of this Agreement, Party B agree to hire the staff in PRC necessary for Party A to fulfill its obligation as stipulated under this Agreement; and Party B shall be responsible for the cost (including basic salary, subsidy, commission and social insurance) of such staffing.

2

3. COPYRIGHTS

3.1 Copyrights Related to the Services. Party B shall own all copyrights of television mini-series and films developed in the course of providing Services, or derived from the provision of the Services. Party A shall be entitled to the profit derived as Party B utilize such copyrights.

3.2 Copyrights Ownership. Party B is responsible to hold the copyrights of the mini-series and films derived from the provision of the Services by Party A, and the staffs of Party B shall not claim any right on such copyrights.

3.3 Conditional Transfer of Copyrights. Party B may transfer the copyright to a third party with the prior written consent of Party A.

4. PAYMENT

4.1 Service Fee. In consideration of the Services provided by Party A hereunder, Party B shall pay to Party A during the term of this Agreement a consulting services fee (the “Consulting Services Fee”), payable in RMB each year, equal to 62.61% of its revenue for such year based on the annual financial statements audited under US GAAP. Such yearly payment shall be made within once a year after receipt by Party A of the financial statements referenced above.

4.2 Pledge. Party B shall permit and cause over a simple majority of Party B’s shareholders to pledge the equity interests of Party B to Party A in the amount of 62.61% for securing the Consulting Services Fee that should be paid by Party B pursuant to this Agreement.

5. TERM AND TERMINATION

5.1 This Agreement shall take effect on the signing date of this Agreement and shall remain in full force and effect until Party B becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business, unless early termination occurs in accordance with relevant provisions herein or in any other relevant agreements reached by all parties.

5.2 This Agreement can be terminated by either Party giving 30-days prior written notice to the other Party with or without a reason. Under the circumstances that Party B serves the prior written notice to the Party A for termination, Party B hereby agrees to pay a penalty to Party A that is equivalent to the net profit of the last fiscal year.

5.3 This Agreement may be terminated by Party A provided that:

5.3.1 if any circumstances (including but not limiting to Force Majeure Events) arise which materially and adversely affect the performance or the objectives of this Agreement

5.3.2 if Party B has committed a material breach of this Agreement (including but not limited to the failure by Party B to pay the Consulting Services Fee) and such breach, if capable of remedy, has not been so remedied within, in the case of breach of a non-financial obligation, 45 days, following receipt of such written notice;

5.3.3 if Party B transfer the copyrights without the prior consent of Party A

5.4 Any Party electing properly to terminate this Agreement pursuant to Clause 7.2 shall have no liability to the other Party for indemnity, compensation or damages arising solely from the exercise of such right. The expiration or termination of this Agreement shall not affect the continuing liability of Party B to pay any Consulting Services Fees already accrued or due and payable to Party A. Upon expiration or termination of this Agreement, all amounts then due and unpaid to Party A by Party B hereunder, as well as all other amounts accrued but not yet payable to Party A by Party B, shall forthwith become due and payable by Party B to Party A.

3

6. PARTY A’S REMEDY UPON PARTY B’S BREACH

6.1 In addition to the remedies provided elsewhere under this Agreement, Party A shall be entitled to remedies, including without limitation penalty charges for any due and outstanding debt owned by Party B at 10% of total Consulting Service Fee payable every 10 days. If the Consulting Service Fee remain as outstanding for consecutive 30 days, Party A is entitled to terminate this Agreement and all the legal fees incurred to recover losses from such breach.

7. FORCE MAJEURE

7.1 Neither party shall be liable for any failure or delay in performance under this Agreement to the extent said failures or delays are proximately caused by Force Majeure Events, provided that, as a condition to the claim of nonliability, the party experiencing the difficulty shall give the other prompt written notice with full details within 15 days following the occurrence of the Force Majeure Event. Dates by which performance obligations are scheduled to be met will be extended for a period of time equal to the time lost due to any delay so caused.

7.2 Either party shall have the right to terminate this Agreement if such delay or default caused by Force Majeure Events persist for 30 consecutive days.

8. ASSIGNMENT

8.1No part of this Agreement shall be assigned or transferred by either Party without the prior written consent of the other Party. Any such assignment or transfer shall be void. Party A, however, may assign its rights and obligations hereunder to its wholly-owned subsidiary.

9. GOVERNING LAW

9.1 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the People’s Republic of China (“PRC Laws”).

9.2 Change of Governing Laws. Under the circumstances that existing PRC Laws are amended or new PRC Laws become effective (“Change of Governing Laws”), and provided that such changes are in favor to any Parties, the concerned party shall have the right to apply for the preference treatment as stipulated in such amendment or changes.

9.3 Subject to the adverse effect to the rights of any party due to Change of Governing Laws, the parties hereby agree that:

9.3.1 this Agreement shall be governed by the PRC Laws before the Change; or

9.3.2 any party can terminate this Agreement in the absence of a remedy to the adverse effect due to the Change.

10. DISPUTE RESOLUTION

10.1 Arbitration. Any dispute arising from, out of or in connection with this Agreement shall be settled through friendly consultations between the Parties. Such consultations shall begin immediately after one Party has delivered to the other Party a written request for such consultation. If within thirty (30) days following the date on which such notice is given, the dispute cannot be settled through consultations, the dispute shall, upon the request of either Party with notice to the other Party, be submitted to arbitration in China under the auspices of Xi’an Arbitration Centre. The outcome of the arbitration shall be final and binding upon the Parties, and its terms enforceable.

10.2 Continuing Obligations. During the period when a dispute is being resolved, the Parties shall in all other respects continue their implementation of this Agreement.

4

11. GENERAL

11.1 This Agreement shall be valid and binding as of the signing date first set forth above.

11.2 The headings in this Agreement shall not affect the interpretation of this Agreement.

11.3 The knowledge, information, belief or acknowledgement of any party as referred in this Agreement refers to the knowledge, information, belief or acknowledgement of any party acquired after reasonable investigation.

