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|   |  NETWORK CN      INC.                          |   |
|--------|-----------------------------------------------------|--------|
|   | (Name      of small business issuer in its charter) |   |

|   Delaware                                                |   |        11-3177042                    |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer Identification No.) |

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| PART      II |   |
|--------------|--------|

| ITEM      6. | MANAGEMENT'S      DISCUSSION AND ANALYSIS OR PLAN OFOPERATION |
|--------------|---------------------------------------------------------------|

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| 1.  | Tianma,      in consultation with sub-agents, organizes a tour or travel package,      including making reservations for blocks of tickets, rooms, etc. with      third-party service providers. Tianma may be required to make deposits,      pay all or part of the ultimate fees charged by such service providers or      make legally binding commitments to pay such fees. For air-tickets, Tianma      normally books a block of air tickets with airlines in advance and pays      the full amount of the tickets to reserve seats before any tours are      formed. The air tickets are usually valid for a certain period of time. If      the pre-packaged tours do not materialize and are eventually not formed,      Tianma will resell the air tickets to other travel agents or customers.      For hotels, meals and transportation, Tianma usually pays an upfront      deposit of 50-60% of the total cost. The remaining balance is then settled      after completion of the tours.  |
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| 2. | Tianma,      through its sub-agents, advertises tour and travel packages at prices set      by Tianma and sub-agents.   |
|----|------------------------------------------------------------------------------------------------------------------------------|

| 3.  | Customers      approach Tianma or its appointed sub-agents to book an advertised packaged      tour. |
|----------|------------------------------------------------------------------------------------------------------|

| 4.  | The      customers pay a deposit to Tianma directly or through its appointed      sub-agents.   |
|----------|------------------------------------------------------------------------------------------------------|

| 5.  | When      the minimum required number of customers (which number is different for      each tour based on the elements and costs of the tour) for a particular      tour is reached, Tianma will contact the customers for tour confirmation      and request full payment. All payments received by the appointed      sub-agents are paid to Tianma prior to the commencement of the      tours. |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.  | Tianma      will then make or finalize corresponding bookings with outside service      providers such as airlines, bus operators, hotels, restaurants, etc. and      pay any unpaid fees or deposits to such  providers.  |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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I
TEM7.        FINANCIAL STATEMENTS ANDSUPPLEMENTARY DATA

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|   | Jimmy      C.H. Cheung & CoCertified      Public Accountants(A      member of Kreston International) |   | Registered      with the Public Company Accounting      Oversight Board |
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|   | 1607      Dominion Centre, 43 Queen’s Road East, Wanchai, Hong KongTel:      (852) 25295500 Fax: (852) 28651067 Email:      jchc@krestoninternational.com.hkWebsite:      http://www.jimmycheungco.com |      |
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ORK CN INC. ANDSUBSIDIARIES

| NOTE      2 | SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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|        |  (A)      Basis of Presentation The      consolidated financial statements of the Company have been prepared in      accordance with accounting principles generally accepted in      the United States of America. (B)      Principles of Consolidation The      consolidated financial statements include the financial statements of      Network CN Inc., its subsidiaries and its variable interest entities      (VIEs). In May 2006, the management of the Company decided to discontinue      the business and wind down the operations of Teda (Beijing) Hotels      Management Limited, a wholly owned subsidiary which has been accounted for      as discontinued operations since the fourth quarter of 2006 and the wind      down process was yet to be completed as of December 31, 2007. All      significant intercompany transactions and balances have been eliminated      upon consolidation. In      accordance with Interpretation No. 46R, Consolidation of Variable Interest      Entities (“FIN 46R”), VIEs are generally entities that lack sufficient      equity to finance their activities without additional financial support      from other parties or whose equity holders lack adequate decision making      ability. All VIEs with which the Company is involved must be evaluated to      determine the primary beneficiary of the risks and rewards of the VIE. The      primary beneficiary is required to consolidate the VIEs for financial      reporting purposes. The Company has concluded that Tianma and Quo      Advertising are VIEs and that the Company is the primary beneficiary.      Under the requirements of FIN 46R the Company consolidated the financial      statements of Tianma and Quo Advertising as VIEs of the      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|        | (C)      Use of Estimates In      preparing financial statements in conformity with generally accepted      accounting principles, management is required to make estimates and      assumptions that affect the reported amounts of assets and liabilities and      the disclosure of contingent assets and liabilities as of the date of the      financial statements and the reported amounts of revenues and expenses      during the reported period. Actual results could differ from those      estimates. Differences from those estimates are reported in the period      they become known and are disclosed to the extent they are material to the      financial statements taken as a whole. (D)      Cash and Cash Equivalents Cash      includes cash on hand, cash accounts, and interest bearing savings      accounts placed with banks and financial institutions. For purposes of the      cash flow statements, the Company considers all highly liquid investments      with original maturities of three months or less at the time of purchase      to be cash equivalents. As of December 31, 2007 and 2006, the Company had      no cash equivalents. (E)      Prepayments for advertising operating rights Prepayments      for advertising operating rights are measured at cost less accumulated      amortization and impairment losses. Cost includes prepaid expenses      directly attributable to the acquisition of advertising operating rights.      Such prepaid expenses are in general charged to the consolidated      statements of operations on a straight-line basis over the operating      period. The operating periods of the existing advertising operating rights      range from 16 months to 20 years. All the costs expected to be amortized      after 12 months of the balance sheet date are classified as non-current      assets. An      impairment loss is recognized when the carrying amount of the prepayments      for advertising operating rights exceeds the sum of the undiscounted cash      flows expected to be generated from the advertising operating right’s use      and eventual disposition. An impairment loss is measured as the amount by      which the carrying amount exceeds the fair value of the asset calculated      using a discounted cash flow analysis.  |

