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

FORM 10 − Q

[X]
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934For the quarterly three month period ended March 31, 2008[   ]
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor the transition period from [   ] to [   ]


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

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

Texas
    7310
    32-003-4926-----------------------
    ------------------------
    ----------------------(State or other jurisdiction
        of incorporation or organization)
    (Primary Standard Industrial
        Classification Code Number)
    (I.R.S. Employer Identification No.)


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


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

Not Applicable
(Former Name, Former Address and Former
Fiscal Year if Changed Since Last Report)

Indicate
    by check whether the Registrant (1) has filed all reports required to be filed by Section
    13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such
    shorter period that the registrant was required to file such reports), and (2) has been
    subject to such filing requirements for the past 90 days.


Yes  [X]     No [
  ]

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


Large Accelerated Filer [  ]
    Accelerated Filer [  ]    Non-Accelerated Filer [X]
    Smaller Reporting Company [  ]

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


Yes[  ]
      No  [X]

The number of common equity shares outstanding as of May 10, 2008
    was 524,132,450 shares of Common Stock, no par value.




---



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




---



PART I


Item 1.
    Condensed
    Consolidated Financial Statements


China Media Group Corporation
Condensed Consolidated Financial Statements
March 31, 2008
(Unaudited)
(Expressed In United States Dollars)

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




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


March 31,
    
    December 31,2008
    
    2007(Unaudited)
    
    (Audited)Notes
    
    -----------------
    
    ---------------------ASSETSCurrent
    Assets:Cash and
    cash equivalents
    
    $
    57,625
    $
    107,903Accounts
    receivables
    
    
    11,797
    
    -Loans to
    unrelated parties
    
    
    357,330
    
    343,487Prepayments,
    deposit and other receivables
    7
    
    91,684
    
    114,980---------------------
    
    -----------------------Total
    current assets
    
    
    518,436
    
    566,370Non-current assetsProperty
    and equipments, net
    
    
    47,258
    
    48,745Advance
    payment for distribution rights
    
    
    138,000
    
    138,000Goodwill
    
    
    7,791,676
    
    7,791,676---------------------
    
    ---------------------7,976,934
    
    7,978,421---------------------
    
    ---------------------$
    8,495,370
    $
    8,544,791============
    
    ============LIABILITIES
    AND STOCKHOLDERS' EQUITYCurrent
    liabilities:Accounts
    payable
    
    $
    44,415
    $
    32,806Other
    payables and accruals
    8
    
    441,418
    
    374,393Convertible
    debentures
    9
    
    125,000
    
    107,258Short
    term debt
    10
    
    67,600
    
    67,600Due to
    officer and directors
    11
    
    783,446
    
    727,861---------------------
    
    ---------------------Total
    current liabilities
    
    
    1,461,879
    
    1,309,918---------------------
    
    ---------------------Long-term
    debts
    12
    
    2,023,600
    
    2,023,600Minority
    interest
    
    
    182,417
    
    187,804Stockholders'
    equityCommon
    stock, no par value, 85,000,000,000 shares authorized, 524,132,450 (2007: 521,500,871)
    shares issued and outstanding
    4 &5
    
    7,428,902
    
    7,428,902Additional
    paid-in-capital
    
    
    1,524,664
    
    1,449,491Shares
    issued for prepaid consulting services
    13
    
    (148,068)
    
    (293,401)Comprehensive
    income
    
    
    35,488
    
    20,766Accumulated
    deficits
    
    
    (4,013,512)
    
    (3,582,289)---------------------
    
    -----------------------Total
    stockholders' equity
    
    
    4,827,474
    
    5,023,469---------------------
    
    ---------------------$
    8,495,370
    $
    8,544,791============
    
    =============


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



---



CHINA MEDIA GROUP CORPORATIONSTATEMENTS OF STOCKHOLDERS' EQUITY/ (DEFICIT)FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 ANDFOR THE THREE MONTHS ENDED MARCH 31, 2008


Additional
    
    
    