11.4 Unless otherwise stipulated in this Agreement, references herein to Clauses are to be construed as reference to Clause of this Agreement.

11.5 The failure to exercise or delay in exercising a right or remedy under this Agreement shall not constitute a waiver of the right or remedy or waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy.

11.6 This Agreement constitutes the entire agreement between the Parties relating to the subject matter of this Agreement and supersedes all previous agreements.

11.7 No amendment, change, or modification of this Agreement shall be valid unless in writing signed by the parties hereto. Any amendment, change or modification that is subject to the approval of the government shall be valid upon receipt of such governmental approval.

11.8 Should any clause or any part of any clause contained in this Agreement be declared invalid or unenforceable for any reason whatsoever, all other clauses or parts of clauses contained in this Agreement shall remain in full force and effect.

11.9 None of the rights or obligations of either of the Parties under this Agreement shall be capable of being assigned or transferred in whole or in part without the consent of the Parties.

11.10 This Agreement shall be executed in two (2) duplicate originals in Chinese. Each Party has received one (1) duplicate original, and all originals shall be equally valid.

11.11 All of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, if any, successors, and assigns.

11.12 Any notice, demand or other communication given or made under this Agreement or in connection herewith shall be in writing and delivered personally or by prepaid letter, telegram or cable and shall be deemed to have been received, in the case of a telegram or cable, at the time of dispatch thereof, (provided that, if the date of dispatch is not a business day, it shall be deemed to have been received at the opening of business on the next such business day) and, in the case of a letter, when delivered personally or 2 days after it has been posted by registered mail. Any notice shall be sufficiently served if sent to the addressee at its above address.

[SIGNATURE PAGE FOLLOWS]

5

Signature Page

IN WITNESS WHEREOF both parties hereto have caused this Agreement to be duly executed by their legal representatives and duly authorized representatives on their behalf as of the date first set forth above. The parties hereto agree that facsimile signatures shall be as effective as if originals.

PARTY A:	Vallant Pictures Entertainment Co., Ltd. Authorized Signature: /s/ Li Bin
PARTY B:	Xi’an TV Media Inc. Legal Representative: /s/ Li Dean

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Appendix 1: The list of Copyrights of Television mini-series and movies owned by Party A.

The list below set forth the copyrights of television mini-series and movies owned by Party B as of the signing date first set forth above. Party A shall be entitled to the profit when Party B makes use of such copyrights. Party A shall be entitled to the profit derived or developed from the intellectual property of any future television mini-series and/or movies produced in the course of providing Services, or derived from the provision of the Services.

1.Lucky Chicken

2.Tianshan Urgency Action

3.Hard Corps

4.Drive Dragon Gate

5.Lover’s Grief

6.Special Mission

7.Plum Blossom Archive

8.Invisible Wings

9.County Major with Doctor Degree

10.Lotus Lantern Prequel

11.Fox-Hunting

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EX-10.2

BUSINESS OPERATING AGREEMENT

[translation]

THIS BUSINESS OPERATING AGREEMENT (this “Agreement”) is made on May 23, 2007, and is entered into in Xi’an City of China

BETWEEN

Vallant Pictures Entertainment Co., Ltd., with a registered address at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands (“ Party A ”),

AND

Xi’an TV Media Inc., with a registered address at Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei Road, Xi’an City, China (“ Party B ”),

AND

Shareholders holding 62.61% of the outstanding shares of Party B (the “Shareholders of Party B” or “Party C”).

Party A and Party B, and Shareholders of Party B are referred to collectively in this Agreement as the “Parties”.

1

RECITALS

1.  Party A, a company limited by shares and incorporated under law of British Virgin Islands and has the expertise in providing consultancy advice and services in relation to the production of television mini-series, features and commercials;

2.  Party B a private-owned limited company incorporated in Xi’an City of China and is engaged in the business of (1) production and distribution of television mini-series, features and commercials; (2) production and agency service of printed and outdoor advertisements; (3) planning and organization cultural events and arts performance; (4) agency and training of artists; (5) design and production of stage performance; (6) leasing of lightings, sound and filming facilities; (7) information technology network construction, operation and maintenance; (8) development and construction of studios as tourism facilities (the “Business”);

3.  The undersigned Shareholders of Party B collectively own over 62.61% of the equity interests of Party B;

4.  Party A has established a business relationship with Party B by entering into the “Technical Consultancy & Services Agreement” (hereinafter referred to as the “Services Agreement”);

5.  Pursuant to the above-mentioned agreement between Party A and Party B, Party B shall pay a certain amount of money to Party A. However, the relevant payable account has not been paid yet and the daily operation of Party B will have a material effect on its capacity to pay such payable account to Party A;

6.  The Parties are entering into this Agreement to clarify matters in connection with Party B’s operations.

NOW THEREFORE, all parties of this Agreement hereby agree as follows through mutual negotiations:

1.  GUARANTEE. Party A agrees, subject to compliance of the relevant provisions of this Agreement by Party B, as the guarantor for Party B in the contracts, agreements or transactions in connection with Party B’s operation between Party B and any other third party, to provide guarantee for the performance of such contracts, agreements or transactions to the extent of 62.61% of all the liabilities undertaken by Party B that become due and outstanding within 12 months (“Guarantee Liability”). Party B agrees, as the counter-guarantee, to pledge 62.61% of its assets, including but not limiting to 62.61% of its accounts receivable, to Party A.