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|   | (F)      Equipment, Net Equipment      is stated at cost, less accumulated depreciation. Depreciation is provided      using the straight-line method over the estimated useful life of the      assets, which is from three to five years. When equipment is retired or      otherwise disposed of, the related cost and accumulated depreciation are      removed from the respective accounts, and any gain or loss is      reflected in the statement of operations. Repairs and maintenance costs on      equipment are expensed as incurred. (G)      Intangible Rights, Net Intangible      rights are stated at cost, less accumulated amortization and provision for      impairment loss. Intangible rights that have indefinite useful lives are      not amortized. Other intangible rights with finite useful lives are      amortized on straight-line basis over their estimated useful lives of 16      months to 20 years. The amortization methods and estimated useful lives of      intangible rights are reviewed regularly. (H)      Impairment of Long-Lived Assets Long-lived      assets, including intangible rights with definite lives, are reviewed for      impairment whenever events or changes in circumstance indicate that the      carrying amount of the assets may not be recoverable. An intangible right      that is not subject to amortization is reviewed for impairment annually or      more frequently whenever events or changes in circumstances indicate that      the carrying amount of the asset may not be recoverable. An      impairment loss is recognized when the carrying amount of a long-lived      asset and intangible right exceeds the sum of the undiscounted cash flows      expected to be generated from the asset’s use and eventual disposition. An      impairment loss is measured as the amount by which the carrying amount      exceeds the fair value of the asset calculated using a discounted cash      flow analysis. (I)      Deferred Charges, Net Deferred      charges are fees and expenses directly related to an issuance of      convertible promissory notes, including placement agents’ fee. Deferred      charges are capitalized and amortized over the life of the convertible      promissory notes using the effective interest method. Amortization of      deferred charges is included in interest expense on the consolidated      statements of operations while the unamortized balance is included in      deferred charges on the consolidated balance  sheet. |
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|   | (J)      Convertible Promissory Notes and Warrants In      2007, the Company issued 12% convertible promissory note and warrants and      3% convertible promissory notes and warrants. As of December 31, 2007, the      warrants and embedded conversion feature were classified as equity under      EITF 00-19,      “Accounting for      Derivative Financial Instruments Indexed to, and Potentially Settled in, a      Company’s Own Stock” and met      the other criteria in paragraph 11(a) of SFAS 133, “Accounting for Derivative      Instruments and Hedging Activities”. Such classification      will be reassessed at each balance sheet date. The Company allocated the      proceeds of the convertible promissory notes between convertible      promissory notes and the financial instruments related to warrants      associated with convertible promissory notes based on their relative fair      values at commitment date. The fair value of the financial instruments      related to warrants associated with convertible promissory notes was      determined utilizing the Black-Scholes option pricing model and the      respective allocated proceeds to warrants is recorded in additional      paid-in capital. The embedded beneficial conversion feature      associated with convertible promissory notes was recognized and measured      by allocating a portion of the proceeds equal to the intrinsic value of      that feature to additional paid-in capital in according to EITF Issue No.      98-5, “Accounting for Convertible      Securities with Beneficial Conversion Features or Contingently Adjustable      Conversion Ratio” and EITF Issue No. 00-27, “Application of Issue No. 98-5      to Certain Convertible Instruments”. The      portion of debt discount resulting from allocation of proceeds to the      financial instruments related to warrants associated with convertible      promissory notes is being amortized to interest expense over the life of      the convertible promissory notes, using the effective yield method. For      portion of debt discount resulting from allocation of proceeds to the      beneficial conversion feature, it is recognized as interest expenses over      the minimum period from the date of issuance to the date of earliest      conversion, using the effective yield method. (K)      Early Redemption of Convertible Promissory Notes Should      early redemption of convertible promissory notes occur, the unamortized      portion of the associated deferred charges and debt discount would be      fully written off and the early redemption premium, if any, will be      recognized as an expense upon its occurrence. All such related charges, if      material, would be aggregated and included in a separate line, charges on      early redemption of convertible promissory notes, which would be included      in ordinary activities on the consolidated statements of operations as      required by SFAS No.145,      “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB      Statement No. 13, and Technical Corrections” Pursuant      to the provisions of agreements in connection with 3% convertible      promissory notes, certain of investors may require the company to redeem      the 3% Convertible Promissory Notes at 100% of the principal amount, plus      any accrued and unpaid interest, plus an amount representing a 20%      internal rate of return on the then outstanding principal amount in the      event of a default, or if the Company’s actual EPS in any fiscal year is      less than 80% of the respective EPS target. The Company accounts for such      potential liability of 20% internal rate of return on the then outstanding      principal amount in accordance with SFAS No. 5, “Accounting for      Contingencies”.  (L)      Revenue Recognition For      hotel management services, the Company recognizes revenue in the period      when the services are rendered and collection is reasonably      assured. For      tour services, the Company recognizes services-based revenue when the      services have been performed. Guangdong Tianma International Travel      Service Co., Ltd (“Tianma”) offers independent leisure travelers bundled      packaged-tour products, which include both air-ticketing and hotel      reservations. Tianma’s packaged-tour products cover a variety of domestic      and international destinations. Tianma      organizes inbound and outbound tour and travel packages, which can      incorporate, among other things, air and land transportation, hotels,      restaurants and tickets to tourist destinations and other excursions.      Tianma books all elements of such packages with third-party service      providers, such as airlines, car rental companies and hotels, or through      other tour package providers and then resells such packages to its      clients. A typical sale of tour services is as follows:  |
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|   | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Tianma,      in consultation with sub-agents, organizes a tour or travel package,      including making reservations for blocks of tickets, rooms, etc. with      third-party service providers. Tianma may be required to make deposits,      pay all or part of the ultimate fees charged by such service providers or      make legally binding commitments to pay such fees. For air-tickets, Tianma      normally books a block of air tickets with airlines in advance and pays      the full amount of the tickets to reserve seats before any tours are      formed. The air tickets are usually valid for a certain period of time. If      the pre-packaged tours do not materialize and are eventually not formed,      Tianma will resell the air tickets to other travel agents or customers.      For hotels, meals and transportation, Tianma usually pays an upfront      deposit of 50-60% of the total cost. The remaining balance is then settled      after completion of the tours. |

