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 September 30, 2009[   ]
    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
    mark whether the registrant has submitted electronically and posted on its corporate Web
    site, if any, every Interactive Data File required to be submitted and posted pursuant to
    Rule 405 of Regulation S-T (?32.405 of this chapter) during the preceding 12 months (or
    for such shorter period that the registrant was required to submit and post such files).


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[   ] Non-Accelerated Filer [   ] Smaller Reporting Company [ x ]

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


Yes [   ] No[ x ]

The
    number of common equity shares outstanding as of October 31, 2009 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 thePrivate 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.


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PART I


cmg_logo

Item 1.
    Condensed
    Consolidated Financial Statements


China Media Group Corporation
Condensed Consolidated Financial Statements
September 30, 2009
(Unaudited)(Expressed In United States Dollars)

Condensed
    Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008


Condensed Consolidated Statements of Operations for the nine months period ended September
    30, 2009 and September 30, 2008


Condensed Consolidated Statements of Stockholders' Equity for the years ended December 31,
    2008 and 2007, and for the nine months period ended September 30, 2009


Condensed Consolidated Statements of Cash Flows for the nine months periods ended
    September 30, 2009 and 2008


Notes to Condensed Consolidated Financial Statements


---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    BALANCE SHEETSAS OF
    SEPTEMBER 30, 2009 AND DECEMBER 31, 2008


September 30, 2009
    
    December 31, 2008(Unaudited)
    
    (Audited)Notes
    
    -----------------
    
    ---------------------US$
    
    US$ASSETSCurrent Assets:Cash and cash
    equivalents
    
    
    19,561
    
    67,764Accounts
    receivables
    
    
    35,323
    
    5,807Loans to unrelated
    parties
    8
    
    132,665
    
    132,737Prepayments,
    deposit and other receivables
    9
    
    271,094
    
    91,227---------------------
    
    ---------------------Total current
    assets
    
    
    458,643
    
    297,535Non-current
    assetsProperty and
    equipments, net
    10
    
    30,469
    
    39,851Advance payment
    for distribution rights
    11
    
    138,000
    
    138,000Goodwill
    
    
    6,791,676
    
    6,791,676---------------------
    
    ---------------------6,960,145
    
    6,969,527---------------------
    
    ---------------------7,418,788
    
    7,267,062=============
    
    =============LIABILITIES AND
    STOCKHOLDERS' EQUITYCurrent
    liabilities:Accounts payable
    
    
    -
    
    430Other payables and
    accruals
    12
    
    626,198
    
    466,403Convertible
    debentures
    13
    
    -
    
    -Short term debt
    14
    
    99,645
    
    -Due to officer and
    directors
    15
    
    1,101,137
    
    1,118,674Due to a
    shareholder
    
    
    396,528
    
    16,528---------------------
    
    ---------------------Total current
    liabilities
    
    
    2,223,508
    
    1,602,035---------------------
    
    ---------------------Long-term debt
    16
    
    2,000,000
    
    2,099,645Minority
    interest
    
    
    156,221
    
    168,230Stockholders'equity:Common stock, no
    par value, 85,000,000,000 shares authorized, 534,132,450 (2008: 534,132,450) shares issued
    and outstanding
    6
    
    7,428,902
    
    7,428,902Additional
    paid-in-capital
    
    
    1,735,702
    
    1,660,183Shares issued for
    prepaid consulting services
    17
    
    -
    
    -Comprehensive
    income
    
    
    43,304
    
    43,265Accumulated
    deficits
    
    
    (6,168,849)
    
    (5,735,198)---------------------
    
    ---------------------Total
    stockholders' equity
    
    
    3,039,059
    
    3,397,152---------------------
    
    ---------------------7,418,788
    
    7,267,062============
    
    ============




F-3

---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    STATEMENTS OF OPERATIONSFOR
    THE THREE MONTHS AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 AND 2008


Three months periods
    Nine months periodsEnded September 30
    Ended September 30----------------------------------------
    -----------------------------------------2009
    
    2008
    
    2009
    
    2008-----------------
    
    -----------------
    
    -----------------
    
    ---------------US$
    
    US$
    
    US$
    
    US$Net
    revenue
    
    37,309
    
    26,314
    
    79,065
    
    77,715Cost
    of revenue
    
    (16,457)
    
    (11,811)
    
    (53,254)
    
    (39,771)-----------------
    
    -----------------
    
    ----------------
    
    ---------------Gross
    profit
    
    20,852
    
    14,503
    
    25,811
    
    37,944Operating
    expenses:Impairment
    of goodwill
    
    -
    
    1,000,000
    
    -
    
    1,000,000Selling,
    general and administrative expenses
    
    116,186
    
    253,725
    
    343,022
    
    869,715-----------------
    
    -----------------
    
    ---------------
    
    ---------------Loss
    from operations before other expense
    
    (95,334)
    
    (1,239,222)
    
    (317,211)
    
    (1,831,771)Other
    income / (expenses)Interest
    income
    
    -
    
    -
    
    -
    
    37Interest
    expenses
    
    (42,291)
    
    (41,723)
    
    (128,449)
    
    (147,626)-----------------
    
    -----------------
    
    -----------------
    
    --------------Net
    loss before minority interests
    
    (137,825)
    
    (1,280,945)
    
    (445,660)
    
    (1,979,360)Minority
    interest
    
    3,758
    
    4,192
    
    12,009
    
    15,912-----------------
    
    -----------------
    
    -----------------
    
    --------------Net
    loss
    
    (134,067)
    
    (1,276,753)
    
    (433,651)
    
    (1,963,448)-----------------
    
    -----------------
    
    -----------------
    
    --------------Other
    comprehensive incomeForeign
    currency translation gain
    
    274
    
    459
    
    39
    
    26,405-----------------
    
    -----------------
    
    -----------------
    
    --------------Comprehensive
    loss
    
    (133,793)
    
    (1,276,294)
    
    (433,612)
    
    (1,937,043)==========
    
    ==========
    
    ==========
    
    ==========Basic
    and diluted loss per common share
    
    (0.00)
    
    (0.00)
    
    (0.00)
    
    (0.00)==========
    
    ==========
    
    ==========
    
    ==========Basic
    and diluted weighted average number of common shares *
    
    534,132,450
    
    530,762,885
    
    534,132,450
    
    526,329,914==========
    
    ==========
    
    ==========
    
    ==========


*
    Weighted average number of shares used to compute basic and diluted loss per
    share for the three months ended September 30, 2009 and 2008 are the same since the effect
    of dilutive securities are anti-dilutive.


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

F-4

---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    STATEMENTS OF STOCKHOLDERS' EQUITYFOR
    THE YEARS ENDED DECEMBER 31, 2008 AND 2007AND
    FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009


Additional
    
    
    
    TotalCommon stock
    paid-in
    Comprehensive
    Prepaid
    Accumulated
    stockholders'Shares
    Amount
    capital
    income
    Expenses
    Deficit
    equity-----------------------
    -----------------
    ---------------------
    ----------------------
    --------------------
    ---------------------
    ----------------------US$
    US$
    US$
    US$
    US$
    US$Balance
    at January 1, 2007
    361,274,145
    776,670
    576,936
    -
    (55,375)
    (1,854,257)
    (556,026)Issuance
    of shares for staff
    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
    -
    -
    -
    -
    293,401
    -
    293,401Amortization
    of options granted
    -
    -
    100,692
    -
    -
    -
    100,692Issuance
    of shares for extension of repayment of debenture
    2,631,579
    -
    50,000
    -
    -
    -
    50,000Issuance
    of shares for termination of ELOC Agreement
    10,000,000
    -
    60,000
    -
    -
    -
    60,000Comprehensive
    income
    -
    -
    -
    22,499
    -
    -
    22,499Net
    loss
    -
    -
    -
    -
    -
    (2,152,909)
    (2,152,909)----------------
    -----------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance
    at December 31, 2008
    534,132,450
    7,428,902
    1,660,183
    43,265
    -
    (5,735,198)
    3,397,152----------------
    -----------
    --------------
    ---------------
    -------------
    --------------
    ---------------Amortization
    of options granted
    -
    -
    75,519
    -
    -
    -
    75,519Comprehensive
    income
    -
    -
    -
    39
    -
    -
    39Net
    loss
    -
    -
    -
    -
    -
    (433,651)
    (433,651)----------------
    -----------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance
    at September 30, 2009
    534,132,450
    7,428,902
    1,735,702
    43,304
    -
    (6,168,849)
    3,039,059=========
    =======
    ========
    =========
    ========
    ========
    =========




