UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[ x ]
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934For the quarterly three month period ended June 30, 2008[    ]
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor the transition period from [
                           
    ] to [
                            
    ]


--------------------------------------------------------------------
Commission File Number: 000-50431

CHINA MEDIA GROUP CORPORATION---------------------------------------------------------------------(Exact name of small business issuer as specified in its charter)

Texas
    7310
    32-0034926-----------------------
    ------------------------
    ----------------------(State or other jurisdiction of
        incorporation or organization)
    (Primary Standard Industrial
        Classification Code Number)
    (I.R.S. Employer Identification No.)


1403 Wan Chai Commercial Center, 204 Johnston Road, Wanchai, Hong Kong
    --------------------------------------------------------------------------
    ----------------(Address of Company's principal executive offices)
    (Zip Code)


+011 852 3171 1208 (ext.222)
-------------------------------------------------

(Company's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former
Fiscal Year if Changed Since Last Report)

Indicate by check
    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 past 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
    whether the Registrant is a large accelerated filer, an accelerated filer, a
    non-accelerated filer or a smaller reporting company. See the definitions of "large
    accelerated filer,"accelerated filer"and"small reporting company" in
    Rule 12b-2 of the Exchange Act. (check one)


Large Accelerated Filer [    ]
Accelerated Filer

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


Yes [ x ]      No [    ]

The
    number of common equity shares outstanding as of August 8, 2008 was 534,132,450 shares of
    Common Stock, no par value.


---

FORWARD-LOOKING
    STATEMENTSThis
    quarterly report contains forward-looking statements as that term is defined in the Private
    Securities Litigation Reform Act of 1995. These statements relate to future events or
    our future financial performance. In some cases, you can identify forward-looking
    statements by terminology such as "may", "will", "should",
    "expects", "plans", "anticipates", "believes",
    "estimates", "predicts", "potential" or "continue"
    or the negative of these terms or other comparable terminology. These statements are only
    predictions and involve known and unknown risks, uncertainties and other factors,
    including the risks in the section entitled "Risk Factors", that may cause our
    or our industry's actual results, levels of activity,
    performance or achievements to be materially different from any future results, levels of
    activity, performance or achievements expressed or implied by these forward-looking
    statements.Although
    we believe that the expectations reflected in the forward-looking statements are
    reasonable, we cannot guarantee future results, levels of activity, performance or
    achievements. Except as required by applicable law, including the securities laws of the
    United States, we do not intend to update any of the forward-looking statements to conform
    these statements to actual results.Our
    financial statements are stated in United States Dollars and are prepared in accordance
    with United States Generally Accepted Accounting Principles. In this quarterly report,
    unless otherwise specified, all dollar amounts are expressed in United States Dollars.As used
    in this quarterly report, the terms "we", "us", "our",
    "CHMD", and "the Company" mean China Media Group Corporation and its
    subsidiaries unless otherwise indicated.


---

PART I


Item 1.
    Condensed Consolidated
    Financial Statements


China Media Group Corporation
Condensed Consolidated Financial Statements
June 30, 2008
(Unaudited)(Expressed In United States Dollars)

Condensed Consolidated Balance Sheet
    as of June 30, 2008 and December 31, 2007Condensed
    Consolidated Statements of Operations
    for the 3-months and 6-months periods ended June 30, 2008 and 2007
    Condensed Consolidated Statements of Stockholders' Equity / (Deficit)
    for the years ended December 31, 2007 and 2006, and
    for the 6-months periods ended June 30, 2008
    Condensed Consolidated Statements of Cash Flows
    for the 6-months periods ended June 30, 2008 and 2007
    Notes to Condensed Consolidated Financial Statements


---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    BALANCE SHEETAS
    OF JUNE 30, 2008 AND DECEMBER 31, 2007


June 30,
    
    December 31,2008
    
    2007(Unaudited)
    
    (Audited)Notes
    
    -----------------
    
    ---------------------ASSETSCurrent Assets:Cash and cash
    equivalents
    
    $
    52,166
    $
    107,903Accounts
    receivables
    
    
    11,774
    
    -Loans to unrelated
    parties
    
    
    365,295
    
    343,487Prepayments,
    deposit and other receivables
    7
    
    91,718
    
    114,980---------------------
    
    -----------------------Total current
    assets
    
    
    520,953
    
    566,370Non-current assetsProperty and
    equipments, net
    
    
    44,913
    
    48,745Advance payment
    for distribution rights
    
    
    138,000
    
    138,000Goodwill
    
    
    7,791,676
    
    7,791,676---------------------
    
    ---------------------7,974,589
    
    7,978,421---------------------
    
    ---------------------$
    8,495,542
    $
    8,544,791=============
    
    =============LIABILITIES
    AND STOCKHOLDERS' EQUITYCurrent
    liabilities:Accounts payable
    
    $
    30,952
    $
    32,806Other payables and
    accruals
    8
    
    509,388
    
    374,393Convertible
    debentures
    9
    
    -
    
    107,258Short term debt
    10
    
    91,200
    
    67,600Due to directors
    and officers
    11
    
    1,010,118
    
    727,861---------------------
    
    ---------------------Total current
    liabilities
    
    
    1,641,658
    
    1,309,918---------------------
    
    ---------------------Long-term debts
    12
    
    2,000,000
    
    2,023,600Minority
    interest
    
    
    176,084
    
    187,804Stockholders'
    equityCommon
    stock, no par value, 85,000,000,000 shares authorized,
    524,132,450 (2007: 521,500,871) shares issued and outstanding
    4 &5
    
    7,428,902
    
    7,428,902Additional
    paid-in-capital
    
    
    1,549,837
    
    1,449,491Shares issued for
    prepaid consulting services
    13
    
    (78,668)
    
    (293,401)Comprehensive
    income
    
    
    46,712
    
    20,766Accumulated
    deficits
    
    
    (4,268,983)
    
    (3,582,289)---------------------
    
    -----------------------Total
    stockholders' equity
    
    
    4,677,800
    
    5,023,469---------------------
    
    ---------------------$
    8,495,542
    $
    8,544,791============
    
    =============


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

---



CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    STATEMENTS OF OPERATIONS (UNAUDITED)FOR
    THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 2008 AND 2007


Three months periods 
    Ended June 30
    Six months periods
    Ended June 30------------------------------------------------
    ------------------------------------------------2008
    
    2007
    2008
    
    2007-----------------
    
    -----------------
    -----------------
    
    -----------------US$
    
    US$
    US$
    
    US$Net
    revenue
    
    26,126
    
    34,467
    51,401
    
    61,301Cost
    of revenue
    
    11,803
    
    23,142
    27,960
    
    43,389-----------------
    
    -----------------
    ----------------
    
    -----------------Gross
    profit
    
    14,323
    
    11,325
    23,441
    
    17,912Operating
    expenses:Impairment
    of investment
    
    -
    
    -
    -
    
    243,000Selling,
    general and administrative expenses
    
    233,603
    
    339,888
    615,989
    
    685,662-----------------
    
    -----------------
    -----------------
    
    -----------------Loss
    from operations before other expense
    
    (219,280)
    
    (328,563)
    (592,548)
    
    (910,750)Other
    income / (expenses)Interest
    income
    
    -
    
    -
    37
    
    -Interest
    expenses
    
    (42,524)
    
    (24,950)
    (105,903)
    
    (28,463)-----------------
    
    -----------------
    -----------------
    
    --------------Net
    loss before minority interests
    
    (261,804)
    
    (353,513)
    (698,414)
    
    (939,213)Minority
    interest
    
    6,333
    
    4,532
    11,720
    
    4,532-----------------
    
    -----------------
    -----------------
    
    --------------Net
    loss
    
    (255,471)
    
    (348,981)
    (686,694)
    
    (934,681)-----------------
    
    -----------------
    -----------------
    
    --------------Other
    comprehensive incomeForeign
    currency translation gain
    
    11,224
    
    2,208
    25,946
    
    5,746-----------------
    
    -----------------
    -----------------
    
    --------------Comprehensive
    loss
    
    (244,247)
    
    (346,773)
    (660,748)
    
    (928,935)==========
    
    ==========
    =========
    
    =========Basic
    and diluted loss per common share
    $
    (0.00)
    $
    (0.00)
    $
    (0.00)
    $
    (0.00)==========
    
    ==========
    =========
    
    =========Basic
    and diluted weighted average number of common shares *
    
    524,132,450
    
    497,337,381
    524,089,072
    
    445,390,825==========
    
    ==========
    =========
    
    =========


* Basic and diluted weighted
    average number of shares is same since the effect of dilutive securities are
    anti-dilutive.