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|   | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Tianma,      through its sub-agents, advertises tour and travel packages at prices set      by Tianma and sub-agents.                                                                                                                                                                                                                                                                              |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | 3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Customers      approach Tianma or its appointed sub-agents to book an advertised packaged      tour.                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | The      customers pay a deposit to Tianma directly or through its appointed      sub-agents.                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | When      the minimum required number of customers (which number is different for      each tour based on the elements and costs of the tour) for a particular      tour is reached, Tianma will contact the customers for tour confirmation      and request full payment. All payments received by the appointed      sub-agents are paid to Tianma prior to the commencement of the      tours. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | 6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Tianma      will then make or finalize corresponding bookings with outside service      providers such as airlines, bus operators, hotels, restaurants, etc. and      pay any unpaid fees or deposits to such providers.                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Tianma      is the principal in such transactions and the primary obligor to the      third-party providers, regardless of whether it has received full payment      from its customers. In addition, Tianma is also liable to the customers      for any claims relating to the tours, such as accidents or tour services.      Tianma has adequate insurance coverage for accidental loss arising during      the tours. The Company utilizes a network of sub-agents who operate      strictly in Tianma’s name and can only advertise and promote the business      of Tianma with the prior approval of Tianma. For      advertising services, the Company recognizes revenue in the period when      advertisements are either aired or published. (M)      Stock-based Compensation In      December 2004, the Financial Accounting Standards Board (“FASB”) issued      Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment” ,      a revision to SFAS No. 123, “Accounting for Stock-Based      Compensation” , and superseding APB Opinion No. 25, “Accounting for Stock Issued to      Employees”  and its related implementation guidance.      Effective January 1, 2006, the Company adopted SFAS 123R, using a modified      prospective application transition method, which establishes accounting      for stock-based awards in exchange for employee services. Under this      application, the Company is required to record stock-based compensation      expense for all awards granted after the date of adoption and nonvested      awards that were outstanding as of the date of adoption. SFAS 123R      requires that stock-based compensation cost is measured at grant date,      based on the fair value of the award, and recognized in expense over the      requisite services period. Common      stock, stock options and warrants issued to other than employees or      directors in exchange for services are recorded on the basis of their fair      value, as required by SFAS No. 123R, which is measured as of the date      required by EITF Issue 96-18, “Accounting for Equity Instruments That      Are Issued to Other Than Employees for Acquiring, or in Conjunction with      Selling, Goods or Services ”. In accordance with EITF 96-18,      the non-employee stock options or warrants are measured at their fair      value by using the Black-Scholes option pricing model as of the earlier of      the date at which a commitment for performance to earn the equity      instruments is reached (“performance commitment date”) or the date at      which performance is complete (“performance completion date”).      The stock-based compensation expenses are recognized on a      straight-line basis over the shorter of the period over which services are      to be received or the vesting period. Accounting for non-employee stock      options or warrants which involve only performance conditions when no      performance commitment date or performance completion date has occurred as      of reporting date requires measurement at the equity instruments      then-current fair value. Any subsequent changes in the market value of the      underlying common stock are reflected in the expense recorded in the      subsequent period in which that changeoccurs. |

