U.S. SECURITIES EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(X)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(   )

TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended:        June 30, 2003



Commission File Number:          0-13628

ALPHA SPACECOM, INC.

(Exact name of Registrant as specified in its charter)

|COLORADO(State or other jurisdiction of
incorporation or organization) | 13-3183646(I.R.S. Employer Identification No.)
|---------------------------------------------------------------------- | ----------------------------------------------



Room 1305, 13/F Progress Commercial

Building, 7-17 Irving Street, Causeway Bay,

Hong Kong

(Address of principal executive offices) (Zip Code)



(852) 2972-2772

(Issuer's telephone number including area code)

Indicate by check mark 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 preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to filing requirements for the past 90 days.



|Yes
X | No
|----- | --



The number of shares of Common Stock, par value $0.001 per share, outstanding as of June 30, 2003 is 105,219,000.

Transitional Small Business Disclosure Format (check one):

|Yes | No
X
|--- | ----



---



ALPHA SPACECOM, INC.

INDEX TO FORM 10-QSB

June 30, 2003



|PART I.  Financial Information |                                                                                     
|------------------------------ | ------------------------------------------------------------------------------------
|                               |                                                                                     
|Item 1                         | Financial Statements (Unaudited)                                                    
|                               |                                                                                     
|Item 2.                        | Managements Discussion and Analysis of Financial Condition and Results of Operation
|                               |                                                                                     
|Item 3.                        | Controls & Procedures                                                               
|PART II.  Other Information   
|                               |                                                                                     
|Item 1.                        | Legal Proceedings                                                                   
|Item 2.                        | Changes in Securities and Use of Proceeds                                           
|Item 3.                        | Defaults Upon Senior Securities                                                     
|Item 4.                        | Submission of Matters to a Vote of Security Holders                                 
|Item 5.                        | Other Information                                                                   
|Item 6.                        | Exhibits and Reports on Form 8-K                                                    
|                               | Signatures                                                                          

---



PART I  FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



The financial statements required by this Item 1 are set forth at the end of the document.



ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto appearing therewith. Certain statements contained herein that are not related to historical results, including but not limited to, statements regarding our business strategy and objectives, future financial position, expectations about pending litigation and estimated cost savings, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act") and involve risks and uncertainties. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, there can be no assurance that such assumptions will prove to be accurate and actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, regulatory policies, competition from other similar businesses, and market and general policies, competition from other similar businesses, and market and general economic factors. All forward-looking statements contained in this Form 10-QSB are qualified in their entity by this statement.

Overview

On December 10, 2001, pursuant to a Share Exchange Agreement, we acquired from Alpha Sky Investment Limited (ASI) all its equity interests in both Accuhigh Investments Limited, a British Virgin Islands company, and Tidy Sum Investments Limited, a British Virgin Islands company, in exchange for 10,000,000 shares of our convertible preferred stock which shares of convertible preferred stock were have been converted into 900,000,000 shares of our common stock.

Since the Acquisition, we have been engaged in the business of developing a Ka and communication satellite system that will provide broadband telecommunications services to China.  For accounting purposes, the Acquisition was treated as a recapitalization of ASI with ASI as the acquirer.  As such, the financial statements contained herein are those of ASI.

Plan of Operations

On July 29, 2003, the China Film Group Corporation (CFG), the largest film company in China signed a Cooperation Agreement (the Cooperation Agreement) with Alpha Spacecom Company Limited (Alpha). Under the Cooperation Agreement, Alpha will form a Joint Venture (JV) with CFG that will

a.

Reconstruct and upgrade movie theaters to digital projection format, and

b.

Implement a home pay-per-view system in cooperation with cable television operators.

Both digital cinemas and pay-per-view services will receive digitized content via satellite transmission.