F-5

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CHINA MEDIA GROUP CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008Nine months period ended September 30-------------------------------------------2009
    
    2008-----------------
    
    -----------------US$
    
    US$Cash flows from
    operating activities:Net Loss
    
    
    (433,651)
    
    (1,963,448)Adjustments to
    reconcile net loss to net cash used in operating activities:Depreciation
    
    
    9,382
    
    9,152Minority interest
    
    
    (12,009)
    
    (15,912)Impairment on
    goodwill
    
    
    -
    
    1,000,000Common stock
    issuance for termination of ELOC agreement
    
    
    -
    
    60,000Common stock
    issuance for services
    
    
    -
    
    274,733Common stock
    issuance for extension of repayment of convertible debentures
    
    
    -
    
    50,000Option expenses
    for employee compensation
    
    
    75,519
    
    75,519Amortization of
    convertible debenture
    
    
    -
    
    17,742Changes in assets
    and liabilities:Prepaid expenses,
    deposit and other receivables
    
    
    (179,867)
    
    (7,386)Account receivable
    
    
    (29,516)
    
    (14,396)Loan receivable
    
    
    72
    
    -Accounts payable
    and accrued expenses
    
    
    159,365
    
    26,038Short term debt
    
    
    99,645
    
    5,070Long term debt
    
    
    (99,645)Due to related
    parties
    
    
    (17,537)
    
    364,369Due to a
    shareholder
    
    
    380,000
    
    137,759------------------
    
    ------------------Net cash (used
    in) / generated from operating activities
    
    
    (48,242)
    
    19,240Cash flows from
    investing activities:Purchase of
    property and equipment
    
    
    -
    
    (3,385)------------------
    
    ------------------Net cash used
    in investing activities
    
    
    -
    
    (3,385)Cash flows from
    financing activities:Repayment of
    convertible debenture
    
    
    -
    
    (125,000)------------------
    
    ------------------Net cash used
    in financing activities
    
    
    -
    
    (125,000)------------------
    
    ------------------


Net decrease in
    cash and cash equivalents
    
    
    (48,242)
    
    (109,145)Effect of exchange
    rate changes on cash and cash equivalents
    
    
    39
    
    26,405Cash and cash
    equivalents, beginning
    
    
    67,764
    
    107,903------------------
    
    ------------------Cash and cash
    equivalents, ending
    
    
    19,561
    
    25,163===========
    
    ===========Supplemental
    disclosure of cash flow information:Interest paid
    
    
    128,449
    
    147,626===========
    
    ===========Income taxes paid
    
    
    -
    
    -===========
    
    ===========The
    accompanying notes are an integral part of these consolidated financial statements.




---

CHINA MEDIA GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, a 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.In May 2009, the Company established a 50/50 joint venture company, ATC Marketing Limited,
    which is to be in the business of marketing and distributing of convergent multimedia
    communication and internet devicesIn September 2009, the Company acquired a 51% interest in Premium Multimedia Sdn. Bhd.,
    which is to be in the business of outdoor media businessThe Group will be engaged in the media and advertising business, focusing in China, and
    the marketing and distribution of convergent devices. During the period, the Company
    recorded sales in mobile internet devices and the provision of advertising services.


NOTE 2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS


Basis of Presentation


The accompanying financial statements have been prepared in conformity with accounting
    principles generally accepted in the United States and the rules of the U.S. Securities
    and Exchange Commission, and should be read in conjunction with the audited financial
    statements and notes thereto for the year ended December 31, 2008. They do not include all
    information and footnotes required by accounting principles generally accepted in the
    United States of America for complete financial statements. However, except as disclosed
    herein, there has been no material change in the information disclosed in the notes to the
    financial statements for the year ended December 31, 2008 included in the Company Form
    10-K filed with the Securities and Exchange Commission. In the opinion of the management,
    all adjustments (consisting of normal recurring accruals) considered necessary for a fair
    presentation of financial position and results of operations for the interim period
    presented have been included. Operating results for the interim period are not necessary
    indicative of the results that may be expected for the respective year.


Use of estimates


The 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 Consolidation


The consolidated financial statements for the nine months period ended September 30, 2009
    include the financial statements of the Company, its wholly owned subsidiaries Ren Ren
    Media Group Limited, Good World Investments Limited, 51% subsidiary Premium Multimedia
    Sdn. Bhd., and two 50% subsidiaries, namely Beijing Ren Ren Health Culture Promotion
    Limited and ATC Marketing Limited. ATC Marketing Limited was established on the date of
    May 21, 2009 and Premium Multimedia Sdn. Bhd. was acquired on September 26, 2009. The
    Company consolidated both of these 50% ownership companies because of the sole largest
    shareholding. status and/or controlling of the Board of Directors.


The results of subsidiaries acquired or sold during the year are consolidated from their
    effective dates of acquisition or through their effective dates of disposition,
    respectively.


All significant inter-company transactions and balances have been eliminated on
    consolidation.


F-7

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Net
    Income (Loss) per ShareBasic earnings per share were computed by dividing net loss by the weighted average number
    of shares of common stock outstanding during year. Diluted loss per common share for the
    nine months ended September 30, 2009 and year ended December 31, 2008 are not presented as
    it would be anti-dilutive.


Fair Value Measurements and DisclosuresASC 820"Fair Value Measurements and Disclosures"
    codified SFAS No. 107,"Disclosures
    about Fair Value of Financial Instruments". ASC 820 applies
    to all entities, transactions, and instruments that require or permit fair value
    measurements, with specific exceptions and qualifications. The Company is required to
    disclose estimated fair values of financial instruments. Unless otherwise indicated, the
    fair values of all reported assets and liabilities, which represent financial instruments,
    none of which are held for trading purposes, approximate are carrying values of such
    amounts.


Cash and Cash EquivalentsThe Company considers all liquid investments with a maturity of three months or less from
    the date of purchase that are readily convertible into cash to be cash equivalents.InventoriesInventories are stated at the lower of cost or market, cost being determined on the
    first-in, first-out method. Inventories are written down if the estimated net realizable
    value is less than the recorded value.Property & equipmentProperty & equipment is stated at costs. Depreciation are computed using the
    straight-line method over the estimated economic useful lives of the related assets as
    follows:Leasehold improvements
    5 yearsFurniture, fixture and equipment
    5 yearsIntangible 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.Income taxesThe Company accounts for income taxes under ASC 740"Income Taxes" which codified SFAS 109,
    "Accounting for Income Taxes." Under the asset and liability method of ASC 740,
    deferred tax assets and liabilities are recognized for the future tax consequences
    attributable to differences between the financial statements carrying amounts of existing
    assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
    are measured using enacted tax rates expected to apply to taxable income in the years in
    which those temporary differences are expected to be recovered or settled. Under ASC 740,
    the effect on deferred tax assets and liabilities of a change in tax rates is recognized
    in income in the period the enactment occurs. A valuation allowance is provided for
    certain deferred tax assets if it is more likely than not that the Company will not
    realize tax assets through future operations.