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

---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    STATEMENTS OF STOCKHOLDERS' EQUITY/ (DEFICIT)FOR
    THE YEARS ENDED DECEMBER 31, 2007 AND 2006 ANDFOR
    THE SIX MONTHS PERIODS ENDED JUNE 30, 2008


Common stock
    Additional
    
    
    
    'Total--------------------------
    paid-in
    Comprehensive
    Prepaid
    Accumulated
    stockholdersShares
    Amount
    capital
    income
    Expenses
    Deficit
    equity (deficit)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------US$
    US$
    US$
    US$
    US$
    US$Balance
    at January 1, 2006
    343,940,812
    162,170
    -
    -
    -
    (338,514)
    (176,344)Issuance
    of shares for distribution right
    1,000,000
    138,000
    -
    -
    -
    -
    138,000Issuance
    of shares and warrants for cash
    833,333
    170,000
    80,000
    -
    -
    -
    250,000Issuance
    of shares for services
    3,000,000
    69,000
    -
    -
    (55,375)
    -
    13,625Issuance
    of shares for commitment fee for equity line of credit agreement
    12,500,000
    237,500
    -
    -
    -
    -
    237,500Options
    granted
    -
    -
    184,276
    -
    -
    -
    184,276Issuance
    of warrants
    -
    -
    312,660
    -
    -
    -
    312,660Net
    loss
    -
    -
    -
    -
    -
    (1,515,743)
    (1,515,743)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance
    at December 31, 2006 and January 1, 2007
    361,274,145
    776,670
    576,936
    -
    (55,375)
    (1,854,257)
    (556,026)Issuance
    of shares for staffs
    11,731,542
    312,232
    116,337
    -
    -
    -
    428,569Issuance
    of shares for share investment
    3,518,518
    190,000
    -
    -
    -
    -
    190,000Issuance
    of shares for acquisition of subsidiary
    125,000,000
    6,000,000
    -
    -
    -
    -
    6,000,000Issuance
    of shares for services
    17,476,666
    85,000
    603,420
    -
    (238,026)
    -
    450,394Exercise
    of warrants
    500,000
    15,000
    -
    -
    -
    -
    15,000Sell
    shares under ELOC Agreement
    2,000,000
    50,000
    -
    -
    -
    -
    50,000Issuance
    of warrants
    -
    -
    15,590
    -
    -
    -
    15,590Options
    granted
    -
    -
    62,208
    -
    -
    -
    62,208Issuance
    of convertible debenture
    -
    -
    75,000
    -
    -
    -
    75,000Comprehensive
    income
    -
    -
    -
    20,766
    -
    -
    20,766Net
    loss
    -
    -
    -
    -
    -
    (1,728,032)
    (1,728,032)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance
    at December 31, 2007 and January 1, 2008
    521,500,871
    7,428,902
    1,449,491
    20,766
    (293,401)
    (3,582,289)
    5,023,469Amortization
    of issuance of shares for services expenses
    -
    -
    -
    -
    214,733
    -
    214,733Amortization
    of options granted
    -
    -
    50,346
    -
    -
    -
    50,346Issuance
    of shares for extension of repayment of debenture
    2,631,579
    -
    50,000
    -
    -
    -
    50,000Comprehensive
    income
    -
    -
    -
    25,946
    -
    -
    25,946Net
    loss
    -
    -
    -
    -
    -
    (686,694)
    (686,694)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance
    at June 30, 2008
    524,132,450
    7,428,902
    1,549,837
    46,712
    (78,668)
    (4,268,983)
    4,677,800=========
    =======
    ========
    =========
    =======
    ========
    =========


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

---

CHINA MEDIA GROUP CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2008 AND 2007Six months periods ended June 30-----------------------------------------------------2008
    
    2007-----------------
    
    ------------------Cash flows from
    operating activities:
    
    
    US$
    
    US$Net Loss
    
    
    (686,694)
    
    (934,681)Adjustments to
    reconcile net loss to net cash
    used in operating activities:Depreciation
    
    
    6,082
    
    4,335Amortization of
    convertible debentures
    
    
    17,742
    
    19,758Minority interest
    
    
    (11,720)
    
    (4,532)Write off fixed
    assets
    
    
    -
    
    3,253Write off goodwill
    
    
    -
    
    1,589Impairment in
    investment
    
    
    -
    
    243,000Option expenses
    for employee compensation
    
    
    50,346
    
    -Common stock
    issuance for extension of repayment of convertible debenture
    
    
    50,000
    
    -Common stock
    issuance for employees
    
    
    -
    
    97,349Common stock
    issuance for services
    
    
    -
    
    132,876Issuance of option
    for employees compensation
    
    
    
    
    22,454Issuance of common
    stock for prepaid expenses for services
    
    
    214,733
    
    -(Increase)/decrease
    in assets:Prepaid expenses,
    deposit and other receivables
    
    
    1,454
    
    (12,337)Loan receivable
    
    
    -
    
    87,214Due from a
    director of s subsidiary
    
    
    -
    
    (20,260)Accounts
    receivable
    
    
    (11,774)
    
    (10,673)Increase in
    liabilities:Accounts payable
    and accrued expenses
    
    
    133,141
    
    115,855Due to related
    parties
    
    
    282,257
    
    285,795--------------------
    
    -------------------Net cash used in
    operating activities
    
    
    45,567
    
    (30,995)--------------------
    
    -------------------Cash flows from
    investing activities:Increase in
    investment
    
    
    -
    
    (53,000)Purchase of
    property and equipment
    
    
    (2,250)
    
    (49,079)--------------------
    
    --------------------Net cash used in
    investing activities
    
    
    (2,250)
    
    (102,079)--------------------
    
    --------------------Cash flows from
    financing activities:Proceeds from issuance of debt
    
    
    -
    
    75,000Acquisition of
    subsidiary, net of cash
    
    
    -
    
    26,671Repayment of
    convertible debentures
    
    
    (125,000)
    
    ----------------------
    
    ---------------------Net cash provided
    by financing activities
    
    
    (125,000)
    
    101,671---------------------
    
    ---------------------Net (decrease)
    / increase in cash and cash equivalents
    
    
    (81,683)
    
    30,587Effect of
    exchange rate changes on cash and cash equivalents
    
    
    25,946
    
    5,746Cash and cash
    equivalents, beginning
    
    
    107,903
    
    63,039---------------------
    
    ---------------------Cash and cash
    equivalents, ending
    
    
    52,166
    
    99,372============
    
    ============Supplemental
    disclosure of cash flow information:Interest paid
    
    
    -
    
    -============
    
    ============Income taxes paid
    
    
    -
    
    -============
    
    ============


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

---

CHINA MEDIA GROUP CORPORATION
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)NOTE 1
    ORGANIZATION


China
    Media Group Corporation (the "Company") is a Texas corporation, incorporated on
    October 1, 2002.In
    January 2006, the Company established a wholly owned subsidiary Ren Ren Media Group
    Limited, a company incorporated in Hong Kong, as its operating company in Hong Kong. In
    March 2007, the Company acquired all the outstanding shares of Good World Investments
    Limited, British Virgin Islands corporation that holds 50% of Beijing Ren Ren Health
    Culture Promotion Limited, a company incorporated in China in the advertising and media
    business in China.The Company will be engaged in the media and advertising business, focusing in China, and
    the marketing and distribution of convergent devices.


NOTE 2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS


Unaudited
    Interim Financial InformationThe
    accompanying unaudited interim consolidated financial statements have been prepared in
    accordance with accounting principles generally accepted in the United States of America
    and the rules of the U.S. Securities and Exchange Commission, and should be read in
    conjunction with the audited consolidated financial statements and notes thereto for the
    year ended December 31, 2007. They do not include all information and footnotes required
    by accounting principles generally accepted in the United States of America for completing
    the consolidated financial statements. However, except as disclosed herein, there has been
    no material change in the information disclosed in the notes to the consolidated financial
    statements for the year ended December 31, 2007 included in the Company Form 10-KSB filed
    with the Securities and Exchange Commission. In the opinion of management,all
    adjustments (consisting of normal recurring accruals) considered necessary for a fair
    presentation of financial position and the results of operations for the interim periods
    presented have been included. Operating results for the interim periods are not
    necessarily indicative of the results that may be expected for the respective full year.Use
    of EstimatesThe
    preparation of financial statements in conformity with generally accepted accounting
    principles 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 revenues and expenses
    during the reporting period. Actual results could differ from those estimates.Principles
    of ConsolidationThe
    consolidated financial statements include the financial statements of the Company and its
    wholly owned subsidiaries Ren Ren Media Group Limited and Good World Investments Limited,
    and a 50% subsidiary Beijing Ren Ren Health Culture Promotion Limited. Good World
    Investments Limited and Beijing Ren Ren Health Culture Promotion Limited were both
    acquired by the Group in March 2007.The
    results of subsidiaries acquired during the period are consolidated from their effective
    dates of acquisition.All
    significant inter-company transactions and balances have been eliminated on consolidation.


Intangible
    AssetsThe
    Company evaluates intangible assets for impairment, at least on an annual basis and
    whenever events or changes in circumstances indicate that the carrying value may not be
    recoverable from its estimated future cash flows. Recoverability of intangible assets,
    other long-lived assets and, goodwill is measured by comparing their net book value to the
    related projected undiscounted cash flows from these assets, considering a number of
    factors including past operating results, budgets, economic projections, market trends and
    product development cycles. If the net book value of the asset exceeds the related
    undiscounted cash flows, the asset is considered impaired, and a second test is performed
    to measure the amount of impairment loss.


