-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LSJ/wBYejj3gp88x+OxTPvv02j/Ef1gbHuqYl2nqoNsqJ9EtJl0j7JnDQOx4zpof IgXbH42JBK+ZuhctZkDy7Q== 0001079973-08-000791.txt : 20080822 0001079973-08-000791.hdr.sgml : 20080822 20080822145752 ACCESSION NUMBER: 0001079973-08-000791 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080822 DATE AS OF CHANGE: 20080822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Navstar Media Holdings, Inc. CENTRAL INDEX KEY: 0001177274 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 752980786 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-50340 FILM NUMBER: 081034459 BUSINESS ADDRESS: STREET 1: 26, CHAOWAI ROAD, SUITE A2205 CITY: CHAOYANG DISTRICT, BEIJING STATE: F4 ZIP: 100020 BUSINESS PHONE: 011-86-10-85653268 MAIL ADDRESS: STREET 1: 26, CHAOWAI ROAD, SUITE A2205 CITY: CHAOYANG DISTRICT, BEIJING STATE: F4 ZIP: 100020 FORMER COMPANY: FORMER CONFORMED NAME: PREMIER DOCUMENT SERVICES INC DATE OF NAME CHANGE: 20020711 10-Q/A 1 navstar_10qa1-063008.txt FORM 10-Q AMENDMENT NO 1 FORM 10-Q/A U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2008 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number: 000-50340 NAVSTAR MEDIA HOLDINGS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) NEVADA 75-2980786 ---------------------- ------------------- (State of incorporation) (IRS Employer ID No.) 26, Chaowai Road, Suite A2205, Chaoyang District, Beijing, 100020, China ----------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: Phone:011-86-10-85653268 Fax: 011-86-10-85653223 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] As of June 30, 2008, the Registrant had 26,980,609 shares of common stock outstanding. Table of Contents Item No. Description Page No. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. 4-13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk. 16 Item 4. Controls and Procedures Item 4T. Controls and Procedures. 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings. 17 Item 1A Risk Factors. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 17 Item 3. Defaults Upon Senior Securities. 17 Item 4. Submission of Matters to a Vote of Security Holders. 17 Item 5. Other Information. 17 Item 6. Exhibits. 18 SIGNATURES 18 Part I - Financial information Index to Consolidated Financial Statements Balance Sheets 4 Statements of Income and Other Comprehensive Income 5 Statement of Cash Flows 6 Notes to the Consolidated Financial Statements 7 to 13 3
NAVSTAR MEDIA HOLDINGS, INC AND SUBSIDIARIES (FORMERLY KNOWN AS PREMIER DOCUMENT SERVICES, INC.) CONSOLIDATED BALANCE SHEETS June 30, December 31, 2008 2007 ----------- ----------- (Unaudited) (Audited) ----------- ----------- ASSETS CURRENT ASSETS: Cash $ -- $ 1,269 ----------- ----------- Total current assets -- 1,269 ----------- ----------- Total Assets $ -- $ 1,269 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 844,757 $ 777,757 Convertible debentures payable 718,921 718,921 ----------- ----------- Total current liabilities 1,563,678 1,496,678 ----------- ----------- SHAREHOLDERS' EQUITY Common Stock, $0.001 par value, 60,000,000 shares authorized, 26,980,609 shares issued and outstanding for both periods 26,980 26,980 Paid-in-capital 3,958,947 3,958,947 Accumulated deficit (4,224,404) (4,156,135) Accumulated other comprehensive income (20,001) (20,001) Treasury stock, at cost (1,305,200) (1,305,200) ----------- ----------- Total shareholders' equity (1,563,678) (1,495,409) ----------- ----------- Total Liabilities and Shareholders' Equity $ -- $ 1,269 =========== ===========
See notes to consolidated financial statements 4
NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY KNOWN AS PREMIER DOCUMENT SERVICES, INC.) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ---------------------------- ---------------------------- 2008 2007 2008 2007 ------------ ------------ ------------ ------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES $ -- $ -- $ -- $ -- COST OF SALES -- -- -- -- ------------ ------------ ------------ ------------ GROSS PROFIT -- -- -- -- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,500 264,500 19,000 287,449 ------------ ------------ ------------ ------------ INCOME (LOSS) FROM OPERATIONS (3,500) (264,500) (19,000) (287,449) OTHER EXPENSE (INCOME), NET Interest expense 24,000 24,000 48,000 48,000 Other expense (income), net -- -- 1,269 -- ------------ ------------ ------------ ------------ 24,000 24,000 49,269 48,000 ------------ ------------ ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (27,500) (288,500) (68,269) (335,449) PROVISION FOR INCOME TAXES -- -- -- -- ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATION (27,500) (288,500) (68,269) (335,449) INCOME (LOSS) FROM DISCONTINUED OPERATIONS -- (34,114) -- (444,055) ------------ ------------ ------------ ------------ NET INCOME (LOSS) (27,500) (322,614) (68,269) (779,504) FOREIGN CURRENCY TRANSLATION ADJUSTMENTS -- -- -- -- ------------ ------------ ------------ ------------ COMPREHENSIVE INCOME (LOSS) $ (27,500) $ (322,614) $ (68,269) $ (779,504) ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 26,980,609 26,980,609 26,980,609 26,980,609 ============ ============ ============ ============ EARNINGS PER SHARE, BASIC AND DILUTED Continuing operations $ (0.001) $ (0.011) $ (0.003) $ (0.012) ============ ============ ============ ============ Including discontinued operations $ (0.001) $ (0.012) $ (0.003) $ (0.029) ============ ============ ============ ============