F-8

---

Stock-based
    compensationASC 718"Compensation - Stock Compensation" codified SFAS No. 123 prescribes accounting and reporting standards for all
    stock-based payments award to employees, including employee stock options, restricted
    stock, employee stock purchase plans and stock appreciation rights. , may be classified as
    either equity or liabilities. The Company should determine if a present obligation to
    settle the share-based payment transaction in cash or other assets exists. A present
    obligation to settle in cash or other assets exists if: (a) the option to settle by
    issuing equity instruments lacks commercial substance or (b) the present obligation
    is implied because of an entity's past practices or stated
    policies. If a present obligation exists, the transaction should be recognized as a
    liability; otherwise, the transaction should be recognized as equity.The
    Company accounts for stock-based compensation issued to non-employees and consultants in
    accordance with the provisions of ASC 505-50"Equity -
    Based Payments to Non-Employees" which codified 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". Measurement of
    share-based payment transactions with non-employees shall be based on the fair value of
    whichever is more reliably measurable: (a) the goods or services received; or (b)
    the equity instruments issued. The fair value of the share-based payment transaction
    should be determined at the earlier of performance commitment date or performance
    completion date.


Employees'
    benefits and pension obligationsMandatory
    contributions of five percent of gross salary payments, subject to certain minimum and
    maximum levels, are made to defined contribution Mandatory Provident Fund schemes
    ("MPF schemes") pursuant to the laws of Hong Kong. These contributions are
    charged to expense in the same period as the related salary cost. Total contributions made
    by the Company to the MPF schemes were $2,159 and 3,057 for the year December 31, 2008 and
    2007, respectively and $542 for the nine months ended September 30, 2009.


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 Chinese Renminbi, respectively. Such financial statements are
    translated into U.S. Dollars (USD) in accordance with ASC 830"Foreign Currency Translation" which codified
    Statement of Financial Accounts Standards ("SFAS") No. 52, "Foreign
    Currency Translation," with the respective currency as the functional currency.
    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 year. The resulting translation adjustments are reported under other
    comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive
    Income. As of September 30, 2009, the comprehensive income was $43,304, and $43,265 in
    2008, differences were immaterial.


F-9

---

Recent
    PronouncementsRecently
    Implemented StandardsASC
    105, Generally Accepted Accounting Principles ("ASC
    105") (formerly Statement of Financial Accounting Standards
    No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally
    Accepted Accounting Principles a replacement of FASB Statement No. 162) reorganized by
    topic existing accounting and reporting guidance issued by the Financial Accounting
    Standards Board ("FASB")
    into a single source of authoritative generally accepted accounting principles ("GAAP") to be applied by nongovernmental
    entities. All guidance contained in the Accounting Standards Codification ("ASC") carries an equal level of authority.
    Rules and interpretive releases of the Securities and Exchange Commission ("SEC") under authority of federal securities
    laws are also sources of authoritative GAAP for SEC registrants. Accordingly, all other
    accounting literature will be deemed"non-authoritative". ASC 105 is effective on a prospective basis for financial statements issued
    for interim and annual periods ending after September 15, 2009. The Company has
    implemented the guidance included in ASC 105 as of July 1, 2009. The implementation of
    this guidance changed the Company's references to GAAP
    authoritative guidance but did not impact the Company's
    financial position or results of operations.ASC 855, Subsequent Events ("ASC 855") (formerly Statement of Financial Accounting Standards No. 165, Subsequent
    Events) includes guidance that was issued by the FASB in May 2009, and is consistent
    with current auditing standards in defining a subsequent event. Additionally, the guidance
    provides for disclosure regarding the existence and timing of a company's evaluation of its subsequent events. ASC 855 defines two types of
    subsequent events,"recognized" and"non-recognized". Recognized subsequent events provide additional evidence about conditions
    that existed at the date of the balance sheet and are required to be reflected in the
    financial statements. Non-recognized subsequent events provide evidence about conditions
    that did not exist at the date of the balance sheet but arose after that date and,
    therefore; are not required to be reflected in the financial statements. However, certain
    non-recognized subsequent events may require disclosure to prevent the financial
    statements from being misleading. This guidance was effective prospectively for interim or
    annual financial periods ending after June 15, 2009. The Company implemented the guidance
    included in ASC 855 as of April 1, 2009. The effect of implementing this guidance was not
    material to the Company's financial position or results of
    operations.ASC 944, Financial Services - Insurance ("ASC 944") contains guidance that was previously issued by the FASB in May 2008 as
    Statement of Financial Accounting Standards No. 163, Accounting for Financial Guarantee
    Insurance Contracts - an interpretation of FASB Statement No. 60that provides for
    changes to both the recognition and measurement of premium revenues and claim liabilities
    for financial guarantee insurance contracts that do not qualify as a derivative instrument
    in accordance with ASC 815, Derivatives and Hedging (formerly included under
    Statement of Financial Accounting Standards No. 133, Accounting for Derivative
    Instruments and Hedging Activities). This financial guarantee insurance contract
    guidance also expands the disclosure requirements related to these contracts to include
    such items as a company's method of tracking insured financial
    obligations with credit deterioration, financial information about the insured financial
    obligations, and management's policies for placing and
    monitoring the insured financial obligations. ASC 944, as it relates to financial
    guarantee insurance contracts, was effective for fiscal years beginning after December 15,
    2008, except for certain disclosures related to the insured financial obligations, which
    were effective for the third quarter of 2008. The Company does not have financial
    guarantee insurance products, and, accordingly, the implementation of this portion of ASC
    944 did not have an effect on the Company's results of
    operations or financial position.ASC 805, Business Combinations("ASC 805") (formerly included under Statement of Financial Accounting Standards No.
    141 (revised 2007), Business Combinations) contains guidance that was issued by the
    FASB in December 2007. It requires the acquiring entity in a business combination to
    recognize all assets acquired and liabilities assumed in a transaction at the
    acquisition-date fair value, with certain exceptions. Additionally, the guidance requires
    changes to the accounting treatment of acquisition related items, including, among other
    items, transaction costs, contingent consideration, restructuring costs, indemnification
    assets and tax benefits. ASC 805 also provides for a substantial number of new disclosure
    requirements. ASC 805 also contains guidance that was formerly issued as FSP FAS 141(R)-1,
    Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That
    Arise from Contingencies which was intended to provide additional guidance clarifying
    application issues regarding initial recognition and measurement, subsequent measurement
    and accounting, and disclosure of assets and liabilities arising from contingencies in a
    business combination. ASC 805 was effective for business combinations initiated on or
    after the first annual reporting period beginning after December 15, 2008. The Company
    implemented this guidance effective January 1, 2009. Implementing this guidance did not
    have an effect on the Company's financial position or results of
    operations; however it will likely have an impact on the Company's
    accounting for future business combinations, but the effect is dependent upon
    acquisitions, if any, that are made in the future.




