UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

[X]
    QUARTERLY
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For
    the quarterly nine month period ended September 30, 2007[ ]
    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
    32-003-4956-----------------------
    ------------------------
    ----------------------(State
    or other jurisdiction of incorporation or organization)
    (Primary
    Standard Industrial Classification Code Number)
    (I.R.S.
    Employer Identification No.)


1803
    Chinachem Tower, 34-37 Connaught Road, Central, Hong Kong
    0000------------------------------------------------------------------------------------------------------------
    ----------------(Address
    of Company's principal executive offices)
    (Zip
    Code)


+011 852 3171 1208 (ext.222)-------------------------------------------------(Company's Telephone Number, Including Area Code)

This Quarterly
    Report on Form 10-QSB is the Registrant's Quarterly Report for the quarter ended September
    30, 2007 as filed with the Securities and Exchange Commission.


Check whether the issuer: (1) filed all reports required to be filed by Section 13
    or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
    such shorter period that the issuer was required to file such reports), and (2) has been
    subject to such filing requirements for the past 90 days.Yes [ X ] No [ ]


State the number
    of shares outstanding of each of the issuer's classes of common equity, as of the latest
    practical date.As of November
    1, 2007 there were 513,878,888 no par value common stock of the Company issued and
    outstanding.Indicate by
    check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
    Exchange Act)Yes [ ] No [X ]


Transitional Small Business Disclosure Format (check one):Yes [ ] No [X ]


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


---

PART I


Item 1.
    Condensed
    Consolidated Financial Statements


cmg_logo.gif

China Media Group CorporationCondensed Consolidated Financial StatementsSeptember 30, 2007(Unaudited)

(Expressed In United States
    Dollars)Condensed Unaudited Consolidated
    Balance Sheet as of September 30, 2007


Condensed Unaudited
    Consolidated Statements of OperationsFor the three months
    and nine months ended September 30, 2007 and 2006


Condensed Unaudited
    Consolidated Statements of Cash FlowsFor the nine months
    ended September 30, 2007 and 2006


Notes to Condensed Unaudited
    Consolidated Financial Statements


---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    BALANCE SHEETSEPTEMBER
    30, 2007(UNAUDITED)


ASSETSCurrent assets:Cash and cash
    equivalents
    
    $ 29,368Accounts
    receivable, net of allowance for doubtable amount of $ 5,303
    
    3,770Loans receivable
    
    334,401Due from a related
    party
    
    2,860Prepayments,
    deposits and other receivables
    
    79,144---------------------Total current assets
    
    449,543Property and
    equipments, net
    
    60,489Deposit for
    distribution rights
    
    138,000Goodwill
    
    7,791,236---------------------Total non-current assets
    
    7,989,725---------------------Total assets
    
    $ 8,439,268============LIABILITIES AND STOCKHOLDERS' EQUITYCurrent
    liabilities:Accounts payables
    and accrued expenses
    
    $ 366,755Other payable
    
    135,649Convertible
    debenture
    
    88,508Short-term debt
    
    67,600Due to officers
    and directors
    
    582,798---------------------Total current liabilities
    
    1,241,310Long-term loan
    
    2,000,000Minority
    interest
    
    198,929Stockholders'
    equity:Common stock, no
    par value, 85,000,000,000 shares authorized503,462,222 at
    September 30, 2007 shares issued and outstanding
    
    7,215,182Additional
    paid-in-capital
    
    993,320Prepaid consulting
    expenses
    
    (69,217)Comprehensive
    income
    
    7,906Accumulated
    deficits
    
    (3,148,162)---------------------Total stockholders' equity
    
    4,999,029---------------------Total
    liabilities and stockholders' equity
    
    $ 8,439,268============


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

---

CHINA
    MEDIA GROUP CORPORATIONCONSOLIDATED
    STATEMENTS OF OPERATIONS
    FOR THE THREE MONHTS AND NINE MONTHS PERIODS ENDED SEPTEMBER 30, 2007 AND 2006(UNAUDITED)


For the Three Month Periods
    
    For the Nine Month PeriodsEnded September 30,
    
    Ended September 30,2007
    
    2006
    
    2007
    
    2006Net revenue
    
    $
            38,341
    
    $
            25,046
    
    $
            99,642
    
    $
            33,613Cost of revenue
    
    35,694
    
    18,511
    
    79,083
    
    24,589---------------------
    
    ---------------------
    
    ---------------------
    
    ---------------------Gross profit
    
    2,647
    
    6,535
    
    20,559
    
    9,024Operating
    expenses:Impairment of
    investment
    
    -
    
    -
    
    243,000
    
    -Selling, general
    and administrative expenses
    
    347,029
    
    195,626
    
    1,032,692
    
    524,879---------------------
    
    ---------------------
    
    ---------------------
    
    ---------------------Total operating
    expenses
    
    347,029
    
    195,626
    
    1,275,692
    
    524,879---------------------
    
    ---------------------
    
    ---------------------
    
    ---------------------Loss from
    operations before other expense
    
    (344,382)
    
    (189,091)
    
    (1,255,133)
    
    (515,855)Other Income (expenses)Interest income
    
    32
    
    -
    
    156
    
    -Interest expenses
    
    (24,042)
    
    (1,690)
    
    (52,629)
    
    (5,311)---------------------
    
    ---------------------
    
    ---------------------
    
    ---------------------Total Other income (expenses)
    
    (24,010)
    
    (1,690)
    
    (52,473)
    
    (5,311)Net Loss before
    minority interest
    
    (368,392)
    
    (190,781)
    
    (1,307,606)
    
    (521,166)Minority interest
    
    9,168
    
    -
    
    13,700
    
    ----------------------
    
    ---------------------
    
    ---------------------
    
    ---------------------Net loss
    
    (359,224)
    
    (190,781)
    
    (1,293,906)
    
    (521,166)Other
    Comprehensive IncomeForeign currency translation gain
    
    2,160
    
    -
    
    7,906
    
    ----------------------
    
    ---------------------
    
    ---------------------
    
    ---------------------Comprehensive loss
    
    $
             (357,064)
    
    $
          (190,781)
    
    $
          (1,286,000)
    
    $
             (521,166)============
    
    ============
    
    ============
    
    ============Basic
    and diluted net loss per common shares
    $
                  (0.00)
    
    $
               (0.00)
    
    $
                  (0.00)
    
    $
                  (0.00)============
    
    ============
    
    ============
    
    ============Basic and diluted
    weighted average numberof common shares
    outstanding *
    
    501,215,157
    
    345,774,145
    
    463,703,677
    
    345,223,474============
    
    ============
    
    ============
    
    ============


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


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

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CHINA MEDIA GROUP CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE NINE MONTHS PERIODS ENDED SEPTEMBER 30, 2007 AND 2006(UNAUDITED)2007
    
    2006---------------------
    
    ---------------------Cash flows from
    operating activities:Net Loss
    
    
    $ (1,293,906)
    
    $ (521,166)Adjustments to
    reconcile net loss to net cash used in operating activitiesDepreation
    
    
    7,911
    
    1,642Minority interest
    
    
    (13,700)Impairment in investment
    
    
    243,000
    
    -Common stock issuance for employees
    
    
    121,349
    
    -Common stock issuance for services
    
    
    248.580
    
    -Issuance warrants for services
    
    
    10,592
    
    -Issuance options for employees' compensation
    
    
    37,035
    
    -Amortization of convertible debenture
    
    
    38,508
    
    -(Increase) /
    decrease in current assets:Prepaid
    expenses, deposit and other receivables
    
    
    (19,182)
    
    (55,304)Accounts
    receivable
    
    
    (2,873)
    
    (9,292)Due
    from a director in subsidiary
    
    
    28,390
    
    -Increase /
    (decrease) in current liabilities:Accounts
    payables and accrued expenses
    
    
    232,287
    
    122,705---------------------
    
    ---------------------Net cash used in operating activities
    
    
    (362,009)
    
    (461,415)---------------------
    
    ---------------------Cash flows from
    investing activities:Purchase of property and equipment
    
    
    (1,851)
    
    (15,384)Acquisition
    of subsidiary, net of cash
    
    
    26,671
    
    ----------------------
    
    ---------------------Net
    cash provided by (use in) investing activities
    
    
    24,820
    
    15,384Cash flows from
    financing activities:Proceeds
    from issuance of debt
    
    
    75,000
    
    -Advance
    from related parties
    
    
    220,612
    
    245,859Payment
    of debt
    
    
    -
    
    (16,000)Issuance
    of common stock for cash
    
    
    -
    
    250,000---------------------
    
    ---------------------Net
    cash provided by financing activities
    
    
    295,612
    
    479,859---------------------
    
    ---------------------Net increase /
    (decrease) in cash and cash equivalents
    
    
    (41,577)
    
    3,060Effect of exchange
    rate changes on cash and cash equivalents
    
    
    7,906
    
    -Cash and cash
    equivalents, beginning
    
    
    63,039
    
    7,001---------------------
    
    ---------------------Cash and cash
    equivalents, ending
    
    
    $            29,368
    
    $
                  10,061============
    
    =============Supplemental
    disclosure of cash flow information:Interest paid
    
    
    $
                       
    -
    
    $
                   3,700============
    
    =============Income taxes paid
    
    
    $
                       
    -
    
    $
                         
    -============
    
    =============Supplemental
    disclosure of non-cash investing and financing activities:The issuance of common stock for the acquisition of investment of $190,000
    was not included in the cash flow statement due to non cash in nature.The accompanying notes are an integral part of these unaudited financial
    statements.