See notes to consolidated financial statements 5 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY KNOWN AS PREMIER DOCUMENT SERVICES, INC.) CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2008 2007 --------- --------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (68,269) $(779,504) Adjustments to reconcile net income to cash used in operating activities: Increase (decrease) in liabilities: Accounts payable and accrued expenses 67,000 37,208 --------- --------- Net cash used in operating activities (1,269) (742,296) --------- --------- DECREASE IN CASH (1,269) (742,296) CASH, beginning of period 1,269 743,565 --------- --------- CASH, end of period: $ -- $ 1,269 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION Cash paid for interest $ -- $ -- ========= ========= Cash paid for income taxes $ -- $ -- ========= ========= See notes to consolidated financial statements. 6 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) Note 1 -- ORGANIZATION AND NATURE OF OPERATIONS Navstar Media Holdings, Inc. ("Navstar" or the "Company") is a United States based corporation that owned majority interests in companies specializing in media content production and distribution in the People's Republic of China ("PRC"). Navstar subsidiaries have generated revenues through producing television series and movies for the PRC market and through advertising revenues generated from the broadcast and distribution of such programs and movies, and other media and broadcasting production and management services. Navistar Communications Holdings, Ltd, a Hong Kong Corporation, which is a 100% owned subsidiary ("NCHL") was originally established as a Holding Company for equity ownership investments in mainland China media companies. During 2004, NCHL acquired a 55% equity ownership interest in Happy Times Media, Inc. ("HTM"). During 2005, NCHL increased its ownership interest in HTM to 70%. Based in Beijing, HTM since 1998 has produced content for government-owned television stations in China, while acting as a distributor of television series and movies for the Chinese market. Navstar Media Holdings, Inc. was incorporated on January 28, 2002 as Premier Document Services, Inc. (OTCBB: PDSV), a Nevada corporation, which provided document preparation and signatory services to mortgage, real estate and other financial services firms in the Las Vegas, Nevada market. On November 30, 2005, the Company acquired 100% of the capital stock of NCHL. In conjunction with the merger, Premier's former Secretary and President, Crystal Kim Han, purchased Premier's existing document services business, including all assets and liabilities. Prior to the Merger, no director, officer or affiliate of the Company had any material relationship with any director, officer or affiliate of NCHL. Upon completion of the merger, the officers and directors of Premier resigned and were replaced by the Company's current management team and board of directors. Under the terms of the Agreement, NCHL will remain a 100% owned subsidiary of the Company. The transaction contemplated by the Agreement was intended to be a "tax-free" reorganization pursuant to the provisions of Section 351 and 368(a) (1) (A) of the Internal Revenue Code of 1986, as amended. The original stockholders of NCHL, as of the closing date of the merger own approximately 90% of the Company's common stock. The accounting for these transactions is identical to that resulting from a reverse-acquisition, except that no goodwill or other intangible asset is recorded. Accordingly, the financial statements of NCHL are the historical financial statements of HTM. The Company's common stock is registered under Section 12(g) of the Securities Act of 1934 and is currently listed on the over the counter bulletin board under the symbol NVMH.OB. As of June 30, 2008, there were 26,980,609 shares of common stock of the Company outstanding. HTM generates revenue from sales and distribution of its proprietary content, third party programming, and imported TV and films productions in China. In addition, HTM distributes European content from providers such as TVE (UK) and Strawberry Films from France, as well as American content from providers including Miramax. HTM's customers include approximately 300 Provincial and local TV stations throughout China, China Central TV ("CCTV") stations. Additionally, HTM has developed advertising relationships with various Chinese and foreign companies. 