---

ASC
    810, Consolidation("ASC 810") includes new guidance issued by the FASB
    in December 2007 governing the accounting for and reporting of noncontrolling interests
    (previously referred to as minority interests). This guidance established reporting
    requirements which include, among other things, that noncontrolling interests be reflected
    as a separate component of equity, not as a liability. It also requires that the interests
    of the parent and the noncontrolling interest be clearly identifiable. Additionally,
    increases and decreases in a parent's ownership interest that leave control intact shall
    be reflected as equity transactions, rather than step acquisitions or dilution gains or
    losses. This guidance also requires changes to the presentation of information in the
    financial statements and provides for additional disclosure requirements. ASC 810 was
    effective for fiscal years beginning on or after December 15, 2008. The Company
    implemented this guidance as of January 1, 2009. The effect of implementing this guidance
    was not material to the Company's financial position or results of operations.ASC 825, Financial Instruments ("ASC 825") includes guidance which was
    issued in February 2007 by the FASB and was previously included under Statement of
    Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and
    Financial Liabilities Including an amendment of FASB Statement No. 115. The related
    sections within ASC 825 permit a company to choose, at specified election dates, to
    measure at fair value certain eligible financial assets and liabilities that are not
    currently required to be measured at fair value. The specified election dates include, but
    are not limited to, the date when an entity first recognizes the item, when an entity
    enters into a firm commitment or when changes in the financial instrument causes it to no
    longer qualify for fair value accounting under a different accounting standard. An entity
    may elect the fair value option for eligible items that exist at the effective date. At
    that date, the difference between the carrying amounts and the fair values of eligible
    items for which the fair value option is elected should be recognized as a cumulative
    effect adjustment to the opening balance of retained earnings. The fair value option may
    be elected for each entire financial instrument, but need not be applied to all similar
    instruments. Once the fair value option has been elected, it is irrevocable. Unrealized
    gains and losses on items for which the fair value option has been elected will be
    reported in earnings. This guidance was effective as of the beginning of fiscal years that
    began after November 15, 2007. The Company does not have eligible financial assets and
    liabilities, and, accordingly, the implementation of ASC 825 did not have an effect on the
    Company's results of operations or financial position.ASC 820, Fair Value Measurements and Disclosures("ASC 820") (formerly
    included under Statement of Financial Accounting Standards No. 157, Fair Value
    Measurements) includes guidance that was issued by the FASB in September 2006 that
    created a common definition of fair value to be used throughout generally accepted
    accounting principles. ASC 820 applies whenever other standards require or permit assets
    or liabilities to be measured at fair value, with certain exceptions. This guidance
    established a hierarchy for determining fair value which emphasizes the use of observable
    market data whenever available. It also required expanded disclosures which include the
    extent to which assets and liabilities are measured at fair value, the methods and
    assumptions used to measure fair value and the effect of fair value measures on earnings.
    ASC 820 also provides additional guidance for estimating fair value when the volume and
    level of activity for the asset or liability have significantly decreased. The emphasis of
    ASC 820 is that fair value is the price that would be received to sell an asset or paid to
    transfer a liability in an orderly transaction between willing market participants, under
    current market conditions. ASC 820 also further clarifies the guidance to be considered
    when determining whether or not a transaction is orderly and clarifies the valuation of
    securities in markets that are not active. This guidance includes information related to a
    company's use of judgment, in addition to market information, in certain circumstances to
    value assets which have inactive markets.Fair value guidance in ASC 820 was initially effective for fiscal years beginning after
    November 15, 2007 and for interim periods within those fiscal years for financial assets
    and liabilities. The effective date of ASC 820 for all non-recurring fair value
    measurements of nonfinancial assets and nonfinancial liabilities was fiscal years
    beginning after November 15, 2008. Guidance related to fair value measurements in an
    inactive market was effective in October 2008 and guidance related to orderly transactions
    under current market conditions was effective for interim and annual reporting periods
    ending after June 15, 2009.The Company applied the provisions of ASC 820 to its financial assets and liabilities upon
    adoption at January 1, 2008 and adopted the remaining provisions relating to certain
    nonfinancial assets and liabilities on January 1, 2009. The difference between the
    carrying amounts and fair values of those financial instruments held upon initial
    adoption, on January 1, 2008, was recognized as a cumulative effect adjustment to the
    opening balance of retained earnings and was not material to the Company's financial
    position or results of operations. The Company implemented the guidance related to orderly
    transactions under current market conditions as of April 1, 2009, which also was not
    material to the Company's financial position or results of operations.


F-11

---

Recently
    Issued Standards


In
    August 2009, the FASB issued ASC Update No. 2009-05, Fair Value Measurements and
    Disclosures (Topic 820): Measuring Liabilities at Fair Value ("ASC Update No. 2009-05"). This update amends
    ASC 820, Fair Value Measurements and Disclosures and provides further guidance on
    measuring the fair value of a liability. The guidance establishes the types of valuation
    techniques to be used to value a liability when a quoted market price in an active market
    for the identical liability is not available, such as the use of an identical or similar
    liability when traded as an asset. The guidance also further clarifies that a quoted price
    in an active market for the identical liability at the measurement date and the quoted
    price for the identical liability when traded as an asset in an active market when no
    adjustments to the quoted price of the asset are required are both Level 1 fair value
    measurements. If adjustments are required to be applied to the quoted price, it results in
    a level 2 or 3 fair value measurement. The guidance provided in the update is effective
    for the first reporting period (including interim periods) beginning after issuance. The
    Company does not expect that the implementation of ASC Update No. 2009-05 will have a
    material effect on its financial position or results of operations.In September 2009, the FASB issued ASC Update No. 2009-12, Fair Value Measurements and
    Disclosures (Topic 820): Investments in Certain Entities that Calculate Net Asset Value
    per Share (or Its Equivalent) ("ASC Update No. 2009-12"). This update sets forth guidance on using the net asset value per share
    provided by an investee to estimate the fair value of an alternative investment.
    Specifically, the update permits a reporting entity to measure the fair value of this type
    of investment on the basis of the net asset value per share of the investment (or its
    equivalent) if all or substantially all of the underlying investments used in the
    calculation of the net asset value is consistent with ASC 820. The update also requires
    additional disclosures by each major category of investment, including, but not limited
    to, fair value of underlying investments in the major category, significant investment
    strategies, redemption restrictions, and unfunded commitments related to investments in
    the major category. The amendments in this update are effective for interim and annual
    periods ending after December 15, 2009 with early application permitted. The Company does
    not expect that the implementation of ASC Update No. 2009-12 will have a material effect
    on its financial position or results of operations.In June 2009, FASB issued Statement of Financial Accounting Standards No. 167, Amendments
    to FASB Interpretation No. 46(R)("Statement No. 167"). Statement No. 167 amends FASB Interpretation No. 46R, Consolidation of
    Variable Interest Entities an interpretation of ARB No. 51 ("FIN 46R") to require an analysis to determine
    whether a company has a controlling financial interest in a variable interest entity. This
    analysis identifies the primary beneficiary of a variable interest entity as the
    enterprise that has a) the power to direct the activities of a variable interest entity
    that most significantly impact the entity's economic performance
    and b) the obligation to absorb losses of the entity that could potentially be significant
    to the variable interest entity or the right to receive benefits from the entity that
    could potentially be significant to the variable interest entity. The statement requires
    an ongoing assessment of whether a company is the primary beneficiary of a variable
    interest entity when the holders of the entity, as a group, lose power, through voting or
    similar rights, to direct the actions that most significantly affect the entity's economic performance. This statement also enhances disclosures about a
    company's involvement in variable interest entities. Statement
    No. 167 is effective as of the beginning of the first annual reporting period that begins
    after November 15, 2009. Although Statement No. 167 has not been incorporated into the
    Codification, in accordance with ASC 105, the standard shall remain authoritative until it
    is integrated. The Company does not expect the adoption of Statement No. 167 to have a
    material impact on its financial position or results of operations.In June 2009, the FASB issued Statement of Financial Accounting Standards No. 166, Accounting
    for Transfers of Financial Assets an amendment of FASB Statement No. 140 ("Statement No. 166"). Statement No. 166 revises
    FASB Statement of Financial Accounting Standards No. 140, Accounting for Transfers and
    Extinguishment of Liabilities a replacement of FASB Statement 125 ("Statement No. 140") and requires additional
    disclosures about transfers of financial assets, including securitization transactions,
    and any continuing exposure to the risks related to transferred financial assets. It also
    eliminates the concept of a"qualifying special-purpose
    entity", changes the requirements for derecognizing
    financial assets, and enhances disclosure requirements. Statement No. 166 is effective
    prospectively, for annual periods beginning after November 15, 2009, and interim and
    annual periods thereafter. Although Statement No. 166 has not been incorporated into the
    Codification, in accordance with ASC 105, the standard shall remain authoritative until it
    is integrated. The Company does not expect the adoption of Statement No. 166 will have a
    material impact on its financial position or results of operations.