    TotalCommon stock
    paid-in
    Comprehensive
    Prepaid
    Accumulated
    stockholders'Shares
    Amount
    capital
    income
    Expenses
    Deficit
    equity (deficit)US$
    US$
    US$
    US$
    US$
    US$Balance at January 1, 2006
    343,940,812
    162,170
    -
    -
    -
    (338,514)
    (176,344)Issuance of shares for distribution right
    1,000,000
    138,000
    -
    -
    -
    -
    138,000Issuance of shares and warrants for cash
    833,333
    170,000
    80,000
    -
    -
    -
    250,000Issuance of shares for services
    3,000,000
    69,000
    -
    -
    (55,375)
    -
    13,625Issuance of shares for commitment fee for equity line of credit
    agreement
    12,500,000
    237,500
    -
    -
    -
    -
    237,500Options granted
    -
    -
    184,276
    -
    -
    -
    184,276Issuance of warrants
    -
    -
    312,660
    -
    -
    -
    312,660Net loss
    -
    -
    -
    -
    -
    (1,515,743)
    (1,515,743)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance at December 31, 2006 and January 1, 2007
    361,274,145
    776,670
    576,936
    -
    (55,375)
    (1,854,257)
    (556,026)Issuance of shares for staffs
    11,731,542
    312,232
    116,337
    -
    -
    -
    428,569Issuance of shares for share investment
    3,518,518
    190,000
    -
    -
    -
    -
    190,000Issuance of shares for acquisition of subsidiary
    125,000,000
    6,000,000
    -
    -
    -
    -
    6,000,000Issuance of shares for services
    17,476,666
    85,000
    603,420
    -
    (238,026)
    -
    450,394Exercise of warrants
    500,000
    15,000
    -
    -
    -
    -
    15,000Sell shares under ELOC Agreement
    2,000,000
    50,000
    -
    -
    -
    -
    50,000Issuance of warrants
    -
    -
    15,590
    -
    -
    -
    15,590Options granted
    -
    -
    62,208
    -
    -
    -
    62,208Issuance of convertible debenture
    -
    -
    75,000
    -
    -
    -
    75,000Comprehensive income
    -
    -
    -
    20,766
    -
    -
    20,766Net loss
    -
    -
    -
    -
    -
    (1,728,032)
    (1,728,032)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance at December 31, 2007 andJanuary 1, 2008
    521,500,871
    7,428,902
    1,449,491
    20,766
    (293,401)
    (3,582,289)
    5,023,469Amortization of issuance of shares for services expenses
    -
    -
    -
    -
    145,333
    -
    145,333Amortization of options granted
    -
    -
    25,173
    -
    -
    -
    25,173Issuance of shares for extension of repayment of debenture
    2,631,579
    -
    50,000
    -
    -
    -
    50,000Comprehensive income
    -
    -
    -
    14,722
    -
    -
    14,722Net loss
    -
    -
    -
    -
    -
    (431,223)
    (431,223)----------------
    -------------
    --------------
    ---------------
    -------------
    --------------
    ---------------Balance at March 31, 2008
    524,132,450
    7,428,902
    1,524,664
    35,488
    (148,068)
    (4,013,512)
    4,827,474=========
    =======
    ========
    =========
    =======
    ========
    =========


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



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CHINA MEDIA GROUP CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


Three month periods ended March 31--------------------------------------------------------2008
    
    2007-----------------
    
    -----------------US$
    
    US$Net
    revenue
    
    25,275
    
    26,834Cost of
    revenue
    
    16,157
    
    20,247-----------------
    
    -----------------Gross
    profit
    
    9,118
    
    6,587Operating
    expenses:Impairment
    of investment
    
    -
    
    243,000Selling,
    general and administrative expenses
    
    382,386
    
    342,235-----------------
    
    -----------------Loss
    from operations before other expense
    
    (373,268)
    
    (578,648)Other
    income / (expenses)Interest
    income
    
    37
    
    -Interest
    expenses
    
    (63,379)
    
    (3,513)-----------------
    
    -----------------Net loss
    before minority interests
    
    (436,610)
    
    (582,161)Minority
    interest
    
    5,387
    
    ------------------
    
    -----------------Net loss
    
    (431,223)
    
    (582,161)-----------------
    
    -----------------Other
    comprehensive incomeForeign
    currency translation gain
    
    35,488
    
    3,538Comprehensive
    loss
    
    (395,735)
    
    (578,623)-----------------
    
    -----------------Basic
    and diluted loss per common share
    $
    (0.00)
    $
    (0.00)==========
    
    ==========Basic
    and diluted weighted average numberof common shares
    *
    
    524,045,695
    
    392,867,086==========
    
    ==========


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




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



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CHINA MEDIA GROUP CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007


Three month periods ended March 31-----------------------------------------------------------2008
    
    2007-----------------
    
    ------------------Cash
    flows from operating activities:
    
    
    US$
    
    US$Net Loss
    
    
    (431,223)
    
    (582,161)Adjustments
    to reconcile net loss to net cashused in operating
    activities:Depreciation
    
    
    3,035
    
    789Amortization
    of convertible debenture
    
    
    17,742
    
    -Minority
    interest
    
    
    (5,387)
    
    -Impairment
    in investment
    
    
    -
    
    243,000Warrant
    expense
    
    
    -
    
    10,592Option
    expenses for employee compensation
    
    
    25,173
    
    -Common stock issuance for extension of
      repayment of        convertible debenture
    
    
    50,000
    
    -Common
    stock issuance for services
    
    
    -
    
    85,000Issuance
    of common stock for prepaid expenses for services
    
    
    145,333
    
    (28,792)(Increase)/decrease
    in assets:Prepaid
    expenses, deposit and other receivables
    
    
    9,453
    
    (2,465)Inventory
    
    
    
    
    124Accounts
    receivable
    
    
    (11,797)
    