7 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) Note 1 -- ORGANIZATION AND NATURE OF OPERATIONS (cont'd) In January 2005, HTM contributed a total of RMB500,000 for the investment in Beijing Hui Ying International Advertising Co. Ltd. ("BHYIA"). BHYIA is considered a variable interest entity under FASB Interpretation No. 46(R), "Consolidation of Variable Interest Entities", which requires consolidation of business enterprises of variable interest entities meeting certain characteristics. HTM is the primary beneficiary of BHYIA business operations and qualifies to be consolidated under FIN 46(R). BHYIA was established on December 15, 2004, in Beijing, People's Republic of China by four Chinese citizens (the "Registered Shareholders") as a Chinese limited liability company. The duration of the operation is 20 years. BHYIA generates revenue from sales and distribution of advertisements produced by others and sales of advertising designs and products. BHYIA is also a sales agent for advertisements to be broadcast on various television stations in the People's Republic of China. To comply with China laws and regulations that prohibits or restricts foreign ownership of companies that provide advertising services, HTM established BHYIA which is legally owned by the Registered Shareholders. Mr. Yang Xiao Bin and Mr. Kang Sui Jin are the legal shareholders of HTM. Mr. Liu Zhu Jiu and Mr. Shi Rian are the local Chinese citizens. Mr. Liu Zhu Jiu is the company's legal representative. The arrangements with the Registered Shareholders have been undertaken solely to satisfy China regulations, which prohibits foreign companies from owning or operating advertising businesses in China. On March 11, 2006, the Company entered into an agreement with the shareholders of Beijing Broadcasting and Television Media Co., Ltd. ("Beijing Media") to acquire 70% ownership interest and operational control of Beijing Media. Pursuant to the Agreement, the Company agreed to issue 2,400,000 shares of its common stock valued at $1.00 per share to the existing shareholders of Beijing Media, of which 900,000 shares were to be returned and cancelled if certain condition were not met. In June 2006, the Company waived the requirement to meet the conditions. The Board of Directors and management evaluated the fair value of Beijing Media's 2,400,000 shares based on the Company's trading history. The shares approximated the fair value of the net assets acquire. Therefore, no goodwill was recorded as a result of this transaction. 8 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) Note 1 -- ORGANIZATION AND NATURE OF OPERATIONS (cont'd) Beijing Media is a media content production and distribution company located in the People's Republic of China ("PRC"). Beijing Media generates revenues through producing television series and movies for the PRC market, TV syndicated programming production and other media and broadcasting production and management services. On July 9, 2006, the Company entered into a definitive agreement to acquire 70% of ownership interest in Beijing Lucky Star Century Advertisement Co. Ltd. ("Lucky Star"). The purchase price is 2,800,000 shares of the Company's common stock. The Board of Directors and management evaluated the fair value of the 2,800,000 shares based upon the stock trading history and concluded the value was $0.25 per share or $700,000. This determination generated goodwill of approximately $641,417 from this transaction. Lucky Star was established on October 20, 2001 in Beijing, the People's Republic of China ("PRC"). Lucky Star is a Chinese registered limited liability company with a legal structure similar to a limited liability company organized under state laws in the United States of America. The Company principally engages in advertising business in TV commercials, newspapers, magazines, and outdoor media in China. On December 28, 2006, the Company entered into an agreement with the minority shareholders of Happy Times Media Inc. ("HTM") to transfer its interest back to HTM. Pursuant to the agreement all consideration paid to the shareholders of 600,000 shares of the Company's common stock will be returned to the Company. In return, the 70% ownership interest of HTM will be returned to HTM's shareholders or its designated party. As a result, HTM would no longer be a subsidiary of the Company and its financial results ceased to be consolidated into the Company's 2006 financial statements. The Company believes that in view of the unsatisfactory performance of HTM, this rescission of the agreement and the disposal of HTM's operations will have a positive impact on the Company's performance and financial results in the long run. On January 1, 2007, the Company agreed to allow Beijing Media and Lucky Star to operate independently while it focused on identifying merger candidates with substantial operations to merge with. The Company disposed Beijing Media and Lucky Star to return these two companies with all their assets and liabilities to their original shareholders and all the shares issued to the shareholders of these two companies as of January 1, 2007. Currently, the Company has only one subsidiary Navstar Communications Holdings, ltd. in Hong Kong with no substantial operations. 