2.  OPERATIONAL RESPONSIBILITIES. In consideration of the requirement of Article 1 herein and assuring the performance of the various operation agreements between Party A and Party B and the payment of the payables accounts by Party B to Party A, Party B together with its shareholders Party C hereby jointly agree that Party B shall not conduct any transaction which may materially affects its assets, obligations, rights or the operations of Party B (excluding the business contracts, agreements, sell or purchase assets during Party B’s regular operation and the lien obtained by relevant counter parties due to such agreements) unless the obtainment of a prior written consent from Party A, including but not limited to the following:

2.1.   To borrow money from any third party or assume any debt;

2.2.   To sell to or acquire from any third party any asset or right, including but not limited to any intellectual property right;

2.3.   To provide any guarantees to any third parties using its assets or intellectual property rights;

2.4.   To assign to any third party its business agreements.

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3.  ADVICE. In order to ensure the performance of the various operation agreements between Party A and Party B and the payment of the various payables by Party B to Party A, Party B together with its shareholders Party C hereby jointly agree to unconditionally accept, from time to time, advice regarding corporate policy advise provided by Party A in connection with company’s daily operations, television program production and distribution, screenplay and script creation, financial management and the employment and dismissal of the company’s employees.

4.  BOARD MEMBER AND MANAGEMENT. Party B and Party C hereby jointly agree that Party C shall appoint the person recommended by Party A as the directors of Party B such that the persons recommended by Party A shall take up over a simple majority of the board seats of Party B, and Party B shall appoint Party A’s senior managers as Party B’s senior officers and management. Party C shall guarantee over a simple majority of Party B’s appointed directors should not vote against the interest of Party A.

5.  PRIORITY BORROWER. Party B together with its shareholders Party C hereby jointly agree and confirm that Party B shall seek for loans from Party A first to cover the needs of any loan of working capital; and Party A shall provide such loan to Party B to the extent of 62.61% of its total loan requirement.

6.  PLEDGE. Party B shall permit and cause Party C to pledge the equity interests of Party B to Party A for securing the obligation in accordance with this Agreement in a separate pledge agreement.

7.  ASSIGNMENT. No part of this Agreement shall be assigned or transferred by either Party without the prior written consent of the other Party. Any such assignment or transfer shall be void. Party B hereby agrees that Party A may assign its rights and obligations under this Agreement as it needs and such transfer shall only be subject to a written notice sent to Party B by Party A, and no any further consent from Party B will be required

8.  TERM. This Agreement shall take effect on the signing date of this Agreement and shall remain in full force and effect until Party B becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business pursuing to its Article of Association.

9.  TERMINATION. Party A has the right to terminate this Agreement if : (a) Party B has committed a material breach of this Agreement; or (b) Party B amended the Services Agreement without obtaining prior consent from Party A.

10.  GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the People’s Republic of China (“PRC Laws”). If there are no applicable PRC laws, this Agreement shall be governed by the general practices of international trade. During the term of this Agreement, if the existing PRC Laws are amended or new PRC Laws become effective (“Change of Governing Laws”), all Parties hereto agree to execute amendment and/or supplement of this Agreement to reduce the adverse effect on any Parties due to Changes of Governing Laws.

11.  DISPUTE RESOLUTION. The parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation within thirty (30) days. In case no settlement can be reached through consultation, each party can submit such matter to Xi’an Arbitration Center for arbitration in accordance with its rules. Any resulting arbitration award shall be final and conclusive and binding upon all the parties.

12.  GENERAL

12.1.   This Agreement has been executed in four (4) duplicate originals in English, each Party has received one (1) duplicate original, and all originals shall be equally valid.

12.2.   Any amendment and supplement of this Agreement shall be made in writing. The amendment and supplement duly executed by all parties shall be deemed as a part of this Agreement and shall have the same legal effect as this Agreement.

IN WITNESS WHEREOF both parties hereto have caused this Agreement to be duly executed by their legal representatives and duly authorized representatives on their behalf as of the date first set forth above.

[SIGNATURE PAGE FOLLOWS]

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SIGNATURE PAGE

PARTY A:
Vallant Pictures Entertainment Co., Ltd.	/s/ Li Bin
	Director
	Li Bin
PARTY B:
Xi’an TV Media Inc	/s/ Dean Li
	Authorized Signature
	Dean Li
PARTY C:
For and on behalf of Shaan’xi Western Capital & Investment Management Co., Ltd	/s/ Dean Li
	Authorized Signature
	Dean Li
Li Bin
Owns 4.67% of Xi’an TV Media Inc	/s/ Li Bin
	Li Bin

4

EX-10.3

EQUITY PLEDGE AGREEMENT

[translation]

THIS EQUITY PLEDGE AGREEMENT (hereinafter this “Agreement”) is dated May 23, 2007, and entered into in Xi’an City of China

BETWEEN

(1) Vallant Pictures Entertainment Co., Ltd., with a registered address at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands (“Pledgee”);

AND

(2) each of the shareholders of Xi’an TV Media inc (“Party B” or the “Company”) listed on the signature pages hereto (collectively, the “Pledgors”).

RECITALS

1.  The Pledgee, a limited company incorporated under law of British Virgin Islands and has the expertise in providing consultancy advice and services in relation to the production of television mini-series, features and commercials.

2. The Pledgors are shareholders of the Company and collectively own 62.61% of the outstanding equity interests of the Company. The detail of the Company is included in Exhibit 1. 

3.  Pledgee and the Company have executed a series of business contracts dated May 23, 2007, including Technical Consulting Services Agreement, Business Operation Agreement, and Exclusive Option Agreement (hereinafter “ Business Agreements ”) concurrently herewith. In order to ensure that the Company will perform its obligations under the Business Agreements, and in order to provide an additional mechanism for the Pledgee to enforce its rights under the Business Agreements, the Pledgors agree to pledge all their equity interest in the Company as security for the performance of the obligations of the Company under the Business Agreements.

NOW THEREFORE, the Pledgee, the Company and the Pledgors through mutual negotiations hereby enter into this Agreement based upon the following terms:

1.  Definitions and Interpretation.

1.1 Unless otherwise provided in this Agreement, the following terms shall have the following meanings:

“China” or “PRC”	refers to the People’s Republic of China and excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.
“Equity Interest”	refers to all the equity interest in the Company legally held by the Pledgors.
“Event of Default”	refers to any event in accordance with Section 5 hereunder.
“Notice of Default”	refers to the notice of default issued by the Pledgee in accordance with this Agreement.
“Pledge”	refers to the full content of Section 2 hereunder.
“PRC Laws”	refers to the laws and regulations promulgated by the National People’s Congress, State Council, State Commissions of the People’s Republic of China, including all the interim measures, regulations and notices.
“Registration Authority”	Refers to the Administrative Bureau of Industry and Commerce of Xi’an City, China.
“Term of Pledge”	refers to the period provided for under Section 6 hereunder.