---

NOTE 2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS
    (Continued)


Stock-based CompensationSFAS No. 123 prescribes accounting and reporting standards for all stock-based
    compensation plans, including employee stock options, restricted stock, employee stock
    purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense
    to be recorded (i) using the new fair value method or (ii) using the existing accounting
    rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for stock
    issued to employees" (APB 25) and related interpretations with proforma disclosure of
    what net income and earnings per share would have been had the Company adopted the new
    fair value method. The Company has chosen to account for stock-based compensation using
    Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
    Employees" and has adopted the disclosure only provisions of SFAS 123. Accordingly,
    compensation cost for stock options is measured as the excess, if any, of the quoted
    market price of the Company's stock at the date of the grant over the amount an employee
    is required to pay for the stock.The
    Company accounts for stock-based compensation issued to non-employees and consultants in
    accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in
    Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are
    Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or
    Services". Valuation of shares for services is based on the estimated fair market
    value of the services performed.


Issuance of Shares for ServiceThe Company accounts for the issuance of equity instruments to acquire goods and services
    based on the fair value of the goods and services or the fair value of the equity
    instrument at the time of issuance, whichever is more reliably measurable.Revenue
    RecognitionThe Company recognizes its revenue in accordance with the Securities and Exchange
    Commissions ("SEC") Staff Accounting Bulletin No. 104, "Revenue Recognition
    in Financial Statements" ("SAB 104"). Revenue is recognized upon shipment,
    provided that evidence of an arrangement exists, title and risk of loss have passed to the
    customer, fees are fixed or determinable and collection of the related receivable is
    reasonably assured. Revenue is recorded net of estimated product returns, which is based
    upon the Company's return policy, sales agreements, management estimates of potential
    future product returns related to current period revenue, current economic trends, changes
    in customer composition and historical experience.


Foreign Currency TranslationThe accounts of the Company's Hong Kong and China subsidiaries are maintained in the Hong
    Kong dollars (HK) and in Renmenbi, respectively. Such financial statements are translated
    into U.S. Dollars (USD) in accordance with Statement of Financial Accounts Standards
    ("SFAS") No. 52, "Foreign Currency Translation," with the Hong Kong
    dollar and the Renmenbi as the functional currencies. According to the Statement, all
    assets and liabilities were translated at the exchange rate on the balance sheet date,
    stockholder's equity are translated at the historical rates and statement of operations
    items are translated at the weighted average exchange rate for the period. The resulting
    translation adjustments are reported under other comprehensive income in accordance with
    SFAS No. 130, "Reporting Comprehensive Income. As of June 30, 2008, the accumulated
    comprehensive income was $46,712. For the six months ended June 30, 2008, the
    comprehensive income was $25,946 and at the corresponding period in the prior year the
    comprehensive income was a loss of $5,746.


Recent
    PronouncementsIn June 2006, the Financial Accounting Standards Board (FASB) issued FASB Integration No.
    48,"Accounting for Uncertainty in Income
    Taxes, an interpretation of FASB Statements No. 109"(FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes by
    prescribing a two-step method of first evaluating whether a tax position has met a more
    likely than not recognition threshold and second, measuring that tax position to determine
    the amount of benefit to be recognized in the financial statements. Fin 48 provides
    guidance on the presentation of such positions within a classified statement of financial
    position as well as on de-recognition, interest and penalties, accounting in interim
    periods, disclosure and transition. FIN 48 is effectively for fiscal years beginning after
    December 15, 2006. The adoption of this standard is not expected to have a material effect
    on the Company's results of operations or financial condition.


---

NOTE
    2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES &
    REALIZATION OF ASSETS (Continued)Recent
    Pronouncements (Continued)FASB issued SFAS No. 155,"Accounting for
    Certain Hybrid Financial Instruments". SFAS No. 155 amends SFAS No 133,
    "Accounting for Derivative Instruments and Hedging Activities", and SFAS No.
    140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments
    of Liabilities". SFAS No. 155, permits fair value re-measurement for any hybrid
    financial instrument that contains an embedded derivative that otherwise would require
    bifurcation, clarifies which interest-only strips and principal-only strips are not
    subject to the requirements of SFAS No. 133, establishes a requirement to evaluate
    interest in securitized financial assets to identify interests that are freestanding
    derivatives or that are hybrid financial instruments that contain an embedded derivative
    requiring bifurcation, clarifies that concentrations of credit risk in the form of
    subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the
    prohibition on the qualifying special-purpose entity from holding a derivative financial
    instrument that pertains to a beneficial interest other than another derivative financial
    instrument. This statement is effective for all financial instruments acquired or issued
    after the beginning of the Company's first fiscal year that begins after September 15,
    2006. The Company has not evaluated the impact of this pronouncement on its financial
    statements.


In May 2005, the FASB issued SFAS No. 154, entitled Accounting Changes and Error
    Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3. This Statement
    replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting
    Accounting Changes in Interim Financial Statements, and changes the requirements for the
    accounting for and reporting of a change in accounting principle. This Statement applies
    to all voluntary changes in accounting principle. It also applies to changes required by
    an accounting pronouncement in the unusual instance that the pronouncement does not
    include specific transition provisions. Opinion 20 previously required that most voluntary
    changes in accounting principle be recognized by including in net income of the period of
    the change the cumulative effect of changing to the new accounting principle. This
    Statement requires retrospective application to prior periods' financial statements of
    changes in accounting principle, unless it is impracticable to determine either the
    period-specific effects or the cumulative effect of the change. This Statement defines
    retrospective application as the application of a different accounting principle to prior
    accounting periods as if that principle had always been used or as the adjustment of
    previously issued financial statements to reflect a change in the reporting entity. This
    Statement also redefines restatement as the revising of previously issued financial
    statements to reflect the correction of an error. The provisions of SFAS No. 154 are
    effective for accounting changes and correction of errors made in fiscal years beginning
    after December 15, 2005. The adoption of SFAS 154 did not impact the consolidated
    financial statements.


In September 2006, the FASB issued Statement of Financial Accounting Standards("SFAS") No. 157,
    "Fair Value Measurements,"or SFAS 157,
    which defines fair value, establishes a framework for measuring fair value in U.S. GAAP,
    and expands disclosures about fair value measurements. SFAS 157 applies under other
    accounting pronouncements that require or permit fair value measurements, where fair value
    is the relevant measurement attribute. The standard does not require any new fair value
    measurements. SFAS 157 is effective for financial statements issued for fiscal years
    beginning after November 15, 2007, and interim periods within those fiscal years. The
    Company is currently evaluating the impact of adopting SFAS 157 on its consolidated
    financial statements.In February 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") 159, "The Fair Value Option for Financial
    Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115,"or SFAS 159. SFAS 159 permits entities to choose to measure
    many financial instruments and certain other items at fair value. Entities that elect the
    fair value option will report unrealized gains and losses in earnings at each subsequent
    reporting date. The fair value option may be elected on an instrument-by-instrument basis,
    with a few exceptions. SFAS 159 also establishes presentation and disclosure requirements
    to facilitate comparisons between entities that choose different measurement attributes
    for similar assets and liabilities. The requirements of SFAS 159 are effective for the
    Company's fiscal year beginning on October 1, 2008. The Company's management is in the process of evaluating this guidance and therefore has
    not yet determined the impact that SFAS 159 will have on its financial statements upon
    adoption.In September 2006, the SEC issued Staff Accounting Bulletin ("SAB")No. 108, or SAB 108, which provides guidance on the process of quantifying
    financial statement misstatements. In SAB 108, the SEC staff establishes an approach that
    requires quantification of financial statement errors, under both the iron-curtain and the
    roll-over methods, based on the effects of the error on each of our financial statements
    and the related financial statement disclosures. SAB 108 is generally effective for annual
    financial statements in the first fiscal year ending after November 15, 2006. The
    transition provisions of SAB 108 permits existing public companies to record the
    cumulative effect in the first year ending after November 15, 2006 by recording correcting
    adjustments to the carrying values of assets and liabilities as of the beginning of that
    year with the offsetting adjustment recorded to the opening balance of retained earnings.
    We do not expect that the adoption of SAB 108 would have a material effect on our
    consolidated financial statements.


---

NOTE 2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS
    (Continued)


ReclassificationsCertain comparative amounts have
    been reclassified to conform to the current year's presentation.


NOTE 3
    UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERNThe Company's financial statements are prepared using the generally accepted accounting
    principles applicable to a going concern, which contemplates the realization of assets and
    liquidation of liabilities in the normal course of business. As of June 30, 2008, the
    Company has incurred an accumulated deficits totaling $4,268,983 and its total current
    liabilities exceed its total current assets by $1,120,705. In view of the matters
    described above, recoverability of a major portion of the recorded asset amounts shown in
    the accompanying balance sheets is dependent upon continued operations of the Company,
    which in turn is dependent upon the Company's ability to raise additional capital, obtain
    financing and to succeed in its future operations. The financial statements do not include
    any adjustments relating to the recoverability and classification of recorded asset
    amounts or amounts and classification of liabilities that might be necessary should the
    Company be unable to continue as a going concern.


Management has taken the following steps to revise its operating and financial
    requirements, which it believes are sufficient to provide the Company with the ability to
    continue as a going concern. The Company has filed a registered statement to sell up to
    $2,500,000 of its common stock under an Equity Line of Credit Agreement ("ELOC"), which was declared effective by the SEC in May
    2007. During 2007, the Company has sold $50,000 of its common stock under the ELOC
    agreement and in August 2008 the Company terminated the ELOC agreement except for the
    Stock Warrants under the ELOC Agreement. The Company is also actively pursuing additional
    funding and potential merger or acquisition candidates and strategic partners, which would
    enhance stockholders' investment. Management believes that the above actions will allow
    the Company to continue operations through the next fiscal year. However there can be no
    assurances that the Company can sell any of its Stock Warrants or that sufficient
    financing will be available on terms acceptable to the Company or at all.