    7Increase
    / (decrease) in liabilities:Accounts
    payable and accrued expenses
    
    
    78,634
    
    107,362Due to
    related parties
    
    
    55,585
    
    166,201--------------------
    
    -------------------Net cash
    used in operating activities
    
    
    (63,452)
    
    (343)Cash
    flows from investing activities:Increase
    in investment
    
    
    -
    
    (53,000)(Purchase)
    / Disposal of property and equipment
    
    
    (1,548)
    
    2,125--------------------
    
    --------------------Net cash
    used in investing activities
    
    
    (1,548)
    
    (50,875)--------------------
    
    --------------------Cash
    flows from financing activities:Proceeds from issuance of debt
    
    
    -
    
    75,000Acquisition
    of subsidiary, net of cash
    
    
    -
    
    26,671---------------------
    
    ---------------------Net cash
    provided by financing activities
    
    
    -
    
    101,671---------------------
    
    ---------------------Net
    increase in cash and cash equivalents
    
    
    (65,000)
    
    50,453Effect
    of exchange rate changes on cash and cash equivalents
    
    
    14,722
    
    -Cash
    and cash equivalents, beginning
    
    
    107,903
    
    63,039---------------------
    
    ---------------------Cash
    and cash equivalents, ending
    
    
    57,625
    
    113,492============
    
    ============Supplemental
    disclosure of cash flow information:Interest
    paid
    
    
    -
    
    -============
    
    ============Income
    taxes paid
    
    
    -
    
    -============
    
    =============


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



---





CHINA
    MEDIA GROUP CORPORATIONNOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1
    ORGANIZATION


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


NOTE 2
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF
    ASSETS


Unaudited Interim Financial InformationThe accompanying unaudited interim 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, 2007. 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, 2007 included in the Company Form 10-KSB filed with the Securities and
    Exchange Commission. In the opinion of management,all adjustments (consisting of
    normal recurring accruals) considered necessary for a fair presentation of financial
    position and the results of operations for the interim periods presented have been
    included. Operating results for the interim periods are not necessarily indicative of the
    results that may be expected for the respective full year.Use of EstimatesThe preparation of financial statements in conformity with
    generally accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities and disclosure of
    contingent assets and liabilities at the date of the financial statements and the reported
    amounts of revenues and expenses during the reporting period. Actual results could differ
    from those estimates.Principles of ConsolidationThe consolidated financial statements include the financial
    statements of the Company and its wholly owned subsidiaries Ren Ren Media Group Limited
    and Good World Investments Limited, and a 50% subsidiary Beijing Ren Ren Health Culture
    Promotion Limited. Good World Investments Limited and Beijing Ren Ren Health Culture
    Promotion Limited were both acquired by the Group in March 2007.The results of subsidiaries acquired during the period are
    consolidated from their effective dates of acquisition.All significant inter-company transactions and balances have been
    eliminated on consolidation.


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




---



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


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


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


Foreign Currency TranslationThe accounts of the Company's Hong Kong and China subsidiaries are
    maintained in the Hong Kong dollars (HK) and in Renmenbi, respectively. Such financial
    statements are translated into U.S. Dollars (USD) in accordance with Statement of
    Financial Accounts Standards ("SFAS") No. 52, "Foreign Currency
    Translation," with the Hong Kong dollar and the Renmenbi as the functional
    currencies. According to the Statement, all assets and liabilities were translated at the
    exchange rate on the balance sheet date, stockholder's equity are translated at the
    historical rates and statement of operations items are translated at the weighted average
    exchange rate for the period. The resulting translation adjustments are reported under
    other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive
    Income. As of March 31, 2008 and for the three months ended March 31, 2008, the
    comprehensive income was $14,722 and at the corresponding period in the prior year the
    comprehensive income was a loss of $3,538.


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




---



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


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


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


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




---



NOTE 3
    UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN


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


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 March 31, 2008, the Company has incurred an accumulated deficits totaling $4,013,512
    and its total current liabilities exceed its total current assets by $943,443. In view of
    the matters described above, recoverability of a major portion of the recorded asset
    amounts shown in the accompanying balance sheets is dependent upon continued operations of
    the Company, which in turn is dependent upon the Company's ability to raise additional
    capital, obtain financing and to succeed in its future operations. The financial
    statements do not include any adjustments relating to the recoverability and
    classification of recorded asset amounts or amounts and classification of liabilities that
    might be necessary should the Company be unable to continue as a going concern.


Management has taken the following steps to revise its operating
    and financial requirements, which it believes are sufficient to provide the Company with
    the ability to continue as a going concern. The Company has filed a registered statement
    to sell up to $2,500,000 of its common stock under an Equity Line of Credit Agreement
    ("ELOC"), which was declared effective by the SEC in May 2007. During 2007, the
    Company has sold $50,000 of its common stock under the ELOC agreement and still has
    US$2,450,000 remaining to be sold, under certain conditions, under the ELOC agreement. The
    Company is also actively pursuing additional funding and potential merger or acquisition
    candidates and strategic partners, which would enhance stockholders' investment.
    Management believes that the above actions will allow the Company to continue operations
    through the next fiscal year. However there can be no assurances that the Company can sell
    any of its common stocks under the ELOC Agreement or that sufficient financing will be
    available on terms acceptable to the Company or at all.