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1.2  The definition of all the Business Agreements applies to this Agreement.

2.  Pledge.

2.1 The Pledgors agree to pledge their equity interest in the Company to the Pledgee (“Pledged Collateral”) as a security for the obligations of the Company under the Business Agreements. Pledge under this Agreement refers to the rights owned by the Pledgee, who shall be entitled to a priority in receiving payment by the evaluation or proceeds from the auction or sale of the equity interest pledged by the Pledgors to the Pledgee.

2.2 The Pledge under this Agreement shall be recorded in the Register of Shareholders of the Company. The Pledgor shall, within 10 days after the date of this Agreement, process the registration procedures with Registration Authority concerning the Pledge.

3.  Representation and Warranties of Pledgors.

3.1 The Pledgors are the legal owners of the equity interest pledged.

3.2 The Pledgors have not pledged the equity interest to any other party, and/or the equity interest is not encumbered to any other person except for the Pledgee.

3.3 During the effective term of this Agreement the Pledgors shall not transfer or assign the equity interest, create or permit to create any pledges which may have an adverse effect on the rights or benefits of the Pledgee without prior written consent from the Pledgee.

3.4 The Pledgors agree that the Pledgee’s right to the Pledge obtained from this Agreement shall not be suspended or inhibited by any governmental license, approval, authorization, qualification, order or legal procedure.

3.5 By entering into this Agreement, the Pledgors have not violate any guarantees, covenants, warranties, representations, conditions, or any court notice, order and decision that is binding to the Pledgors.

4.  Covenants of Pledgors. During the effective term of this Agreement, the Pledgors promise to the Pledgee for its benefit that the Pledgors shall:

4.1 .not sell, transfer, assign the equity interest, create or permit to create any pledges which may have an adverse effect on the rights or benefits of the Pledgee without prior written consent from the Pledgee,

4.2 present to the Pledgee the notices, orders, suggestions or investigation with respect to the Pledge issued or made by the competent authority; and comply with such notices, orders, suggestions or investigation; or object to the foregoing matters at the reasonable request of the Pledgee or with consent from the Pledgee.

4.3 timely notify the Pledgee of any events or any received notices which may affect the Pledgor’s equity interest or any part of its right, and any events or any received notices which may change the Pledgor’s warranty and obligation under this Agreement or affect the Pledgor’s performance of its obligations under this Agreement.

4.4  execute in good faith and cause other parties who have interests in the Pledge to execute all the title certificates, contracts, and perform actions and cause other parties who have interests to take action, as required by the Pledgee; and make access to exercise the rights and authorization vested in the Pledgee under this Agreement.

4.5 execute all amendment documents (if applicable and necessary) in connection with any registration of the Pledge with the Pledgee or its designated person (natural person or a legal entity), and provide the notice, order and decision to the Pledgee as necessary, within a reasonable amount of time upon request.

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5. Event of Default; Remedy

5.1 The following events shall be regarded as the events of default: (a) the Company is incapable of repaying the general debit or other debt, or fails to perform the obligation to pay the Pledgee as stipulated in the Business Agreements, or becomes bankrupt or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution; (b) the Pledgor is not capable of continuing to perform the obligations to pay the Pledgee as stipulated in the Business Agreements due to any reason except force majeure; (c) The property of the Pledgor is adversely affected due to any dispute, litigation, arbitration, and/or other administrative procedure, and causing the Pledgee to believe that the capability of the Pledgor to perform the obligations herein is adversely affected; or (d) any other condition defined as Event of Default by PRC Laws.

5.2 If an event of default occurs, or is continuing, Pledgee shall have the right to exercise the following rights and powers: (a) purchase the Pledged Collaterals in accordance with the Option Agreement; (b) sell the Pledged Collaterals by auction; or (c) take any action with respect to the Pledged Collateral that is permitted by PRC Laws or provided for in this Agreement

5.3 If an event of default occurs, or is continuing, the Pledgors shall duly carry out the security provisions of this Agreement and take any action and execute any instrument or documents that the Pledgee may deem necessary or advisable as a remedy.

6. Term of Pledge.

6.1  The Pledge shall take effect as of the signing date of this Agreement and shall remain in full force and effect until either (1) the Pledgee becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution; or (2) the obligations of the Company and the Pledgors as stipulated under the Business Agreements are completely fulfilled or (3) the Pledged Collaterals are disposed in accordance with Secion 5, whichever is earlier.

7. Dispute Resolution.

7.1 This Agreement shall be governed by and construed in accordance with the PRC law. If there are no applicable PRC laws, this Agreement shall be governed by the general practices of international trade.

7.2 During the term of the Pledge , if the existing PRC Laws are amended or new PRC Laws become effective (“Change of Governing Laws”), and if such Changes of Governing Laws are in favor to any Party, the concerned party hereto shall have the right to apply for the preferential treatment as stipulated in such changes.

7.3 Subject to the adverse effect to the rights of any party due to Change of Governing Laws, the parties hereby agree that:

7.3.1 this Agreement shall be governed by the PRC Laws before the Change; or

7.3.2 any party can terminate this Agreement in the absence of a remedy to the adverse effect due to the Change.

7.4 The parties shall strive to settle any dispute arising from the interpretation or performance, or in connection with this Agreement through friendly consultation. In case no settlement can be reached through consultation, each party can submit such matter to Xi’an Arbitration Center for arbitration. Any resulting arbitration award shall be final and binding upon the parties.

7.5 During the period when a dispute is being resolved, the Parties shall in all other respects continue their implementation of this Agreement.

