Jacksam Corp - Quarter Report: 2006 September (Form 10-Q)

September 30, 2006 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

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

For the transition period from _____ to _____

Commission File Number: 033-33263

ASIA PREMIUM TELEVISION GROUP, INC.

(Name of small business issuer as specified in its charter)


NEVADA	62-1407521
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

SUITE 602, 2 NORTH TUANJIEHU STREET, CHAOYANG DISTRICT,
BEIJING 100026, PEOPLE’S REPUBLIC OF CHINA

(Address of principal executive offices)

86-10-6582-7900

(Issuer’s telephone number)

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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. S Yes £ No

Indicate by check mark if the registrant is a large accelerated filer, an accelerated filed, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer £

Accelerated filer £

Non-accelerated filer S

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

£Yes S No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. £Yes £No

As of November 9, 2006, the registrant had 1,613,191,009 shares of its common stock outstanding.

ASIA PREMIUM TELEVISION GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q FOR THE

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

INDEX

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Unaudited Condensed Consolidated Financial Statements

Consolidated Balance Sheets

Unaudited Consolidated Statements Of Operations And Other Comprehensive Income

Unaudited Consolidated Statements Of Cash Flows

Notes to the Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Item 3

Quantitative and Qualitative Disclosures About Market Risk

Item 4

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3

Defaults Upon Senior Securities

Item 4

Submission of Matters to a Vote of Security Holders

PART I. FINANCIAL INFORMATION

ITEM 1.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ASIA PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

ASSETS


		September 30, 2006		March 31, 2006
		(Unaudited)		(Audited)
CURRENT ASSETS
Cash	$	4,581,203	$	2,932,698
Short-term investment		44,255		-
Accounts receivable, net of allowance for doubtful accounts (Note 2)		10,784,911		8,585,429
Receivable from related party, net of allowance for doubtful accounts (Note 9)		45,741		35,367
Other receivables, net of allowance for doubtful accounts		152,351		377,037
Prepaid expenses (Note 3)		1,713,541		3,298,048
Other current assets		17,769		9,693
Total Current Assets		17,339,771		15,238,272

PROPERTY AND EQUIPMENT, NET (Note 4)		967,913		934,810

OTHER ASSETS		-		5,918

Total Assets	$	18,307,684	$	16,179,000

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	12,200,963	$	10,181,968
Accounts payable – related party (Note 9)		112,366		80,060
Accrued expenses		470,545		467,455
Customer deposits		3,614,800		1,117,725
Other payables		234,742		2,780,023
Notes payable, current (Note 5)		177,020		149,761
Convertible notes payable (Note 5)		4,000,000		4,000,000
Total Current Liabilities		20,810,436		18,776,992

NON CURRENT LIABILITIES
Notes payable (Note 5)		17,702		104,832

Total Liabilities		20,828,138		18,881,824

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, $.001 par value, 1,750,000,000 shares authorized, 1,623,191,009 shares issued, 1,613,191,009 shares outstanding		1,623,191		1,623,191
Less: Treasury stock		(10,000)		(10,000)
Capital in excess of par value (deficit)		(4,065,297)		(4,065,297)
Accumulated other comprehensive income		41,574		23,418
Retained earnings (deficit)		(109,922)		(274,136)
Total Stockholders' Equity (Deficit)		(2,520,454)		(2,702,824)

Total Liabilities and Stockholders’ Equity (Deficit)	$	18,307,684	$	16,179,000

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

ASIA PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements Of Operations
And Other Comprehensive Income


		For the three months ended September 30,				For the six months ended September 30,
		2006		2005		2006		2005

REVENUE	$	12,560,752	$	15,132,008	$	33,052,628	$	27,051,008

COST OF SALES		11,860,641		14,463,900		31,401,447		25,761,925

GROSS PROFIT (LOSS)		700,111		668,108		1,651,181		1,289,083

EXPENSE:
General and administrative		345,009		523,816		720,829		996,220
Bad debt expenses (NOTE 7)		735,817		308,813		682,347		485,800
Depreciation		39,451		13,838		71,934		38,202
Total Expenses		1,120,277		846,467		1,475,110		1,520,222

INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE)		(420,166)		(178,359)		176,071		(231,139)

OTHER INCOME (EXPENSE)
Interest income		15,577		2,786		21,196		41,261
Interest expense		(2,263)		-		(4,993)		-
Other income (Expense)		(423)		(8,339)		(423)		(6,159)
Total Other Income (Expense)		12,891		(5,553)		15,780		35,102

INCOME (LOSS) BEFORE INCOME TAXES		(407,275)		(183,912)		191,851		(196,037)