Reclassifications


Certain comparative amounts have been reclassified to conform to the current period's
    presentation.


F-12

---

NOTE 3
    UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN


The 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 September 30, 2009, the
    Company has incurred an accumulated deficits totaling $6,168,849 and its total assets
    exceed its total liabilities by $3,039,059. 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 is 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.


NOTE 4
    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:


US$Cash
    
    
    26,671Current assets
    
    416,378Current liabilities
    
    (30,008)Property, plant and
    equipment
    
    7,471Goodwill
    
    7,791,676Long-term loan
    
    (2,000,000)Minority interest
    (50%)
    
    
    (212,188)Purchase price
    
    
    6,000,000


The goodwill of the above transaction is measured and recognized according to SFAS 141
    (revised 2007) Business Combination, which is the difference between the purchase price
    and total assets less total liabilities and minority interest. The carrying value of
    Goodwill is $7,791,676. No amortization was provided in 2007 and 2008. In 2008 a
    $1,000,000 impairment charge was made.


F-13

---

NOTE 5
    STOCKHOLDERS' EQUITY


Common Stock


In March 2006, the Company issued 1,000,000 shares of common stock under the agreement for
    the acquisition of the distribution rights for M.AG.I.C. Convergent Device.In March
    2006, the Company issued 833,333 shares of common stock for $250,000.In
    November and December 2006, the Company issued a total of 3,000,000 shares of common stock
    for services valued at a total of $69,000.In
    December 2006, the Company issued 12,500,000 shares of common stock as a commitment fee
    under an Equity Line of Credit Agreement.In
    December 2006, the Company entered into an agreement to issued 4,342,464 shares of common
    stock for accrued services for $158,500. These shares were issued on January 3, 2007.


In January 2007, the Company entered into an agreement to acquire 18% in Guangzhou Waho
    Culture & Media Co., Ltd. for $243,000 of which $53,000 was paid in cash and $190,000
    was paid by the issuance of 3,518,518 shares of common stock in the Company. The Company
    impaired the investment made in Waho Culture & Media Co., Ltd., as of March 31, 2007,
    as the marketable value is uncertain. In 2009, this investment was disposed for a nominal
    value of $10,000 as this company was in a net deficit position.


In March 2007, the Company issued 1,700,000 shares of common stock for services valued at
    $85,000.
    In March 2007, the Company entered into an agreement
    to acquire 100% of Good World Investments Limited for a consideration of $6,000,000, which
    was settled by the issuance of 125,000,000 common stock in the Company.
    In May 2007, the Company issued a total of 2,667,095
    unrestricted shares of Common Stock to its staff and consultants in accordance with the
    Form S8 registration statements filed on March 8, 2007.
    In June 2007, the Company issued 1,230,000 shares of
    common stock for services valued at $60,550.
    In July 2007, the Company distributed S8 stocks of
    800,000 shares of common stock to its employees and consultant for their services valued
    at $34,000.
    Between August and October 2007, the Company issued
    a total of 10,846,666 shares of common stock for promotional and consulting services
    valued at a total of $406,870.
    In October 2007, the Company issued 500,000 and
    2,000,000 shares of common stock in relation to the exercise of 500,000 warrant shares at
    $0.030 per share for a total of $15,000 and sold $50,000 commons stock, respectively,
    under the ELOC Agreement.
    In November 2007, the Company issued 2,500,000
    shares of common stock for services valued at $90,000.
    In November and December 2007, the Company issued a
    total of 2,344,205 unrestricted shares of Common Stock to its staff and consultants in
    accordance with the Form S8 registration statements filed on March 8, 2007.
    In December 2007, the Company issued 2,777,778
    restricted shares of common stock for accrued services of $100,000.
    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.
    On August 3, 2008 the Company issued 10,000,000
    shares of Common Stock pursuant to a Letter Agreement to terminate the ELOC Agreement.


F-14

---

WarrantsIn
    February 2006, the Company issued stock warrants for 1,666,666 shares of common stock to
    Central Star Holdings Limited. The warrants expired on February 21, 2008 and have an
    exercise price of $0.30 per share. The Company booked expense of $80,000. On February 21,
    2008, these warrants lapsed.The
    Company issued stock warrants for 31,250,000 shares of common stock to Tailor-Made Capital
    Limited ("TMC"), as part of the Equity Line of Credit Agreement between TMC and
    the Company, in which TMC was to invest up to $2,500,000 to purchase the Company's common
    stock. The warrants expire on or about May 12, 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. The Company recorded expense of $311,508. In 2007,
    500,000 warrant shares were exercised at an exercise price of $0.030 per share for a total
    of $15,000. There was no warrants exercise in the first half of 2009 to May 12, 2009 when
    all the remaining stock warrants expired.The
    Company also issued 138,889 stock warrants as part of commission in relation to the Equity
    Line of Credit Agreement above. These warrants have an exercise price of $0.036 per share
    and expired on May 12, 2009.


In March 2007, the Company issued 208,333 stock warrants as part of commission in relation
    to the issuance of $75,000 Convertible Debenture under the Debenture Purchase Agreement
    with TMC. These warrants have an exercise price of $0.036 per share and expired on May 12,
    2009.


In October 2007, the Company issued 41,666 and 138,888 stock warrants as part of
    commission in relation to the $15,000 received from the exercise of warrant and $50,000
    received from the draw down, respectively, under the ELOC Agreement with TMC. These
    warrants have an exercise price of $0.036 per share and expired on May 12, 2009.


NOTE 6
    STOCK OPTIONS AND WARRANTS


Stock OptionsThe Company adopted
    ASC 718"Compensation - Stock Compensation" codified 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.


F-15

---

2002 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.


On May 18, 2007, the board of directors approved to issue 12,300,000 stock options to
    employees to purchase shares of our Common Stock under the 2002 Stock Option Plan, at
    exercise price of $0.038 for a vesting period of 3 years. The Company had 29,800,000 stock
    options outstanding as at September 30, 2009.


Following is a summary of the activities of the 2002 Stock Option Plan for the nine months
    ended September 30, 2009:


Options outstandingOutstanding, December
    31, 2008
    29,800,000Granted during the
    period
    -Forfeited/lapsed
    during the period
    -Exercised during the
    period
    -------------------------------Outstanding,
    September 30, 2009
    29,800,000===================


Following is a summary of the status of options outstanding at September 30, 2009: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
    0.23
    $0.0365
    17,500,000
    $0.005/18/2007
    $0.0380
    12,300,000
    0.63
    $0.0380
    12,300,000
    $0.00


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
    0


ii) 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


F-16

---

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 scheme.


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.
    During the year 2007, the Company had issued a total
    of 5,811,300 shares to its staff and consultants for their service provided.
    No shares were issued under the registration
    statement on Form S-8 during the year 2008 and for the nine months ended September 30,
    2009. As at September 30, 2009 there were 32,588,700 shares available underlying stock
    options under the 2007 Stock Incentive Plan.
    As of September 30, 2009, there were no outstanding
    stock options to purchase shares of our Common Stock under the 2007 Stock Incentive Plan.


Warrants


Following is a summary of the warrant activity in the third quarter of 2009:Outstanding, December
    31, 2008
    31,277,776Granted during the
    period
    -Forfeited during the
    period
    -Exercised during the
    period
    -Expired during the
    period - May 2009
    (31,277,776)------------------------Outstanding,
    September 30, 2009
    0==============


Details of the warrants are specified in Note 7 (b), (c), (d), (h) and (o).