NOTE 4
    STOCKHOLDERS' EQUITY


Common Stock


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


WarrantsDuring the three months period ended March 31, 2008, the only
    movements in the warrants related to the issue of stock warrants in February 2006 when the
    Company issued stock warrants for 1,666,666 shares of common stock exercisable for a two
    year period to February 21, 2008 at an exercise price of $0.30 per share to Central Star
    Holdings Limited. The warrants expired on February 21, 2008.




---



NOTE 5
    STOCK OPTIONS AND WARRANTS


Stock OptionsThe Company adopted SFAS No. 123 (Revised 2004), Share Based
    Payment ("SFAS No. 123R"), under the modified-prospective transition method on
    April 1, 2006. SFAS No. 123R requires companies to measure and recognize the cost of
    employee services received in exchange for an award of equity instruments based on the
    grant-date fair value. Share-based compensation recognized under the modified-prospective
    transition method of SFAS No. 123R includes share-based compensation based on the
    grant-date fair value determined in accordance with the original provisions of SFAS No.
    123, Accounting for Stock-Based Compensation, for all share-based payments granted prior
    to and not yet vested as of April 1, 2006 and share-based compensation based on the
    grant-date fair-value determined in accordance with SFAS No. 123R for all share-based
    payments granted after April 1, 2006. SFAS No. 123R eliminates the ability to account for
    the award of these instruments under the intrinsic value method proscribed by Accounting
    Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
    Employees, and allowed under the original provisions of SFAS No. 123. Prior to the
    adoption of SFAS No. 123R, the Company accounted for our stock option plans using the
    intrinsic value method in accordance with the provisions of APB Opinion No. 25 and related
    interpretation2002 Stock Option PlanEffective on October 11, 2002, the Company adopted the 2002 Stock
    Option Plan (the "2002 Plan") allowing for the awarding of options to acquire
    shares of common stock. This plan provides for the grant of incentive stock options to key
    employees and directors. Options issued under this plan will expire over a maximum term of
    ten years from the date of grant. The Company had 29,800,000 stock options outstanding as
    at March 31, 2008.Following is a summary of the activities of the 2002 Stock Option
    Plan for the three months ended March 31, 2008:


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


Following
    is a summary of the status of options outstanding March 31, 2008:Outstanding Options
    
    Exercisable Options------------------------------------
    
    ----------------------------------------------------------------------Grant
    Date
    Exercise
    Price
    Number
    Average Remaining
    Contractual Life
    Average Exercise Price
    Number
    Intrinsic Price12/23/2006
    $0.0365
    17,500,000
    1.73
    $0.0365
    17,500,000
    $0.005/18/2007
    $0.0380
    12,300,000
    2.13
    $0.0380
    12,300,000
    $0.00




---



NOTE 5
    STOCK OPTIONS AND WARRANTS (Continued)


Stock Options (Continued)


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


2007 Stock Incentive
    PlanOn February 19, 2007, the Company adopted the 2007 Stock Incentive
    Plan (the "2007 Plan") allowing for the awarding of options to acquire shares of
    common stock. This plan provides for the grant of incentive stock options to key
    employees, directors and consultants. Options issued under this plan will expire over a
    maximum term of ten years from the date of grant. The Company had not issued any stock
    options under this plan since inception to March 31, 2007.


On March 8, 2007, we registered 38,400,000 shares underlying stock
    options under the 2007 Stock Incentive Plan with the SEC pursuant to a registration
    statement on Form S-8. As of March 31, 2008, there were 32,588,700 shares underlying the
    stock options under the 2007 Stock Incentive Plan.


Warrants


Following is a summary
    of the warrant activity for the three months ended March 31, 2008:


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




---



NOTE 5
    STOCK OPTIONS AND WARRANTS (Continued)


Warrants (Continued)


Following is a summary
    of the status of warrants outstanding at March 31, 2008:


Outstanding Warrants
    
    Exercisable Warrants---------------------------------
    
    ------------------------------------------------------------------Exercise Price
    Number
    Average Remaining Contractual Life
    Average Exercise Price
    Number
    Intrinsic Value$0.030
    15,125,000
    1.20
    $0.030
    15,125,000
    $0 .00$0.036
    15,625,000
    1.20
    $0.036
    15,625,000
    $0 .00$0.036
    138,889
    1.20
    $0.036
    138,889
    $0 .00$0.036
    208,333
    1.09
    $0.036
    208,333
    $0 .00$0.036
    41,666
    1.14
    $0.036
    41,666
    $0 .00$0.036
    138,888
    1.15
    $0.036
    138,888
    $0 .00


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


NOTE 6
    STOCK PURCHASE AGREEMENTS


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




---



NOTE 6
    STOCK PURCHASE AGREEMENTS (Continued)


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


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


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


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


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


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




---



NOTE 6
    STOCK PURCHASE AGREEMENTS (Continued)


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


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


u) On December 28, 2007, the Company issued 2,777,778 restricted
    shares of common stock for accrued services of $100,000.v) During the
    three months ended March 31, 2008, in January 2008 the Company issued 2,631,579 shares
    pursuant to a Second Amendment Agreement to extend the repayment of the $50,000
    Convertible Debenture to March 28, 2008.