CURRENT INCOME TAX EXPENSE		9,165		6,673		27,637		11,821

NET INCOME (LOSS)	$	(416,440)	$	(190,585)	$	164,214	$	(207,858)

OTHER COMPREHENSIVE INCOME
Foreign Currency translation Adjustment		14,741		1,092		18,156		1,092

INCOME (LOSS) AVAILABLE TO
COMMON SHAREHOLDERS	$	(401,699)	$	(189,493)	$	182,370	$	(206,766)

BASIC INCOME (LOSS) PER SHARE (NOTE 12)	$	(0.00)	$	(0.00)	$	0.00	$	(0.00)

DILUTED EARNINGS PER COMMON SHARE
(NOTE 12)	$	(0.00)	$	(0.00)	$	0.00	$	(0.00)

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

ASIA PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements Of Cash Flows


		For the Six Months Ended September 30,
		2006		2005

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)	$	164,214	$	(207,858)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation expense		71,934		38,202
Bad debt expense (recovery)		682,347		485,800
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable & other receivable		(2,696,726)		(697,708)
Decrease (Increase) in prepaid expense		1,584,507		(1,293,089)
Decrease (Increase) in other current assets		(8,076)		16,677
Decrease (Increase) in other non-current assets		5,918		(1,792)
Increase (Decrease) in accounts payable & other payable		(526,286)		1,469,796
Increase (Decrease) in accrued expenses		3,090		(92,716)
Increase (Decrease) in customer deposits		2,497,075		29,194
Exchange gain		45,034		34,809

Net Cash Provided (Used) by Operating Activities		1,823,031		(218,685)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for property and equipment		(108,560)		(42,698)
Proceeds from disposal of property and equipment		-		40,000
Proceeds (Payments) for note receivable		(44,255)		82,175

Net Cash Provided (Used) by Investing Activities		(152,815)		79,477

CASH FLOWS FROM FINANCING ACTIVITIES
Payments for note payable		(59,870)		(259,819)
Decrease (Increase) in advances receivable-related party		5,853		(110,546)
Increase in advances payable-related party		32,306		352,080

Net Cash Used by Financing Activities		(21,711)		(18,285)

NET INCREASE (DECREASE) IN CASH		1,648,505		(157,493)

CASH AT BEGINNING OF PERIOD		2,932,698		1,098,080

CASH AT END OF PERIOD	$	4,581,203	$	940,587

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

ASIA PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements Of Cash Flows (Continued)


		For the Six Months Ended September 30,
		2006		2005
Supplemental Disclosures of Cash Flow Information

Cash paid during the period for

Interest	$	3,141	$	-
Income taxes	$	13,548	$	6,229

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

For the six months ended September 30, 2006

None

For the six months ended September 30, 2005

None

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

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 1 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements of Asia Premium Television Group, Inc and Subsidiaries (the “Company”) have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of such consolidated financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s most recent audited consolidated financial statements and notes included in its annual report on Form 10-K for the fiscal year ended March 31, 2006, filed on June 28, 2006. Operating results for the three and six months ended September 30, 2006, are not necessarily indicative of the results that may be expected for longer periods or the entire year.

Organization

Asia Premium Television Group, Inc. (“Parent”) was organized under the laws of the State of Nevada on September 21, 1989. Parent went through various name changes prior to September 2002 when the name was changed to Asia Premium Television Group, Inc. Asia Premium Television Group, Inc. was originally formed to purchase, merge with or acquire any business or assets which management believes has potential for being profitable.

Parent entered into a stock for stock acquisition with Beijing Asia Hongzhi Advertising Co., Ltd. (“BAHA”) during March 2003, which was finalized on July 9, 2004, in a transaction that has been accounted for as a recapitalization of BAHA in a manner similar to a reverse purchase. There was no adjustment to the carrying values of the acquired assets or liabilities. Operations prior to July 2004 are those of BAHA. The parent is the continuing entity for legal purposes; BAHA is the continuing entity for accounting purposes.

Subsidiaries

BAHA was organized under the laws of the People’s Republic of China on June 1, 1995 as Shandong Hongzhi Advertising Co., Ltd. In July 2003, its name was changed to Beijing Asia Hongzhi Advertising Co., Ltd.

Beijing Hongzhi Century Advertising Co., Ltd (“BHCA”) was organized under the laws of the People’s Republic of China on January 7, 2003 as Beijing Yongfu Century Consulting Co., Ltd. as a wholly-owned subsidiary of BAHA. In March 2003 BHCA changed its name to Beijing Hongzhi Century Advertising Co., Ltd.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Subsidiaries (Continued)

Shandong Hongzhi Communications and Career Advertising Co., Ltd. (“SHCCA”) was organized under the laws of the People’s Republic of China on April 29, 2003 as a wholly-owned subsidiary of BAHA.