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|   | (N)      Income Taxes The      Company accounts for income taxes under SFAS No. 109, “Accounting for Income      Taxes”. Under SFAS 109, deferred tax assets and liabilities are      provided for the future tax effects attributable to temporary differences      between the financial statement carrying amounts of assets and liabilities      and their respective tax bases, and for the expected future tax benefits      from items including tax loss carry forwards. Deferred      tax assets and liabilities are measured using enacted tax rates expected      to apply to taxable income in the years in which those temporary      differences are expected to be recovered or reversed. Under SFAS 109, the      effect on deferred tax assets and liabilities of a change in tax rates is      recognized in income in the period that includes the enactment      date. (O)      Comprehensive Income (Loss) The      Company follows SFAS No. 130, “Reporting Comprehensive      Income” for the reporting and display of its comprehensive income      (loss) and related components in the financial statements and thereby      reports a measure of all changes in equity of an enterprise that results      from transactions and economic events other than transactions with      the shareholders. Items of comprehensive income (loss) are reported      in both the consolidated statement of operations and comprehensive loss      and the consolidated statement of stockholders’ equity. (P)      Earnings (Loss) Per Common Share Basic      earnings (loss) per common share are computed by dividing the net income      (loss) attributable to holders of common stock by the weighted average      number of shares of common stock outstanding during the period. Diluted      earnings (loss) per share is computed by dividing net income (loss) by the      weighted average number of common shares including the dilutive effect of      common share equivalents then outstanding. The      diluted net loss per share is the same as the basic net loss per share for      the years ended December 31, 2007 and 2006 as all potential ordinary      shares including stock options and warrants are anti-dilutive and are      therefore excluded from the computation of diluted net loss per      share. |
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|   | (Q)      Operating Leases Leases      where substantially all the rewards and risks of ownership of assets      remain with the leasing company are accounted for as operating      leases. Payments made under operating leases are charged to the      consolidated statements of operations on a straight-line basis over the      lease period. (R)      Foreign Currency Translation The      assets and liabilities of the Company’s subsidiaries denominated in      currencies other than United States (“U.S.”) dollars are translated into      U.S. dollars using the applicable exchange rates at the balance sheet      date. For statement of operations’ items, amounts denominated in      currencies other than U.S. dollars were translated into U.S. dollars using      the average exchange rate during the period. Equity accounts were      translated at their historical exchange rates. Net gains and losses      resulting from translation of foreign currency financial statements are      included in the statements of stockholders’ equity as accumulated other      comprehensive income (loss). Foreign currency transaction gains and losses      are reflected in the statements of operations. (S)      Fair Value of Financial Instruments The      carrying value of the Company’s financial instruments, which consist      of cash, accounts receivables, prepaid expenses and other current assets,      accounts payable, accrued expenses and other payables, approximates fair      value due to the short-term maturities. The      carrying value of the Company’s financial instruments related to warrants      associated with convertible promissory notes issued in 2007 is stated at a      value being equal to the allocated proceeds of convertible promissory      notes based on the relative fair value of notes and warrants. In the      measurement of the fair value of these instruments, the Black-Scholes      option pricing model is utilized, which is consistent with the Company’s      historical valuation techniques. These derived fair value estimates are      significantly affected by the assumptions used. The allocated value of the      financial instruments related to warrants associated with convertible      promissory notes is recorded as an equity, which does not require to      mark-to-market as of each subsequent reporting period , (T) Concentration of Credit      Risk The      Company places its cash with various financial institutions. The      Company believes that no significant credit risk exists as these cash      investments are made with high-credit-qualify financial      institutions. All      the revenue of the Company and a significant portion of the Company’s      assets are generated and located in China. The Company’s business      activities and accounts receivables are mainly from tour services and      advertising services. Deposits are usually collected from customers in      advance and the Company performs ongoing credit evaluation of its      customers. The Company believes that no significant credit risk exists as      credit loss.  |
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|   | (U)      Segmental Reporting SFAS      No. 131,      “Disclosures      about Segments of an Enterprise and Related Information”      establishes standards for reporting information about operating segments      on a basis consistent with the Company’s internal organization structure      as well as information about geographical areas, business segments and      major customers in financial statements. The Company’s operating segments      are organized internally primarily by the type of services rendered. In      2007, the Company changed their operating segments as a result of change      of internal organization structure by management. It is the management’s      view that the services rendered by the Company are of three operating      segments: Media Network, Travel Network and Investment Holding in      2007.  (V)      Recent Accounting Pronouncements In      September 2006, FASB issued SFAS 157, “Fair Value      Measurements”. This statement defines fair value and establishes a      framework for measuring fair value in generally accepted accounting      principles. More precisely, this statement sets forth a standard      definition of fair value as it applies to assets or liabilities, the      principal market (or most advantageous market) for determining fair value      (price), the market participants, inputs and the application of the      derived fair value to those assets and liabilities. The effective date of      this pronouncement is for all full fiscal and interim periods beginning      after November 15, 2007. The Company is currently evaluating the      impact of adopting SFAS 157 on its financial statements and related      disclosures. In      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for      Financial Assets and Financial Liabilities” which permit entities      to choose to measure many financial instruments and certain other items at      fair value that are not currently required to be measured at fair value.      