NOTE 7
    PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES


Prepayments, deposits
    and other receivables are summarized as follows:


As of March 31, 2008
    
    As of December 31, 2007--------------------------
    
    ----------------------Rental
    deposits
    $
    5,937
    $
    21,334Utility
    and other deposits
    
    631
    
    9,860Advance
    to suppliers
    
    82,513
    
    82,337Other
    receivables
    
    2,603
    
    1,449---------------------------
    
    -----------------------$
    91,684
    $
    114,980================
    
    ==============




---



NOTE 8
    OTHER PAYABLES AND ACCRUALS


Other payables and
    accruals are summarized as follows:


As of March 31, 2008
    
    As of December 31, 2007--------------------------
    
    ----------------------Accrued
    salaries and wages
    $
    104,248
    $
    93,955Accrued
    interest
    
    72,730
    
    27,325Accrued
    accounting, audit, legal and consulting fee
    
    59,661
    
    45,191Accrued
    office and related expenses
    
    27,668
    
    39,799Accrued
    others
    
    16,654
    
    16,578Other
    payables
    
    100,516
    
    121,544Deposit
    from customers
    
    59,941
    
    30,001---------------------------
    
    ---------------------------$
    441,418
    $
    374,393================
    
    ==============


NOTE 9
    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 of US$0.024 per share. Under the DPA, the
    Company can issue the Convertible Debentures in 3 stages: 1) US$50,000 upon signing the
    DPA, 2) US$50,000 upon filing the registration statement in accordance to the SPA, and 3)
    US$25,000 upon the aforementioned registration statement being declared effective by the
    Securities Exchange Commission. On December 20, 2006, the Company issued US$50,000
    Convertible Debenture pursuant to the DPA and this was the only Convertible Debenture
    outstanding as at December 31, 2006.
    On March 28, 2007, the Company issued
    US$75,000 Convertible Debenture pursuant to the DPA and as at December 31, 2007 a total of
    US$125,000 Convertible Debentures were issued and outstanding.
    On January 4, 2008, the Company issued
    2,631,579 common stock as consideration to extend the repayment date of the $50,000
    Convertible Debenture to March 28, 2008. These common stock were registered and declared
    effective by the Securities Exchange Commission on February 13, 2008.
    On April 7, 2008, the Company paid the two
    Convertible Debentures totaling $125,000 and accrued interests of $14,198.


NOTE 10
    SHORT-TERM DEBT


As of March 31, 2008, the Company has an outstanding short-term
    unsecured debt payable of $67,600, with annual interest rate of 10%.


NOTE 11
    DUE TO DIRECTORS AND OFFICERS


The due to directors and officers are interests free, unsecured and
    due on demand. The balance of due to directors and officers is $783,446 as of March 31,
    2008.




---



NOTE 12
    LONG TERM DEBTS


March 31, 2008
    
    December 31, 2007 2006--------------------------
    
    ----------------------Shareholder
    Loan
    $
    2,000,000
    $
    2,000,000Other
    Loan
    
    23,600
    
    23,600---------------------------
    
    ---------------------------$
    2,023,600
    $
    2,023,600================
    
    ==============


The shareholder loan of $2,000,000 is non-secured, accrue interest
    from November 25, 2007 at a rate of 8% per annum and payable on November 25, 2010.


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


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


NOTE 13
    SHARES ISSUED FOR PREPAID EXPENSES


Three months ended
    March 31, 2008
    
    Year ended December 31, 2007--------------------------
    
    ----------------------Balance
    at the beginning of period
    $
    293,401
    $
    55,375Issue of
    shares for service during period
    
    -
    
    603,420Less:
    service expensed during period
    
    (145,333)
    
    (365,394)---------------------------
    
    ---------------------------Balance
    at the end of period
    $
    148,068
    $
    293,401================
    
    ==============


NOTE 14
    RELATED COMPANY TRANSACTIONS


There were no transactions with related parties for the three
    months ended March 31, 2008 and year ended December 31, 2007 other than as noted below.The Company agreed to pay directors and officers a monthly salary
    for services performed. During the three months period ended March 31, 2008 and year ended
    December 31, 2007, the Company paid the directors and its officers and their services
    companies a total remuneration of $54,000 and $91,500, respectively.