Tibet Asia Culture Media Co., Ltd (“TACM”) was organized under the laws of the People’s Republic of China in April 2004 as a wholly-owned subsidiary of BAHA.

Beijing Asia Qiangshi Media Advertising Co., Ltd (“BAQM”) was organized under the laws of the People’s Republic of China in April 2005 as a wholly-owned subsidiary of BAHA.

Tibet Hongzhi Advertising Co., Ltd. (“THZA”) was organized under the laws of the People’s Republic of China in April 2006 as a wholly-owned subsidiary of BHCA.

Asia Premium Television Group, Inc. (“APTV-BVI”) was formed on December 28, 2002, as a British Virgin Island Company.

American Overseas Investment Company (“AOI”), a company incorporated in Macau SAR, China, was acquired by the Company in June 2001.

On September 30, 2005, the Company sold AOI and APTV-BVI to a third party with a net book value of $0 at a price of $1.

On July 31, 2006, the Company sold 95% of BAQM shares to a third party and 5% to a shareholder at the net book value as of June 30, 2006.

Consolidation

The consolidated financial statements include the accounts of Parent, BAHA, BHCA, SHCCA, TACM, AOI, APTV-BVI, BAQM and THZA. All inter-company balances and transactions between Parent and subsidiaries have been eliminated in consolidation. The Company has a March 31 year end while the subsidiaries have statutory December 31 year ends. The subsidiaries have been audited on March 31 year ends to match the parent.

Reclassification

The financial statements for periods prior to September 30, 2006 have been reclassified to conform to the headings and classifications used in the September 30, 2006 financial statements.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 2 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


	September 30, 2006	March 31, 2006

Accounts receivable - trade	$ 12,621,430	$ 9,289,096
Allowance for doubtful accounts	(1,836,519)	(703,667)

Accounts receivable, net	$ 10,784,911	$ 8,585,429

Bad debt expense for the six months ended September 30, 2006 and 2005 was $1,116,244 and $250,642 respectively (See Note 7).

NOTE 3 –

PREPAID EXPENSES

At September 30, 2006, the Company had prepaid expenses of $1,713,541. The Company enters into agreements with vendors to provide advertising services. Usually the agreements cover a period of time, and the vendors require the Company to pay in advance. The prepaid expenses are transferred to cost of sales after the service is provided by the vendors.

NOTE 4 –

PROPERTY AND EQUIPMENT

The following is a summary of property and equipment, at cost, less accumulated depreciation:


	September 30, 2006	March 31, 2006

Office equipment	$ 658,755	$ 623,719
Vehicles	522,134	497,629
Leasehold improvement	94,133	45,115
Less accumulated depreciation	(307,109)	(231,653)

	$ 967,913	$ 934,810

Depreciation expense for the six months ended September 30, 2006 and 2005 was $71,934 and $38,202, respectively.

NOTE 5 –

NOTES PAYABLES

Convertible Notes Payable

The Company issued a convertible note payable on September 26, 2001 in the amount of $3,000,000 to acquire a film rights license from Sun Television Cybernetworks Holding Ltd. (“Sun”). The film rights license that was acquired from Sun provided the Company with the right to the Film Library, consisting of the master recordings of segmented productions including programs produced by Sun and programs licensed to Sun. In December 2001, the Company renegotiated the terms of the agreement to convert the note payable into 261,838 shares of common stock at an agreed upon price of $11.466 per share.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 5 –

NOTES PAYABLES (Continued)

Convertible Notes Payable (Continued)

The Company issued a convertible note payable on October 12, 2001 in the amount of $1,000,000 to acquire non-exclusive access rights for three years to use the production facilities and production equipment of Sun and access to use Sun employees to operate and assist, until such time as the sum of $1,000,000 of relevant charge-out rates has been reached. Sun also granted airtime on the Sun TV Channel for three years from the commencement of broadcasting (but not commencing later than November 30, 2001). In December 2001, the Company renegotiated the terms of the agreement to convert the note payable into 87,217 shares of common stock at an agreed upon price of $11.466 per share.