CFG is an operating state-owned company under the sponsorship of the China State Economic and Trade Commission and the State Administration of Radio, Film, and Television (SARFT) with the authorization from the China State Council.  CFG is the market leader in the China media business: film and TV drama creation and production, foreign film imports, domestic and foreign film distribution, joint film production with foreign entities, film advertisement, film development and copy production.  A vertically integrated media company, CFG has high quality film creation and production personnel as well as state-of-the-art filmmaking facilities.

The Demand Side

Chinas rapid transformation into a market economy and continuing GDP growth rate of 7.5-8% have set on course the creation of the largest national consumer market in the world.  The basic needs of food, clothing and shelter having been met, the demand for high-quality entertainment, media as well as cultural products and services is steadily escalating. The 300 million movie viewers of China still await the availability of a larger range of attractive offerings at the 100,000 cinemas China-wide.

China has gradually liberalized regulations which had limited the production of media content that could effectively compile against imported media content; China has increased the volume of imported content, including the number of foreign films to 25 per year, in accordance with WTO requirements.  At the same time, China has sought effective measures against piracy, which has deterred the creation, distribution, and transfer of media content in China.  In this context, the Alpha-CFG joint venture for digital cinema and Satellite Pay-Per-View (SPPV) can help serve as a catalyst for change that will transform Chinas entertainment broadcasting and distribution: state-of-the-art anti-piracy technology and a management system that is conductive to protection for intellectual property.

The Supply Side

The supply side of entertainment media shows an oligopoly structure as in other media markets in the world.  Controlled by the Chinese government and regulated by SARFT, a few large state-owned companies dominate media content production and broadcasting.  Among these, CFG is by far the largest vertically integrated filmmaker, distributor and retailer in China.  Provincial and municipal operators make up the second and third tiers in China media industries.  CFGs repertoire of entertainment content exceeds the perhaps better internationally known CCTV Group (China Central Television Group).  CFGs asset includes the followings:

·10,000+ hours of film content (domestic and imports films).

·Dominant position as importer and distributors of foreign and domestic films.

·Retail cinema operation which comprises some 100,000+ cinemas China-wide.

The entertainment and broadcasting business in China, considered one of the strategic industries, requires foreign investors to conduct business with qualified China-based partners.  Where broadcasting is the core business, including digital cinemas, present regulations limit foreign ownership in any joint venture to 49% or less.  Obtaining a license for broadcasting has been difficult even for major multinationals such as CNN, Reuters, and the News Corp.  The opportunity to partner with CFG in a joint venture therefore represents an exceptional way to enter the broadcasting business in China.  The joint venture with CFG possesses the competitive advantages:

·Early mover advantage: the JV will receive the first license of digital cinema granted in China.

·

Exclusive partnership with CFG provides assured access to the largest and most attractive content entertainment bank in China.

·

CFGs close ties with government assure best compliance with government regulations and also assure a position in the emerging oligopoly that will dominate the fast changing media industry in China.

Equity Structure

The JV will be owned 51% by CFG and 49% by Alpha.

Capital Injection

CFG will be required to contribute a total value of RMB200 million as the capital (RMB140 million in the form of cash, 35 sets of installed digital projection equipments, and digital film management system).

Alpha will be required to contribute USD30 million ( about RMB250 million) in the form of cash.  The contribution must be completed by July 28, 2004.

Life of the JV

The Agreement will remain valid for thirty (30) years from the date of the formation of the JV.

In addition, CFG commits to an exclusive cooperation with Alpha in digital film and satellite transmission services within the validity of the Agreement.

Business Objective

In the first phase, the JV is aimed at converting major cinemas with traditional projection to a digital projection mode.  Digitization will reduce the cost of operations, increase box office receipts by improving the audio and visual effects for attracting higher attendance rates and charging higher ticket prices, and address the piracy issues.  China has more than 100,000 cinemas nationwide.  More than 5,000 are classified as 3-stars or above.  The JV will first digitize 165 from the pool of 5,000 cinemas in the major cities in China.  By mid 2003, CFG has already modernized 35 cinemas in China, though full digital broadcasting via satellite awaits operation of the JV, based on the expertise from Alpha.