On February 13, 2008, 1,666,666 warrant shares were expired.


In May 2009, a total of 31,277,776 warrant shares were expired. As at September 30, 2009,
    there is no warrant share outstanding.


F-17

---

NOTE 7
    STOCK PURCHASE AGREEMENTS


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:


-
    Within one month of signing the agreement, one million shares of the Company;-
    Within one month of receiving the prototype devices, one million shares of the Company;-
    Within one month of receiving the product from commercial production, two million shares
    of the Company; and-
    A royalty payment of 100,000 shares of the Company for every 5,000 devices sold for the
    next 3 years.


As of December 31, 2006, 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.


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 expired on May 7, 2009. The warrants had 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.


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 had an exercise price of $0.036 per
    share and were expired 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.


F-18

---

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 had an exercise price of $0.036 per share and
    were expired 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 promotion 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.


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, the Company entered into an Advertising Agreement
    ("Agreement") with a third party consultant to provide promotional 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.


F-19

---

s) On
    November 28, 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 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) 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 8
    LOANS TO UNRELATED PARTIES


Loans to unrelated parties amounted to $132,665 in 2009 (December 31, 2008: $132,737). The
    loans are unsecured, interest free and repayable on or before December 31, 2010.


NOTE 9
    PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES


Prepayments, deposits and other receivables are summarized as follows:


As of September 30, 2009
    
    As of December 31, 2008-----------------------
    
    -----------------------US$
    
    US$Rental deposits
    
    5,961
    
    5,961Utility and other
    deposits
    
    504
    
    777Advance to
    suppliers
    
    204,534
    
    78,279Other receivable
    
    60,095
    
    6,210-----------------------
    
    -----------------------271,094
    
    91,227==============
    
    =============


F-20

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NOTE 10
    PROPERTY AND EQUIPMENT, NET


Property and equipment is summarized as follows:


As of September 30, 2009
    
    As of December 31, 2008----------------------
    
    ----------------------Cost
    
    US$
    
    US$Furniture, fixture
    and equipment
    
    6,035
    
    6,945Computers
    
    8,058
    
    8,058Automobile
    
    47,951
    
    47,951-----------------------
    
    -----------------------62,044
    
    62,954Accumulated
    depreciation
    
    (31,575)
    
    (23,103)-----------------------
    
    -----------------------30,469
    
    39,851==============
    
    ==============


NOTE 11
    ADVANCE PAYMENT FOR DISTRIBUTION RIGHTS


On 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 territories of China and Hong Kong. Under the agreement the
    Company will issue the following shares to Fleming:


*
    Within one month of signing the agreement, one million shares of the Company;*
    Within one month of receiving the prototype devices, one million shares of the Company;*
    Within one month of receiving the product from commercial production, two million shares
    of the Company; and*
    A royalty payment of 100,000 shares of the Company for every 5,000 devices sold for the
    next 3 years.


The Company issued 1,000,000 shares of common stock valued at $138,000. The shares were
    valued at the market price on the date of issuance.


F-21

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NOTE 12
    OTHER PAYABLES AND ACCRUALS


Other payables and accruals are summarized as follows:


As of
    September 30, 2009
    
    As of
    December 31, 2008-------------------
    
    ---------------US$
    
    US$Accrued salaries
    and wages
    
    33,027
    
    130,263Accrued interest
    
    8,304
    
    830Accrued
    accounting, legal and consulting fee
    
    138,153
    
    83,048Accrued office and
    related expenses
    
    15,294
    
    11,329Accrued audit fee
    
    40,000
    
    40,000Accrued others
    
    15,662
    
    21,170Other payables
    
    347,108
    
    160,113Deposit from
    customers
    
    19,650
    
    19,650-------------------
    
    -------------------626,198
    
    466,403===========
    
    =========


NOTE 13
    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 14
    SHORT-TERM DEBT


As of September 30, 2009, the Company has an outstanding unsecured debt payable, which was
    reclassifies from long term debts (Note 16), of $99,645 (December 31, 2008: $nil), with
    annual interest rate of 10%. This debt is due on May 31, 2010. The Company recorded
    accrued interest of $7,473 for the nine months ended September 30, 2009 (December 31,
    2008: $nil).


F-22

---

NOTE 15
    DUE TO OFFICERS AND DIRECTORS


The due to directors and officers are interests free, unsecured and repayable on demand.
    The balance of due to directors and officers is $1,101,137 as of September 30, 2009
    (December 31, 2008: $1,118,674).


NOTE 16
    LONG-TERM DEBTS


As of September 30, 2009
    
    As of December 31, 2008--------------------------
    
    --------------------------US$
    
    US$Shareholder Loan
    
    2,000,000
    
    2,000,000Other Loan
    
    -
    
    99,645---------------------------
    
    ---------------------------2,000,000
    
    2,099,645================
    
    ==============


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.


The other loan is unsecured, accrue interest at 10% per annum and payable on May 31, 2010.
    In this period, this loan was reclassified to short term loan (note 14).


NOTE 17
    SHARES ISSUED FOR PREPAID EXPENSES


As of September 30, 2009
    
    As of December 31, 2008--------------------------
    
    --------------------------US$
    
    US$Balance at January
    1
    
    -
    
    293,401Issue of shares
    for service during period/year
    
    -
    
    -Less: service
    expensed during period/year
    
    -
    
    (293,401)---------------------------
    
    ---------------------------Balance at
    September 30/December 31
    
    -
    
    -================
    
    ================


NOTE 18
    RELATED COMPANY TRANSACTIONS


The Company agreed to pay directors and officers a monthly salary for services performed.
    During the years ended December 31, 2008 and 2007, the Company paid the directors and its
    officers and their services companies a total remuneration of $162,000 and $289,512,
    respectively and $36,000 for the nine months period ended September 30, 2009
    On November 25 2005, a subsidiary of the Company
    signed a loan agreement with its major shareholder, Central High Limited for a loan of
    $2,000,000. This long term shareholder loan is unsecured and repayable on November 25,
    2010, and bears no interest for the first two years until November 25, 2007 and thereafter
    8% per annum. The accrued interest for 2008 was $160,000 (2007: $16,444) and $120,000 for
    the nine months period ended September 30, 2009.
    On July 1, 2009, the Group entered into a consulting
    agreement with Mr. Cheng Pheng Loi, the CEO of the Company. According to the agreement, Mr
    Loi will receive a consulting fee of USD3,000 per month and this agreement is cancelable
    by either party by giving 30 days notice.


F-23

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NOTE 19
    SEGMENT REPORTING


Business Segments
    For management purposes, the Group currently
    organized into three operating units - advertising, telecommunication devices, and other
    services. Turnover represents the net amounts received and receivable for goods sold or
    services provided by the Group during the period. These units are the basis on which the
    Group reports its primary segment information.
    Segment information about these businesses is
    presented below.