The film rights and the non-exclusive access rights have been fully impaired. The terms of the conversion provisions of the agreement are “At any time within 5 years of the date of the Note, the Noteholder may by notice in writing to the principal place of business of the Issuer demand repayment or conversion into shares of common stock in the Issuer having a par value of US$0.01 each of the entire principal amount of the Note. Unless the Issuer and the Noteholder agree in their absolute discretion to repayment of the Note, within 10 business days of receipt of a duly signed Notice, the Issuer shall issue and allot Shares in the name of the Noteholder or its nominee as identified in the Notice.” The two note payables do not provide for interest nor do they provide for any repayment terms other than by conversion into common stock.

The two convertible note payables also contain a contingency to issue additional common shares if the market value stock price is below $11.466 per share when the converted shares are subsequently sold. When the contingency is triggered, the Issuer shall issue such number of additional common shares equal to Z based on the following formula:

(A-B) / Y=Z

Where:

A = the total number of Conversion Shares sold multiplied by the Agreed Price;

B = the total number of Conversion Shares sold multiplied by the Market Value on the day of completion of the sale;

Y= Market Value per share on the day of completion of the sale;

Z= Number of additional shares issued.

Under the formula, Conversion Shares means the shares to be issued to Sun upon exercise by Sun of its conversion rights under the Convertible Notes. Agreed Price means $11.466, the trigger price of the obligation to issue contingent additional common shares when the converted shares are subsequently sold. Market Value means the average reported sale price on the ten trading days prior to the relevant valuation date on which the shares are traded; if no such sale of shares was reported during such period, Market Value shall be the average of the reported ask and bid prices for such period.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE5 – NOTES PAYABLES (Continued)

The Company accounts for the conversion feature of the convertible note under the guidance of EITF 00-19: Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock. At September 30, 2006, the total approximate number of shares for which the notes could have been converted, amounted to 51,000,000 shares and 17,000,000 shares of common stock respectively.

Notes Payable

On October 18, 2005 the Company entered into a note payable with Jinan Haichen Real Estate Development Co., Ltd. (“JHRED”) in the amount of $316,993 to acquire office facility for SHCCA. The terms of the note requires repayment to be made on a monthly basis of no less than $12,507 per month. The note matures on October 17, 2007. At September 30, 2006 and March 31, 2006, the unpaid note payable to JHRED is $194,722 and $254,593 respectively. The note bears interest based on the current monthly bank rate.

The following is a maturity schedule for the next five years.


Minimum Annual Payments	September 30, 2006	March 31, 2006

Within one year	$ 4,177,020	$ 4,149,761
After one year but within five years	17,702	104,832
	$ 4,194,722	$ 4,254,593

NOTE 6 – CAPITAL STOCK

Common Stock

The Company has authorized 1,750,000,000 shares of common stock, $.001 par value. At September 30, 2006, the Company had 1,623,191,009 shares issued and 1,613,191,009 shares outstanding.

Warrants/Options

The Company has no warrants/options issued and outstanding as of September 30, 2006 and March 31,2006.

2001 Stock Plan

During 2001, the Board of Directors adopted a Stock Plan (“the Plan”). Under the terms and conditions of the Plan, the board is empowered to grant stock options to employees, consultants, officers, and Directors of the Company. Additionally, the Board will determine at the time of granting the vesting provisions and whether the options will qualify as Incentive Stock Options under Section 422 of the Internal Revenue Code (Section 422 provides certain tax advantages to the employee recipients). The Plan was approved by the shareholders of the Company on September 15, 2001. The total number of shares of common stock available under the Plan may not exceed 2,000,000. At September 30, 2006 and March 31,2006, no options were granted under the Plan.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 6 – CAPITAL STOCK (Continued)

Development Fund

In 2004, certain shareholders, directors, and officers entered into an agreement to establish a fund wherein 650 million shares of common stock would be returned by the shareholders to the Company for cancellation and reissuance as incentives to compensate new officers, directors and other management team members based on the management effort and performance decided by the three shareholders.

On July 28, 2005, one of the shareholders returned 10 million shares to the Company, the face value of which is treated as treasury stock and the premium is treated as additional paid-in capital. The shares have been valued at a predecessor cost value of $0.001 per share. At present, only 10 million shares have been returned and no shares have been reissued. When the shares are reissued to management personnel, the Company will record the fair market value of the shares issued as compensation expenses.

NOTE 7 –

BAD DEBT EXPENSES (RECOVERY)

The following is a summary of bad debt expenses (recovery):


	For the six months ended September 30,
	2006	2005
Accounts receivable (Note 2)	$ 1,116,244	$ 250,642
Receivable from related party (Note 9)	(17,037)	(33,540)
Other receivables	(416,860)	268,698
	$ 682,347	$ 485,800

NOTE 8 –

OPERATING LEASES

The Company has entered into two building leases for its offices in Beijing and Ji’nan. The Beijing facility lease expires on August 31, 2007. The Ji’nan facility lease expired on April 30, 2006. The combined lease expense for the six months ended September 30, 2006 and 2005 amounted to $40,806 and $51,733 respectively. The following is a schedule of minimum annual rental payments for the next five years.