JVs Business License and Rights

The JV will have the following rights and licenses:

(a)

The exclusive right for transmitting digitized movies distributed by CFG.

(b)

The first license, in all China, for transmitting media programs through satellite grant by SARFT.

(c)

The right to operate commercial advertisement at the beginning and break time of the digitized movies.

(d)

The right to instruct the cinemas on the ticket price for all digitized movies.

(e)

The right to operate value-added programs such as live performances and special events at the digital cinemas.

(f)

The right to select cinemas for digitization.

The Board of Directors

The Board will be chaired by the Chairman of CFG and will consist of six (6) Directors, three from CFG and three from Alpha.

Results of Operations For the Quarter Ended June 30, 2003 Compared to June 30, 2002

Revenues. We are in our development stage and we have not generated any revenues since we began our operations.

Net Loss.  Net operating loss decreased to $61,755 for the quarter ended June 30, 2003 compared to $273,615 for the quarter year ended June 30, 2002.  The net operating loss for the six months ended June 30, 2003 was $237,469 compared to $505,115 for the 6 months ended June 30, 2002 in each case due to the managements imposition of tight control on general administrative expenses, expenses related to being a public company and research and development expenses related to the Alpha/CFG agreement.

Financial Condition, Liquidity, Capital Resources

Net cash used in operations during the quarter year ended 2003 was $200,839, which was a $58,605 increase or 41% from the quarter ended 2002.  The increase is due to an increase in project development expenses related to the Alpha/CFG agreement.  Net cash received from financing activities was $200,839, which was $61,341 more than that received during the same period in 2002.

We will continue to rely upon external financing sources to meet the cash requirements of our ongoing operations.  Management is currently seeking to raise additional funding in the form of equity or debt, or a combination thereof including to fund the capital contribution requirements for the Joint Venture.  However, there is no guarantee that we will raise sufficient capital to execute our business plan and/or meet our obligations to fund the Joint Venture.  To the extent that we are unable to raise sufficient capital, our business plan will require substantial modification and our operations will be curtailed.  Additionally, we may be in breach of our obligations under the Cooperation Agreement.

Our auditors have issued their report, which contains an explanatory paragraph as to our ability to continue as a going concern. We are currently addressing our liquidity requirements by the following actions:

·

We are considering a smaller facility in Beijing.  We currently lease a 3,300 square foot space and we may be able to conduct our operations in a smaller facility.

·

We will continue to accept advances from management.

·

We are considering allowing our employees to tele-commute to reduce cost.

·

We will continue seeking investment capital through the issuance of both debt and equity securities in private placement to qualified investors.

·

We are considering short term funding through bank borrowing and other means of debt financing.

There is no guarantee that any of these strategies will enable us to meet our obligations for the foreseeable future.

Recently Issued Accounting Standards

In July 2001, The Financial Accounting Standards Board (" FASB" ) issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Use of the pooling-of-interests method will be prohibited after that date. SFAS No. 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach and requires intangible assets with finite lives to be amortized over their useful lives. Thus, amortization of goodwill and intangible assets with indefinite lives will cease upon adoption of the statement. SFAS No. 142 is required to be applied in fiscal years beginning after December 15, 2001. Upon the adoption of SFAS No. 142, the Company will not amortize goodwill and instead will conduct an annual impairment test of the remaining goodwill. The Company does not expect that the adoption of SFAS No. 141, or SFAS No. 142 will have a significant immediate impact on the financial condition or results of operations of the Company.



In October 2001, FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. As required by SFAS No. 144, the Company adopted this new accounting standard on July 1, 2002. The adoption of SFAS No. 144 did not have a material impact on the Companys financial statements.



In April 2002, FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections. This Statement eliminates an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions and establishes that gains and losses from extinguishment of debt should be classified as extraordinary items only if they meet the criteria of extraordinary. There was no material impact on the Companys financial statements as a result of adopting SFAS No. 145.