---

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


NOTE 1
    ORGANIZATION


China Media
    Group Corporation (the "Company") is a Texas corporation, incorporated on
    October 1, 2002.In January 2006,
    the Company established a wholly owned subsidiary Ren Ren Media Group Limited, a company
    incorporated in Hong Kong, as its operating company in Hong Kong.In March 2007,
    the Company acquired Good World Investments Limited ("Good World"), a company
    incorporated in the British Virgin Islands, which owns a 50% subsidiary, Beijing Ren Ren
    Health Culture Promotion Limited ("Beijing Ren Ren") as hereinafter defined, a
    company established in the Peoples' Republic of China ("PRC") with a registered
    capital of RMB5,000,000. Beijing Ren Ren is working with the Chinese Government on the
    "Great Wall of China Project" which is to promote health awareness and health
    education in China.The Company
    plans to be engaged in the media and advertising business, focusing in China, and the
    marketing and distribution of convergent devices.


NOTE 2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND REALIZATION OF ASSETS


Unaudited Interim Financial InformationThe accompanying unaudited interim financial statements have been prepared in
    accordance with accounting principles generally accepted in the United States of America
    and the rules of the U.S. Securities and Exchange Commission, and should be read in
    conjunction with the audited financial statements and notes thereto for the year ended
    December 31, 2006. 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, 2006 included in the Company Form 10-KSB filed with the Securities and
    Exchange Commission. In the opinion of management, all adjustments (consisting of
    normal recurring accruals) considered necessary for a fair presentation of financial
    position and the results of operations for the interim periods presented have been
    included. Operating results for the interim periods are not necessarily indicative of the
    results that may be expected for the year ended December 31,2007.


Use of EstimatesThe preparation of financial statements in conformity with generally accepted
    accounting principles requires management to make estimates and assumptions that affect
    the reported amounts of assets and liabilities and disclosure of contingent assets and
    liabilities at the date of the financial statements and the reported amounts of revenues
    and expenses during the reporting period. Actual results could differ from those
    estimates.


Principles of ConsolidationThe consolidated financial statements include the financial statements of the
    Company and its subsidiaries Ren Ren Media Group Limited, Good World Investments Limited
    and its 50% owned subsidiary Beijing Ren Ren Health Culture Promotion Limited. Both Good
    World and Bejing Ren Ren were acquired in March 2007.The results of subsidiaries acquired during the period are consolidated from their
    effective dates of acquisition.All significant inter-company transactions and balances have been eliminated on
    consolidation.


---

Minority InterestThe amount of 198,929 as of
    September 30, 2007 represents a non-related minority shareholder's interest in Beijing Ren
    Ren, a 50% subsidiary of the Company.


Intangible Assets


The 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.


Investment in Equity Securities


The Company's policy for investment in equity securities, other than investment in
    subsidiaries, are as follows:


-
    Investment in Securities held for trading are classified as current assets and are
    initially stated at fair value. At each balance sheet date the fair value is remeasured,
    with any resultant gain or loss being recognized in profit and loss;-
    Investments in nonmarketable securities that are not accounted for by the equity
    method are subject to the requirements of SFAS No. 107. Pursuant to SFAS No. 107, if
    quoted market prices are not available, management's best estimate of fair value may be
    based on the quoted market price of a financial instrument with similar characteristics or
    on valuation techniques.


During the nine month period ended September 30, 2007, the Company evaluated its
    investment in Guangzhou Waho Culture & Media Co., Ltd. and recognized an impairment
    loss equal to the book value of these investments amounting to $243,000. These evaluations
    were based upon market value of similar investments.





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Stock-based
    CompensationSFAS No. 123 prescribes accounting and reporting standards for all stock-based
    compensation plans, including employee stock options, restricted stock, employee stock
    purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense
    to be recorded (i) using the new fair value method or (ii) using the existing accounting
    rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for stock
    issued to employees"(APB 25) and related interpretations with proforma disclosure of
    what net income and earnings per share would have been had the Company adopted the new
    fair value method. The Company has chosen to account for stock-based compensation using
    Accounting Principles Board Opinion No. 25,"Accounting for Stock Issued to
    Employees" and has adopted the disclosure only provisions of SFAS 123. Accordingly,
    compensation cost for stock options is measured as the excess, if any, of the quoted
    market price of the Company's stock at the date of the grant over the amount an employee
    is required to pay for the stock.


The Company accounts for stock-based compensation issued to non-employees and
    consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task
    Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity
    Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with
    Selling, Goods or Services". Valuation of shares for services is based on the
    estimated fair market value of the services performed.


Issuance of Shares for ServiceThe Company accounts for the issuance of equity instruments to acquire goods and
    services based on the fair value of the goods and services or the fair value of the equity
    instrument at the time of issuance, whichever is more reliably measurable.


Revenue RecognitionThe Company recognizes its revenue in accordance with the Securities and Exchange
    Commissions ("SEC") Staff Accounting Bulletin No. 104, "Revenue Recognition
    in Financial Statements" ("SAB 104"). Revenue is recognized upon shipment,
    provided that evidence of an arrangement exists, title and risk of loss have passed to the
    customer, fees are fixed or determinable and collection of the related receivable is
    reasonably assured. Revenue is recorded net of estimated product returns, which is based
    upon the Company's return policy, sales agreements, management estimates of potential
    future product returns related to current period revenue, current economic trends, changes
    in customer composition and historical experience.


Foreign Currency TranslationThe accounts of the Company's Hong Kong subsidiary are maintained; in the Hong Kong
    dollars (HK) and the China subsidiary are maintained in Renminbi. Such financial
    statements are translated into U.S. Dollars (USD) in accordance with Statement of
    Financial Accounts Standards ("SFAS") No.52, "Foreign Currency
    Translation," with the Hong Kong dollar and the Renminbi as the functional
    currencies. According to the Statement, all assets and liabilities were translated at the
    exchange rate on the balance sheet date, stockholder's equity are translated at the
    historical rates and statement of operations items are translated at the weighted average
    exchange rate for the period. The resulting translation adjustments are reported under
    other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive
    Income." For the nine months period and the three months period ended September 30,
    2007, such differences were a translation gain of $7,906 and $2,160, respectively.


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Recent Pronouncements


In September 2006, FASB issued SFAS 157 'Fair Value Measurements'. This Statement
    defines fair value, establishes a framework for measuring fair value in generally accepted
    accounting principles (GAAP), and expands disclosures about fair value measurements. This
    Statement applies under other accounting pronouncements that require or permit fair value
    measurements, the Board having previously concluded in those accounting pronouncements
    that fair value is the relevant measurement attribute. Accordingly, this Statement does
    not require any new fair value measurements. However, for some entities, the application
    of this Statement will change current practice. This Statement is effective for financial
    statements issued for fiscal years beginning after November 15, 2007, and interim periods
    within those fiscal years. The management is currently evaluating the effect of this
    pronouncement on financial statements.