Minimum Annual Payments	September 30, 2006	March 31, 2006

Within one year	$ 62,222	$ 19,269

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 9 –

RELATED PARTY TRANSACTIONS

Receivables from related party

The receivables from related party mainly include the advances to staff, and are carried at the expected realizable value. Receivables from related party consisted of the following:


	September 30, 2006	March 31, 2006

Receivables from related party	$ 99,530	$ 105,383
Allowance for doubtful accounts	(53,789)	(70,016)

Receivables from related party, net	$ 45,741	$ 35,367

Bad debt recovery for the six months ended September 30, 2006 and 2005 was $(17,037) and $(33,540) respectively (See Note 7).

Accounts Payable

The Company’s accounts payable to related parties at September 30, 2006 and March 31, 2006 was $112,366 and $80,060 respectively.

Management Compensation

For the six months ended September 30, 2006 and 2005, the Company expensed $29,780 and $38,439 respectively, for services as management compensation.

Accrued Expenses

At September 30, 2006, unpaid payroll and unpaid bonus due to employees were $0 and $169,255 respectively. At March 31, 2006, unpaid payroll due to current officers and shareholder/former officer/director was $18,715 and unpaid bonus to employees was $164,367.

NOTE 10 –

COMMITMENTS AND CONTINGENCIES

Operational Agreements

The Company routinely enters into various consulting arrangements as part of its operations primarily related to marketing communication and brand promotion services to customers from industries such as real estate, banking, and cosmetics.

Net Income Guarantee

In connection with the acquisition of BAHA by Parent, three shareholders guaranteed that the net income of BAHA should be no less than US$1.5 million for each of the two years ending on the first and second anniversary of the completion date of the acquisition. In the event that BAHA does not generate the guaranteed net income, the shareholders have agreed to contribute an amount equal to the difference.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 10 – COMMITMENTS AND CONTINGENCIES (Continued)

In connection with the acquisition of BHCA by Parent, two shareholders guaranteed that the net income of BHCA should be no less than RMB 8 million, approximately US$1 million for each of the two years ending on the first and second anniversary of the completion date of the acquisition. In the event that BHCA does not generate the guaranteed net income, the shareholders have agreed to contribute an amount equal to the difference.

By the terms of the agreements, the above guarantees expired on July 8, 2006. Due to significant changes in the fair value of ASTV following our acquisition of BAHA and BHCA, the Company signed two supplementary agreements with the correlative three and the two shareholders respectively to cancel the net income guarantee terms with the approval of board of directors on July 8, 2006.

Anti-Dilution Agreement

A shareholder previously received an anti-dilution agreement for a period of one year. For any issuances of common stock by the Company, the shareholder was to receive an issuance of common stock sufficient to maintain a seven percent (7%) ownership in the Company. The Company has made various issuances as part of the anti-dilution agreement. On December 15, 2003 (effective November 4, 2003) the Company extended the agreement indefinitely for as long as the shareholder does not voluntarily sell shares of common stock that causes its percentage ownership to fall below seven percent (7%), or as defined and agreed in cases of major acquisitions by the Company in which all parties may waive their rights under the anti-dilution agreement. In August 2005, the Company finalized general release agreements with the shareholder and a former officers/directors. The agreements state that the Company pays $30,000 and they agreed to cancel the above anti-dilution agreement and also settled accrued salary of $81,571.

The Company entered into a shareholder loan settlement agreement of $30,000 from a shareholder to finalize the general release agreement in July 2005. On August 9, 2005, 1,629,331 shares of common stock were issued to the shareholder to repay the $30,000 loan and $27,027 in other payables owed according to the shareholder loan settlement agreement at the market price of $0.035 per share.

NOTE 11 –CONCENTRATIONS

Sales

For the six months ended September 30, 2006, the Company had one significant customer which accounted for 72% of sales.

For the six months ended September 30, 2005, the Company had one significant customer which accounted for 67% of sales.

Cost of Sales

The cost of sales during the six months ended September 30, 2006 and 2005 were $31,401,447 and $25,761,925 respectively. Cost associated with China Central TV Station (CCTV) accounted for 8% and 30% of the cost of sales respectively.