NOTE 4
    STOCKHOLDERS' EQUITY


Common Stock


In
    January 2008, the Company issued 2,631,579 shares of common stock pursuant to a Second
    Amendment Agreement to extend the repayment of the $50,000 Convertible Debenture to March
    28, 2008.


After the balance sheet date on August 3, 2008 the Company issued 10,000,000 shares of
    Common Stock pursuant to a Letter Agreement to terminate the ELOC Agreement.WarrantsThere
    were no movements in the warrants during the three months ended June 30, 2008. During the
    six months period ended June 30, 2008, the only movements in the warrants related to the
    issue of stock warrants in February 2006 when the Company issued stock warrants for
    1,666,666 shares of common stock exercisable for a two year period to February 21, 2008 at
    an exercise price of $0.30 per share to Central Star Holdings Limited. The warrants
    expired on February 21, 2008.


---

NOTE 5
    STOCK OPTIONS AND WARRANTS


Stock OptionsThe
    Company adopted SFAS No. 123 (Revised 2004), Share Based Payment ("SFAS No.
    123R"), under the modified-prospective transition method on April 1, 2006. SFAS No.
    123R requires companies to measure and recognize the cost of employee services received in
    exchange for an award of equity instruments based on the grant-date fair value.
    Share-based compensation recognized under the modified-prospective transition method of
    SFAS No. 123R includes share-based compensation based on the grant-date fair value
    determined in accordance with the original provisions of SFAS No. 123, Accounting for
    Stock-Based Compensation, for all share-based payments granted prior to and not yet vested
    as of April 1, 2006 and share-based compensation based on the grant-date fair-value
    determined in accordance with SFAS No. 123R for all share-based payments granted after
    April 1, 2006. SFAS No. 123R eliminates the ability to account for the award of these
    instruments under the intrinsic value method proscribed by Accounting Principles Board
    ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and allowed
    under the original provisions of SFAS No. 123. Prior to the adoption of SFAS No. 123R, the
    Company accounted for our stock option plans using the intrinsic value method in
    accordance with the provisions of APB Opinion No. 25 and related interpretation2002 Stock Option PlanEffective on October 11, 2002, the Company adopted the
    2002 Stock Option Plan (the "2002 Plan") allowing for the awarding of options to
    acquire shares of common stock. This plan provides for the grant of incentive stock
    options to key employees and directors. Options issued under this plan will expire over a
    maximum term of ten years from the date of grant. The Company had 29,800,000 stock options
    outstanding as at June 30, 2008.Following
    is a summary of the activities of the 2002 Stock Option Plan for the six months ended June
    30, 2008:


Options outstanding--------------------------------Outstanding, December
    31, 2007
    29,800,000Granted during the
    period
    -Forfeited/lapsed
    during the period
    -Exercised during the
    period
    ---------------------------------Outstanding, June 30,
    2008
    29,800,000===================


Following is a
    summary of the status of options outstanding June 30, 2008:Outstanding Options
    
    Exercisable Options------------------------------------
    
    ----------------------------------------------------------------------Grant
    Date
    Exercise
    Price
    Number
    Average Remaining
    Contractual Life
    Average Exercise Price
    Number
    Intrinsic Price12/23/2006
    $0.0365
    17,500,000
    1.48
    $0.0365
    17,500,000
    $0.005/18/2007
    $0.0380
    12,300,000
    1.88
    $0.0380
    12,300,000
    $0.00


---

NOTE 5
    STOCK OPTIONS AND WARRANTS (Continued)


Stock Options (Continued)


The assumptions used in calculating the fair value of options granted using the
    Black-Scholes option pricing model are as follows:i) The outstanding 17,500,000 stock options granted on December 23, 2006:Grant date:
    12/23/2006Risk-free interest rate
    4.63%Expected life of
    the options
    3.00 yearsExpected
    volatility
    95%Expected dividend
    yield
    0ii) The outstanding
    12,300,000 stock options granted on May 18, 2007:Grant date:
    5/18/2007Risk-free interest rate
    4.63%Expected life of
    the options
    3.00 yearsExpected
    volatility
    139%Expected dividend
    yield
    0


2007 Stock Incentive PlanOn February 19,
    2007, the Company adopted the 2007 Stock Incentive Plan (the "2007 Plan")
    allowing for the awarding of options to acquire shares of common stock. This plan provides
    for the grant of incentive stock options to key employees, directors and consultants.
    Options issued under this plan will expire over a maximum term of ten years from the date
    of grant. The Company had not issued any stock options under this plan since inception to
    June 30, 2008.


On March 8, 2007, we registered 38,400,000 shares underlying stock options under the 2007
    Stock Incentive Plan with the SEC pursuant to a registration statement on Form S-8. As of
    June 30, 2008, there were 32,588,700 shares underlying the stock options under the 2007
    Stock Incentive Plan.


Warrants


Following is a summary of the warrant activity for the three months ended June 30, 2008:


Outstanding, December 31, 2007
    32,944,442Granted during the
    period
    -Forfeited during the
    period
    1,666,666Exercised during the
    period
    -------------------------Outstanding, June 30,
    2008
    31,277,776==============


---

NOTE 5
    STOCK OPTIONS AND WARRANTS (Continued)


Warrants (Continued)


Following is a summary of the
    status of warrants outstanding at June 30, 2008:


Outstanding Warrants
    
    Exercisable Warrants---------------------------------
    
    ------------------------------------------------------------------Exercise
    Price
    Number
    Average Remaining Contractual Life
    Average Exercise Price
    Number
    Intrinsic Value$0.030
    15,125,000
    0.95
    $0.030
    15,125,000
    $0 .00$0.036
    15,625,000
    0.95
    $0.036
    15,625,000
    $0 .00$0.036
    138,889
    0.95
    $0.036
    138,889
    $0 .00$0.036
    208,333
    0.84
    $0.036
    208,333
    $0 .00$0.036
    41,666
    0.89
    $0.036
    41,666
    $0 .00$0.036
    138,888
    0.90
    $0.036
    138,888
    $0 .00


Details of the warrants are
    specified in Note 6 (b), (c), (d), (h), and (o).


NOTE 6
    STOCK PURCHASE AGREEMENTS


The significant Stock Purchase Agreements entered into by the Company during the past year
    are highlighted below.a) On or about January 25, 2006, the Company entered into an agreement with Fleming Assets
    Limited ("Fleming") to acquire the distribution rights for the M.A.G.I.C.
    Convergent Communications Device for the territory of China and Hong Kong. Under the
    agreement the Company will issue the following shares to Fleming:
    1. Within one month of signing the agreement, one million shares of
        the Company;
        2. Within one month of receiving the prototype devices, one million
        shares of the Company;
        3. Within one month of receiving the product from commercial
        production, two million shares of the Company; and
        4. A royalty payment of 100,000 shares of the Company for every
        5,000 devices sold for the next 3 years.
    As of March 31, 2008, the Company has only issued
    one million shares in respect of this agreement.
    b) On or about February 13, 2006, the Company
    announced a Stock Purchase Agreement with Central Star Holdings Limited ("Central
    Star"). Under the agreement, Central Star will purchase 833,333 shares in the Company
    for $250,000 upon signing the agreement and thereafter purchasing an additional $1 million
    worth of stock of the Company in 4 equal tranches every 2 months over an 8 months period.
    Central Star is obliged to purchase the additional tranches provided that the share price
    of the 5 days prior to the relevant date is not below $0.33 per share. However if the
    share price is below $0.33 then Central Star still has the right, but not the obligation,
    to purchase the stock at $.30 per share. For every stock purchased, Central Star will be
    entitled to receive an option to purchase 2 additional shares in the Company at the same
    price that it paid for the shares subscribed over a one year period from the later date of
    the final payment of the last tranche to complete the $1 million additional stock purchase
    and February 21, 2007. The Company received $250,000 in February 2006. $80,000 was
    expensed for issuing the warrants. The stock warrants for 1,666,666 shares of Common Stock
    exercisable for a year period to February 21, 2008 expired on the date without any of the
    stock warrants being exercised.