9 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) Note 2 -- SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - --------------------- The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America. The consolidated financial statements reflect activities of the Company and the following subsidiaries: Company name Place of incorporation Ownership - -------------------------- ------------------------------ --------- Navistar Communications Holdings, Ltd. Hong Kong 100% All material inter-company transactions and balances are eliminated in consolidation. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results, when ultimately realized could differ from those estimates. Fair Value of Financial Instruments - ----------------------------------- Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires certain disclosures regarding the fair value of financial instruments. Accounts receivable, accounts payable, accrued liabilities and convertible debentures payable are reflected in the financial statements at fair value because of the short-term maturity of the instruments. Impairment of Long Lived Assets - ------------------------------- In accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", a long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. There were no such assets at June 30, 2008. 10 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) Note 2 -- SIGNIFICANT ACCOUNTING POLICIES (cont'd) Foreign Currency Translation - ---------------------------- The reporting currency of the Company is the US dollar. The Company uses their local currency, Renminbi (RMB), as their functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate as quoted by the People's Bank of China at the end of each reporting period. Equity accounts are translated at their historical rate. This quotation of the exchange rates does not imply free convertibility of RMB to other foreign currencies. All foreign exchange transactions continue to take place either through the People's Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rate quoted by the People's Bank of China. Approval of foreign currency payments by the Bank of China or other institutions requires submitting a payment application form together with invoices, shipping documents and signed contracts. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. These amounts are not material to the consolidated financial statements. Cash and Concentration of Risk - ------------------------------ Cash includes cash on hand and demand deposits in accounts maintained with State-owned banks within the People's Republic of China. Total cash in these banks at June 30, 2008 and December 31, 2007 amounted to $0 and $1,269 respectively. In China no deposits are covered by insurance. The Company has not experienced any loss in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts. Earnings (Loss) Per Share - ------------------------- The Company reports earnings per share in accordance with the provisions of SFAS No. 128, "Earnings Per Share." SFAS No. 128 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings (loss) per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings (loss) per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. All shares that have antidilutive effect are not included in the diluted earnings per share computation. The weighted average number of shares used to calculate earnings (loss) per share for the three and six months ended June 30, 2008 and 2007 both totaled 26,980,609. 11 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) Note 2 -- SIGNIFICANT ACCOUNTING POLICIES (cont'd) Revenue Recognition - ------------------- Revenue from the sales or licensing of proprietary content, third party programming, imported TV and films, and sales and distribution of advertisement programs are recognized upon meeting all recognition requirements of Statement of Position (SOP) 00-2 "Accounting by Producers or Distributors of Films". Revenue from sales of advertisement designs and products are recognized when the products are delivered and title has passed. Cash payments received are recorded as deferred revenue until all the conditions of revenue recognition have been met. Stock-Based Compensation - ------------------------ Previously, pursuant to Accounting Principles Board Opinion No.25, "Accounting for Stock Issued to Employees", the Company accounted for stock based employee compensation arrangements using the intrinsic value method. Effective January 1, 2006, the Company adopted SFAS No.123 (revised 2004), "Shares Based Payment" ("SFAS No. 123R") which eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The Company has adopted the modified prospective method whereby compensation cost is recognized in the financial statements beginning with the effective date based on the requirements of SFAS No. 123R for all share-based payments granted after that date. The Company did not issue any stock options prior to the effective date, and therefore there was no impact to the Company's operations, cash flow or financial condition. .. Note 3 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses mainly consist of payments to be made for cost of sales and expenses incurred for the Company's operating activities. Accounts payable and accrued expenses as of June 30, 2008 and December 31, 2007 are $844,757 and $777,757 respectively. 