In September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined Benefit
    Pension and Other Postretirement Plans--an amendment of FASB Statements No. 87, 88, 106,
    and 132(R)' This Statement improves financial reporting by requiring an employer to
    recognize the over funded or under funded status of a defined benefit postretirement plan
    (other than a multi-employer plan) as an asset or liability in its statement of financial
    position and to recognize changes in that funded status in the year in which the changes
    occur through comprehensive income of a business entity or changes in unrestricted net
    assets of a not-for-profit organization. This Statement also improves financial reporting
    by requiring an employer to measure the funded status of a plan as of the date of its
    year-end statement of financial position, with limited exceptions. An employer with
    publicly traded equity securities is required to initially recognize the funded status of
    a defined benefit postretirement plan and to provide the required disclosures as of the
    end of the fiscal year ending after December 15, 2006. An employer without publicly traded
    equity securities is required to recognize the funded status of a defined benefit
    postretirement plan and to provide the required disclosures as of the end of the fiscal
    year ending after June 15, 2007.However, an employer without publicly traded equity
    securities is required to disclose the following information in the notes to financial
    statements for a fiscal year ending after December 15, 2006, but before June 16, 2007,
    unless it has applied the recognition provisions of this Statement in preparing those
    financial statements:


a.
    A brief description of the provisions of this Statement,b.
    The date that adoption
    is required, andc.
    The date the employer
    plans to adopt the recognition provisions of this Statement, if earlier.


The requirement to measure plan assets and benefit obligations as of the date of
    the employer's fiscal year-end statement of financial position is effective for fiscal
    years ending after December 15, 2008. The management is currently evaluating the effect of
    this pronouncement on financial statements.


---

In February
    2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and
    Financial Liabilities. FAS 159 is effective for fiscal years beginning after November 15,
    2007. Early adoption is permitted subject to specific requirements outlined in the new
    Statement. Therefore, calendar-year companies may be able to adopt FAS 159 for their first
    quarter 2007 financial statements.


The new Statement allows entities to choose, at specified election dates, to
    measure eligible financial assets and liabilities at fair value that are not otherwise
    required to be measured at fair value. If a company elects the fair value option for an
    eligible item, changes in that item's fair value in subsequent reporting periods must be
    recognized in current earnings. FAS 159 also establishes presentation and disclosure
    requirements designed to draw comparison between entities that elect different measurement
    attributes for similar assets and liabilities.


In July 2006, the FASB released FASB Interpretation No. 48, Accounting for
    Uncertainty in Income Taxes, an interpretation of FASB Statement No.109 (FIN 48). FIN 48
    clarifies the accounting and reporting for uncertainties in income tax law. This
    interpretation prescribes a comprehensive model for the financial statement recognition,
    measurement, presentation and disclosure of uncertain tax positions taken or expected to
    be taken in income tax returns. This statement is effective for fiscal years beginning
    after December 15, 2006. We are currently in the process of evaluating the expected effect
    of FIN48 on our results of operations and financial position.


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


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, 2007, the Company has incurred accumulated deficits totaling $3,148,162 and its total
    current liabilities exceed its total current assets by $791,767. In view of the matters
    described above, recoverability of a major portion of the recorded asset amounts shown in
    the accompanying balance sheets is dependent upon continued operations of the Company,
    which in turn is dependent upon the Company's ability to raise additional capital, obtain
    financing and to succeed in its future operations. The financial statements do not include
    any adjustments relating to the recoverability and classification of recorded asset
    amounts or amounts and classification of liabilities that might be necessary should the
    Company be unable to continue as a going concern.


Management has taken the following steps to revise its operating and financial
    requirements, which it believes are sufficient to provide the Company with the ability to
    continue as a going concern. The Company has entered into an Equity Line of Credit
    Agreement to sell up to US$2,500,000 common stock of the Company for a two year period
    from the effective date of registration statement which was May 14, 2007. The Company is
    also actively pursuing additional funding and potential merger or acquisition candidates
    and strategic partners, which would enhance stockholders' investment. Management believes
    that the above actions will allow the Company to continue operations through the next
    fiscal year. However there can be no assurances that the Company can draw down on the
    Equity Line of Credit Agreement which is conditional on achieving certain price and volume
    share trading activities or that sufficient financing will be available on terms
    acceptable to the Company or at all.


---

NOTE 4
    LOANS RECEIVABLE


As of September 30, 2007, the Company loaned $213,538 and $120,863 to two
    non-related parties at no interest through its subsidiary Beijing Ren Ren respectively.
    The loan is unsecured and the principal is due in December 2007.


NOTE 5
    PREPAYMENTS, DEPOSITS AND RECEIVABLESFollowing is the detail of prepayments, deposits and other receivable as of
    September 30, 2007:US$Rental deposits
    21,248Utility deposits
    1,308Advance to suppliers
    52,173Inventory
    329Other receivable
    4,086-----------------------79,144=============


NOTE 6
    DUE FROM A RELATED PARTYAs of September 30, 2007 the Company has a receivable of $2,860 from a director of
    its subsidiary Beijing Ren Ren. The amount is unsecured, interest free and due on demand.


NOTE 7
    PROPERTY AND EQUIPMENTProperty, Plant & Equipment consist of the following as of September 30, 2007:US$Furniture &
    Fixtures
    13,140Office Equipment
    1,062Computers
    9,913Automobile
    47,951--------------------------Less: Accumulation
    depreciation
    (11,577)--------------------------Total
    60,489=============Depreciation
    expenses were $7,911 and $1,642 for the nine month periods ended September 30, 2007 and
    2006, respectively.NOTE 8
    **ACCOUNTS PAYABLE AND ACCRUED EXPENSES**Accounts payable and accrued expenses consist of the following at September 30, 2007:As of
    September 30, 2007US$Account payables
    32,931Accrued salaries and
    wages
    122,162Accrued interest
    29,666Accrued accounting and
    legal
    25,571Accrued consulting fee
    112,776Accrued trip and office
    expense
    43,649---------------------Total
    366,755=============


---

NOTE 9
    **OTHER PAYABLE**Other payable consist of the following at September 30, 2007:As of
    September 30, 2007US$Other payable deposit
    from customers
    44,841Other payable -
    commission
    12,500Others
    78,308---------------------Total
    135,649=============


NOTE
    10
    STOCKHOLDERS'
    EQUITY


Common Stock


In January 2007,
    the Company entered into an agreement to acquire 18% in Guangzhou Waho Culture & Media
    Co., Ltd. for $243,000 of which $53,000was 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 March 2007, the Company issued 1,700,000 shares of common stock for service
    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 service
    valued at $60,550.In July 2007, the Company issued a total of 800,000 unrestricted shares of Common
    Stock to its staff and consultants in accordance with the Form S8 registration statements
    filed on March 8, 2007.In August and September 2007, the Company issued a total of 2,930,000 shares of
    common stock for services valued at $106,870.


WarrantsThe Company issued stock warrants for 1,666,666 shares of common stock to Central
    Star Holdings Limited. The warrants expire on February 21, 2008 and have an exercise price
    of $0.30 per share. The company booked expense of $80,000.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 booked
    expense of $391,508. On October 15, 2007, the TMC exercised a portion of its warrants to
    purchase 500,000 common stock in the Company at $0.030 per share.


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


---

NOTE
    11
    STOCK
    OPTIONS AND WARRANTS


Stock OptionsThe Company adopted SFAS No. 123 (Revised 2004), Share Based Payment ("SFAS
    No. 123R"), under the modified-prospective transition method on April 1, 2006. SFAS
    No. 123R requires companies to measure and recognize the cost of employee services
    received in exchange for an award of equity instruments based on the grant-date fair
    value. Share-based compensation recognized under the modified-prospective transition
    method of SFAS No.123R includes share-based compensation based on the grant-date fair
    value determined in accordance with the original provisions of SFAS No. 123,Accounting for
    Stock-Based Compensation, for all share-based payments granted prior to and not yet vested
    as of April 1, 2006 and share-based compensation based on the grant-date fair-value
    determined in accordance with SFAS No. 123R for all share-based payments granted after
    April 1,2006. SFAS No. 123R eliminates the ability to account for the award of these
    instruments under the intrinsic value method proscribed by Accounting Principles Board
    ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and allowed
    under the original provisions of SFAS No. 123. Prior to the adoption of SFAS No. 123R, the
    Company accounted for our stock option plans using the intrinsic value method in
    accordance with the provisions of APB Opinion No. 25 and related interpretation.


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 34,100,000 stock options outstanding as at September 30, 2007.


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.