---



NOTE 15
    COMMITMENTS AND CONTINGENCIES


a)
    The Company leases office premises for its operations in United
    States, Hong Kong and China under operating leases. Rental expenses under operating lease
    for the year ended March 31, 2008 was $10,000 (for three months ended March 31, 2007
    :$18,341).Future minimum rental payments under non-cancellable operating
    leases for the year ended December 31, 2008 is $10,211.b)
    The Company has service or employment agreements with the Directors
    and Officer and its service companies (the "Executives") for two years
    commencing on October 1, 2005 and the agreements shall continue thereafter unless
    terminated by either parties. The Executives will receive a monthly salary at a rate to be
    agreed by the Company and the Executives from time to time. In addition, the Executives
    will receive an annual management bonus to be determined by the majority of the Board
    based on the operating results of the Company and the Executives' performances, provided
    that it does not exceed 8.8 % of the net profit of the Company.c)
    On December 7, 2006, 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 (C)
    above.d)
    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.e)
    On or about May 7, 2008, the Company received a correspondence from a
    law firm regarding complaints on some transmission of unsolicited facsimile allegedly from the
    Company in 2006, and advised of potential litigation.  The Company has never sent or authorized
    any unsolicited facsimile transmission, and the Company has taken every possible effort to
    distance from these unauthorized transmission. The Company firmly believes that the complaint
    is frivolous and without basis, and is consulting with its solicitor.  The Company would
    vigorously defend any such legal action if pursued.




---



NOTE 16
    SUBSEQUENT EVENTS (Unaudited)


On April 7, 2008, the Company paid the two Convertible Debentures
    totaling $125,000 and the accrued interests of $14,198.


NOTE 17
    BUSINESS COMBINATIONS


Sale and Purchase Agreement between the Company and Central High
    Limited


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


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


The
    purchase price was allocated as follows:


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




---



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


Forward Looking
    Statements


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


Critical Accounting
    Policy and Estimates


Our Management's Discussion and Analysis of Consolidated Financial
    Condition and Results of Operations section discusses our consolidated financial
    statements, which have been prepared in accordance with accounting principles generally
    accepted in the United States of America. The preparation of these consolidated financial
    statements requires management to make estimates and assumptions that affect the reported
    amounts of assets and liabilities at the date of the consolidated financial statements and
    the reported amounts of revenues and expenses during the reporting period. On an on-going
    basis, management evaluates its estimates and judgments, including those related to
    revenue recognition, accrued expenses, financing operations, and contingencies and
    litigation. Management bases its estimates and judgments on historical experience and on
    various other factors that are believed to be reasonable under the circumstances, the
    results of which form the basis for making judgments about the carrying value of assets
    and liabilities that are not readily apparent from other sources. Actual results may
    differ from these estimates under different assumptions or conditions. The most
    significant accounting estimates inherent in the preparation of our consolidated financial
    statements include estimates as to the appropriate carrying value of certain assets and
    liabilities which are not readily apparent from other sources. These accounting policies
    are described at relevant sections in this discussion and analysis and in the notes to the
    consolidated financial statements included in our Quarterly Report on Form 10-Q for the
    period ended March 31, 2008.




---



Overview


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


In summary, the update
    of some of the events are as follows:Advertising 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 which has since become our subsidiary company. Beijing Ren Ren had obtained
    approval for signs in Chao Yuan District in Beijing. However, with the upcoming Olympics,
    the Beijing Government has banned all outdoor signs until after the Olympics. Therefore no
    revenue will be obtained from outdoor media advertising until in Q4 2008 or 2009. In the
    meantime we will focus our attention away from Beijing and other Olympic cities that have
    similar government restrictions, and concentrate on second tier cities on district signs
    for the health promotion and awareness campaigns. During the period, the Company has
    earned $8,348 in relation to advertising services.Furthermore on or about December 7, 2005 the Company entered into a
    cooperation agreement with Harbin Shendong Advertising Co. Limited on developing adverting
    revenue in Harbin, which then progress to discussions on acquisition of 9 signs from
    Harbin Shengdong. The Company is having on going discussion with Harbin Shendong on the
    acquisition of the 9 signs. No revenue has been generated from these signs.