12 NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES (Formerly Known As Premier Document Services, Inc.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 4 - DISCONTINUED OPERATIONS The Company has spun off Beijing Media and Lucky Star together with their liabilities and assets to their original shares holders against the return 5,200,000 shares of the Company's common stock issued to them in connection with the original acquisition. In accordance with Statement of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for the Impairment and Disposal of Long Lived Assets," we have reported the Assets, Liabilities and operating results of these businesses as discontinued operations in our consolidated financial statements. Revenues and pre-tax losses from discontinued operations for the three and six months ended June 30, 2008 and 2007 are presented below: ------------------------ June 30 June 30 2008 2007 ------------------------ (Dollars in Thousands) Assets $ - $ - Liabilities $ - $ - Revenues $ - $ - Loss before income taxes $ - $ - NOTE 5 - GOING CONCERN The Company has no cash, has large accumulated loss and has significant debt and other payment obligations has no current source of income and its long term viability is doubt if it cannot consummate a merger with candidate with substantial operations. The noteholders have not exercised their right for default payment in the expectation that the Company will consummate the merger with Lewell Ltd. There is considerable risk that the merger will be delayed or may not happen within the expected timeframe, and the Company may be unable to continue as a going concern. The financial statements do not include any adjustments which might be necessary should the Company be unable to continue as a going concern. 13 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results Of Operations The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control, including adverse changes in economic, political and market conditions, losses from the Company's market-making and trading activities arising from counter-party failures and changes in market conditions, the possible loss of key personnel, the impact of increasing competition, the impact of changes in government regulation, the possibility of liabilities arising from violations of federal and state securities laws and the impact of changes in technology in the securities and commodities trading industries. Although the Company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the Company's actual results will not differ materially from any results expressed or implied by the Company's forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. Overview - -------- Navstar Media Holdings, Inc. ("the Company") owns majority interests in firms specializing in media content production and distribution in the People's Republic of China ("PRC"). Navstar subsidiaries generate revenues through television program production and distribution and through advertising revenues generated the broadcast and distribution of such programs, outdoor billboard advertising and other media and broadcasting production and management services. On March 11, 2006, the Company entered into an agreement with the shareholders of Beijing Broadcasting and Television Media Co., Ltd ("Beijing Media") to acquire 70% ownership interest and operational control of Beijing Media, a media content production and distribution company located in Beijing, PRC. Pursuant to the agreement, the Company issued 2,400,000 shares of its common stock to the existing shareholders of Beijing Media, of which 900,000 shares were to be returned and cancelled if certain condition were not met. In June 2006, the Company waived the requirement to meet the conditions. The consolidated 2006 financial statements of the Company as presented in this Report include the results of Beijing Media for a period of nine months from April to December. On July 9, 2006, the Company entered into a definitive agreement to acquire 70% of ownership interest in Beijing Lucky Star Advertising Company ("Lucky Star"). Founded in 1992, Lucky Star is engaged in advertising business in the following areas: TV commercials, newspaper, magazines, and outdoor media. The purchase price was 2,800,000 shares of the Company's common stock. The consolidated 2006 financial statements of the Company as presented in this Report include the results of Lucky Star for a period of nine months from July to December. On July 31, 2006, the subordinated debenture of $1,000,000 was extended till November 30, 2006 with its conversion price adjusted to $0.40 and warrant price adjusted to $0.50 per shares. In addition, there is an increase of 20% of the principal and additional 20% warrants issued to the debenture holders. These Debentures were again extended for another four months until June 30, 2007 with the conversion price further reduced to $0.20 per share and Warrant exercise price reduced to $0.30 per share. The notes were extended again till July 31, 2007 with certain members of the management transferring approximately 600,000 shares of common stock owned to the holders of the debenture as compensation for the extension. The notes are currently over due and in default. The note holders and the Company are working out arrangement on the notes to allow the Company to move forward with its future business. On January 30, 2007, the Company has filed a registration statement with SEC covering the underlying shares of common stock in connection with the debentures. 