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8. General

8.1 Any notice which is given by the parties hereto for the purpose of performing the rights and obligations hereunder shall be in writing. Where such notice is delivered personally, the time of notice is the time when such notice actually reaches the addressee; where such notice is transmitted by facsimile, the notice time is the time when such notice is transmitted. If such notice does not reach the addressee on business date or reaches the addressee after the business time, the next business day following such day is the date of notice. The delivery place is the address first written above of the parties hereto or the address advised in writing including via facsimile from time to time.

8.2  The Pledgors shall not donate or transfer rights and obligations herein without prior consent from the Pledgee. The Pledgee may donate or transfer rights and obligations herein to its wholly-owned subsidiary without the consent of the Pledgors.

8.3 Any provision of this Agreement which is invalid or unenforceable because of inconsistent with the relevant laws shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof. Both Parties shall negotiate in good faith to resolve any provision of this Agreement which is determined to be invalid or unenforceable, and to execute any amendments, modification, supplements, additions or changes to this Agreement to reflect the intent to this transaction as stipulated in this Agreement.

8.4 Without violation to this Agreement, both Parties shall be responsible for their own fees and actual expenses in relation to this Agreement including but not limited to legal fees, cost of production, stamp tax and any other taxes and charges.

8.5 The failure to exercise or delay in exercising a right or remedy under this Agreement shall not constitute a waiver of the right or remedy or waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy.

8.6 This Agreement shall be binding upon each of the Pledgors and his, her or its successors and be binding on the Pledgee and his each successor and assignee.

8.7. All Parties agree that this Agreement constitute the entire agreement of the Parties with respect to the subject matter therein upon its effectiveness and supersedes and replaces all prior oral and/or written agreements and understandings relating to this Agreement.

8.8 This agreement and any amendments, modification, supplements, additions or changes hereto shall be in writing and come into effect upon being executed and sealed by the parties hereto.

8.9. This Agreement has been executed in three (3) duplicate originals in English, each Party has received one (1) duplicate original, and all originals shall be equally valid.

[SIGNATURE PAGE FOLLOWS]

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SIGNATURE PAGE

IN WITNESS WHEREOF both parties hereto have caused this Agreement to be duly executed by their legal representatives and duly authorized representatives on their behalf as of the date first set forth above.

PLEDGEE	VALLANT PICTURES ENTERTAINMENT CO. LTD.
	/s/ Li Bin
PLEDGORS:	SHAREHOLDERS OF THE COMPANY:
	Shaan’xi Western Capital & Investment Management Co., Ltd.
	/s/ Dean Li
	Owns 57.94% of Xi’an TV Media inc.
	/s/ Li Bin
	Owns 4.67% of Xi’an TV Medic Inc.

5

Exhibit 1: PRC Company – shareholder list

Company Name:	Xi’an TV Media Inc
Registered Address:	Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei Road, Xi’an City, China
Nature of Corporation:	PRC company limited by shares
Registered Capital:	RMB 107,000,000
Shareholders:	a) Shaan’xi Western Capital & Investment Management Co., Ltd. injected RMB 62,000,000 and take up 57.94% of registered capital (Pledgor A); b) Bin Li injected RMB 5,000,000 and take up 4.67% of registered capital  (Pledgor B);
Scope of Business:	(1) investment and management of television programs and movies; (2) creation of screenplay and scripts; (3) planning, filming, production and distribution of TV series and movies; (4) real estate agency

6

EX-10.4

EXCLUSIVE OPTION AGREEMENT

 [translation]

THIS OPTION AGREEMENT (this “Agreement”) is made on May 23, 2007, and is entered into in Xi’an City of China

BETWEEN

Vallant Pictures Entertainment Co., Ltd., with a registered address at OMC Chambers, P.O. Box 3152, Road Town, Tortola, British Virgin Islands (“ Party A ”),

AND

Xi’an TV Media Inc., with a registered address at Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei Road, Xi’an City, China (“ Party B ”),

AND

Each of the shareholders of Party B listed on the signature pages hereto (collectively, the “Party C ”).

(Party A, Party B and Party C are referred to collectively in this Option Agreement as the “Parties”.)

RECITALS

1.   Party A, a company incorporated under the law of British Virgin Islands and has the expertise in the business of providing consultancy advice and services in relation to the production of television mini-series, features and commercials;

2.   Party B is a private-owned company incorporated in the People’s Republic of China (“PRC”), and is engaged in the business of (1) production and distribution of television mini-series, features and commercials; (2) production and agency service of printed and outdoor advertisements; (3) planning and organization cultural events and arts performance; (4) agency and training of artists; (5) design and production of stage performance; (6) leasing of lightings, sound and filming facilities; (7) information technology network construction, operation and maintenance; (8) development and construction of studios as tourism facilities (the “Business”);

3.   Party C refers collectively to the shareholders of Party B, and has the ownership of 62.61% equity interest in Party B (each, an “Equity Interest” and collectively the “Equity Interests”) as stipulated in Exhibit A;

4.   A series agreements, including the Business Operating Agreement, Consulting Services Agreement and the Equity Pledge Agreement (collectively the “Said Agreements”), have been entered into by and among the Parties on May 23, 2007;

5.   The Parties are entering into this Option Agreement in conjunction with the Said Agreements

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NOW, THEREFORE, the Parties to this Option Agreement hereby agree as follows

1.   Definition

Unless otherwise stipulated by this Option Agreement, the following terms shall have the following meaning

“Article of Association”	refers to the document describing the purpose, place of business and details of an organization.
“China” or “PRC”	refers to the People’s Republic of China and excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.
“PRC Laws”	shall means the laws and regulations promulgated by the National People’s Congress, State Council, State Commissions of the People’s Republic of China, including all the interim measures, regulations and notices.