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. On May 18,
    2007, the Company issued a total of 2,667,095 shares to its staff and consultants for
    their services provide. In July 2007, the Company issued a total of 800,000 shares to its
    staff and consultants for their services provided. As of September 30, 2007 there were
    34,932,905 shares underlying stock options under the 2007 Stock Incentive Plan.
    As of September 30, 2007, there were no
    outstanding stock options to purchase shares of our Common Stock under the 2007 Stock
    Incentive Plan.


---

Following is a
    summary of the stock option activity for the nine months ended September 30, 2007:


Options
    outstanding------------------------------------Outstanding, December
    31, 2006
    21,800,000Granted during the
    period - in May 2007
    12,300,000Forfeited during the
    period
    -Exercised during the
    period
    -------------------------------------Outstanding, September
    30, 2007
    34,100,000=====================


Following is a summary of the
    status of options outstanding at September 30, 2007:


Outstanding
    Options
    
    Exercisable
    Options------------------------------------
    
    ----------------------------------------------------------------------


GrantDate
    ExercisePrice
    Number
    Average
    RemainingContractual Life
    Average
    Exercise Price
    Number
    Intrinsic
    Price12/23/2006
    $0.0365
    21,800,000
    2.23
    $0.0365
    21,800,000
    $0.005/18/2007
    $0.0380
    12,300,000
    2.63
    $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:


Grant date:
    12/23/2006
    
    Grant date:
    5/18/2007Risk-free
    interest rate
    4.63%
    
    Risk-free
    interest rate
    4.63%Expected life of the
    options
    3.00
    years
    
    Expected life of the
    options
    3.00
    yearsExpected volatility
    95%
    
    Expected volatility
    139%Expected dividend
    yield
    0
    
    Expected dividend
    yield
    0


The 21,800,000 and 12,300,000 stock
    options granted on December 23, 2006 and May 18, 2007, respectively.


Warrants


Following is a summary of the
    warrant activity for the six months ended September 30, 2007:


Outstanding, December
    31, 2006
    33,055,555Granted during the
    period-March 2007
    208,333Forfeited during the
    period
    -Exercised during the
    period
    -------------------------Outstanding, September
    30, 2007
    33,263,888==============


---

Following is a summary of the
    status of warrants outstanding at September 30, 2007:


Outstanding
    Warrants
    
    Exercisable
    Warrants---------------------------------
    
    ----------------------------------------------------------


ExercisePrice
    Number
    Average
    Remaining Contractual Life
    Average
    Exercise Price
    Number
    Intrinsic
    Value$0.300
    1,666,666
    0.37
    $0.300
    1,666,666
    $0 .00$0.030
    15,625,000
    1.70
    $0.030
    15,625,000
    $0
    .00$0.036
    15,625,000
    1.70
    $0.036
    15,625,000
    $0
    .00$0.036
    138,889
    1.70
    $0.036
    138,889
    $0
    .00$0.036
    208,333
    1.59
    $0.036
    208,333
    $0
    .00


Details of the warrants are
    specified in Note 10.


On October
    15,2007, 500,000 warrant shares were exercised at an exercise price of $0.030.


NOTE 12
    STOCK PURCHASE AGREEMENTS


a) On or about October 12 2005, the Company entered into two non-binding Stock
    Purchase Agreements with Central High Limited ("Central High").


1)
    for
    the entire issued share capital of Good World Investments Limited, subject to satisfactory
    completion of legal, financial and operational due diligence. Good World Investments
    Limited holds 50% interests in Beijing Ren Ren Health Culture Promotion Limited. This
    transaction closed on March 13, 2007 (refer to item (i) below;2)
    for
    50,000,000 shares in Cody Ventures Corporation ("CVC") representing about 52.1%
    of the issued share capital in CVC in exchange for 30 million new common stock of the
    Company, subject to satisfactory completion of legal, financial and operational due
    diligence. CVC is quoted on the US Pink Sheets Market under the symbol CDYV. This
    agreement was terminated in July 2006.


Both directors,
    Messrs Con Unerkov and Alex Ho own 25% each in the issued share capital of Central High.b) 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 September
    30, 2007, the Company has only issued one million shares in respect of this agreement.


---

c) On or about
    February 1, 2006, the Company entered into a non-binding Stock Purchase Agreement with
    Dongguang Zhishixin Advertising Limited ("Zhishixin") for the controlling
    interests in Zhishixin ("Stock Purchase Agreement"). Under the Stock Purchase
    Agreement the Company will subscribe about $68,500 (RMB550, 000) of registered capital,
    representing about 52.3% of the enlarged capital, in Zhishixin. This Agreement is
    conditional on satisfactory completion of the legal, financial and operational due
    diligence by the Company. This agreement was terminated in September 2006.


d) 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 $0.3
    per share. For every stock purchased, Central Star will been titled 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.


e) 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 5trading
    days of a prior notice of an advance. For each common stock purchased under the ELOC, TMC
    will pay between 90-100% of the volume weighted average price of our common stock quoted
    on the Over-the-Counter Bulletin Board for the 5 days immediately preceding the notice
    date. As part of this agreement, the Company issued to TMC 12,500,000 common stock as
    commitment fee and stock warrants for a total of 31,250,000 shares of common stock. The
    warrants expire on May 7, 2009. The warrants have an exercise price for 15,625,000 shares
    of common stock at $0.030 per share and the other 15,625,000 shares of common stock at
    $0.036 per share.


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


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


h) On January 13, 2007 the Company acquired 18% interests in Guangzhou Waho Culture
    & Media Co., Ltd. (the "GWCM") for $243,000, of which$53,000 shall be paid
    in cash within 6 months from the date of the agreement and $190,000 worth of common stock,
    which is calculated to 3,518,518 shares of the Company. GWCM is a company focused in the
    business of online advertising for the China market.


---

i) 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 will issue 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.j) On March 27, 2007, the Company issued 208,333 stock warrants as part of
    commission in relation to the issuance of $75,000 Convertible Debenture to TMC in respect
    of the Debenture Purchase Agreement. These warrants have an exercise price of $0.036 per
    share and expire on May 12, 2009.


k) 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.


l) 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.


m) 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, of which $27,233 was prepaid service expense.


n) On August 20, 2007, the Company entered into an Agreement
    ("Agreement") with a third party consultant to provide promotional works for the
    Company and, in return, the Company shall issue 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 the Agreement. The services were valued at fair market value
    of the common stock issued for $43,750, of which $23,819 was prepaid service expense.


o) 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 a consideration of the Agreement. The services were
    valued at fair market value of the common stock issued for $6,120, of which $3,876 was
    prepaid service expense.**NOTE 13**
    **INTANGIBLE ASSETS**


a)
    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 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.


The Company issued 1,000,000 shares of common stock valued at $138,000 and
    classified as deposit on distribution rights. The shares were valued at the market price
    on the date of issuance. As of March 31, 2007, the Company has not received the prototype
    device.


b)
    On March 13, 2007, the Company acquired 100% interests in Good World Investments
    Limited for $6,000,000, which resulted in the Group recording a goodwill upon
    consolidation of $7,791,236.


---

**NOTE
    14**
    **CONVERTIBLE
    DEBENTURE**


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 ofUS$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$50,000upon 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 12, 2006 and March 27, 2007, the Company issued US$50,000
    and US$75,000 of convertible debentures, respectively, pursuant to the DPA. As of
    September 30, 2007, a total of $125,000 Convertible Debentures was issued and outstanding.The Company calculated a beneficial conversion feature of $75,000. The Company
    amortized the beneficial conversion feature in accordance with the conversion terms of the
    note. At March 31, 2007, the note is presented net of the unamortized beneficial
    conversion feature of $75,000 to be amortized over the term of the note of 1 year.For the
    three months periods ended September 30,2007, $18,750 beneficial conversion feature was
    amortized.


**NOTE 15**
    **SHORT-TERM DEBT**


As of September 30, 2007, the Company has an outstanding short-term unsecured debt
    payable of $67,600, with annual interest rate of 10%. The interest expense amounted to
    $12,674 and $5,311 for the nine-months periods ended September 30, 2007 and 2006, and
    $4,815 and $1,690 for the three months periods ended September 30, 2007 and 2006.


**NOTE 16**
    **DUE TO DIRECTORS AND OFFICERS**


The due to directors and officers are interests free, unsecured and due on demand.
    The balance of due to directors and officers is $ 582,798 as of September 30, 2007.