14 On September 30, 2006, the Company through its subsidiary and its exclusive agent signed an agreement with CCTV TV Shopping Co., Ltd., the TV shopping arm of the state monopoly CCTV network to apply for special permits from the 2008 Olympic Committee for selling 2008 Olympic Games products over a jointly developed TV shopping program as a start to launch a nation-wide TV shopping program in China. According to the State Statistics Bureau of China, TV shopping in China constitutes approximately 0.1% of the national retail sales (as compared to 7% in U.S. and Europe and 10% in Japan and Korean), which reached US$850 billion in 2005. Retail sales have been growing at approximately 10% per year for the last four years with accelerating growth. There is no national leader in the TV shopping market in China. The Company currently produces TV shopping related TV programs for CCTV and the Company intends to break into the nascent TV shopping market in China and open up a major sustainable source of revenues and income. So far the Company has not obtained the relevant approvals to launch the joint venture with CCTV and believes that the issuance of a TV shopping license from the 2008 Olympic Committee may not happen. Given the closeness to the 2008 Olympic Games, it may not be practical to launch a Olympic goods fouced TV shopping program even if the license from the 2008 Olympic Committee is issued. The Company is currently exploring other opportunities for growth and expansion and may change its business direction and strategy to protect and increase its shareholders value. On December 13, 2007, the Company has entered into a merger agreement with Leewell Investment, Ltd. (LWL"), the shareholder of a real estate company in China on the condition that the Company shall spin off its media operations and to cancel the shares issued for the media operation acquisitions and to the Company's employees to restructure the Company's operations as well as satisfactory of its outstanding convertible notes issue. On December 14, 2007, the Company entered an agreement with the shareholders of Beijing Media and Lucky Star to return these two companies with all their assets and liabilities to its original shareholders and all the shares issued to the shareholders of these two companies. Results of Operations for Three Months Ended June 30, 2008 versus June 30, 2007 For the three months ended June 30, 2008, the Company had no revenue-generating Operating activities either through the parent shell company or its subsidiary Based out of H.K., resulting in zero operating profit. Selling, general and administrative expenses decreased to $3,500, for the three months ended June 30, 2008, compared to $264,500 for the same period last year, which is primarily due to decreased staffing cost and public company maintenance cost after the divesture. The Company incurred an interest expense of $24,000 for the three months ended June 30 of both 2008 and 2007, which is calculated as 8% on the effective Outstanding principal balance of $1,200,000. After accounting for the various components of the income statement, the company recorded a loss of $27,500 or $0.001 per share versus a loss of $322,614, or $0.012 per share in the prior year. At June 30, 2008, there were 26,980,609 shares outstanding. Results of Operations for Six months Ended June 30, 2008 versus June 30, 2007 For the six months ended June 30, 2008, the Company had no revenue-generating Operating activities either through the parent shell company or its subsidiary Based out of H.K., resulting in zero operating profit. Selling, general and administrative expenses decreased to $19,000, for the six months ended June 30, 2008, compared to $287,449 for the same period last year, which is primarily due to decreased staffing cost and public company maintenance cost after the divesture. The Company incurred an interest expense of $48,000 for the six months ended June 30 of both 2008 and 2007, which is calculated as 8% on the effective Outstanding principal balance of $1,200,000. 15 After accounting for the various components of the income statement, the company recorded a loss of $68,269 or $0.0032 per share versus a loss of $779,504, or $0.029 per share in the prior year. At June 30, 2008, there were 26,980,609 shares outstanding. