Yesterday, China Youth Media, Inc. (OTC:CHYU) hit an impressive gain. Just for the day, the stock soared 125% and traded 
more than 4 million shares on the market. The reason for the sudden price change was crystal clear – a piece of news released by the company.
It was just yesterday when CHYU announced that it has entered into a Merger Agreement with Midwest Energy Emissions Corp. At the closing of the agreement, China Youth Media Merger Sub, Inc., a wholly owned subsidiary of the company, will merge into Midwest, which will result in Midwest becoming a wholly-owned subsidiary of the company. Also, the shareholders of Midwest will own 90% of the company’s issued and outstanding capital stock after giving effect to the Merger.
Apparently, the news certainly inspired traders and they started buying CHYU shares intensively, although the agreement is yet to be closed.
CHYU is a China focused youth marketing and media company whose business is to deliver advertising and content to the People’s Republic of China. In end-May, the company filed its financial results, which however, were not satisfying at all.[BANNER]
As of March 31 this year the company’s liabilities are much higher than its total assets, while the stockholders’ deficit got over $1 million. At the same time, the company’s total accumulated deficit reached $24 million, which CHYU is not able to cover with its minor revenue.
Due to its poor financials, during the three months ended March, 31 China Youth primarily relied upon financing activities to fund its operations. Despite the fact that the management is seeking additional financing for its projects, no assurances can be made that it will be able to obtain it on acceptable terms, if at all. Presently, CHYU relies on its new Merger Agreement, though it is still not closed. Moreover, in the event closing does not occur within 90 days, it may be terminated by either party, which will not be good news for anyone.