In June 2002, FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. SFAS No. 146 also establishes that fair value is the objective for initial measurement of the liability. The Company adopted this standard by the required December 2002 deadline. The financial statements were not impacted by the adoption of this Statement.



In November, 2002, FASB issued FASB Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This Interpretation requires a guarantor to include disclosure of certain guarantees that it has issued and if applicable, at inception of the guarantee, to recognize a liability for the fair value of the obligation undertaken in issuing a guarantee. The recognition and measurement requirements of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The adoption of this Interpretation did not have a material impact on the Companys financial statements.



In December, 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123. This Statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. As required under SFAS No. 148, the Company adopted these disclosure requirements in fiscal 2003.

ITEM 3. CONTROLS AND PROCEDURES

(a)

Evaluation of Disclosure Controls and Procedures

Disclosure Controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Within the 90 days prior to the filing of this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures.  Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective to ensure that the information required to be disclosed in the reports the Company files and submits under the exchange act is recorded, processed, summarized and reported as and when required.

(b)

Changes in Internal Controls

There were no changes in the Companys internal records or in other factors that could have significantly affected those controls subsequent to the date of the Companys most recent evaluation.

---

PART II.  OTHER INFORMATION



Item 1.

Legal Proceedings

None.

Item 2.

Changes in Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Submission of Matters to a Vote of Security Holders

None.

Item 5.

Other Information

None.

Item 6.

Exhibits and Reports on Form 8-K

(a)

Exhibits:

31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)

Reports on Form 8-K:

None.



---

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  September 24, 2003

ALPHASPACECOM, INC.

By: /s/ Terence Sien

Name:   Terence Sien

Title:     Chief Financial Officer

---





ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Consolidated Balance Sheets

(Unaudited)



|A S S E T S | June 30,
2003 | December 31,
2002
|----------- | ------------- | -----------------



| | US$ | US$
| | --- | ---



|Current Assets:                                                                                                                                       |             |            
|----------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | -----------
|Cash and cash equivalents                                                                                                                             | 5,958       | 6,259      
|Other receivables, deposits and prepayments                                                                                                           | 26,281      | 33,169     
|                                                                                                                                                      |             |            
|Total Current Assets                                                                                                                                  | 32,239      | 39,428     
|                                                                                                                                                      |             |            
|Property, plant and equipment, net                                                                                                                    | 15,469      | 27,544     
|                                                                                                                                                      |             |            
|                                                                                                                                                      | 47,708      | 66,972     
|LIABILITIES AND
SHAREHOLDERS DEFICIENCY                                                                                                              |             |            
|                                                                                                                                                      |             |            
|Current Liabilities:                                                                                                                                  |             |            
|Other accounts payable and accrued expenses                                                                                                           | 323,432     | 301,846    
|Deposit received on issue of stock                                                                                                                    | 43,000      | 43,000     
|Advances from related parties                                                                                                                         | 1,360,072   | 1,156,669  
|Advances from shareholder                                                                                                                             | 176,729     | 176,729    
|                                                                                                                                                      |             |            
|Total Current Liabilities                                                                                                                             | 1,903,233   | 1,678,244  
|                                                                                                                                                      |             |            
|Shareholders Deficiency:
Preferred stock:                                                                                                            |             |            
|Series A 7% cumulative convertible, par value $0.001;
23,000 shares issued and outstanding as of
June 30, 2003                                        | 23          | 23         
|Series B convertible, par value $0.001;
9,765,553 and 9,833,331 shares, issued and
outstanding as of June 30, 2003 and
December 31, 2002 respectively | 9,765       | 9,833      
|Common stock:                                                                                                                                         |             |            
|$0.001 par value; 2,000,000,000 shares authorized;                                                                                                    |             |            
|105,219,000 and 99,119,000 shares issued                                                                                                              |             |            
|and outstanding as of June 30, 2003 and
December 31, 2002 respectively                                                                                | 105,219     | 99,119     
|Accumulated deficit (including deficit accumulated
during the development stage of $1,964,629)                                                        | (1,970,532) | (1,720,247)
|                                                                                                                                                      |             |            
|Total Shareholders Deficiency                                                                                                                        | (1,855,525) | (1,611,272)
|                                                                                                                                                      | 47,708      | 66,972     