Advertising
    Telecommunication Device
    Other Services
    Consolidated-------------------------
    -----------------------
    ------------------------
    -------------------------------For the nine months ended September 30
    For the nine months ended September 30
    For the nine months ended September 30
    For the nine months 
    ended September 302009
    2008
    2009
    2008
    2009
    2008
    2009
    2008US$
    US$
    US$
    US$
    US$
    US$
    US$
    US$Turnover
    49,498
    67,609
    29,567
    5,137
    -
    4,969
    79,065
    77,715========
    =======
    =======
    =======
    =======
    =======
    =========
    =========Segment
    results
    (14,931)
    (1,012,809)
    201
    (1,973)
    -
    (1,031)
    (14,730)
    (1,015,813)========
    =======
    =======
    =======
    =======
    =======Unallocated
    corporate income
    
    
    
    
    
    
    --
    37Unallocated
    corporate expenses
    
    
    
    
    
    
    (290,784)
    (800,046)--------------
    --------------Loss
    from operations
    
    
    
    
    
    
    (305, 202)
    (1,815,822)Finance
    costs
    
    
    
    
    
    
    (128,449)
    (147,626)Loss
    for the period
    
    
    
    
    
    
    (433,651)
    (1,963,448)=========
    =========As at
    September 30, 2009
    As at
    September 30,2008ASSETSSegment
    assets
    6,853,664
    6,843,926
    346,338
    221,242
    -
    -
    7,200,002
    7,065,168Unallocated
    corporate assets
    
    
    
    
    
    
    218,786
    412,898--------------
    --------------Consolidated
    total assets
    
    
    
    
    
    
    7,418,788
    7,478,066=========
    =========LIABILITIESSegment
    liabilities
    156,221
    171,892
    -
    10,718
    -
    -
    156,221
    182,610Unallocated
    corporate liabilities
    
    
    
    
    
    
    4,223,508
    3,748,778--------------
    --------------Consolidated
    total liabilities
    
    
    
    
    
    
    4,379,729
    3,931,388=========
    =========Depreciation
    of fixed assets
    8,562
    8,528
    990
    757
    -
    -
    9,552
    9,285Impairment
    of goodwill
    -
    1,000,000
    -
    -
    -
    -
    -
    1,000,000=======
    =======
    =======
    =======
    =======
    =======
    =========
    =========


Geographical Segments
    The Group's customers are principally located in
    Hong Kong.


F-24

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NOTE 20
    COMMITMENTS AND CONTINGENCIES


a)
    The Company leases office premises for its operations in United States and Hong Kong under
    operating leases. Rental expenses under operating lease for the nine months ended
    September 30, 2009 and for the year ended December 31, 2008 was $18,535 and $33,215.


Future minimum rental payments under non-cancelable operating leases at September 30, 2009
    and as at December 31, 2008 are $5,128 and $23,438, respectively.


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)
    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 transmissions. 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.


F-25

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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 September 30, 2009.


2

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Overview


DESCRIPTION OF BUSINESS.


OVERVIEW
    In September 2005, the Company refocused the efforts
    in advertising and media in the emerging China market where global companies are rushing
    into China to try to grab and hold the attention of its 1.3 billion citizens. Our
    objective is to be a new age media company 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. The Company will initially focus on two main business units
    being "Advertising" and "Telecommunications and Mobile Computing" and"Product Services."


OUR BUSINESS.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.
    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.Due to the global economic recession and faced extreme uncertainty, advertisers in most
    sectors planned for the worst and cut their costs in anticipation of steep drops in
    revenue. In uncertain times, advertising expenditure is often treated as discretionary
    spending and easily reduced. It is reported that China to be the fourth largest ad market
    in 2009 and that China ad market will experience growth of 5.4% in 2009. These are
    cautiously optimistic prediction of the ad revenue, however many corporations are still
    facing uncertain economic times and we will need to monitor signs of economic recovery. We
    will move cautiously in the second half of 2009. We will monitor the economic conditions
    before we deploy any activities. We will also explore other markets in the Asia region for
    any synergistic business opportunities.


Advertising UnitOn March 13, 2007, the Company acquired 100% of the issued and outstanding shares of Good
    World Investments Limited, which owns 50% of the registered capital of Beijing Ren Ren
    Health Culture Promotion Limited ("BRR"). BRR is working with the Chinese Government on a benevolent project named"Great Wall of China Project" to advertise and
    promote health education and health awareness in China. We believe BRR provides a
    strategic advertising platform for us to launch our advertising operations in China as it
    is can advertise in hospitals and districts in China. During the period, the company did
    not derive any advertising income from the BRR project but has recorded $581 in relation
    to advertising services.During the period we have published one edition of the Hong Kong Tourist Maps"Hong Kong Fantasy Map". This is our third
    edition and the ad customers has been very positive. We plan to issue one edition for the
    Christmas and New Year holiday season before the end of the year. In future, we plan to
    explore working with local Chinese partners to expand to China to serve the growing
    tourist market in China.On September 25, 2009 we acquired 51% interests in Premium Multimedia Sdn. Bhd, a Malaysia
    corporation, that has been dormant, for our outdoor media business in Kuala Lumpur. Since
    the acquisition, PMSB has received approval for 29 outdoor signs in and around Kuala
    Lumpur, of which 19 outdoor signs has already been constructed. PMSB has also entered into
    2 contracts to sell two of these outdoor boards in Q4 2009. In addition, PMSB has acquired
    one unipole board from its local partner and is in the process of selling this board to
    the market in Q4 2009. We expect that we will be able to acquire additional outdoor board
    locations in 2010.


3

---

Telecommunications
    Unit
    In January 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.


Advertising through mobile devices is becoming more prominent to reach the mobile society
    of today. The goal of the Telecommunications and Mobile Computing Unit is to provide the
    Company with entry into the new sector of advertising through telecommunication media,
    mobile computing and other convergent devices. Our strategy on gaining access in
    telecommunication media is through cooperation with existing networks or establishes
    select networks. However our longer-term strategy is to partner with network operators to
    provide extensive network access for our advertising media. We have secured the
    distribution rights for M.A.G.I.C. Convergent Device for the territory of China and Hong
    Kong. 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. We expect the M.A.G.I.C. Device will
    provide us with a unique device to enter the information and advertising sector of the
    mobile society. As announced in our Form 8-K of May 21, 2009, we entered into an agreement
    with Advance Tech Communications Sdn. Bhd. ("ATC"), the developer of M.A.G.I.C., to establish a joint venture company to
    market the convergent devices worldwide (other than China and Hong Kong) developed by ATC.In the previous quarter, the Company received the latest prototype unit, know as
    M.A.G.I.C. S1, and after conducting compliance, functional, stability, load and usability
    testing on the device and discussion with our resellers and partners, we have decided to
    focus on the new platform wCube which is based on the Windows XP/Seven operating system.
    The first prototype should be available in Q1 2001.During this quarter under review, the Group did not earn any revenue in this Convergent
    Device segment. The Company however is exploring a 10" Pen
    Touch computer device for sale with its key customers as a prelude to selling the
    M.A.G.I.C. True Convergent Devices and other Multimedia Internet Devices ("MIDs") in China. We will endeavor to continue
    to sell other convergent devices in Hong Kong and China in the upcoming quarter to start
    to prepare the distribution channels for M.A.G.I.C.


Products Services Units
    We have commenced a Products Services Unit to build
    brands recognition and to take advantage of our contacts networks, distribution channel
    and trading partners. We will leverage off our advertising platform to develop our own
    brands name for select products. This will uniquely position our Product Services for
    brand awareness as well as develop a long term business unit that will serve both
    consumers and industries markets. In this quarter under review, no revenue was derived
    from this business unit.


4

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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 $19,561 as of September 30, 2009; a decrease from the
    previous period end of December 31, 2008. 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 ("ELOC") 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 intended 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. On May 12, 2009 all the remaining 30,750,000
    unexercised stock warrants in respect of the ELOC Arrangement expired.


Management 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.


5

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Results
    of operation.