ASIA PREMIUM TELEVISION GROUP, INC AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

NOTE 11 – CONCENTRATIONS

Accounts Receivable

At September 30, 2006, the Company had one customer which accounted for 80% of the Company’s accounts receivable balances.

At March 31, 2006, the Company had one customer which accounted for 79% of the Company’s accounts receivable balances.

Foreign Operations

All of the Company’s operating activities are located in the People’s Republic of China.

NOTE 12 – EARNINGS (LOSS) PER SHARE

The following data show the amounts used in computing income per share and the effect on income and the weighted average number of shares of dilutive potential common stock for the three and six months ended September 30, 2006 and 2005.


		For the Three Months Ended September 30,				For the Six Months Ended September 30,
		2006		2005		2006		2005
Income/(loss) available to common shareholders
(Numerator)	$	(401,699)	$	(189,493)	$	182,370	$	(206,766)
Weighted average number of common shares outstanding used in earnings per share during the period
(Denominator)		1,613,191,009		1,615,435,097		1,613,191,009		1,618,481,648
Weighted average number of common shares outstanding used in diluted earnings per share during the period
(Denominator)		1,681,191,009		1,715,435,097		1,681,191,009		1,718,481,648

NOTE 13 –GOING CONCERN FACTORS

At September 30, 2006, the Company had a working capital deficiency of $3,470,665 which would have raised substantial doubt about the Company’s ability to continue as a going concern. However, management believes the going concern is mitigated because of the following factors: a) Convertible notes payable in the amount of $4,000,000 is included in current liabilities but the note is held by a significant shareholder and will be repaid by conversion into common stock, b) the Company has shown a net profit in each of the two most recent fiscal years and expects the trend to continue, and, c) the Company has generated positive cash flows in each of the two most recent fiscal years and expects the trend to continue.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the accompanying consolidated financial statement and related notes thereto included within this Report.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements relate to, among other things, our future plans of operations, business strategy, operating results and financial position and are often, though not always, indicated by words or phrases such as “anticipate,” “estimate,” “plan,” “project,” “outlook,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” and similar words or phrases. These forward-looking statements include statements other than historical information or statements of current condition, but instead represent only our belief regarding future events, many of which by their nature are inherently uncertain and outside of our control. Important factors that could cause actual results to differ materially from forward-looking statements include, but are not limited to, those described in the section titled “Risk Factors” previously disclosed in our Annual Report on Form 10-K for the year ended March 31, 2006:

changes in the advertising and marketing services markets in China;

our ability to attract and retain customers;

the financial condition of our customers;

unexpected changes in our margins and certain cost or expense items as a percentage of our net revenues;

our ability to execute key strategies;

actions by our competitors;

our ability to retain and attract key employees;

risks associated with assumptions we make in connection with our critical accounting estimates;

potential adverse accounting related developments;

developments or change in the regulatory and legal environment for advertising and marketing service companies in China; and

other matters discussed in this Report generally.

Consequently, readers of this Report should not rely upon these forward-looking statements as predictions of future events. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update or revise any forward-looking statements in this Report to reflect any new events or any change in conditions or circumstances. All of the forward-looking statements in this Report are expressly qualified by these cautionary statements.

Overview

We operate as a single segment business and provide advertising, media and marketing solutions to product manufacturers, service providers and other clients located in China. Our comprehensive products and

services range from consumer research and brand management to advertisement production, media planning, public relations and direct marketing services. We deliver a comprehensive range of solutions that we believe simplify, improve and maximize the effectiveness of multiple phases of our customers’ marketing campaigns, from the inception of an advertising concept, through design, production and targeted distribution, and ultimately to the measurement of advertising effectiveness. Our customers may employ any one of the services we provide individually or on a combined basis to meet their specific needs.

Our broad range of service offerings can be categorized generally into the following groups:

Media consulting services.

Advertisement production services.

Advertising agent services.

Evaluation services.

During the six months ended September 30, 2006, we had one significant advertising customer that accounted for approximately 72% of our revenues.

Results of Operations

Six Months Ended September 30, 2006 Compared to Six Months Ended September 30, 2005

Total Revenues. Our total revenues for the six months ended September 30, 2006 increased by 22% to US$33.1 million as compared to US$27.1 million for the six months ended September 30, 2005. This was primarily due to significantly increased revenues from our largest customer, which accounted for 72% of our revenues for the six months ended September 30, 2006.

Cost of Sales. Our cost of sales increased by 22% for the six months ended September 30, 2006 to US$31.4 million as compared to US$25.8 million for the six months ended September 30, 2005. This increase in our cost of sales corresponded with the 22% increase in our revenues for the six months ended September 30, 2006.