---

**NOTE
    17**
    **LONG
    TERM SHAREHOLDER LOAN**


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


**NOTE 18**
    **RELATED COMPANY TRANSACTIONS**


The transactions with related parties for the nine months ended September 30, 2006
    and 2007 are as noted below.


During the nine months period ended September 30, 2007, the Company entered into an
    agreement to acquire 100% of Good World Investments Limited from Central High Limited
    which our directors Con Unerkov and Alex Ho each holds 25% interest.


The Company agreed to pay directors and officers a monthly salary for services
    performed. During the nine months period ended September 30, 2007 and 2006, the Company
    paid the directors and its officers and their services companies a total remuneration of
    $303,530 and $162,000 for the nine months period ended September 30, 2007 and 2006, and
    $93,515 and $54,000 for the three months period ended September 30, 2007 and 2006
    respectively.


**NOTE 19**
    **COMMITMENTS AND CONTINGENCIES**


a)
    The Company leases office premises for its operations in United States, Hong Kong
    and Malaysia under operating leases. Rental expenses under operating lease for the
    three-months period and nine months period ended September 30, 2007 was $15,200 and
    $47,358 respectively.
    Future minimum rental payments under
    non-cancellable operating leases for the year ended December 31, 2007 is $5,474.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 February 6, 2006, the Company received a correspondence from the
    Florida Attorney General's office regarding some complaints on some transmissions of
    unsolicited facsimile allegedly from the Company, and advised of potential civil
    penalties. The Company's legal council contacted the Attorney General office to state that
    the Company has never sent or authorized any unsolicited facsimile transmission, and that
    the Company has taken every possible effort to distance from these unauthorized
    transmissions including adding a "pop up" window on its website. The Company has
    offered its assistance in any investigation to the Attorney General office. The Attorney
    General office has not imposed any penalties on the Company to date. The Company would
    vigorously defend any such civic action if pursued.


---

d)
    On
    March 1, 2006 the Company entered into an agreement with Dolphin Investments Inc., (DII)
    whereby DII will assist Company in procuring R & D funding, developing resource pool
    for engineering expertise and liaising and building relationship with customers to achieve
    business and sales target.
    According to the terms of the agreement the
    Company will pay $10,500 per month as consulting fees for the period of 12 months from the
    date of the agreement.e)
    On December 7, 2007 The Company has entered into an Equity Line of Credit Agreement
    to sell US$2,500,000 of common stock, as further described in Note 6 (E) above.f)
    The Company will pay a 10% commission in cash and an equal amount in stock warrant
    to an independent party on any funds received under the ELOC Agreement and the Debenture
    Purchase Agreement.g)
    On July 14, 2007, the Registrant, China Media Group Corporation (the
    "Company") entered into a Stock Right Transfer Agreement (the
    "Agreement") with the shareholders of Conwood Industrial Limited
    ("CIL") to acquire 70% of the issued and outstanding shares of CIL. The
    consideration for the acquisition of these shares shall be RMB 13 million. Under the terms
    of the Agreement, the closing of this transaction is subject to satisfactory due diligence
    by the Company. CIL is a company registered in Hong Kong, which owns 49% of a joint
    venture company in China that owns and operates a microwave network in Hunan province and
    has a 25% interests in a digital television channel.


**NOTE 20**
    **SUBSEQUENT EVENTS**


On October 9, 2007, the Company entered into a Consulting Services Agreement with a
    third party consultant to provide consultancy services 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 90 days.


On October 15, 2007, the TMC exercised a portion of its warrants to purchase
    500,000 common stock in the Company at $0.030 per share for a total purchase price of
    $15,000.


On October 18, 2007 the Company drawdown $50,000 on the ELOC agreement referred to
    note 10(e) above by issuing 2,000,000 common stock in the Company.


On October 30, 2007 the Company entered into an Advertising Agreement with a third
    party to display advertisements of the Company on its website. In return, the Company
    issued 6,666,666 shares of Common Stock as service fee. The term of this agreement is 12
    months.


NOTE 21
    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
    
    (29,161)Property, plant and
    equipment
    
    7,505Goodwill
    
    7,791,236Long-term loan
    
    (2,000,000)Minority interest (50%)
    
    
    (212,629)Purchase price
    
    
    6,000,000


Proforma Financials


The accompanying pro-forma condensed consolidated financial statements are provided
    for informational purposes only. The Pro-Forma Consolidated Balance Sheet and Pro-Forma
    Combined Statement of Operations are unaudited and are not necessarily indicative of the
    consolidated financial position which actually would have occurred if the above
    transaction had been consummated at the beginning of the period being reported on, nor
    does it purport to present the operating results that would be achieved for future
    periods.


The Unaudited Pro-Forma Consolidated Financial Statement reflect financial
    information which gives pro-forma effect to the acquisition of all the outstanding common
    shares of Good World in exchange for 125,000,000 shares of common stock of the Company.


The acquisition is to be recorded as a purchase acquisition. The Pro-Forma
    Consolidated Balance Sheet included herein reflects the use of the purchase method of
    accounting for the above transaction.


Unaudited Pro-Forma Consolidated Balance SheetThe acquisition was completed on March 13, 2007 and has been accounted
    for in the consolidated balance sheet presented in the Condensed Consolidated Balance
    Sheet as at September 30, 2007 and 2006.


Unaudited Pro-Forma Consolidated Statement of OperationsThe Pro-Forma Combined Statement of Operations
    give effect to the above transaction as if it occurred as at the beginning of the period
    being reported on.


---

CHINA MEDIA GROUP CORPORATIONUNAUDITED PRO-FORMAAS OF SEPTEMBER 30, 2007 AND 2006 FOR BALANCE SHEET ACCOUNTSAND FOR THE NINE MONTHS PERIOD ENDEDSEPTEMBER 30, 2007 AND 2006 FOR INCOME STATEMENTS ACCOUNTS

2007
    
    
    
    2006Proforma
    
    
    
    ProformaUS$
    
    
    
    US$---------------
    
    
    
    ---------------Current assets
    
    
    
    427,707
    
    
    
    519,334Non-current
    assets
    
    
    
    7,989,725
    
    
    
    7,865,483Current
    liabilities
    
    
    
    (1,241,310)
    
    
    
    (562,300)Long term
    liabilities
    
    
    
    (2,000,000)
    
    
    
    (2,200,131)Minority interest
    
    
    
    (180,907)
    
    
    
    -Stockholders'
    equity
    
    
    
    4,995,215
    
    
    
    5,622,386Net revenues
    
    
    
    99,642
    
    
    
    34,958Cost of revenue
    
    
    
    (79,083)
    
    
    
    (24,589)Gross profits
    
    
    
    20,559
    
    
    
    10,369Selling, general
    and administrative expenses
    
    
    
    (1,315,550)
    
    
    
    (644,536)Other expenses -
    interest expense
    
    
    
    (52,629)
    
    
    
    (5,311)Other income
    
    
    
    156
    
    
    
    -Minority interest
    
    
    
    31,722
    
    
    
    58,449Net loss
    
    
    
    (1,315,742)
    
    
    
    (581,029)Basic and diluted
    loss per common share
    
    
    
    $0.01
    
    
    
    $0.01============
    
    
    
    ============Basic and diluted
    weighted average number of common shares
    
    
    
    463,703,677
    
    
    
    345,223,474============
    
    
    
    ============


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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 BASEDON HISTORICAL FACT. FORWARD-LOOKING STATEMENTS
    MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKINGTERMINOLOGY, 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. THEFORWARD-LOOKING STATEMENTS
    SPECIFIED IN THE FOLLOWING INFORMATION HAVE BEEN COMPILED BY OUR MANAGEMENTON THE BASIS OF
    ASSUMPTIONS MADE BY MANAGEMENT AND CONSIDERED BY MANAGEMENT TO BE REASONABLE. OURFUTURE
    OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION, GUARANTY, OR
    WARRANTYIS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.
    THE ASSUMPTIONS USED FOR PURPOSES OF THE
    FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING INFORMATIONREPRESENT 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 ANDOTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING
    ASSUMPTIONS FROM AND AMONG REASONABLEALTERNATIVES REQUIRE THE EXERCISE OF JUDGMENT. TO THE
    EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THEOUTCOME MAY VARY SUBSTANTIALLY FROM
    ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION ISEXPRESSED ON THE
    ACHIEVABILITY OF THOSE FORWARD-LOOKING STATEMENTS. WE CANNOT GUARANTY THAT ANY OF
    THEASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THE FOLLOWING
    INFORMATION AREACCURATE, 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-QSB for the period ended September 30, 2007.