---

NOTE 6
    STOCK PURCHASE AGREEMENTS (Continued)


c) On or about December 7, 2006 the Company entered into an Equity Line of Credit
    Agreement ("ELOC") with Tailor-Made Capital Limited ("TMC"). Pursuant
    to Equity Line of Credit Agreement, the Company may at its sole discretion, periodically
    sell to TMC common stock for a total purchase price of up to US$2,500,000 during the two
    year period commencing on the effective date of the registration statement but not later
    than three years from the date of the ELOC. The amount of each advance is subject to a
    maximum amount of US$250,000, and the Company may not submit an advance within 5 trading
    days of a prior notice of an advance. For each common stock purchased under the ELOC, TMC
    will pay between 90-100% of the volume weighted average price of our common stock quoted
    on the Over-the-Counter Bulletin Board for the 5 days immediately preceding the notice
    date. As part of this agreement, the Company issued to TMC 12,500,000 common stock as
    commitment fee and stock warrants for a total of 31,250,000 shares of common stock. The
    warrants expire on May 7, 2009. The warrants have an exercise price for 15,625,000 shares
    of common stock at $0.030 per share and the other 15,625,000 shares of common stock at
    $0.036 per share. At the date of this report, the Company has draw down US$50,000 on the
    Equity Line of Credit and in August 2008, the ELOC Agreement was terminated. Furthermore
    on the date of this report, TMC has exercised 500,000 stock warrants as per Note 6 (o)
    below.


d) On December 12, 2006, the Company also issued 138,889 stock warrants as part of
    commission in relation to the issuance of $50,000 Convertible Debenture to TMC in respect
    of the Debenture Purchase Agreement. These warrants have an exercise price of $0.036 per
    share and expire on May 12, 2009.


e) On January 3, 2007, the Company issued 4,342,464 shares of common stock for accrued
    services of $158,500.


f) On January 13, 2007 the Company acquired 18% interests in Guangzhou Waho Culture &
    Media Co., Ltd. (the "GWCM") for $243,000, of which $190,000 was to be paid by
    the issuance of 3,518,518 common stock of the Company. GWCM is a company focused in the
    business of online advertising for the China market.


g) On March 13, 2007, the Company entered into a Sales and Purchase Agreement to acquire
    the entire issued share capital of Good World Investments Limited which owns 50% issued
    shares capital of Beijing Ren Ren Health Culture Promotion Limited. Pursuant to the
    agreement, the Company issued 125 million shares to Central High Limited as the
    consideration. This purchase consideration was negotiated with reference to the BRR
    accounts and the underlying projects in BRR. Our directors Messrs. Con Unerkov and Alex Ho
    each owns 25% interests in, but are not directors or officers of, Central High Limited.h) On March 27, 2007, the Company issued 208,333 stock warrants as part of commission in
    relation to the issuance of $75,000 Convertible Debenture to TMC in respect of the
    Debenture Purchase Agreement. These warrants have an exercise price of $0.036 per share
    and expire on May 12, 2009.i) On May 18, 2007, the Company issued 2,667,095 unrestricted shares of common stock for
    accrued services of $97,349. These shares were issued in accordance with the Form S8
    registration statements.j) On July 18, 2007, the Company issued 800,000 unrestricted shares of common stock to its
    staff and consultant for services of $34,000. These shares were issued in accordance with
    the Form S8 registration statements.k) On August 14, 2007, the Company issued the third tranche of 1,500,000 shares to an
    independent third party for 3 months consulting services in accordance with the Consultant
    Agreement executed on December 1, 2006. The services were valued at fair market value of
    the common stock issued for $57,000.l) On August 20, 2007, the Company entered into an agreement with a third party consultant
    to provide promotional works for the Company and, in return, the Company issued 1,250,000
    shares of Common Stock as compensation fee. The term of this agreement is for a period of
    3 months commencing immediately after the date of this agreement. The services were valued
    at fair market value of the common stock issued for $43,750.


m) On September 19, 2007, we entered into a Financial Public Relation Agreement ("FPR
    Agreement") with a third party consultant to provide services for the Company.
    Pursuant to the FPR Agreement, the term of the Agreement shall be for 30 days commencing
    immediately after the date of execution. The Company issued to the consultant 180,000
    shares of common stock as consideration pursuant to the FPR Agreement. The services were
    valued at fair market value of the common stock issued for $6,120.


---

NOTE 6
    STOCK PURCHASE AGREEMENTS (Continued)


n) On October 9, 2007, we entered into a Consulting Services Agreement ("CS
    Agreement") with a third party consultant to provide consulting services for the
    Company. Pursuant to the CS Agreement, The term of the CS Agreement shall be for 3 months
    commencing immediately after the date of execution. The Company issued to the consultant
    1,250,000 shares of common stock as a consideration in the CS Agreement. The services were
    valued at fair market value of the common stock issued for $60,000 of which $4,667 was
    prepaid service expense at December 31, 2007.o) On October 15, 2007, 500,000 warrant shares were exercised at an exercise price of
    $0.030 per share under the ELOC Agreement.p) On October 18, 2007, the Company sold 2,000,000 common stock of the Company for $50,000
    under the ELOC Agreement.q) On October 30, 2007, we entered into an Advertising Agreement ("Agreement")
    with a third party consultant to provide services for the Company. Pursuant to the
    Agreement, The term of the Agreement shall be for 12 months commencing after the date of
    execution. The Company issued to the consultant 6,666,666 shares of common stock as a
    consideration of the Agreement. The services were valued at fair market value of the
    common stock issued for $240,000, of which $198,667 was prepaid service expense at
    December 31, 2007.


r) On November 26, 2007, the Company issued 1,000,000 unrestricted shares of common stock
    for accrued services of $36,000, of which $27,400 was prepaid service expenses at December
    31, 2007. These shares were issued in accordance with the Form S8 registration statements.s) On November 28, 2007, the Company entered into an agreement with a third party
    consultant to provide services for the Company and, in return, the Company issued
    2,500,000 shares of Common Stock as compensation fee. The term of this agreement is for a
    period of 3 months commencing on December 3, 2007. The services were valued at fair market
    value of the common stock issued for $90,000, of which $61,000 was prepaid service expense
    at December 31, 2007.t) On December 19, 2007, the Company issued 1,344,205 unrestricted shares of common stock
    for accrued services of $48,720. These shares were issued in accordance with the Form S8
    registration statements.


u) On December 28, 2007, the Company issued 2,777,778 restricted shares of common stock
    for accrued services of $100,000.v) In January 2008 the Company issued 2,631,579 shares pursuant to a Second Amendment
    Agreement to extend the repayment of the $50,000 Convertible Debenture to March 28, 2008.w) After the balance sheet date on August 3, 2008 the Company issued 10,000,000 shares of
    Common Stock pursuant to a 
    Letter Agreement to terminate the ELOC Agreement.


NOTE 7
    PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES


Prepayments, deposits and other receivables are summarized as follows:


As of June 30, 
    2008
    
    As of December 31, 2007--------------------------
    
    -------------------------------Rental deposits
    $
    5,925
    $
    21,334Utility and other
    deposits
    
    631
    
    9,860Advance to
    suppliers
    
    77,806
    
    82,337Other receivables
    
    7,356
    
    1,449---------------------------
    
    -------------------------------$
    91,718
    $
    114,980================
    
    ==================


---

NOTE 8
    OTHER PAYABLES AND ACCRUALS


Other payables and accruals are
    summarized as follows:


As of June 30, 2008
    
    As of December 31, 2007----------------------------
    
    -------------------------------Accrued salaries
    and wages
    $
    97,497
    $
    93,955Accrued interest
    
    101,004
    
    27,325Accrued
    accounting, audit, legal and consulting fee
    
    74,207
    
    45,191Accrued office and
    related expenses
    
    56,562
    
    39,799Accrued others
    
    4,018
    
    16,578Other payables
    
    156,569
    
    121,544Deposit from
    customers
    
    19,531
    
    30,001---------------------------
    
    ---------------------------$
    509,388
    $
    374,393================
    
    ================


NOTE 9
    CONVERTIBLE DEBENTURES


On December 7, 2006 the Company entered into a Debenture Purchase Agreement
    ("DPA") with TMC whereby TMC agreed to purchase certain convertible securities
    issued by the Company. Pursuant to the terms of the DPA, the Company may sell and issue to
    TMC, and TMC will purchase from the Company, up to an aggregate of US$125,000 of
    convertible debenture ("Convertible Debenture") of the Company which will be due
    12 months from the date of issuance. The terms of the Convertible Debenture due one year
    from the date of issue, bears interest at a rate of 10% per annum which is payable on the
    conversion date or at maturity, and can be converted at TMC's discretion at any time prior
    to maturity date at a conversion price of US$0.024 per share. Under the DPA, the Company
    can issue the Convertible Debentures in 3 stages: 1) US$50,000 upon signing the DPA, 2)
    US$50,000 upon filing the registration statement in accordance to the SPA, and 3)
    US$25,000 upon the aforementioned registration statement being declared effective by the
    Securities Exchange Commission. On December 20, 2006, the Company issued US$50,000
    Convertible Debenture pursuant to the DPA and this was the only Convertible Debenture
    outstanding as at December 31, 2006.
    On March 28, 2007, the Company issued US$75,000
    Convertible Debenture pursuant to the DPA and as at December 31, 2007 a total of
    US$125,000 Convertible Debentures were issued and outstanding.
    On January 4, 2008, the Company issued 2,631,579
    common stock as consideration to extend the repayment date of the $50,000 Convertible
    Debenture to March 28, 2008. These common stock were registered and declared effective by
    the Securities Exchange Commission on February 13, 2008.
    On April 7, 2008, the Company paid the two
    Convertible Debentures totaling $125,000 and accrued interests of $14,198.


NOTE 10
    SHORT-TERM DEBT


As of
    June 30, 2008, the Company has an outstanding short-term unsecured debt payable of
    $91,200, with annual interest rate of 10%.


NOTE 11
    DUE TO DIRECTORS AND OFFICERS


The due
    to directors and officers are interests free, unsecured and due on demand. The balance of
    due to directors and officers is $1,010,118 as of June 30, 2008.