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



| |  | 
| |  | 





---





ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Consolidated Statements of Operations

(Unaudited)

Six Months Ended June 30, 2003 and 2002





|                                    |                                     | Three months ended June 30 | Six months ended June 30
|----------------------------------- | ----------------------------------- | -------------------------- | ------------------------
|                                    | Cumulative During Development Stage | 2003                       | 2002                    
|                                    | US$                                 | US$                        | US$                     
|                                    |                                     |                            |                         
|Income                              | -                                   | -                          | -                       
|                                    |                                     |                            |                         
|General and administrative
expenses | (1,549,732)                         | (68,539)                   | (273,615)               
|                                    |                                     |                            |                         
|Loss from operation                 | (1,549,732)                         | (68,539)                   | (273,615)               
|                                    |                                     |                            |                         
|Other income                        |                                     |                            |                         
|Cost of share exchange              | (415,013)                           | -                          | -                       
|                                    |                                     |                            |                         
|Other                               | 116                                 | -                          | -                       
|                                    |                                     |                            |                         
|Loss Before Income Taxes            | (1,964,629)                         | (68,539)                   | (273,615)               
|                                    |                                     |                            |                         
|Income Taxes                        | -                                   | -                          | -                       
|                                    |                                     |                            |                         
|Net Loss                            | (1,964,629)                         | (68,539)                   | (273,615)               
|                                    |                                     |                            |                         
|Loss Per Common Share
- Basic       |                                     | 0.001*                     | 0.003                   















* - Below $0.001 per share



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

| |  | 
| |  | 





---

ALPHA SPACECOM INCORPORATED AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Shareholders Deficiency

(Unaudited)

For the Period from December 31, 2000 to June 30, 2003





| | Common Stock | Preferred
Stock | Additional
Paid-In Capital | Accumulated Deficit | Total
| | ------------ | --------------- | -------------------------- | ------------------- | -----



| | Alpha | Tridon | Tridon | Alpha | Tridon | Alpha | Tridon | Accumulated
Deficit
| | ----- | ------ | ------ | ----- | ------ | ----- | ------ | -------------------
| | US $  | US $   | US $   | US $  | US $   | US $  | US $   | US $               