SFAS 159 is effective for fiscal years beginning after November 15,      2007. The Company is currently evaluating the impact of adopting SFAS 159      on its financial statements and related disclosures. In      December 2007, the FASB issued SFAS No. 141 (Revised), “Business Combinations”       (“SFAS No. 141 (R)”), replacing      SFAS No. 141,      “Business      Combinations”  (“SFAS No. 141”), and      SFAS No. 160,      “Noncontrolling      Interests in Consolidated Financial Statements — an Amendment of ARB      No. 51” .      SFAS No. 141(R) retains the fundamental requirements of      SFAS No. 141, broadens its scope by applying the acquisition      method to all transactions and other events in which one entity obtains      control over one or more other businesses, and requires, among other      things, that assets acquired and liabilities assumed be measured      at fair value as of the acquisition date, that liabilities      related to contingent consideration be recognized at the      acquisition date and re-measured at fair value in each      subsequent reporting period, that acquisition-related costs be      expensed as incurred, and that income be recognized if the fair value      of the net assets acquired exceeds the fair value of the consideration      transferred. SFAS No. 160 establishes accounting and      reporting standards for non controlling interests (i.e. minority      interests) in a subsidiary, including changes in a parent’s ownership      interest in a subsidiary and requires, among other things,      that noncontrolling interests in subsidiaries be classified as a      separate component of equity. Except for the presentation and disclosure      requirements of SFAS No. 160, which are to be applied      retrospectively for all periods presented, SFAS No. 141 (R) and      SFAS No. 160 are to be applied prospectively in financial      statements issued for fiscal years beginning after December 15, 2008.      The Company is currently assessing the impact of adopting      SFAS No. 141 (R) and SFAS No. 160 on its      financial statements and relateddisclosures. |
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| NOTE      10 | CONVERTIBLE      PROMISSORY NOTES AND WARRANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|         | (a)   12%      Convertible Promissory Note and Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|         | On      November 12, 2007, the Company entered into a 12% Note and Warrant      Purchase Agreement with Wei An Developments Limited (“Wei An”) with      respect to the purchase by Wei An a convertible promissory note in the      principal account of $5,000,000 at interest rate of 12% per annum (the      “12% Convertible Promissory Note”). The 12% Convertible Promissory      Note is convertible into the Company’s common stock at the conversion      price of $2.40 per share. Pursuant to the agreement, the Company is      subject to a commitment fee of 2% of the principal amount of the 12%      Convertible Promissory Note. The term of the 12% Convertible Promissory      Note is six months and the Company has the option to extend the 12%      Convertible Promissory Note by an additional six-month period at an      interest rate of 14% per annum and be subject to an additional commitment      fee of 2% of the principal amount of the note. However, the Company has      the right to prepay all or any portion of the amounts due under the note      at any time without penalty or premium.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|         | In      addition, pursuant to the Warrant Purchase Agreement, the Company issued      warrants to purchase up to 250,000 shares of the Company’s common stock at      the exercise price of $2.30 per share, which are exercisable for a period      of two years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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|         | (b)   3%      Convertible Promissory Notes and warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|         | On      November 19, 2007, the Company, Quo Advertising and the Designated Holders      (as defined in the Purchase Agreement), entered into a 3% Note and Warrant      Purchase Agreement (the “Purchase Agreement”) with affiliated investment      funds of Och-Ziff Capital Management Group (the “Investors”). Pursuant to      the Purchase Agreement, the Company agreed to issue 3% Senior Secured      Convertible Notes due June 30, 2011 in the aggregate principal amount of      up to $50,000,000 (the “3% Convertible Promissory Notes”) and warrants to      acquire an aggregate amount of 34,285,715 shares of common stock of the      Company (the “Warrants”). The 3% Convertible Promissory Notes and      Warrants are issued and issuable in three tranches, with Convertible Notes      in the aggregate principal amount of $6,000,000, Warrants exercisable for      2,400,000 shares at $2.50 per share and Warrants exercisable for 1,714,285      shares at $3.50 per share, issued on 19 November, 2007, Convertible Notes      in the aggregate principal amount of $9,000,000, Warrants exercisable for      3,600,000 shares at $2.50 per share and Warrants exercisable for 2,571,430      shares at $3.50 per share issued on 28 November 2007, and Convertible      Notes in the aggregate principal amount of $35,000,000, Warrants      exercisable for 14,000,000 shares at $2.50 per share and Warrants      exercisable for 10,000,000 shares at $3.50 per share to be issued in      the third tranche, which was completed in January 2008. Please refer      to Note 18 - Subsequent Events for details. The warrants shall expire on      June 30, 2011, pursuant to the Purchase Agreement. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|         | The      3% Convertible Promissory Notes bear interest at 3% per annum payable      semi-annually in arrears and mature on June 30, 2011. The 3% Convertible      Promissory Notes are convertible into shares of common stock at an initial      conversion price of $1.65 per share, subject to customary anti-dilution      adjustments. In addition, the conversion price will be adjusted      downward on an annual basis if the Company should fail to meet certain      annual earnings per share (“EPS”) targets described in the Purchase      Agreement. In the event of a default, or if the Company’s actual EPS for      any fiscal year is less than 80% of the respective EPS target, certain of      the investors may require the Company to redeem the 3% Convertible      Promissory Notes at 100% of the principal amount, plus any accrued and      unpaid interest, plus an amount representing a 20% internal rate of      return on the then outstanding principal amount. The Warrants grant the      holders the right to acquire shares of common stock at $2.50 and $3.50 per      share, subject to customary anti-dilution adjustments. The exercise price      of the Warrants will also be adjusted downward whenever the conversion      price of the 3% Convertible Promissory Notes is adjusted downward in      accordance with the provisions of the Purchase  Agreement.                                                                                                                                                                                                                                                                                                                                                               |