---

Overview


The Company was incorporated in Texas on October 1, 2002 and was originally formed
    to be a frozen drink machine rental service. It was intended to specialize in renting
    frozen drink machines for gatherings such as wedding receptions, birthday parties,
    football parties, anniversaries, family reunions, weekend barbeques, social functions and
    fund raising events, as well as any other type of occasion. From the beginning, this
    business was at the first stage of development and the primary focus was on continuing to
    developing and revising our business strategies.


In 2005, the Company changed its name to International Debt Exchange Associates
    Inc. reflecting the Company's then intent to become a diverse company through mergers and
    acquisitions and to still maintain business as a frozen drink machine rental service.
    In September 2005, the Company changed its
    board of directors and has since changed the Company name to China Media Group Corporation
    to reflect the Company's intent to focus all its efforts in advertising and media in the
    emerging China market. Under new management, the Company commenced to position the Company
    to capitalize on the growth of the Chinese advertising market where global companies are
    rushing into China to try to grab and hold the attention of its 1.3 billion citizens. It
    is estimated that advertising expenditure in China will surpass those in Japan by 2010,
    making China the second largest advertising market in the world after the USA.


Our mission is to become one of China's leading new age media companies through the
    use of new technologies and devices combined with traditional media of TV, Newspapers,
    Magazines, Billboards and Internet to reach today's mobile society. In order to facilitate
    this mission the Company established5 strategic business units: "Television",
    "Advertising" "Print", "Telecommunications and Mobile
    Computing" and "Products and Services".


In summary, the update of some of the events are as follows:Acquisition AgreementOn
    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 can advertise in hospitals and districts across China.


Pending AcquisitionOn
    July 14, 2007, we entered into a Stock Right Transfer Agreement with the shareholders of
    Conwood Industrial Limited ("CIL") to acquire 70% of the issued and outstanding
    shares of CIL. CIL is a company registered in Hong Kong, which owns 49% of a joint venture
    company in China that owns and operates a microwave network in Hunan province and has a
    25% interests in a digital television channel. This transaction is expected to close in
    the first quarter of 2008 after successful completion of financial, legal and operational
    due diligence.


---

Advertising UnitOn or about December 5, 2005, the Company
    announced that it has been appointed as the advertising agent for Beijing Ren Ren Health
    Culture Promotion Co. Limited. As further announced later, Beijing Ren Ren had obtained
    approval for over 600 sign ad placements of which about 90 location placements have been
    approved in Chao Yuan District in Beijing. Beijing Ren Ren has initially provided about 12
    ad placements in the Chao Yuan District for the Company to sell advertising. No
    advertising revenue has been generated yet from these signs.


Furthermore on or about December 7, 2005 the Company entered into a cooperation
    agreement with Harbin Shendong Advertising Co. Limited on developing adverting revenue in
    Harbin, which then progressed to discussions on acquisition of 9 signs from Harbin
    Shengdong. The Company is having on going discussion with Harbin Shendong on the
    acquisition of the 9 signs through the establishment of setting up a 70%/30% joint venture
    company where we would have the major shareholding. The joint venture is still being
    processed and is expected to be completed before the end of the year. No revenue has been
    generated yet from these signs.


On or about December 9, 2005 the Company entered into a cooperation agreement with
    DreamWorks Movie & TV Culture Media Co. Limited on developing the advertising market
    for Changsha. We are working with DreamWorks to secure customers to advertise in Changsha,
    but at the date of this report no revenue has been generated yet.


Telecommunications UnitIn
    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. No revenue has been generated
    from advertising through telecommunications media and devices at the date of this report.


As announced on or about January 25, 2006 the Company entered into a distribution
    agreement for the territory of China and Hong Kong for the M.A.G.I.C. Convergent Device.
    The Company has acquired the rights to M.A.G.I.C. convergent device which is expected to
    be commercially available for sales after successful testing. M.A.G.I.C. is a next
    generation convergent device that has the full capabilities of a notebook computer shrink
    to a size of a PDA phone. The Company received the prototype unit in May 2006 and is still
    conducting compliance, functional, stability, load and us ability testing on the device
    prior to testing by our resellers and partners. We expect that compliance testing will be
    completed by the end of the year. No revenue has been generated from this M.A.G.I.C.
    convergent device at the date of this report.


---

The Company
    also announced on or about January 17, 2006 that it has signed a Letter of Intent with
    DreamWorks Movie & TV Culture Media Co. Ltd to jointly develop mobile TV network in
    Hunan Province and advertising on such mobile network. No further update since the last
    report. No revenue has been generated from this cooperation.
    In January 2007, the Company acquired 18%
    interests in Guangzhou Waho Culture co, Ltd. ("Waho"), a company in the business
    of online advertising with specifically a contract to do the print and online edition of
    Yellow Pages for Guangdong Province for China Tie tong Communications Co., Ltd., one of
    the licensed telecommunication carriers in China. This investment provides us an entry
    into this online portal and possible future collaboration between Waho's online portal
    with our advertising and technology platforms.


As such, the Group has signed a co-operative agreement with Waho to provide the
    online search engine and website for the Yellow Pages directory engine. The beta version
    of the website has been completed at www.cttyp.com.
    The Group expects to start selling online advertising on the website 2008. Furthermore in
    the period the Group has combined the technology of Webcall to facilitate the selling of
    online advertising by connecting the potential viewers on the web with the online
    advertiser. Online advertisers can actively talk to potential customers after seeing the
    online advertising.


In August 2007, Mr. Paul Scanlan President of our Telecommunications Unit left the
    Company.


Hospital Advertising UnitOn
    or about December 13, 2005 the Company announced that it will undertake the advertising
    works inside/outside of the Changsha Central Hospital to introduce domestic and
    international healthcare companies to advertise at the hospitals. Also on or about
    February 27, 2006 the Company announced that it has been appointed to undertake the
    advertising placement work for Beijing Number 6 Hospital. Our staff continues to work to
    secure advertising customers for both these hospitals. No revenue has been generated from
    the placement from these two hospitals at the date of this report.


Product Services UnitWe
    have commenced a Products Services Unit to build brands and to take advantage of our
    contacts, distribution network and trading opportunities. We will leverage off our
    advertising platform to develop our won brands for selected products. This will uniquely
    position our Product Services for brand awareness and as well as develop a long term
    business unit that will serve both consumers and industries.


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


---

Plan of operations


OUR 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 $29,368 as of September 30, 2007; an increase
    from the previous period end of December 31, 2006. 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.


The Company entered into an agreement to sell USD$2,500,000 in common stock in
    December 2006, under the ELOC agreement, subject to the approval of the Registration
    Statement. As of the date of this report, the Registration Statement has been approved by
    the SEC. 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, 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 twelvemonths.


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


---

Results of
    Operations


FOR THE THREE AND NINE MONTHS PERIODS ENDED SEPTEMBER 30, 2007 COMPARED TO THE
    THREE AND NINE MONTHS PERIODS ENDED SEPTEMBER 30, 2006.


REVENUES.
    The Group has realized revenue of $99,642 and
    $33,613 for the nine months ended September 30, 2007 and 2006, respectively. The Group
    incurred a cost of revenue of $79,083, achieving a gross profit of $20,559 for the nine
    months ended September 30, 2007 and for the similar period in 2006, the Group had a cost
    of revenue of $24,589, achieving a gross profit of $9,024. For the three months ended
    September 30, 2007 and 2006, the Group realized revenue of $38,341 and $25,046.
    Respectively. The Group incurred a cost of revenue of $35,694 and achieved a gross profit
    of $2,647 for the three months ended September 30, 2007, and for the three months ended
    September 30, 2006, the group incurred a cost of revenue of $18,511 and a gross profit of
    $6,535. We hope to generate additional revenues when we receive more 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 nine months period ended September
    30, 2007, our gross profit was $20,559 and our total operating expenses were $1,275,692,
    all of which were selling, general and administrative expenses and $243,000 for impairment
    in investment. We also had $52,629 in interest expenses and $156 in interest income,
    $13,700 in minority interest and $7,906 in comprehensive income, so that the net loss to
    our shareholders for the nine months period ended September 30, 2007 was $1,293,906. This
    is in comparison to the same period ended September 30, 2006, where we had $524,879 in
    selling, general and administrative expenses and $5,311 in interest expenses, making our
    net loss for that period $521,166.
    For the three months period ended September
    30, 2007, our gross profit was $2,647 and our total operating expenses were $347,029, all
    of which were selling, general and administrative expenses . We also had $24,042 in
    interest expenses and $156 in interest income, $9,168 in minority interest and $2,160 in
    comprehensive income, so that the net loss to our shareholders for the three months period
    ended September 30, 2007 was $359,224. This is in comparison to the same period ended
    September 30, 2006, where we had $195,626 in selling, general and administrative expenses
    and $1,690 in interest expenses, making our net loss for that period $190,781.