2.   Purchase and Sale of Equity Interest

2.1.   Grant of Rights. Party C (hereafter collectively the “Transferor”) hereby irrevocably grants to Party A an exclusive and conditional option to purchase or cause any person designated by Party A (“Designated Persons”) to purchase, upon foreign investor is permitted by PRC law to hold 51% stake of Party B, at the price specified in Section 2.3 of this Option Agreement, at any time from the Transferor a portion or all of the equity interests held by Transferor in Party B (the “Option”). This Option is deemed exclusive as no Option shall be granted to any third party other than Party A and/or its Designated Persons. The “person” set forth in this clause and this Option Agreement means an individual person, corporation, joint venture, partnership, enterprise, trust or a non-corporation organization.

2.2.   Exercise of Option. (a) According to the stipulations of PRC laws and regulations, Party A and/or its Designated Persons may exercise the Option by issuing a written notice (the “Notice”) to the Transferor with three (3) days prior notice and specifying the equity interest purchased from Transferor (the “Purchased Equity Interest”) and the manner of purchase. Party C shall execute a share purchase agreement within ten (10) days after receiving the Notice. (b) Party B shall amend its Article of Association in such a way that reflects the purchase of shares upon Party A’s exercise of the Option.

2.3.   Purchase Price. For Party A and/or its Designated Persons to exercise the Option, the purchase price of the Purchased Equity Interest (“Purchase Price”) shall be equal to the lowest price permissible under the applicable laws.

2.4.   Under the circumstances that Party B becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business before Party A and/or its Designated Persons exercise the Option, Party C is obliged to transfer to Party A (and/or its Designated Persons) any benefit through liquidation or dissolution of Party B.

2.5.   Under the condition that Party A and each of the shareholders of Party B has executed separate loan agreement(s), and the purpose of the loan is deemed as a shareholder’s loan (“Shareholder Loan”) provided to Party B, the monies collected by the shareholders of Party B under Purchase Price shall be settled with such Shareholder Loan. If the benefits obtained by Party C through liquidation or dissolution of Party B is insufficient to settle all the Shareholder Loan, the Parties hereto agrees to waive the outstanding balance.

3.   Representations and Warranties.

3.1.   As of the signing date of this Option Agreement, Party B and Party C hereby represent and warrant collectively and respectively to Party A as follows:

(a) It is legally capable to enter into this Option Agreement and perform the obligation hereto;

(b) The execution, delivery of this Option Agreement and performance of the obligations under this Option Agreement will not: (i) cause to violate any relevant laws and regulations of PRC; (ii) constitute a conflict with its Articles of Association or other organizational documents; (iii) cause to breach any Agreement or instruments to which it is a party or having binding obligation on it, or constitute the breach under any Agreement or instruments to which it is a party or having binding obligation on it; (iv) cause to violate relevant authorization of any consent or approval to it and/or any continuing valid condition; or (v) cause any consent or approval authorized to it to be suspended, removed, or into which other requests be added;

(c) The Transferor bears the fair and salable ownership of its Equity Interest free of encumbrances of any kind, other than the security interest pursuant to the Equity Pledge Agreement;

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(d) Without prior written consent by Party A, Party C hereby promises not, upon the execution of this Option Agreement, to sell, transfer, mortgage or dispose in any other form any legitimate or beneficial interest of equity interest, or to approve any other security interest set on it, or change or renew the Articles of Association of Party B, to increase or decrease registered capital of the corporation, or to change the structure of the registered capital in any other forms with the exception of the pledge set on the equity interest of the Transferor subject to Equity Pledge Agreement;

(e) Party B has complied with all PRC laws and regulations applicable to the acquisition of assets and securities in connection with this Option Agreement.

(f) Party C promises to provide a wavier upon Party A’s exercise of the Option to purchase the shares from any Transferor;

(g) Without prior written notice by Party A, not to assign equity interests to shareholders in any form; however, Party B shall distribute all or part of its distributable profits to its own shareholders upon request by Party A;

(h) Party C agrees to maintain the existence of Party B, prudently and effectively operate the business according to customary fiduciary standards applicable to managers with respect to corporations and their shareholders, and to promptly execute documents reasonably required to perform the provisions and the aim of this Option Agreement or documents beneficial to it, and to take actions reasonably required to perform the provisions and the aim of this Option Agreement or actions beneficial to it;

(i) No litigation, arbitration or administrative procedure relevant to the Equity Interests and assets of Party B or Party B itself is in process or to be settled and the Parties have no knowledge of any pending or threatened claim.

3.2.   As of the signing date of this Option Agreement, Party A hereby represents and warrants collectively and respectively to Party C as follows:

(a) It is legally capable to enter into this Option Agreement and perform the obligation hereto;

(b) execution of this Agreement shall not require approval of any governmental bodies or individuals; and shall not violate any of its business license, article of association, by-laws, or any laws and regulations, or other contracts.

(c) The execution, delivery of this Option Agreement and performance of the obligations under this Option Agreement will not cause Party A to violate any relevant laws and regulations of PRC; and cause Party A to breach any Agreement or instruments to which it is a party or having binding obligation on it, or constitute the breach under any Agreement or instruments to which it is a party or having binding obligation on it.

4.   Party A’s remedy upon Party C’s Breach

4.1.   Party A shall be entitled to remedies permitted under PRC laws, including without limitation to compensation equivalent to the actual and anticipated gain by exercising the Option for any direct and indirect losses arising from the breach of any duty, representation, promise or warranty of Party C herein to recover losses from such breach.

5.   Assignment of Agreement

5.1.   Party B and Party C shall not transfer their rights and obligations under this Option Agreement to any third party without the prior written consent of Party A. Party B and Party C hereby agree that Party A shall be able to transfer all of its rights and obligation under this Option Agreement to any third party as its needs (natural person or legal entity) at any time, and such transfer shall only be subject to a written notice sent to Party B, Party C by Party A, and no any further consent from Party B and/or Party C will be required.

6.   Effective Date and Term

6.1.   This Agreement shall take effect on the signing date of this Agreement and shall remain in full force and effect until Party B becomes bankruptcy or insolvent or is the subject of proceedings or arrangements for liquidation or dissolution or ceases to carry on business, unless early termination occurs (a) when Party A fully exercises the Option; (b) if Party B becomes bankrupt or insolvent.