---



Telecommunications UnitOn or about January 23, 2006, the Company
    announced the establishment of the Telecommunications and Mobile Computing Division to
    focus on the new media advertising where we would take advantage of new convergent devices
    for telecommunications advertising. The business of selling advertising through
    telecommunications media and devices is still at an early stage as we are developing
    strategies to effectively enter the market. No revenue has been generated from advertising
    through telecommunications media and devices at the date of this report.As announced on or about January 25, 2006 the Company entered into
    a distribution agreement for the territory of China and Hong Kong for the M.A.G.I.C.
    Convergent Device. The Company has acquired the rights to M.A.G.I.C. convergent device
    which is expected to be commercially available for sales in the coming months. M.A.G.I.C.
    is a next generation convergent device that has the full capabilities of a notebook
    computer shrink to a size of a PDA phone. The Company received the initial prototype unit
    in May 2006 and have completed conducting compliance, functional, stability, load and
    usability testing on the device. In May 2008, the Company has received the final
    prototype, and expects to start the commercial sale of the M.A.G.I.C. convergent devices
    in Q3 of this year. No revenue has been generated from this M.A.G.I.C. convergent device
    at the date of this report.The Company has commenced selling mobile devices through certain
    distribution channels in Hong Kong in advance of selling the MAGIC device. The Company has
    earned revenue of $5,137 during this period on selling mobile devices.Print Unit
    On or about January 13, 2007, the Company
    acquired 18% interests in Guangzhou Waho Culture Co., Ltd. ("Waho"), a company
    in the business of online advertising with specifically a contract to do the print and
    online edition of Yellow Pages for Guangdong Province for China Tietong Communications
    Co., Ltd., one of the licensed telecommunications carriers in China. We will actively
    monitor this investment and will hold discussions with management to determine if certain
    collaboration between Waho's online portal with our advertising and technology platforms.
    We have written off this investment in the accounts, but we are still actively working on
    this investment to bring the project into our Group. At the date of this report, we have
    generated $11,790 revenue for printing services from the publishing the 2008 China Tietong
    Guangdong Yellow Pages.Hospital Advertising
    UnitOn or about February 27, 2006 the Company announced that it has
    been appointed to undertake the advertising placement work for Beijing Number 6 Hospital.
    We have erected 9 sign boards for sale and our staff continues to work to secure
    advertising customers for this hospital. No revenue has been generated from the placement
    from this hospital at the date of this report.


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




---



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


We have cash and cash equivalents of $57,625 as of March 31, 2008;
    a decrease from the previous period end of December 31, 2007. In the opinion of
    management, these funds will not satisfy our working capital requirements to operate at
    our current level of activity for the next twelve months. To effectuate our business plan,
    during the next twelve months, we must arrange for adequate funding to implement our plans
    of increasing our advertising offerings and promote our advertising services, through
    cooperation agreements and otherwise.Financing and funding


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


The Company will try to sell the remaining $2,450,000 shares of
    common stock under the ELOC Agreement, subject to certain conditions. Management intents
    intends to continue to raise additional financing through debt and equity financing or
    other means and interests that it deems necessary, with a view to implementing our
    business plan and building a revenue base. We plan to use the proceeds of such financings
    to provide working capital to our operations and increase our capital expenditure for
    marketing and working with our co-operative partners. There can be no assurances that
    sufficient financing will be available on terms acceptable to us or at all. Our forecast
    for the period for which financial resources will be needed to support our operations
    involves risks and uncertainties and actual results could fail as a result of a number of
    factors.


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


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


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




---



Results of operation.


FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2008 COMPARED TO THE
    THREE MONTH PERIODS ENDED MARCH 31, 2007.REVENUES.


For the three months period ended March 31, 2008, the Group has
    realized revenue of $25,275 and a cost of revenue of $16,157, achieving a gross profit of
    $9,118. For the three months period ended March 31, 2007, the Group has realized revenue
    of $26,834 and a cost of revenue of $20,247, achieving a gross profit of $6,587. We hope
    to generate additional revenues when we begin to receive contracts from clients or through
    acquisitions. Depending upon the availability of operating capital, we intend to expand
    our operations in the next 12 months.OPERATING EXPENSES.


For the three month period ended March 31, 2008, our gross profit
    was $9,118 and our total operating expenses were $382,386, all of which were selling,
    general and administrative expenses. We also had $37 in interest income, $63,379 in
    interest expenses and loss attributable to minority interests of $5,387, so that the net
    loss to our shareholders for the three month period ended March 31, 2008 was $431,223.
    This is in comparison to the same period ended March 31, 2007, where our gross profit was
    $6,587 and our total operating expenses were $342,235, all of which were selling, general
    and administrative expenses. We also had $3,513 in interest expenses and $243,000 in
    impairment in investment, so that the net loss to our shareholders for the three month
    period ended March 31, 2007 was $582,161.


Liquidity and Capital ResourcesAs at March 31, 2008, the Company had cash and cash equivalents
    totaling $57,625, other current assets of $460,811 and non-current assets totaling
    $7,976,934 which were represented by $47,258 in fixed assets, $138,000 in distribution
    rights and $7,791,676 in goodwill. The total assets of the Company were $8,495,370 as of
    March 31, 2008. We also had current liabilities of $1,461,879 which were represented by
    $44,415 in accounts payable, $441,418 in accruals, $67,600 in short term debt, $783,446
    due to related parties and $125,000 in convertible debenture as of March 31, 2008. We also
    had $2,023,600 in long-term shareholders loan and $182,417 in minority interests as of
    March 31, 2008, making our total liabilities $3,667,896
    At present the Company does not have
    sufficient cash resources to provide for all general corporate operations in the
    foreseeable future. The Company will be required to sell its Common Stock under the ELOC
    agreement for $2,450,000 and to raise additional capital in order to continue to operate
    in fiscal 2008.