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- After paying off the bank with its bank account cash balance as settlement of Accrued bank charges, the Company has zero cash balance and no liquidity. The Company is working with certain strategic partners, as well as its investment bankers to secure additional financing to increase working capital. OFF BALANCE SHEET ARRANGEMENTS We have not entered into any off-balance sheet financing arrangements and have not established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets. CRITICAL ACCOUNTING POLICES The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on current information, historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from the estimates we used under different assumptions or conditions. We believe the following concentrations and critical accounting policies relate to our more significant judgments and estimates used in the preparation of our consolidated financial statements. REVENUE RECOGNITION Revenue from the sales or licensing of proprietary content, third party programming, imported TV and films, and sales and distribution of advertisement programs are recognized upon meeting all recognition requirements of Statement of Position (SOP) 00-2 "Accounting by Producers or Distributors of Films". Revenue from sales of advertisement designs and products are recognized when the products are delivered and title has passed. Cash payments received are recorded as deferred revenue until all the conditions of revenue recognition have been met. ITEM 3 Quantitative and Qualitative Disclosures About Market Risk Not applicable. ITEM 4 Control and Procedures Disclosure Controls and Procedures. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our Chief Executive Officer and Chief Financial Officer have reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) within the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our Chief Executive Officer and Chief Financial Officer Changes in Internal Control over Financial Reporting. During the fiscal quarter ended June 30, 2008, there have been no changes in the Company's internal control over financial reporting, identified in connection with our evaluation thereof, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. 16 Part II. OTHER INFORMATION Item 1. Legal Proceedings Not applicable. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 3. Default on Senior Securities The Company is in default over the convertible notes issued in 2006 and is working with creditors to allow the Company to move forward with the merger with Leewell, Ltd. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. other Information Not applicable. 16 Item 6. Exhibits Exhibits: The following exhibits are filed with this report: 31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934 as amended. 31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934 as amended. 32.1 Certifications pursuant to 18 U.S.C section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certifications pursuant to 18 U.S.C section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 17 Date: August 22, 2008 /s/ Ranny Liang - ---------------- Chief Executive Officer 18 EX-31.1 2 navstar_10q-ex311.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION I, Ranny Liang, certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of Navstar Media Holdings, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The small business issuer's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: August 22, 2008 /s/ Ranny Liang - ----------------------- Ranny Liang Executive Chairman EX-31.2 3 navstar_10qsex312.txt EXHIBIT 31.2 Exhibit 31.2 CERTIFICATION I, Ranny Lang, certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of Navstar Media Holdings, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The small business issuer's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures; and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: August 22, 2008 /s/ Ranny Liang - ----------------------- Ranny Liang Acting Chief Financial Officer EX-32.1 4 navstar_10q-ex321.txt EXHIBIT 32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Certification of Chief Executive Officer In connection with the Quarterly Report of Navstar Media Holdings, Inc. (the "Company") on Form 10-Q/A for the fiscal quarter ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ranny Liang, Chief Executive Officer certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. August 22, 2008 /s/ Ranny Liang - ------------------------ Ranny Liang Executive Chairman EX-32.2 5 navstar_10q-ex322.txt EXHIBIT 32.2 Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Certification of Chief Financial Officer In connection with the Quarterly Report of Navstar Media Holdings, Inc., (the "Company") on Form 10-Q/A for the fiscal quarter ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward Meng, Chief Financial Officer certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. August 22, 2008 /s/ Ranny Liang - --------------- ----------------------------------- Ranny Liang Acting Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----