---

NOTE 12
    LONG TERM DEBTS


June 30, 
    2008
    
    December 31, 
    2007--------------------------
    
    ----------------------Shareholder Loan
    $
    2,000,000
    $
    2,000,000Other Loan
    
    -
    
    23,600---------------------------
    
    ---------------------------$
    2,000,000
    $
    2,023,600================
    
    ==============


The other loan is
    unsecured, accrue interest at 10% per annum and payable on March 31, 2009.


The long term shareholder loan of $2,000,000 is unsecured, repayable on November 25, 2010.
    This long term loan bears no interest for the first two years to November 25 2007 and
    thereafter 8% per annum.


NOTE 13
    SHARES ISSUED FOR PREPAID EXPENSES


Six months ended
    June 30, 2008
    
    Year ended December 31, 2007--------------------------
    
    ----------------------Balance at the
    beginning of period
    $
    293,401
    $
    55,375Issue of shares
    for service during period
    
    -
    
    603,420Less: service
    expensed during period
    
    (214,733)
    
    (365,394)---------------------------
    
    ---------------------------Balance at the end
    of period
    $
    78,668
    $
    293,401================
    
    ==============


NOTE 14
    RELATED PARTIES TRANSACTIONS


There were no transactions with related parties for the three months and six months ended
    June 30, 2008 and year ended December 31, 2007 other than as noted below.The Company agreed to pay directors and officers a monthly salary and consultation fee for
    services performed. During the three and six months periods ended June 30, 2008, the
    Company paid the directors and its officers and their services companies a total
    remuneration of $54,000(three months ended June 30, 2007 $118,515), and $108,000 (six
    months ended June 30, 2007 $210,015) respectively.


---

NOTE 15
    COMMITMENTS AND CONTINGENCIES


a)
    The Company leases office premises for its operations in United States, Hong Kong and
    China under operating leases. Rental expenses under operating lease for the three months
    ended June 30, 2008 was $7,759 (for three months ended March 31, 2007 :$18,341).Future minimum rental payments under non-cancellable operating leases for the year ended
    December 31, 2008 is $10,211.b)
    The Company has service or employment agreements with the Directors and
    Officer and its service companies (the "Executives") for two years commencing on
    October 1, 2005 and the agreements shall continue thereafter unless terminated by either
    parties. The Executives will receive a monthly salary at a rate to be agreed by the
    Company and the Executives from time to time. In addition, the Executives will receive an
    annual management bonus to be determined by the majority of the Board based on the
    operating results of the Company and the Executives' performances, provided that it does
    not exceed 8.8 % of the net profit of the Company.c)
    The Company will pay a 10% commission in cash and an equal amount in stock
    warrant to an independent party on any funds received as a result of any exercise of stock
    warrants issued pursuant to the ELOC Agreement.d)
    On or about May 7, 2008, the Company received a correspondence from a law
    firm regarding complaints on some transmission of unsolicited facsimile allegedly from the
    Company in 2006, and advised of potential litigation. The Company has never sent or
    authorized any unsolicited facsimile transmission, and the Company has taken every
    possible effort to distance from these unauthorized transmission. The Company firmly
    believes that the complaint is frivolous and without. basis, and is consulting with its
    solicitor. The Company would vigorously defend any such legal action if pursued.


---

NOTE 16
    SUBSEQUENT EVENTS (Unaudited)


After the balance sheet date on August 3, 2008 the Company issued 10,000,000 shares of
    Common Stock pursuant to a Letter Agreement to terminate the ELOC Agreement.


NOTE 17
    BUSINESS COMBINATIONS


Sale and Purchase Agreement between the Company and Central High Limited


On March 13, 2007, the Company entered into a Sales and Purchase agreement (the
    "Purchase Agreement") to acquire 100% of the issued and outstanding shares of
    Good World Investments Limited ("Good World") from Central High Limited.


The consideration for the acquisition is 125,000,000 shares of the Company's common stock
    valued at $6,000,000 based upon the market value of shares as it traded on the
    Over-the-Counter Bulletin Board (OTCBB) at the date of acquisition . Our directors,
    Messrs. Con Unerkov and Alex Ho, each own 25% interests in Central High Limited. Good
    World, an investment holding company, owns 50% of the registered capital of Beijing Ren
    Ren Health Culture Promotion Limited (the "BRR"). BRR is a company incorporated
    in the People's Republic of China, and is working with the Chinese Government on a
    benevolent project named "Great Wall of China Project" to promote health
    education and health awareness to China.


The purchase price was allocated as follows:


Cash
    
    $
    26,671Current assets
    
    416,378Current liabilities
    
    (30,008)Property, plant and equipment
    
    7,471Intangible assets
    
    7,791,676Long-term loan
    
    (2,000,000)Minority interests
    
    (212,188)Purchase price
    
    $
    6,000,000


---

Item 2.
    Management' s Discussion and
    Analysis of Financial Condition and Results of Operations.


Forward Looking Statements


THIS FOLLOWING INFORMATION SPECIFIES CERTAIN FORWARD-LOOKING STATEMENTS OF MANAGEMENT OF
    THE COMPANY. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE HAPPENING OF
    FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACT. FORWARD-LOOKING STATEMENTS MAY BE
    IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, SUCH AS "MAY",
    "SHALL", "COULD", "EXPECT", "ESTIMATE",
    "ANTICIPATE", "PREDICT", "PROBABLE", "POSSIBLE",
    "SHOULD", "CONTINUE", OR SIMILAR TERMS, VARIATIONS OF THOSE TERMS OR
    THE NEGATIVE OF THOSE TERMS. THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING
    INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENT ON THE BASIS OF ASSUMPTIONS MADE BY
    MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. OUR FUTURE OPERATING RESULTS,
    HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE
    INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
    THE ASSUMPTIONS USED FOR PURPOSES OF THE
    FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATION REPRESENT ESTIMATES OF
    FUTURE EVENTS AND ARE SUBJECT TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC,
    LEGISLATIVE, INDUSTRY, AND OTHER CIRCUMSTANCES. AS A RESULT, THE IDENTIFICATION AND
    INTERPRETATION OF DATA AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING
    ASSUMPTIONS FROM AND AMONG REASONABLE ALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO
    THE EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY FROM
    ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED ON THE
    ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. WE CANNOT GUARANTY THAT ANY OF THE
    ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING
    INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING
    STATEMENTS.


Critical Accounting Policy and
    Estimates


Our Management's Discussion and Analysis of Consolidated Financial Condition and Results
    of Operations section discusses our consolidated financial statements, which have been
    prepared in accordance with accounting principles generally accepted in the United States
    of America. The preparation of these consolidated financial statements requires management
    to make estimates and assumptions that affect the reported amounts of assets and
    liabilities at the date of the consolidated financial statements and the reported amounts
    of revenues and expenses during the reporting period. On an on-going basis, management
    evaluates its estimates and judgments, including those related to revenue recognition,
    accrued expenses, financing operations, and contingencies and litigation. Management bases
    its estimates and judgments on historical experience and on various other factors that are
    believed to be reasonable under the circumstances, the results of which form the basis for
    making judgments about the carrying value of assets and liabilities that are not readily
    apparent from other sources. Actual results may differ from these estimates under
    different assumptions or conditions. The most significant accounting estimates inherent in
    the preparation of our consolidated financial statements include estimates as to the
    appropriate carrying value of certain assets and liabilities which are not readily
    apparent from other sources. These accounting policies are described at relevant sections
    in this discussion and analysis and in the notes to the consolidated financial statements
    included in our Quarterly Report on Form 10-Q for the period ended June 30, 2008.


---

Overview


DESCRIPTION
    OF BUSINESS.OUR
    BACKGROUND. The Company was incorporated in Texas on October 1, 2002 and was originally
    formed to be a frozen drink machine rental service. It was intended to specialize in
    renting frozen drink machines for gatherings such as wedding receptions, birthday parties,
    football parties, anniversaries, family reunions, weekend barbeques, social functions and
    fund raising events, as well as any other type of occasion. From the beginning, this
    business was at the first stage of development and the primary focus was on continuing to
    developing and revising our business strategies.In
    January 2005, the Company changed its name to International Debt Exchange Associates Inc.
    reflecting the Company's intent to become a diverse company through mergers and
    acquisitions and still maintained the current business as a frozen drink machine rental
    service.In
    September 2005, the Company changed its board of directors whom has since changed the
    Company name to China Media Group Corporation to reflect the Company's intent to focus all
    its efforts in advertising and media in the emerging China market. Under new management,
    the Company commenced to position the Company to capitalize on the growth of the Chinese
    advertising market where global companies are rushing into China to try to grab and hold
    the attention of its 1.3 billion citizens.OUR
    BUSINESS. Our mission is to become one of China's leading new age media companies through
    the use of new technologies and devices combined with traditional media of TV, Newspapers,
    Magazines, Billboards and Internet to reach today's mobile society. In order to facilitate
    this the Company established 5 strategic business units being "Television",
    "Advertising" "Print" "Telecommunications and Mobile
    Computing" and"Products and Services" .In
    March 2007, we acquired the entire issued share capital of Good World Investments Limited
    ("Great World") which owns 50% of Beijing Ren Ren Health Culture Promotion
    Limited ("Beijing Ren Ren"). Good World is an investment holding company and
    Beijing Ren Ren is in the business of advertising in promoting health education and health
    awareness in China under the program Great Wall of China Project as further described
    below.
    We plan to offer advertising services in China.
    These advertising services would be across all media thus we will offer our customers
    selective advertising on specific media for nationwide campaign. China's advertising
    industry is still young and fragmented. We aim to differ from other advertisers so that we
    can provide nationwide campaigns across all media spectrum. To this end, we will work to
    secure strategic ad placements in key cities in China so that our customers will have the
    ability to launch nationwide campaigns.