|Balance at December 31, 2000                 | 1,000     | 79,795    | 53        | 282       | 12,319,816    | (416,684
)   | (13,269,287
) | (13,685,971
)
|-------------------------------------------- | --------- | --------- | --------- | --------- | ------------- | ------------ | ------------- | -------------
|                                             |           |           |           |           |               |              |               |              
|Issuance of common stock in
connection with: |           |           |           |           |               |              |               |              
|Conversion of preferred stock                | -         | 700       | (17
)     | -         | 151,800       | -            | -             | -            
|Payment of dividends on                      |           |           |           |           |               |              |               |              
|preferred stock                              | -         | 3,943     | -         | -         | 63,834        | -            | -             | -            
|Repayment of loan from                       |           |           |           |           |               |              |               |              
|shareholder                                  | -         | 14,030    | -         | -         | 631,544       | -            | -             | -            
|Effect of share exchange                     | (1,000
)  | -         | 10,000    | (282
)    | (13,166,994
) | -            | 13,573,289    | 13,573,289   
|Net loss  pre share exchange                | -         | -         | -         | -         | -             | -            | (304,002
)    | (304,002
)   
|Net loss during the year                     | -         | .-        | .-        | -         | .-            | .(834,830
)  | -             | (834,830
)   
|                                             |           |           |           |           |               |              |               |              
|Balance at December 31, 2001                 | -         | 98,468    | 10,036    | -         | -             | (1,251,514
) | -             | (1,251,514
) 
|                                             |           |           |           |           |               |              |               |              
|Issuance of common stock                     |           |           |           |           |               |              |               |              
|in connection with:                          |           |           |           |           |               |              |               |              
|Conversion of preferred stock                | -         | 51        | (2
)      | -         | -             | (49
)        | -             | (49
)        
|Consulting services                          | -         | 600       | -         | -         | -             | -            | -             | -            
|Retirement of preferred stock,               |           |           |           |           |               |              |               |              
|at par value                                 | -         | -         | (178
)    | -         | -             | 178          | -             | 178          
|Net loss during the year                     | -         | .-        | .-        | .-        | -             | (468,862
)   | .-            | (468,862
)   
|                                             |           |           |           |           |               |              |               |              
|Balance at December 31, 2002                 | -         | 99,119    | 9,856     | -         | -             | (1,720,247
) | -             | (1,720,247
) 
|                                             |           |           |           |           |               |              |               |              
|Issuance of common stock in
connection with: |           |           |           |           |               |              |               |              
|Conversion of preferred stock                | -         | 6,100     | (68
)     | -         | -             | (6,032
)     | -             | (6,032
)     
|Consulting services                          | -         | 881       | -         | -         | -             | -            | -             | -            
|Net loss during the period                   | -         | -         | -         | -         | -             | (237,469
)   | -             | (237,469
)   
|                                             |           |           |           |           |               |              |               |              
|Balance at June 30, 2003                     | -         | 106,100   | 9,788     | -         | -             | (1,963,748
) | -             | (1,963,748
) 
|                                             | ========= | ========= | ========= | ========= | ============  | ===========  | ============  | =============
|                                             |           |           |           |           |               |              |               |              



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



---



ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Consolidated Statements of Cash Flows

(Unaudited)

Six Months Ended June 30, 2003 and 2002





| |  | 2003 | 2002
| |  | ---- | ----



| | Cumulative During Development Stage | US$ | US$
| | ----------------------------------- | --- | ---



|Cash Flows from Operating Activities:                                       |             |           |          
|--------------------------------------------------------------------------- | ----------- | --------- | ---------
|Net loss                                                                    | (1,964,629) | (244,253) | (505,115)
|Adjustments to reconcile net loss to
net cash used in operating activities: |             |           |          
|Costs of share exchange                                                     | 415,013     | -         | -        
|Depreciation and amortization                                               | 108,531     | 12,075    | 12,075   
|Allowance for bad debts                                                     | 2,777       | -         | -        
|Common stock issued in connection
with consulting services                  | 600         | -         | -        
|Changes in operating assets and liabilities:                                |             |           |          
|(Increase)/decrease in other receivables,                                   |             |           |          
|Deposits and prepayments                                                    | (13,213)    | 6,888     | -        
|Increase in other payables and                                              |             |           |          
|accrued expenses                                                            | 215,451     | 21,586    | 350,806  
|                                                                            |             |           |          
|Net Cash Used in Operating Activities                                       | (1,235,470) | (203,704) | (142,234)
|                                                                            |             |           |          
|Cash Flows from Investing Activities:                                       |             |           |          
|Acquisition of plant and equipment                                          | (120,749)   | -         | -        
|                                                                            |             |           |          
|Cash Flows from Financing Activities:                                       |             |           |          
|Increase in advances from related parties                                   | 1,917,468   | 203,403   | 115,857  
|Repayments to related parties                                               | (599,573)   | -         | (9,359)  
|Issuance of common stock                                                    | 1,282       | -         | -        
|Deposits received for issuance of
common stock                              | 43,000      | -         | 33,000   
|                                                                            |             |           |          
|Net Cash Provided by Financing Activities                                   | 1,362,177   | 203,403   | 139,498  
|                                                                            |             |           |          
|Net Increase/(Decrease) in Cash                                             | 5,958       | (301)     | (2,736)  
|                                                                            |             |           |          
|Cash and Cash Equivalents  Beginning                                       | -           | 6,259     | 4,412    
|                                                                            |             |           |          
|Cash and Cash Equivalents  Ending                                          | 5,958       | 5,958     | 1,676    
|                                                                            |             |           |          



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



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ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Notes to Consolidated Financial Statements

(Unaudited)

Six Months Ended June 30, 2003 and 2002







NOTE 1  BASIS OF PRESENTATION



The consolidated financial statements include the accounts of Alpha Spacecom, Inc. and its wholly-owned subsidiaries, Accuhigh Investments Limited, Tidy Sum Investments Limited and Alpha Spacecom Company Limited (collectively the Company).  All significant inter-company accounts and transactions have been eliminated in consolidation.