Gross Profit. As a result of the foregoing, our gross profit for the six months ended September 30, 2006 increased by 31% to US$1.7 million as compared to US$1.3 million for the six months ended September 30, 2005. Our gross profit margin ratio increased slightly from 4.8% for the six months ended September 30, 2005 to 5% for the six months ended September 30, 2006.

Total Expenses. Our total expenses for the six months ended September 30, 2006 were US$1.5 million, which consisted primarily of general and administrative expenses in the amount of US$0.7 million. This represented no increase from our total expenses of US$1.5 million for the six months ended September 30, 2005.

Income (Loss) Before Income Taxes. Our income before income taxes was US$0.2 million for the six months ended September 30, 2006 compared to a loss of US$0.2 million for the six months ended September 30, 2005.

Net Income (Loss). As a result of the foregoing, our net income was US$0.2 million for the six months ended September 30, 2006, as compared to a loss of US$0.2 million for the six months ended September 30, 2005.

Liquidity and Capital Resources

We finance our operations primarily through cash generated from operating activities and a mixture of short and long-term loans.

The following table summarizes our cash flows for the six months ended September 30, 2005 and September 30, 2006:


	Six Months Ended September 30,
	2006	2005

Net cash provided by (used in) operating activities	$1,823,031	$(218,685)
Net cash provided by (used in) investing activities	(152,815)	79,477
Net cash used in financing activities	(21,711)	(18,285)
Net increase (decrease) in cash and cash equivalents	1,648,505	(157,493)
Cash and cash equivalents (closing balance)	$4,581,203	$940,587

Our total assets as of September 30, 2006 were US$18.3 million. Our total liabilities at September 30 2006 were US$20.8 million. Liabilities consisted primarily of US$12.2 million in accounts payable and US$4.2 million in notes and convertible notes payable. See Note 5 to our condensed consolidated financial statements included herein.

Our net cash provided by operating activities increased to US$1.8 million for the six months ended September 30, 2006 compared to net cash used in operating activities of US$0.2 million for the six months ended September 30, 2005. This increase was primarily due to an increase in customer deposits.

Our net cash used in investing activities was US$0.2 million for the six months ended September 30, 2006 compared to net cash provided by investing activities of US$0.08 million for the six months ended September 30, 2005. The additional cash used by investing activities was due primarily to increases in payments for property and equipment and a note receivable.

Net cash used by financing activities was US$0.022 million in the six months ended September 30, 2006, as compared to US$0.018 million during the six months ended September 30, 2005.

Contractual Obligations

On October 18, 2005, we entered into an agreement with Ji’nan Haichen Real Estate Development Co., Ltd. (“JHRED”) to borrow US$316,993 to acquire an office facility for SHCCA. Our note payable to JHRED matures on October 17, 2007 and provides for monthly payments in the amount of US$12,507. At September 30, 2006, the outstanding amount on the note payable to JHRED was US$194,722, which bears interest at the current monthly bank rate in China.

At September 30, 2006, we had two convertible notes payable totaling US$4,000,000, which may be convertible into an aggregate of 68,000,000 shares of common stock. These notes do not provide for payment of interest or any other repayment terms other than by conversion into shares of our common stock.

The following table sets forth information regarding our aggregate payment obligations in future years based on contractual obligations that we had as of September 30, 2006:


	Payments due by period
Contractual Obligations	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
	US$	US$	US$	US$	US$
Capital expenditure	-	-	-	-	-
Operating leases	-	-	-	-	-
Short-term debt	4,177,020	4,177,020	-	-	-
Long-term debt	17,702	-	17,702	-	-
Total	4,194,722	4,177,020	17,702	-	-

Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Application of Critical Accounting Policies

Our significant accounting policies are described in Note 1 to our audited consolidated financial statements previously included in our Annual Report on Form 10-K for the year ended March 31, 2006. We prepare our financial statements in conformity with U.S. GAAP, which requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the financial reporting period. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our financial statements as their application places the most significant demands on our management’s judgment.

Revenue Recognition

We rely on SEC Staff Accounting Bulletin: No. 101 “Revenue Recognition in Financial Statements” (“SAB 101”) to recognize our revenue. SAB 101 states that revenue generally is realized or realizable and earned when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the seller's price to the buyer is fixed or determinable, and (4) collectibility is reasonably assured.

We provide advertising agent, media consulting and advertising production services. These services can either be (1) bundled together, in one or more combinations, in a single contract, or (2) provided independently pursuant to separate contracts. Revenue recognition is dependent on the type of service provided to the customer: (a) for advertising agent services, we recognize revenue at the end of each month in which the services were provided; (b) for both media consulting and advertising production services, we recognize revenue upon the achievement of particular milestones set forth in the contract.