FOR THE THREE MONTHS AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE
    MONTHS AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2008


REVENUES.
    For the three months period ended September 30,
    2009, the Group has realized revenue of $37,309 and a cost of revenue of $16,457,
    achieving a gross loss of $20,852. For the three months period ended September 30, 2008,
    the Group has realized revenue of $26,314 and a cost of revenue of $11,811 achieving a
    gross profit of $14,503. 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 nine months period ended September 30, 2009, the Group has realized revenue of
    $79,065 and a cost of revenue of $53,254, achieving a gross profit of $25,811. For the
    nine months period ended September 30, 2008, the Group has realized revenue of $77,715 and
    a cost of revenue of $39,771 achieving a gross profit of $37,944. 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 September 30, 2009,
    our gross profit was $20,852 and our total operating expenses were $116,186, all of which
    were selling, general and administrative expenses. We also had $42,491 in interest
    expenses, and loss attributable to minority interests of $3,758, so that the net loss to
    our shareholders for the three months period ended September 30, 2009 was $134,067. This
    is in comparison to the same period ended September 30, 2008, where our gross profit was
    $14,503 and our total operating expenses were $253,725, all of which were selling, general
    and administrative expenses. We also had $41,723 in interest expenses, $1,000,000 in
    impairment on goodwill and loss attributable to minority interests of $4,192, so that the
    net loss to our shareholders for the three months period ended September 30, 2008 was
    $1,276,753.


For the nine month period ended September 30, 2009, our gross profit was $25,811 and our
    total operating expenses were $343,022, all of which were selling, general and
    administrative expenses. We also had $128,449 in interest expenses, and loss attributable
    to minority interests of $12,009, so that the net loss to our shareholders for the nine
    months period ended September 30, 2009 was $433,651. This is in comparison to the same
    period ended September 30, 2008, where our gross profit was $37,944 and our total
    operating expenses were $869,715, all of which were selling, general and administrative
    expenses. We also had $37 in interest income, $147,626 in interest expenses, $1,000,000 in
    impairment on goodwill and loss attributable to minority interests of $15,912, so that the
    net loss to our shareholders for the nine months period ended September 30, 2008 was
    $1,963,448.


Liquidity and Capital Resources


As at September 30, 2009, the Company had cash and cash equivalents totaling $19,561,
    other current assets of $439,082 and non-current assets totaling $6,960,145 which were
    represented by $30,469 in fixed assets, $138,000 in distribution rights and $6,791,676 in
    goodwill. The total assets of the Company were $7,418,788 as of September 30, 2009. We
    also had current liabilities of $2,223,508 which were represented by $nil in accounts
    payable, $626,198 in accruals, $99,645 in short term debt, $1,101,137 due to related
    parties, $396,528 due to a shareholder as of September 30, 2009. We also had $2,000,000 in
    long-term shareholders loan and 156,221 in minority interests as of September 30, 2009,
    made our total liabilities $4,379,729.
    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 2009.


6

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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 September 30, 2009 the Company incurred net
    losses of $134,067 and has accumulated losses of $6,168,849 as at September 30, 2009. 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 September 30, 2009, there were no off balance sheet arrangements. The Company has no
    off balance sheet obligations or guarantees and has not historically used special purpose
    entities for any transactions.


7

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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.


8

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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 Information


None.


9

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Item 6.
    Exhibits


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


Notes1.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 7, 2006.2.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 16, 2006.3.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on March 15, 2007.4.
    Incorporated by reference to our Registration Statement on Form SB-2 as filed
    with the SEC on April 15, 2003.5.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 3, 2005.6.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on November 28, 2006.7.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on December 4, 2006.8.
    Incorporated by reference to our Annual Report on Form 10-KSB/A as filed with
    the SEC on August 11, 2006.9.
    Incorporated by reference to our Current Report on Form 8-K/A as filed with
    the SEC on March 8, 2007.10.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on February 16, 2006.11.
    Incorporated by reference to our Registration Statement on Form SB-2 as filed
    with the SEC on April 15, 2003.12.
    Incorporated by reference to our Registration Statement on Form S8 as filed
    with the SEC on March 8, 2007.13.
    Incorporated by reference to our Registration Statement on Form SB-2 as filed
    with the SEC on March 16, 2007.14.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on January 8, 2008.15.
    Incorporated by reference to our Current Report on Form 8-K as filed with the
    SEC on August 7, 2008.


* Filed herewith.


10

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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/ Cheng Pheng
    Loi---------------------------------------Cheng Pheng LoiChief Executive
    Officer Principal executive officerChina Media Group
    Corporationa Texas corporation/s/ Con Unerkov---------------------------------------Con UnerkovChief Financial
    Officer Principal executive officer


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/ Cheng Pheng Loi
    November 18, 2009--------------------------------------------Cheng Pheng Loi


Its:
    Principal executive
    officerPresident, director


11

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Exhibit
    31.1Rule
    13a-14(a)/15d-14(a)Certification
    of Chief Executive Officer of the Company
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    and Securities and Exchange Commission Release 34-46427I, Cheng
    Pheng Loi, certify that:1. I
    have reviewed this quarterly 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 registrant as of, and for, the periods presented in this
    report;4. The
    registrant'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)) and internal control over financial reporting (as defined in Exchange Act
    Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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)
    Designed such internal control over financial reporting, or caused such internal control
    over financial reporting to be designed under our supervision, to provide reasonable
    assurance regarding the reliability of financial reporting and the preparation of
    financial statements for external purposes in accordance with generally accepted
    accounting principles;(c)
    Evaluated the effectiveness of the registrant's disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness of the disclosure
    controls and procedures, as of the end of the period covered by this report based on such
    evaluation; and(d)
    Disclosed in this report any change in the registrant's internal control over financial
    reporting that occurred during the registrant's most recent fiscal quarter (the
    registrant's fourth fiscal quarter in the case of an annual report) that has materially
    affected, or is reasonably likely to materially affect, the registrant's internal control
    over financial reporting.


5. I have disclosed, based on our most recent evaluation of internal control over
    financial reporting, to the registrant's auditors and the audit committee of the
    registrant'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 registrant'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 registrant's internal control over financial reporting.


Date: November 18, 2009


/s/ Cheng Pheng Loi-----------------------Cheng Pheng LoiChief Executive Officer


---

Exhibit
    31.2Rule
    13a-14(a)/15d-14(a)Certification
    of 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 quarterly 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 registrant as of, and for, the periods presented in this
    report;4. The
    registrant'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)) and internal control over financial reporting (as defined in Exchange Act
    Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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)
    Designed such internal control over financial reporting, or caused such internal control
    over financial reporting to be designed under our supervision, to provide reasonable
    assurance regarding the reliability of financial reporting and the preparation of
    financial statements for external purposes in accordance with generally accepted
    accounting principles;(c)
    Evaluated the effectiveness of the registrant's disclosure controls and procedures and
    presented in this report our conclusions about the effectiveness of the disclosure
    controls and procedures, as of the end of the period covered by this report based on such
    evaluation; and(d)
    Disclosed in this report any change in the registrant's internal control over financial
    reporting that occurred during the registrant's most recent fiscal quarter (the
    registrant's fourth fiscal quarter in the case of an annual report) that has materially
    affected, or is reasonably likely to materially affect, the registrant's internal control
    over financial reporting.


5. I have disclosed, based on our most recent evaluation of internal control over
    financial reporting, to the registrant's auditors and the audit committee of the
    registrant'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 registrant'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 registrant's internal control over financial reporting.


Date: November 18, 2009


/s/ Con Unerkov-----------------------Con UnerkovChief Financial Officer


---

Exhibit 32.1


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

In connection with the Quarterly Report of China Media Group Corporation a Texas
    corporation (the "Company") on Form 10-Q for the three months period ending
    September 30, 2009, as filed with the Securities and Exchange Commission on the date
    hereof (the "Report"), Cheng Pheng Loi, Chief Executive 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/ Cheng Pheng Loi--------------------------Cheng
    Pheng LoiChief
    Executive OfficerNovember
    18, 2009


---

Exhibit 32.2


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

In connection with the Quarterly Report of China Media Group Corporation a Texas
    corporation (the "Company") on Form 10-Q for the three months period ending
    September 30, 2009, as filed with the Securities and Exchange Commission on the date
    hereof (the "Report"), Con Unerkov, 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
    Financial OfficerNovember
    18, 2009