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|        | As      of December 31, 2007, none of the conversion options and warrants      associated with the above convertible promissory notes was      exercised. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                      |
|   | The      following table details the accounting treatment of the convertible      promissory notes:                                                       |

|   |                                                                                     |   | 12%      ConvertiblePromissory      Note |      |   | 3%      ConvertiblePromissory      Notes |   |       | Total  |   |
|--------|------------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|--------|------------------------------------------|--------|------------|--------|--------|
|   | Proceeds      of convertible promissory notes                                            |   | $                                        | 5,000,000 |   |                                     | $      | 15,000,000 |   |   | $ | 20,000,000 |   |
|   | Allocation      of proceeds:                                                             |   |                                     |      |   |                                     |   |       |   |   |   |   |   |
|   | Allocated      relative fair value of warrants                                           |   |                                     | (333,670  | )      |                                     |   | (2,490,000 | )      |   |   | (2,823,670 | ) |
|   | Allocated      intrinsic value of beneficial conversion feature                          |   |                                     | -         |   |                                     |   | (4,727,272 | )      |   |   | (4,727,272 | ) |
|   | Total      net proceeds of the convertible promissory notes as of December 31,      2007 |   |                                     | 4,666,330 |   |                                     |   | 7,782,728  |   |   |   | 12,449,058 |   |
|   |  Amortization      of debt discount for the year ended December 31, 2007            |   |                                     | 74,466    |   |                                     |   | 4,762,728  |   |   |   | 4,837,194 |   |
|   | Net      carrying value of convertible promissory notes                                  |   | $                                        | 4,740,796 |   |                                     | $      | 12,545,456 |   |   | $ | 17,286,252 |   |