Liquidity and Capital ResourcesAs at September 30, 2007, the Company had cash and cash equivalents totaling
    $29,638, other current assets of $449,543 and non-current assets totaling $7,989,725 which
    were represented by $60,489 in fixed assets, $138,000 in distribution rights and
    $7,791,236 in goodwill. The total assets of the Company were $8,439,268 as of September
    30, 2007. We also had current liabilities of $1,241,310 which were represented by $366,755
    in accounts payable and accruals, $135,649 in other payable, $67,600 in short term debt,
    $582,798 due to related parties, $88,508 in convertible debenture as of September 30,
    2007. We also had $2,000,000 in long-term shareholders loan as of September 30, 2007,
    making our total liabilities $3,241,310.
    At present the Company does not have
    sufficient cash resources to provide for all general corporate operations in the
    foreseeable future. The Company has completed the registration statement relating to the
    ELOC agreement for $2,500,000 and will be required to satisfy certain share trading
    conditions in order to draw down on this facility, and to raise additional capital in
    order to continue to operate in fiscal 2007.


---

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 nine months ended September 30, 2007 the Company incurred net loss
    of $1,293,906, and has accumulated losses of $3,148,162 as at September 30, 2007. The
    Company's ability to continue as a going concern is contingent upon its 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, 2007, there were no off balance sheet arrangements.


Item 3.
    Controls and Procedures.


(A)
    Evaluation Of Disclosure Controls And Procedures


As of the end of the period covered by this report, the Company carried out an
    evaluation, under the supervision and with the participation of the Company's Principal
    Executive Officer/Principal Financial Officer, of the effectiveness of the design and
    operation of the Company's disclosure controls and procedures. The Company's disclosure
    controls and procedures are designed to provide a reasonable level of assurance of
    achieving the Company's disclosure control objectives. The Company's Principal Executive
    Officer/Principal Accounting Officer has concluded that the Company's disclosure controls
    and procedures are, in fact, effective at this reasonable assurance level as of the period
    covered.


(B)
    Changes In Internal Controls Over Financial Reporting


In connection with the evaluation of the Company's internal controls during the
    Company's last fiscal quarter, the Company's Principal Executive Officer/Principal
    Financial Officer has determined that there are no changes to the Company's internal
    controls over financial reporting that has materially affected, or is reasonably likely to
    materially effect, the Company's internal controls over financial reporting.


---

PART II


Item 1.
    Legal Proceedings


None.


Item 2.
    Unregistered Sales of Equity Securities and Use of Proceeds


a)
    On December 23, 2006, the Company entered into a number of Subscription Agreements
    with its employees for them to subscribe a total of 4,342,464 shares (the
    "Subscription Shares") at USD0.0365 per share for an aggregate of USD158,500
    which was used to retire debts owed to its employees. This Subscription Shares included
    1,369,863 shares that were subscribed for USD50,000 by our director Mr. Con
    Unerkov,1,232,876 shares that were subscribed for USD45,000 by our director Mr. Alex Ho
    and 1,369,863 shares that were subscribed for USD50,000by Mr. Paul Scanlan, former
    President of our Telecommunication and Mobile Computing Division. The Company relied upon
    the exemption from registration as set forth in Regulation S of the Securities Act for the
    issuance of these shares. The stockholders are not a "U.S. Person" as that term
    is defined in the Securities Act, and at the time of the offering and issuance of the
    shares, the stockholders were located outside of the United States. In addition, the
    stockholders took the shares for investment purposes without a view to distribution and
    had access to information concerning the Company and our business prospects, and were
    permitted access to the Company's management for the purpose of acquiring investment
    information, as required by the Securities Act. Further, there was no general solicitation
    or advertising for the issuance of the shares. The Company issued the shares without
    compliance with the registration requirements of the Securities Act in reliance upon the
    exemptions therefrom afforded by Section 4(2) and Regulations D thereunder as well as
    Regulation S.


b)
    On January 13, 2007, the Company entered into a Sale and Purchase Agreement (the
    "SP Agreement") with an independent third party (the "Vendor") to
    purchase 18% of the registered capital of Guangzhou Waho Culture & Media Co., Ltd.
    ("GWCM") for US$243,000, which will be paid by US$53,000 in cash and US$190,000
    in common stock which is calculated to 3,518,518 shares of the Company. Pursuant to the
    Agreements, the cash consideration of US$53,000 shall be paid within 6 months from the
    date of the SP Agreement and the shares consideration of 3,518,518 shares are kept in
    escrow by the Company until the completion of the registration of the 18% of the
    registered capital of GWCM into the Company's name. The Company relied upon the exemption
    from registration as set forth under Section 4(2) of the Securities Act for the issuance
    of these shares. The stockholder was an Accredited Investor as that term is defined in the
    Securities Act and took the shares for investment purposes without a view to distribution
    and had access to information concerning the Company and our business prospects, as
    required by the Securities Act. In addition, there was no general solicitation or
    advertising for the issuance of the shares. The stockholder was permitted access to the
    Company's management for the purpose of acquiring investment information.


c)
    On March 1, 2007, the Company issued the secondtranche of 1,500,000
    shares to an independent third party in accordance with the Consultant Agreement executed
    on December 1, 2006. The Company relied upon the exemption from registration as set forth
    under Section 4(2) for the issuance of these shares. The stockholder was an Accredited
    Investor as that term is defined in the Securities Act and took the shares for investment
    purposes without a view to distribution and had access to information concerning the
    Company and our business prospects, as required by the Securities Act. In addition, there
    was no general solicitation or advertising for the issuance of the shares. The stockholder
    was permitted access to the Company's management for the purpose of acquiring investment
    information.


---

d)
    On
    March 13, 2007 we entered into a Sales and Purchase Agreement to acquire the entire issued
    share capital of Good World Investment Limited which owns 50% issued shares capital of
    Beijing Ren Ren Health Culture Promotion Limited. Pursuant to the agreement, the Company
    will issue 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. The Company relied upon the
    exemption from registration as set forth under Section 4(2) of the Securities Act for the
    issuance of these shares. The stockholder was an Accredited Investor as that term is
    defined in the Securities Act and took the shares for investment purposes without a view
    to distribution and had access to information concerning the Company and our business
    prospects, as required by the Securities Act. In addition, there was no general
    solicitation or advertising for the issuance of the shares. The stockholder was permitted
    access to the Company's management for the purpose of acquiring investment information.


e)
    On May 31, 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 on June 1,2007. The Company issued to the consultant 180,000 shares of common
    stock as a consideration of the Agreement. The Company relied upon the exemption from
    registration as set forth under Section 4(2) of the Securities Act for the issuance of
    these shares. The stockholder was an Accredited Investor as that term is defined in the
    Securities Act and took the shares for investment purposes without a view to distribution
    and had access to information concerning the Company and our business prospects, as
    required by the Securities Act. In addition, there was no general solicitation or
    advertising for the issuance of the shares. The stockholder was permitted access to the
    Company's management for the purpose of acquiring investment information.


f)
    On June 11, 2007, we entered into a Comprehensive Campaign Agreement
    ("Agreement") with a third party consultant to provide promotional coverage for
    the Company and, in return, the Company shall issue 1,050,000 shares of Common Stock as
    compensation fee. The term of this Agreement is 90 days commencing on June 14, 2007. The
    Company relied upon the exemption from registration as set forth under Section 4(2) of the
    Securities Act for the issuance of these shares. The stockholder was an Accredited
    Investor as that term is defined in the Securities Act and took the shares for investment
    purposes without a view to distribution and had access to information concerning the
    Company and our business prospects, as required by the Securities Act. In addition, there
    was no general solicitation or advertising for the issuance of the shares. The stockholder
    was permitted access to the Company's management for the purpose of acquiring investment
    information.