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7.   Miscellaneous.

7.1.   Notices. Notices or other communications required to be given by any party pursuant to this Option Agreement shall be written in English and Chinese and delivered personally or sent by registered mail or postage prepaid mail or by a recognized courier service or by facsimile transmission to the address of relevant each party or both parties set forth below or other address of the party or of the other addressees specified by such party from time to time. The date when the notice is deemed to be duly served shall be determined as the follows: (a) a notice delivered personally is deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly served the tenth (10th) day after the date when the air registered mail with postage prepaid has been sent out (as is shown on the postmark), or the fourth (4th) day after the delivery date to the internationally recognized courier service agency; and (c) a notice sent by facsimile transmission is deemed duly served upon the receipt time as is shown on the transmission confirmation of relevant documents.

7.2.   Applicable Law; Arbitration. (a) The execution, validity, construing and performance of this Option Agreement and the resolution of disputes under this Option Agreement shall be governed by the laws of PRC. (b) The parties shall strive to settle any dispute arising from the interpretation or performance, or in connection with this Agreement through friendly consultation. In case no settlement can be reached through consultation within thirty (30) days, each party can submit such matter to Xi’an Arbitration Center for arbitration in accordance with its arbitration rules in force at the date of this Agreement including such addition to its arbitration rules as are therein contained. Any resulting arbitration award shall be final conclusive and binding upon the parties. (c) During the period when a dispute is being resolved, the Parties shall in all other respects continue their implementation of this Option Agreement

7.3.   Change of Governing Laws. Under the circumstances that existing PRC Laws are amended or new PRC Laws become effective (“Change of Governing Laws”): (a) if such Change of Governing Laws are in favor to any Parties, the concerned party shall have the right to apply for the preference treatment as stipulated in such amendment or changes; and (b) if the Change of Governing Laws result in adverse effect to the rights of any party, the concerned party shall have the right to apply for the wavier to such amendment or changes, or the Parties shall negotiate for a remedy to the adverse effect due to the Change of Governing Laws.

7.4.   Severability. If any provision of this Option Agreement is judged as invalid or non-enforceable according to relevant Laws, the provision shall be deemed invalid only within the applicable laws and regulations of the PRC, and the validity, legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through fairly consultation, replace those invalid, illegal or non-enforceable provisions with valid provisions that may bring the similar economic effects with the effects caused by those invalid, illegal or non-enforceable provisions.

7.5.   Wavier. The failure to exercise or delay in exercising a right or remedy under this Agreement shall not constitute a waiver of the right or remedy or waiver of any other rights or remedies and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy

7.6.   Successor. This Agreement shall bind and benefit the successor of each Party and the transferee allowed by each Party.

7.7.   Entire Agreement. Notwithstanding the Article 5 of this Option Agreement, the Parties acknowledge that this Option Agreement constitutes the entire agreement of the Parties with respect to the subject matters therein and supercede and replace all prior or contemporaneous agreements and understandings, whether orally or in writing.

7.8.   Amendment, Modification and Supplement. Any amendment and supplement to this Option Agreement shall only be effective is made by the Parties in writing.

7.9.   Language and Copies. This Agreement has been executed in English in three (3) duplicate originals; each Party holds one (1) original and each duplicate original shall have the same legal effect.

[INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

4

SIGNATURE PAGE

IN WITNESS WHEREOF both parties hereto have caused this Option Agreement to be duly executed by their legal representatives and duly authorized representatives on their behalf as of the date first set forth above.

PARTY A:	Vallant Pictures Entertainment Co., Ltd.
	Legal/Authorized Representative:
	/s/ Li Bin
	Title: Director
PARTY B:	Xi’an TV Media Inc
	Legal/Authorized Representative:
	/s/ Dean Li
	Title: Director
PARTY C:	/s/ Li Bin
	owns 4.67% shares of Xi’an TV Media Inc
	Shaan’xi Western Capital & Investment Management Co., Ltd.
	/s/ Dean Li
	Owns 57.94% shares of Xi’an TV Media Inc

5

Exhibit 1: Details of Party B

Company Name:	Xi’an TV Media Inc
Registered Address:	Room 2802, Block B, Zhong Lian Yi Hua Yuan, No. 190 Wen Yi Bei Road, Xi’an City, China
Nature of Corporation:	PRC company limited by shares
Registered Capital:	RMB 107,000,000
Shareholders:	(a) Shaan’xi Western Capital & Investment Management Co., Ltd. injected RMB 62,000,000 and take up 57.94% of registered capital; (b) Bin Li injected RMB 5,000,000 and take up 4.67% of registered capital; (c) Wenhan Zheng injected RMB 9,422,800 and take up 8.81% of registered capital; (d) Hui Ho injected RMB 3,000,000 and take up 2.80% of registered capital; (e) Wen Guan injected RMB 1,400,000 and take up 1.31% of registered capital (f)  Yingzhong Xie injected RMB 1,000,000 and take up 0.94% of registered capital (g) Shaokang Zheng injected RMB 25,177,200 and take up 25.53% of registered capital
Scope of Business:	(1) investment and management of television programs and movies; (2) creation of screenplay and scripts; (3) planning, filming, production and distribution of TV series and movies; (4) real estate agency

6

Exhibit 2: Wavier of Purchasing Right pursuant to Article of Association

Date: May 23, 2007

To: Xi’An TV Media Inc.

Room B 2802, Yiyuange Building B, Huashuo Garden, No. 190, Wenyi Road, Yanta District, Xi’An, Shaan’xi Province, China

Dear Sir/Madam:

RE: WAVIER OF RIGHT OF SHAREHOLDERS OF PARTY B

I acknowledged that an Option Agreement dated May 23, 2007 was duly executed between Vallant Pictures Entertainment Co., Ltd. (“Transferee”) and the Shareholders holding 62.61% of the registered capital of Xi’An TV Media Inc. (including Shaan’xi Western Capital & Investment Management Co., Ltd. and Bin Li; hereinafter as “Transferors”).