The accompanying unaudited consolidated financial statements, which are for interim periods, do not include all disclosures provided in the annual consolidated financial statements.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in the Annual Report on Form 10-KSB for the year ended December 31, 2002 of Alpha Spacecom, Inc. and Subsidiaries, as filed with the Securities and Exchange Commission.  The summary December 31, 2002 balance sheet was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles.



In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation of the financial statements.  The results for interim periods are not necessarily indicative of results to be expected for the complete fiscal year.



NOTE 2  ORGANIZATION AND BUSINESS



Pursuant to a resolution of the Board of Directors dated August 20, 2002, Tridon Enterprises Incorporated changed its name to Alpha Spacecom Incorporated and, in connection therewith, increased the number of shares of common stock authorized from 100,000,000 to 2,000,000,000.



The Company has been in the development stage since formation  (December 9, 1998) and primarily through the operations of Alpha Spacecom Company Limited, is engaged in the business of developing a KA band communication satellite system that will provide broadband telecommunications services to the Peoples Republic of China (the PRC) and its neighboring Asia Pacific countries.  Accordingly, the Companys consolidated financial statements are presented as those of a development stage enterprise, as prescribed by Statement of Financial Accounting Standards No. 7, Accounting and Reporting by Development State Enterprises.

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ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Notes to Consolidated Financial Statements

(Unaudited)

Six Months Ended June 30, 2003 and 2002





NOTE 2  ORGANIZATION AND BUSINESS (Continued)



Alpha Sky Investment Limited (Alpha Sky) was incorporated on August 19, 1998 in the British Virgin Islands.  It was incorporated with authorized share capital of 50,000 shares of common stock with a par value of $1.00 per share.  As of June 30, 2003 and December 31, 2002, 1,000 shares of common stock were issued and outstanding.



Accuhigh Investments Limited (Accuhigh), a British Virgin Islands Company, was incorporated on June 12, 2001. It was incorporated with authorized share capital of 50,000 shares of common stock with a par value of $1.00 per share.  As of June 30, 2003 and December 31, 2002, one share of common stock was issued and outstanding.



Tidy Sum Investments Limited, a British Virgin Islands Company (Tidy), was incorporated on June 22, 2001 with authorized share capital of 50,000 shares of common stock; par value of $1.00 per share. As of June 30, 2003 and December 31, 2002, one share of common stock was issued and outstanding.



Alpha Spacecom Company Limited (ASC, the operating company) was incorporated in Hong Kong on December 9, 1998, with authorized share capital of 10,000 shares of common stock with a par value of HK $1.00 per share.  As of June 30, 2003 and December 31, 2002, one share of common stock was issued and outstanding.



On July 10, 2001, Accuhigh acquired 100% of the shares of ASC accounted for under the purchase method without any resultant goodwill; 1% of the then outstanding common shares were held by Tidy Sum Investment Limited in trust for the Company.



Alpha Sky Investment Limited (Alpha Sky) entered into a Share Exchange Agreement dated December 10, 2001 to effectuate an exchange of shares with Alpha Spacecom, Inc. (Alpha) (the Registrant). Pursuant to the terms of the share exchange agreement, Alpha acquired from Alpha Sky all of its equity interest in Accuhigh Investments Limited and Tidy Sum Investments Limited in exchange for 10,000,000 shares of convertible preferred stock convertible into 900,000,000 shares of common stock of Alpha. The transaction resulted in Alpha Sky obtaining a majority voting interest in Alpha and Alpha was treated as the acquired entity.  For accounting purposes, the acquisition has been treated as an acquisition of Alpha.  The historical financial statements prior to December 10, 2001 are those of Alpha.