In summary, the update of some of
    the events are as follows:Advertising
    Unit
    On or about December 5, 2005, the Company announced
    that it has been appointed as the advertising agent for Beijing Ren Ren Health Culture
    Promotion Co. Limited which has since become our subsidiary company. Beijing Ren Ren had
    obtained approval for signs in Chao Yuan District in Beijing. However, with the upcoming
    Olympics, the Beijing Government has banned all outdoor signs until after the Olympics.
    Therefore no revenue will be obtained from outdoor media advertising until in Q4 2008 or
    2009. In the meantime we will focus our attention away from Beijing and other Olympic
    cities that have similar government restrictions, and concentrate on second tier cities on
    district signs for the health promotion and awareness campaigns. During the period, the
    Company has earned $21,126 in relation to advertising services.Furthermore
    on or about December 7, 2005 the Company entered into a cooperation agreement with Harbin
    Shendong Advertising Co. Limited on developing adverting revenue in Harbin, which then
    progress to discussions on acquisition of 9 signs from Harbin Shengdong. The Company is
    having on going discussion with Harbin Shendong on the acquisition of the 9 signs. No
    revenue has been generated from these signs.


---

Telecommunications
    Unit
    On or about January 23, 2006, the Company announced
    the establishment of the Telecommunications and Mobile Computing Division to focus on the
    new media advertising where we would take advantage of new convergent devices for
    telecommunications advertising. The business of selling advertising through
    telecommunications media and devices is still at an early stage as we are developing
    strategies to effectively enter the market. No revenue has been generated from advertising
    through telecommunications media and devices at the date of this report.


As announced on or about January 25, 2006 the Company entered into a distribution
    agreement for the territory of China and Hong Kong for the M.A.G.I.C. Convergent Device.
    The Company has acquired the rights to M.A.G.I.C. convergent device which is expected to
    be commercially available for sales in the coming months. M.A.G.I.C. is a next generation
    convergent device that has the full capabilities of a notebook computer shrink to a size
    of a PDA phone. The Company received the initial prototype unit in May 2006 and have
    completed conducting compliance, functional, stability, load and usability testing on the
    device. In May 2008, the Company has received the final prototype, and expects to start
    the commercial sale of the M.A.G.I.C. convergent devices in Q3 of this year. No revenue
    has been generated from this M.A.G.I.C. convergent device at the date of this report.


The Company has commenced selling mobile devices through certain distribution channels in
    Hong Kong in advance of selling the MAGIC device. For this year the Group has earned
    $5,137 on selling mobile devices but did not make any revenue for this quarter due to
    unfavorable market condition in mobile devices.


Print Unit
    On or about January 13, 2007, the Company acquired
    18% interests in Guangzhou Waho Culture Co., Ltd. ("Waho"), a company in the
    business of online advertising with specifically a contract to do the print and online
    edition of Yellow Pages for Guangdong Province for China Tietong Communications Co., Ltd.,
    one of the licensed telecommunications carriers in China. We will actively monitor this
    investment and will hold discussions with management to determine if certain collaboration
    between Waho's online portal with our advertising and technology platforms. We have
    written off this investment in the accounts, but we are still actively working on this
    investment to bring the project into our Group. For this fiscal year, we have generated
    $11,790 revenue for printing services from the publishing the 2008 China Tietong Guangdong
    Yellow Pages. We did not generate any revenue from the printing unit in this quarter.


Hospital Advertising Unit
    On or about February 27, 2006 the Company announced
    that it has been appointed to undertake the advertising placement work for Beijing Number
    6 Hospital. We have erected 9 sign boards for sale and our staff continues to work to
    secure advertising customers for this hospital. No revenue has been generated from the
    placement from this hospital at the date of this report.


I
    It is the Company's intention to increase the Company's size and earning potential through
    internal growth, joint venture, acquisitions and mergers with similar businesses to gain a
    greater foothold in the marketplace. We are continuing to search for possible acquisition
    and\or merger candidates to be identified and this will be competitors, business
    associates and other similar businesses that would help strengthen the Company.


---

Plan of operationsOUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS.
    We hope to generate additional revenues in the next
    twelve months by engaging business operations through internal growth and through
    strategic acquisitions and cooperative advertising agreements, as described more fully
    under "Overview" above.


We have cash and cash equivalents of $52,166 as of June 30, 2008; a decrease from the
    previous period end of December 31, 2007. In the opinion of management, these funds will
    not satisfy our working capital requirements to operate at our current level of activity
    for the next twelve months. To effectuate our business plan, during the next twelve
    months, we must arrange for adequate funding to implement our plans of increasing our
    advertising offerings and promote our advertising services, through cooperation agreements
    and otherwise.


Financing and funding
    On or about December 7, 2006, the Company entered
    into an Equity Line of Credit Arrangement with a private equity firm that will purchase up
    to US$2.5 million of our Common Stock under certain conditions after we have successfully
    registered the Registration Statement with the SEC. On the same date, the Company entered
    into a Debenture Purchase Agreement with the same party a $125,000 convertible debenture
    under certain conditions. Details of both financing arrangements can be found on the
    Company's filing on the SEC website. The Company intends to use this funding to for
    working capital and to aggressively roll out its business plans. At the date of this
    report, the Company has draw down US$50,000 on the Equity Line of Credit but has received
    $125,000 under the Debenture Purchase Agreement. Furthermore the private equity firm has
    exercised US$15,000 in warrants. In April 2008, the Company repaid the $125,000
    Convertible Debenture. In August 2008, the Company terminated the ELOC agreement except
    for the stock warrants issued pursuant to the ELOC Agreement.


Management intents intends to continue to raise additional financing through debt and
    equity financing or other means and interests that it deems necessary, with a view to
    implementing our business plan and building a revenue base. We plan to use the proceeds of
    such financings to provide working capital to our operations and increase our capital
    expenditure for marketing and working with our co-operative partners. There can be no
    assurances that sufficient financing will be available on terms acceptable to us or at
    all. Our forecast for the period for which financial resources will be needed to support
    our operations involves risks and uncertainties and actual results could fail as a result
    of a number of factors.


Specifically, we hope to accomplish the steps listed below to implement our business plan.
    We estimate that we will require approximately $2,000,000 to commence operations as
    envisioned below during the next twelve months. The figures and steps outlined below are
    estimates only, and our actual progress and cost may vary from these estimates and is
    subject to our ability to obtain adequate funding. Such additional capital may be raised
    through public or private equity financing, borrowings, or other sources, such as
    contributions from our officers and directors. If we are unable to obtain funds necessary
    to implement our business plan, we may revise or scale back our business plan.


Over the course of the next two years, subject to available resources, we propose to build
    up our advertising presences to over 5 regional offices in China. Over the next two years,
    we also propose to acquire strategic partners that have existing operations in cities or
    regions to grow our business by acquisition and through cooperation agreements and
    otherwise, subject to available funding. Additional support staff may be hired as
    necessity and resources dictate within the next twelve months.


We are not currently conducting any research and development activities, other than the
    continual development of our website in both English and Chinese. We do not anticipate
    conducting such activities in the near future. In the event that we expand our business
    scope, then we may need to hire additional employees or independent contractors as well as
    purchase or lease additional equipment.


---

Results
    of operation.


FOR THE THREE MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 2008 COMPARED TO THE THREE
    MONTHS AND SIX MONTHS PERIODS ENDED JUNE 30, 2007.


REVENUES.
    For the three months period ended June 30, 2008, the
    Group has realized revenue of $26,126 and a cost of revenue of $11,803, achieving a gross
    profit of $14,323. For the three months period ended June 30, 2007, the Group has realized
    revenue of $34,467 and a cost of revenue of $23,142, achieving a gross profit of $11,325.
    We hope to generate additional revenues when we begin to receive contracts from clients or
    through acquisitions. Depending upon the availability of operating capital, we intend to
    expand our operations in the next 12 months.


For the six months period ended June 30, 2008, the Group has realized
    revenue of $51,401 and a cost of revenue of $27,960, achieving a gross profit of $23,441.
    For the six months period ended June 30, 2007, the Group has realized revenue of $61,301
    and a cost of revenue of $43,389, achieving a gross profit of $17,912. We hope to generate
    additional revenues when we begin to receive contracts from clients or through
    acquisitions. Depending upon the availability of operating capital, we intend to expand
    our operations in the next 12 months.


OPERATING EXPENSES.
    For the three month period ended June 30, 2008, our
    gross profit was $14,323 and our total operating expenses were $233,603, all of which were
    selling, general and administrative expenses. We also had $42,524 in interest expenses and
    loss attributable to minority interests of $6,333, so that the net loss to our
    shareholders for the three months period ended June 30, 2008 was $255,471. This is in
    comparison to the same period ended June 30, 2007, where our gross profit was $11,325 and
    our total operating expenses were $339,888, all of which were selling, general and
    administrative expenses. We also had $24,950 in interest expenses and loss attributable to
    minority interests of $4,532, so that the net loss to our shareholders for the three
    months period ended June 30, 2007 was $348,981.