---



Going Concern


The Company's financial statements are presented on a going
    concern basis, which contemplates the realization of assets and satisfaction of
    liabilities in the normal course of business. The Company has experienced significant
    losses from operations in recent periods. For the three months ended March 31, 2008 the
    Company incurred net losses of $431,223 and has accumulated losses of $4,013,512 as at
    March 31, 2008. The Company's ability to continue as a going concern must be considered
    in light of the problems, expenses and complications frequently encountered in developing
    markets and the competitive environment in which the Company operates. The Company is
    pursuing financing for its operations and seeking additional investment. In addition, the
    Company is seeking to expand its revenue base by adding new customers and to start out its
    advertising business. Failure to secure such financing, to raise additional equity capital
    and to expand its revenue based may result in the Company depleting its available funds
    and not being able to pay its obligations. These financial statements do not include any
    adjustments to reflect the possible future effects on the recoverability and
    classification of assets or the amounts and classification of liabilities that may result
    from the possible inability of the Company to continue as a going concern.


Off Balance Sheet Arrangements


As of March 31, 2008, there were no off balance sheet arrangements.The Company has no off-balance sheet obligations nor guarantees and has not
    historically used special purpose entities for any transactions.




---



Item 3.
    Quantitative and
    Qualitative Disclosure About Market Risk.


Quantitative and
    Qualitative Disclosures about Market Risk:


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


Item 4.
    Controls and
    Procedures.


Evaluation of
    Disclosure Controls and Procedures:


Our disclosure controls and procedures are designed to ensure that
    information required to be disclosed in reports that we file or submit under the
    Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the
    time periods specified in the rules and forms of the United States Securities and Exchange
    Commission. Our principal executive and financial officer have reviewed the effectiveness
    of our "disclosure controls and procedures" (as defined in the Securities Exchange Act
    of 1934 Rules 13a-14(c) and 15d-14(c)) within the end of the period covered by this
    Quarterly Report on Form 10-Q and have concluded that the disclosure controls and
    procedures are effective to ensure that material information relating to the Company is
    recorded, processed, summarized, and reported in a timely manner. There were no
    significant changes in our internal controls or in other factors that could significantly
    affect these controls subsequent to the last day they were evaluated by our principal
    executive and financial officers.


Changes in Internal
    Controls over Financial Reporting:


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




---



PART II − OTHER INFORMATION


Item 1.
    Legal
    ProceedingsNone.


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


a)
    On January 4, 2008 the Company entered into a Second Amendment
    Agreement (the "SAA") with Tailor-Made Capital Ltd. ("TMC") to amend
    and restate the repayment terms of the First Tranche Debenture under the Debenture
    Purchase Agreement, which the parties entered into on or about December 7, 2006. Pursuant
    to the SAA, both parties agree to:-


*
    postpone the repayment of the First Tranche Debenture (interest and
    principal amount) from December 20, 2007 to March 28, 2008; and


*
    issue 2,631,579 restricted shares to TMC as consideration for the
    postponement of the repayment of the First Tranche Debenture.


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 SecuritiesNone.


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


Item 5.
    Other
    InformationNone.




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Item 6.
    Exhibits


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


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


* Filed herewith.




---



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


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


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


By:
    /s/ Con
    Unerkov
    May 19,
    2008--------------------------------------------Con UnerkovIts:
    Principal
    executive officerPresident,
    CFO, director




---



Exhibit 31Rule 13a-14(a)/15d-14(a)Certification of Chief Executive Officer and Chief Financial
    Officer of the Company
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    and Securities and Exchange Commission Release 34-46427I, Con Unerkov, certify that:1. I have reviewed this annual report on Form 10-Q of China Media
    Group Corporation;2. Based on my knowledge, this report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements were made, not
    misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other
    financial information included in this report, fairly present in all material respects the
    financial condition, results of operations and cash flows of the small business issuer as
    of, and for, the periods presented in this report;4. The small business issuer's other certifying officer(s) and I
    are responsible for establishing and maintaining disclosure controls and procedures (as
    defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and
    have:


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


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


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


Date: May 19, 2008/s/ Con Unerkov-----------------------Con UnerkovChief Executive Officer
    and Chief Financial Officer




---



Exhibit 32


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



In connection with the Annual Report of China Media Group
    Corporation a Texas corporation (the "Company") on Form 10-Q for the year ending
    March 31, 2008, as filed with the Securities and Exchange Commission on the date hereof
    (the "Report"), Con Unerkov, Chief Executive Officer and Chief Financial Officer
    of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. ss. 1350, as
    adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:


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


A signed original of this written statement required by Section 906
    has been provided to China Media Group Corporation, and will be retained by China Media
    Group Corporation and furnished to the Securities and Exchange Commission or its staff
    upon request./s/ Con Unerkov--------------------------Con UnerkovChief Executive Officer and Chief Financial OfficerMay 19, 2008




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