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ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Notes to Consolidated Financial Statements

(Unaudited)

Six Months Ended June 30, 2003 and 2002



NOTE 2  ORGANIZATION AND BUSINESS (Continued)



In connection with the share exchange, Xuedong Hu, Fung Sien and Wai Man Yu, officers of Alpha Sky, were appointed as members of the board of directors.  Brain Brick resigned from the position of chief executive officer of Alpha.  The directors then elected Xuedong Hu as the chairman of the board and executive officer and appointed Mr. Brick as the chief operating officer of the Company.



On April 1, 2003, Wai Man Yu resigned from the Board and Jian Wang replaced the vacancy effective from May 26, 2003.



Risk Consideration  As a majority of the Companys operations are conducted in the PRC, the Company is subject to special considerations and significant risks not typically associated with investments in equity securities of North American and Western European companies.  The Companys operations may be adversely affected by significant political, economic and social uncertainties in the PRC.  Although the PRC government has been pursuing economic reform policies for the past several years, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption or unforeseen circumstances affecting the PRCs political, economic and social life.  There is also no guarantee that the PRC governments pursuit of economic reforms will be consistent or effective.



The Company expects that substantially all of its revenues will be denominated in Renminbi (RMB).  A portion of such revenues will need to be converted into other currencies to meet foreign currency obligations such as payment of any dividends declared.  Both the conversion of RMB into foreign currencies and the remittance of foreign currencies abroad require PRC government approval.  No assurance can be given that the operating subsidiaries within the Company will continue to be able to convert sufficient amounts of foreign currencies in the PRCs foreign exchange markets in the future for payment of dividends.



NOTE 3  TRANSLATION OF FOREIGN CURRENCIES



ASCs Assets and Liabilities are generally translated into U.S. Dollars at current exchange rates, and revenues and expenses are translated at average exchange rates for the year.  Resulting translation adjustments are reflected as a separate component of shareholders equity.  Foreign currency transaction gains and losses are included in consolidated operations.





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ALPHA SPACECOM, INC. AND SUBSIDIARIES

(A Development Stage Company)



Notes to Consolidated Financial Statements

(Unaudited)

Six Months Ended June 30, 2003 and 2002

NOTE 4  LOSS PER COMMON SHARE  BASIC



Loss per common share  basic (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  As of June 30, 2003 and 2002, the diluted share base excludes incremental shares relating cto convertible preferred stock since their effect was anti-dilutive.  The weighted-average number of common shares outstanding for computing EPS was approximately 105,200,000 and 98,500,000 as of June 30, 2003 and 2002, respectively.



NOTE 5  GOING CONCERN



The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern.  However, the Company has sustained substantial operating losses in recent years and, additionally, the Company has used substantial amounts of working capital in its operations.  Further, at June 30, 2003, current liabilities exceed current assets by $1,870,994, and total liabilities exceed total assets by $1,855,525.



In view of these matters, realization of a major portion of the assets in the accompanying consolidated balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Companys ability to meet its financing requirements, and the success of its future operations.



Management believes that it has the ability to improve its cash position through financing activities, including possible private or public offerings of stock.  However, the uncertainty of a sustained financing and cash management program and continued losses from operations raise substantial doubt about the ability of the Company to continue as a going concern.



NOTE 6  SUBSEQUENT EVENT



Alpha Spacecom Company Limited (Alpha) signed a Cooperation Agreement with China Film Group Corporation (CFG) on July 29, 2003 in Beijing whereby Alpha will form a joint venture with CFG (owned 51% by CFG and 49% by Alpha) to reconstruct and upgrade movie theater complexes to digital projection format and implement a home pay-per-view system, both of which will receive digitized content via satellite transmission.



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