For the six month period ended June 30, 2008, our gross profit was
    $23,441 and our total operating expenses were $615,989, all of which were selling, general
    and administrative expenses. We also had $37 in interest income, $105,903 in interest
    expenses and loss attributable to minority interests of $11,720, so that the net loss to
    our shareholders for the six months period ended June 30, 2008 was $686,694. This is in
    comparison to the same period ended June 30, 2007, where our gross profit was $17,912 and
    our total operating expenses were $685,662, all of which were selling, general and
    administrative expenses. We also had $28,463 in interest expenses, $243,000 in impairment
    in investment and loss attributable to minority interest of $4,532, so that the net loss
    to our shareholders for the six months period ended June 30, 2007 was $934,681.


Liquidity and Capital Resources


As at June 30, 2008, the Company had cash and cash equivalents totaling $52,166, other
    current assets of $468,787 and non-current assets totaling $7,974,589 which were
    represented by $44,913 in fixed assets, $138,000 in distribution rights and $7,791,676 in
    goodwill. The total assets of the Company were $8,495,542 as of June 30, 2008. We also had
    current liabilities of $1,641,658 which were represented by $30,952 in accounts payable,
    $509,388 in accruals, $91,200 in short term debt, $1,010,118 due to related parties as of
    June 30, 2008. We also had $2,000,000 in long-term shareholders loan and $176,084 in
    minority interests as of June 30, 2008, making our total liabilities $3,817,742
    At present the Company does not have sufficient cash
    resources to provide for all general corporate operations in the foreseeable future. The
    Company will be required to raise additional capital in order to continue to operate in
    fiscal 2008.


---

Going
    Concern


The Company's financial statements are presented on a going concern basis, which
    contemplates the realization of assets and satisfaction of liabilities in the normal
    course of business. The Company has experienced significant losses from operations in
    recent periods. For the three months ended June 30, 2008 the Company incurred net losses
    of $255,471 and has accumulated losses of $4,268,983 as at June 30, 2008. The Company's
    ability to continue as a going concern must be considered in light of the problems,
    expenses and complications frequently encountered in developing markets and the
    competitive environment in which the Company operates. The Company is pursuing financing
    for its operations and seeking additional investment. In addition, the Company is seeking
    to expand its revenue base by adding new customers and to start out its advertising
    business. Failure to secure such financing, to raise additional equity capital and to
    expand its revenue based may result in the Company depleting its available funds and not
    being able to pay its obligations. These financial statements do not include any
    adjustments to reflect the possible future effects on the recoverability and
    classification of assets or the amounts and classification of liabilities that may result
    from the possible inability of the Company to continue as a going concern.


Off Balance Sheet Arrangements


As of June 30, 2008, there were no off balance sheet arrangements.The Company has
    no off-balance sheet obligations nor guarantees and has not historically used special
    purpose entities for any transactions.


---

Item 3.
    Quantitative and Qualitative
    Disclosure About Market Risk.


Quantitative and Qualitative Disclosures about Market Risk:


The Company is exposed to various market risks, including changes in interest rates.
    Market risk is the potential loss arising from adverse changes in market rates and prices,
    such as interest rates and foreign currency exchange rates. The Company does not enter
    into derivatives or other financial instruments for trading or speculative purposes. The
    Company also has not entered into financial instruments to manage and reduce the impact of
    changes in interest rates and foreign currency exchange rates, although we may enter into
    such transactions in the future.


Item 4.
    Controls and Procedures.


Evaluation of 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 principal
    executive and 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 principal executive and financial
    officers.


Changes in Internal Controls over Financial Reporting:


There have been no changes in the Company's internal control over financial reporting
    during the last quarterly period covered by this report that have materially affected, or
    are reasonably likely to materially affect, the Company's internal control over financial
    reporting.


---

PART
    II-OTHER INFORMATION


Item 1.
    Legal Proceedings


None.Item 2.
    Unregistered Sales of Equity Securities and Use of Proceeds


None.Item 3.
    Defaults Upon Senior Securities


None.Item 4.
    Submissions of Matters to a Vote of Security Holders


None.Item 5.
    Other InformationNone.


---

Item 6.
    Exhibits


Exhibit Number
    Description of Exhibit2.1
    Non-Blinding
    Agreement for Sale Purchase of shares of Cody Ventures Corporation. (1)2.2
    Sales and Purchase
    Agreement with Fleming Assets Limited for the distribution rights to M.A.G.I.C. Convergent
    Phone Device.(2)2.3
    Non-Blinding Stock Purchase Agreement with Dongguan Zhishixin Advertising
    Limited to acquire 52.3% controlling interests in Zhishixin.(3)2.4
    Stock Purchase
    Agreement with Central Star Holdings Limited. (4)2.5
    Sales and Purchase
    Agreement to purchase the entire share capital of Good World Investments Limited. (5)3.1
    Articles of Incorporation (6)3.1.1
    Certificate of Amendment to Articles of Incorporation (7)3.1.2
    Certificate of Amendment to Articles of Incorporation, as amended.(15)3.2
    Bylaws (6)4.1
    Consultancy Agreement between China Media Group Corporation and Waterville
    Investment Research, Inc.(8)4.2
    Consultancy Agreement between China Media Group Corporation and Uptick
    Limited. (9)4.3
    Executive Services Agreement between China Media Group Corporation and Con
    Unerkov (10)4.4
    Executive Services Agreement between China Media Group Corporation and Alex
    Ho (10)4.5
    Warrants to Purchase Common Stock (11)(12)10.1
    ELOC Arrangement with Tailor-Made Capital Ltd. (11)10.2
    Debenture Purchase Agreement with Tailor-Made Capital Ltd.(11).10.3
    2002 Stock Option Plan (13)10.4
    2007 Stock Incentive Plan(14)10.5
    Second Amendment Agreement (16)10.6
    Termination Letter Agreement (18)21.1
    Subsidiaries of small business issuer.(15)31*
    Certification as
    required by Rule 13a-14(a)/15d-14(a).32*
    Certification as
    required by 18 U.S.C. Section 1350.Notes:


1.
    Incorporated by reference to our Current Report on Form 8-K/A as filed with
    the SEC on October 19, 2005.2.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 1, 2006.3.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 7, 2006.4.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 16, 2006.5.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on March 15, 2007.6.
    Incorporated by reference to our Registration Statement on Form SB-2 as filed
    with the SEC on April 15, 2003.7.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 3, 2005.8.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on November 28, 2006..9.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on December 4, 2006.10.
    Incorporated by reference to our Annual Report on Form 10-KSB/A as filed with
    the SEC on August 11, 2006.11.
    Incorporated by reference to our Current Report on Form 8-K/A as filed with
    the SEC on March 8, 2007.12.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 16, 2006.13.
    Incorporated by reference to our Registration Statement on Form SB-2 as filed
    with the SEC on April 15, 2003.14.
    Incorporated by reference to our Registration Statement on Form S8 as filed
    with the SEC on March 8, 2007.15.
    Incorporated by reference to our Registration Statement on Form SB-2 as filed
    with the SEC on March 16, 2007.16.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on January 8, 2008.17.
    Incorporated by reference to our Annual Report on Form 10-KSB/A as filed with
    the SEC on August 11, 2006.18.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on August 7, 2008.


* Filed herewith.


---

SIGNATURESPursuant
    to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 34, the
    registrant has duly caused this report to be signed on its behalf by the undersigned,
    thereunto duly authorized.


China Media Group Corporationa Texas corporation/s/ Con Unerkov---------------------------------------Con UnerkovPrincipal executive
    officerPresident, director


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.


By:
    /s/ Con Unerkov
    August 15, 2008--------------------------------------------Con UnerkovIts:
    Principal executive
    officerPresident, CFO,
    director


---

Exhibit
    31Rule
    13a-14(a)/15d-14(a)Certification
    of Chief Executive Officer and Chief Financial Officer of the Company
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    and Securities and Exchange Commission Release 34-46427I, Con
    Unerkov, certify that:1. I
    have reviewed this annual report on Form 10-Q of China Media Group Corporation;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 small business issuer as of, and for, the periods
    presented in this report;4. The
    small business issuer's other certifying officer(s) and I are 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; and(c)
    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.


5. 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
    the 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 15, 2008/s/ Con Unerkov-----------------------Con UnerkovChief Executive Officer and Chief
    Financial Officer


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Exhibit 32


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In
    connection with the Annual Report of China Media Group Corporation a Texas corporation
    (the "Company") on Form 10-Q for the three months period ending June 30, 2008,
    as filed with the Securities and Exchange Commission on the date hereof (the
    "Report"), Con Unerkov, Chief Executive Officer and Chief Financial Officer of
    the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. ss. 1350, as
    adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:


(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 result of operations of the Company.


A signed original of this written statement required by Section 906 has been provided to
    China Media Group Corporation, and will be retained by China Media Group Corporation and
    furnished to the Securities and Exchange Commission or its staff upon request./s/ Con
    Unerkov--------------------------Con
    UnerkovChief
    Executive Officer and Chief Financial OfficerAugust
    15, 2008