I hereby release, acquit, and forever discharge the Transferors, from any and all obligation to sell their shares to me, whether in law or in equity, which the Transferor, as the case may be, had or now have or may claim to have by reason of those matters set forth in the Article of Association of Xi’An TV Media Inc.

If the Transferee is a third party other than Vallant Pictures Entertainment Co., Ltd, I will still execute the right to purchase from the Transferor as set forth in the Article of Association of Xi’An TV Media Inc.

Sincerely yours,

Shaan’Xi Western Assets Investment Management Co., Ltd.  /s/ Dean Li
/s/ Wenhan Zheng	/s/ Bin Li
/s/ Hui Ho	/s/ Wen Guan
/s/ Yingzhong Xie	/s/ Shaokang Zheng

CC:

Vallant Pictures Entertainment Co., Ltd.

OMC Chambers, P.O. Box 3152

Road Town, Tortola,

British Virgin Islands

7

EX-99.1

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

	Vallant Pictures
	Entertainment Co.,			China Media
	Limited			Inc.			Pro				Pro Forma
	(historical)			(historical)			Forma				Consolidated
	9/30/2009			7/31/2009			Adjustments				Balance Sheet
Cash	$	5,284		$	1,871		$	-			$	7,155
Accounts receivables, net		1,526,353			-							1,526,353
Notes receivable		3,370,190			-							3,370,190
Total current assets		4,901,827			1,871			-				4,903,698
Fixed assets, net		94,828			-							94,828
Intangibles Assets, net		66,189			-							66,189
Other assets		73,265			-							73,265
Asset held for sale		1,172,240			-							1,172,240
Film cost		594,912			-							594,912
	$	6,903,261		$	1,871		$	-			$	6,905,132
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	171,158		$	2,016		$	-			$	173,174
Accrued liabilities		4,678			-							4,678
Short term debt		117,224			-							117,224
Due to related parties		89,867			-							89,867
Total current liabilities		382,927			2,016			-				384,943
Minority interest		2,155,643			-							2,155,643
Common Stock		1			397			(1	)	(a)		397
Additional paid-in capital		8,750,656			166,728			(396	)	(a)		8,750,260
								(166,728	)	(a)
Accumulated other comprehensive income		748,427			-							748,427
Accumulated deficit		(5,134,393	)		(167,270	)		167,125		(a)		(5,134,538	)
Total stockholders' equity		4,364,691			(145	)		-				4,364,546
	$	6,903,261		$	1,871		$	-			$	6,905,132

1

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATION

	Vallant Pictures							Pro Forma
	Entertainment Co.,			China Media				Consolidated
	Limited			Inc.				Statements of
	(historical)			(b)			Pro Forma	Operation
	Year ended 6/30/09			12 Months ended 7/31/09			Adjustments	Year ended 6/30/09
Revenues	$	1,675,455		$	-			$	1,675,455
Cost of revenues		800,431			-				800,431
Gross profit		875,024			-				875,024
Selling, general and administrative		153,098			83,241				236,339
Depreciation and amortization expense		92,860			-				92,860
Operating income (loss)		629,066			(83,241	)			545,825
Other income:
Interest income		278,331			-				278,331
Net income before minority interest		907,397			(83,241	)			824,156
Minority interest		(340,391	)		-				(340,391	)
Net income (loss)	$	567,006		$	(83,241	)		$	483,765
Other Comprehensive Income
Foreign currency translation		18,125			-				18,125
Comprehensive Income	$	585,131		$	(83,241	)		$	501,890

2

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATION

	Vallant Pictures
	Entertainment Co.,							Pro Forma
	Limited			China Media				Consolidated Statements
	(historical)			Inc.			Pro Forma	of Operation
	Quarter ended 9/30/09			Quarter ended 7/31/09			Adjustments	Quarter ended 9/30/09
Revenues	$	-			-			$	-
Cost of revenues		-			-				-
Gross profit		-			-				-
Selling, general and administrative		24,671			58,428				83,099
Depreciation and amortization expense		15,600			-				15,600
Operating loss		(40,271	)		(58,428	)			(98,699	)
Other income:
Interest income		-			-				-
Net loss before minority interest		(40,271	)		(58,428	)			(98,699	)
Minority interest		15,058			-				15,058
Net loss	$	(25,213	)		(58,428	)		$	(83,641	)
Other Comprehensive Income
Foreign currency translation		(1,182	)		-				(1,182	)
Comprehensive Income	$	(26,395	)		(58,428	)		$	(84,823	)

3

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – BASIS OF PRESENTATION

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

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

On November 30, 2009, the Company closed the transactions contemplated by the Share Exchange Agreement and acquired Vallant as its wholly owned subsidiary.  Vallant has entered into a series of contractual obligations with Xi’An TV Media Co., Ltd., a company incorporated under the laws of the People’s Republic of China (“Xi’An TV”) that is engaged in the business of producing and developing television programming for the Chinese market, as well as the holders of 62.61% of the voting shares of Xi’An TV.

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

These pro forma consolidated financial statements are prepared assuming the above transaction occurred on September 30, 2009 (as to the balance sheet) and on July 1, 2008 (as to the income statements).  

Audited financial statements of Vallant and the Company have been used in the preparation of these pro forma consolidated financial statements. These pro forma consolidated financial statements should be read in conjunction with the historical financial statements of Vallant and the Company.

Note 2 – PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

(a)	To eliminate the equity of the accounting acquiree, China Media Inc., and to reflect the recapitalization of the common stock and additional paid in capital as a result of the reverse merger.
(b)	The historical income statement for the 12 months ended July 31, 2009 for China Media Inc. is derived from the following historical income statements:  the income statement for the year ended January 31, 2009 plus the income statement for the six months ended July 31, 2009 less the income statement for the six months ended July 31, 2008.