When two or more services are bundled together in a single contract, the recognition of revenue related to one deliverable is not contingent upon the provision of service or milestone achievement of any subsequent deliverable. We follow EITF 00-21 for recognizing revenues in instances involving the delivery or performance of multiple deliverables.

We may be required to provide a refund to the customer in the event of non-delivery of a service by us if the customer does not otherwise extend the delivery deadline, accept substitute service, or choose another alternative as set forth in the contract. However, we are not required to refund any portions of amounts previously received and for which services have been rendered because subsequent deliverables are not provided. At no point do we recognize any revenue when there is a possibility of having to refund anything to the customer.

We report our revenue on a gross basis under the guidance of EITF 99-19, as (1) we are the primary obligor under contracts with our suppliers and have the risks and rewards of a principal in these transactions; (2) we have latitude in establishing the price for services under our advertising contracts, and the net amount earned by us varies with each contract; (3) we are primarily responsible for the fulfillment of services ordered by the customer pursuant to the contract, including the portion of the services performed by the media supplier with whom we separately contract; and (4) we have discretion in supplier selection.

Income Taxes

We account for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes”, as described in Note 8 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2006. We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of their recorded amount, an adjustment to our deferred tax assets would increase our income in the period such determination was made. Likewise, if we determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to our deferred tax assets would be charged to our income in the period such determination is made. We record income tax expense on our taxable income using the balance sheet liability method at the effective rate applicable in China in our consolidated statements of operations and comprehensive income.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary exposure to market risks relate to interest rates and foreign exchange rates.

Interest rates

Our exposure to market risk for changes in interest rates relates primarily to our debt obligations. As of September 30, 2006, we had an outstanding note payable in the amount of US$194,722 which is subject to a variable interest rate. We do not anticipate being exposed to material risks due to changes in market interest rates.

Foreign exchange rates

Substantially all our revenues and expenses are denominated in Renminbi, which are translated to U.S. dollars as our reporting currency for our financial statements. As such, our primary foreign exchange risk is to changes in the value of the Renminbi relative to the U.S. dollar. See “Item 3A. Risk Factors — Fluctuations in the value of the Renminbi could negatively impact our results of operations.” We do not engage in any hedging activities, and as such, we may in the future experience economic loss or gain as a result of any foreign currency exchange rate fluctuations.

The following chart indicates the net foreign exchange gain/loss we recognized in the periods indicated.


	For the six months ended September 30,
	2006	2005⁽¹⁾	2004⁽¹⁾

Net foreign exchange gain	$18,156	-	-
Percent of revenue	0.05%	-	-
Percent of profit from income before taxes	9.46%	-	-

________________

(1)

The Renminbi remained pegged to the U.S. dollar until July 21, 2005.

ITEM 4

CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Finance Manager, carried out an evaluation of the effectiveness of our “disclosure, controls and procedures” (as defined in Rules 13a-15(3) and 15-d-15(3) of the Exchange Act) as of the end of the period covered by this Report (the “Evaluation Date”). Based upon that evaluation, our Chief Executive Officer and Finance Manager concluded that, as of the Evaluation Date, our disclosure, controls and procedures are effective, providing them with material information relating to our company as required to be disclosed in the reports we file or submit under the Exchange Act on a timely basis.

There were no changes in our internal controls over financial reporting, known to our Chief Executive Officer or Finance Manager, that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1

LEGAL PROCEEDINGS

We are not involved in any current, and are not aware of any pending, legal proceedings involving our company or our officers and directors which may have any material impact on our results of operations or financial position.

ITEM 1A

RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended March 31, 2006.

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period covered by this Report, we did not sell or purchase any of our equity securities.

ITEM 3

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5

OTHER INFORMATION

None.

ITEM 6

EXHIBITS


Exhibit No.	Title
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Finance Manager pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Finance Manager pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

ASIA PREMIUM TELEVISION GROUP, INC.

Date: November 14, 2006

By: /s/ Yan Gong

Yan Gong

Chief Executive Officer

Date: November 14, 2006

By: /s/ Hongmei Zhang

Hongmei Zhang

Finance Manager

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

Date: November 14, 2006

By: /s/ Li Li

Li Li

Chairman and Director

Date: November 14, 2006

By: /s/ Qiang Jiang

Qiang Jiang

Director

Date: November 14, 2006

By: /s/ Yan Gong

Yan Gong

Director

Date: November 14, 2006

By: /s/ Min Wei

Min Wei

Director