---

g)
    On
    August 14, 2007, the Company issued the third tranche of 1,500,000 shares to an
    independent third party in accordance with the Consultant Agreement executed on December
    1, 2006. The Company relied upon the exemption from registration as set forth under
    Section 4(2) for the issuance of these shares. The stockholder was an Accredited Investor
    as that term is defined in the Securities Act and took the shares for investment purposes
    without a view to distribution and had access to information concerning the Company and
    our business prospects, as required by the Securities Act. In addition, there was no
    general solicitation or advertising for the issuance of the shares. The stockholder was
    permitted access to the Company's management for the purpose of acquiring investment
    information.


h)
    On August 20, 2007, we entered into an Agreement ("Agreement") with a
    third party consultant to provide promotional works for the Company and, in return, the
    Company shall issue 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 the
    Agreement. The Company relied upon the exemption from registration as set forth under
    Section 4(2) of the Securities Act for the issuance of these shares. The stockholder was
    an Accredited Investor as that term is defined in the Securities Act and took the shares
    for investment purposes without a view to distribution and had access to information
    concerning the Company and our business prospects, as required by the Securities Act. In
    addition, there was no general solicitation or advertising for the issuance of the shares.
    The stockholder was permitted access to the Company's management for the purpose of
    acquiring investment information.


i)
    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 a consideration of the Agreement. The Company
    relied upon the exemption from registration as set forth under Section 4(2) of the
    Securities Act for the issuance of these shares. The stockholder was an Accredited
    Investor as that term is defined in the Securities Act and took the shares for investment
    purposes without a view to distribution and had access to information concerning the
    Company and our business prospects, as required by the Securities Act. In addition, there
    was no general solicitation or advertising for the issuance of the shares. The stockholder
    was permitted access to the Company's management for the purpose of acquiring investment
    information.


j)
    On October 9, 2007, the Company entered into a Consulting Services Agreement with a
    third party consultant to provide consultancy services 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 90 days. The Company relied upon the exemption from registration as set forth
    under Section 4(2) of the Securities Act for the issuance of these shares. The stockholder
    was an Accredited Investor as that term is defined in the Securities Act and took the
    shares for investment purposes without a view to distribution and had access to
    information concerning the Company and our business prospects, as required by the
    Securities Act. In addition, there was no general solicitation or advertising for the
    issuance of the shares. The stockholder was permitted access to the Company's management
    for the purpose of acquiring investment information.


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k)
    On October 30, 2007 the Company entered into an Advertising Agreement with a third
    party to display advertisements of the Company on its website. In return, the Company
    issued 6,666,666 shares of Common Stock as service fee. The term of this agreement is 12
    months. The Company relied upon the exemption from registration as set forth under Section
    4(2) of the Securities Act for the issuance of these shares. The stockholder was an
    Accredited Investor as that term is defined in the Securities Act and took the shares for
    investment purposes without a view to distribution and had access to information
    concerning the Company and our business prospects, as required by the Securities Act. In
    addition, there was no general solicitation or advertising for the issuance of the shares.
    The stockholder was permitted access to the Company's management for the purpose of
    acquiring investment information.Item 3.
    Defaults Upon Senior Securities


None.


Item 4.
    Submissions of Matters to a Vote of Security Holders


None.


Item 5.
    Other Information


None.


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Item 6.
    Exhibits


Exhibit Number
    Description of Exhibit----------------
    ----------------------------------------------------------------------------------------------------------------3.1
    Articles
    of Incorporation (1)3.1.1
    Certificate
    of Amendment to Articles of Incorporation (2)3.1.2
    Certificate
    of Amendment to Articles of Incorporation, as amended. (6)3.2
    Bylaws
    (1)10.1
    ELOC
    Arrangement with Tailor-Made Capital Ltd. (3)10.2
    Debenture
    Purchase Agreement with Tailor-Made Capital Ltd. (3).10.3
    2002
    Stock Option Plan (4)10.4
    2007
    Stock Incentive Plan (5)21.1
    Subsidiaries
    of small business issuer. (6)31*
    Certification
    of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232*
    Certification
    of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


1. Incorporated by reference to our
    Registration Statement on Form SB-2 filed with the SEC on April 15, 2003.2. Incorporated by reference to our
    Current Report on Form 8-K filed with the SEC on February 3, 2005.3. Incorporated by reference to our
    Current Report on Form 8-K/A as filed with the SEC on March 8, 2007.4. Incorporated by reference to our
    Registration Statement on Form SB-2 filed with the SEC on April 15, 2003.5. Incorporated by reference to our
    Registration Statement on Form S8 filed with the SEC on March 8, 2007.6. Incorporated by reference to our
    Registration Statement on Form SB-2/A filed with the SEC on April 23, 2007.


* Attached herein.


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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/ Con Unerkov---------------------------------------Con UnerkovPrincipal executive
    officerPresident, director


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


By:
    /s/ Con Unerkov
    November 5, 2007--------------------------------------------Con UnerkovIts:
    Principal executive
    officerPresident, CFO,
    director


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Exhibit 31


Rule 13a-14(a)/15d-14(a)Certification of Chief Executive Officer and Chief Financial Officer of the CompanyPursuant to Section 302 of the Sarbanes-Oxley Act of 2002and Securities and Exchange Commission Release 34-46427I, Con Unerkov, certify that:1. I have reviewed this quarterly report on Form 10-QSB of China Media Group
    Corporation;2. Based on my knowledge, this report does not contain any untrue statement of a
    material fact or omit to state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were made, not misleading with
    respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information
    included in this report, fairly present in all material respects the financial condition,
    results of operations and cash flows of the small business issuer as of, and for, the
    periods presented in this report;4. The small business issuer's other certifying officer(s) and I are responsible
    for establishing and maintaining disclosure controls and procedures (as defined in
    Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:


(a)
    Designed such disclosure controls and procedures, or caused such disclosure
    controls and procedures to be designed under our supervision, to ensure that material
    information relating to the small business issuer, including its consolidated
    subsidiaries, is made known to us by others within those entities, particularly during the
    period in which this report is being prepared;(b)
    Evaluated the effectiveness of the small business issuer's disclosure controls and
    procedures and presented in this report our conclusions about the effectiveness of the
    disclosure controls and procedures, as of the end of the period covered by this report
    based on such evaluation; and(c)
    Disclosed in this report any change in the small business issuer's internal control
    over financial reporting that occurred during the small business issuer's most recent
    fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual
    report) that has materially affected, or is reasonably likely to materially affect, the
    small business issuer's internal control over financial reporting.


5. I have disclosed, based on our most recent evaluation of internal control over
    financial reporting, to the small business issuer's auditors and the audit committee of
    the small business issuer's board of directors (or persons performing the equivalent
    functions):


(a)
    All significant deficiencies and material weaknesses in the design or operation of
    internal control over financial reporting which are reasonably likely to adversely affect
    the small business issuer's ability to record, process, summarize and report financial
    information; and(b)
    Any fraud, whether or not material, that involves management or other employees who
    have a significant role in the small business issuer's internal control over financial
    reporting.


Date: November 5, 2007/s/ Con Unerkov-----------------------Con UnerkovChief Executive Officer and Chief
    Financial Officer


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Exhibit 32


CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 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-QSB for the period ending September 30, 2007, as filed
    with the Securities and Exchange Commission on the date hereof (the "Report"),
    Con Unerkov, Chief Executive Officer and Chief Financial Officer of the Company, certifies
    to the best of his knowledge, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
    906 of the Sarbanes-Oxley Act of 2002, that:


(1)
    The Report fully complies with the requirements of Section 13(a) or 15(d) of the
    Securities Exchange Act of 1934; and(2)
    The
    information contained in the Report fairly presents, in all material respects, the
    financial condition and result of operations of the Company.


A signed
    original of this written statement required by Section 906 has been provided to China
    Media Group Corporation, and will be retained by China Media Group Corporation and
    furnished to the Securities and Exchange Commission or its staff upon request./s/ Con Unerkov--------------------------Con UnerkovChief Executive
    Officer and Chief Financial OfficerNovember 5, 2007


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