|   | Warrant and Beneficial      Conversion Features                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      fair value of the financial instruments associated with warrants of both      12% convertible promissory note and 3% convertible promissory notes was      determined utilizing Black-Scholes option pricing model, which is      consistent with the Company’s historical valuation methods. The following      assumptions and estimates were used in the Black-Scholes option pricing      model: (1) 12% convertible promissory note: volatility of 182%; an average      risk-free interest rate of 3.52%; dividend yield of 0%; and an expected      life of 2 years, (2) 3% convertible promissory notes: volatility of 47%;      an average risk-free interest rate of 3.30%; dividend yield of 0%; and an      expected life of 3.5 years. |

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|   | Both      the warrants and embedded conversion features issued in connection with      12% convertible promissory note and 3% convertible promissory notes meet      the criteria of EITF 00-19, “Accounting for Derivative      Financial Instruments Indexed to, and Potentially Settled in, a Company's      Own Stock” for equity classification and also met the other      criteria in paragraph 11(a) of SFAS 133, “Accounting for Derivative      Instruments and Hedging Activities” as of December      31, 2007. Accordingly, the conversion features do not require derivative      accounting. The intrinsic value of beneficial conversion feature is      calculated in according to EITF Issue No. 98-5, “Accounting for Convertible      Securities with Beneficial Conversion Features or Contingently Adjustable      Conversion Ratio”  and EITF Issue No. 00-27, “Application of Issue No. 98-5      to Certain Convertible Instruments” . For 3%      convertible promissory note, as the effective conversion price after      allocating a portion of the proceeds to the warrants was less than the      Company’s market price of common stock at commitment date, it was      considered to have a beneficial conversion feature while for 12%      convertible promissory note, no beneficial conversion feature existed. The      value of beneficial conversion feature is recorded as a reduction in the      carrying value of the convertible promissory notes against additional      paid-in capital. As 3% convertible promissory notes are convertible at the      date of issuance, the respective debt discount being equal to the value of      beneficial conversion feature of $4,727,272 is fully amortized through      interest expense as of the date of issuance. |
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|   | Amortization of Deferred      Charges and Debt Discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      amortization of deferred charges and debt discount for the year ended      December 31, 2007 were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|   |                                 |   | Warrants |    |   | Conversion Features |   |      | Deferred Charges |   |   | Total  |   |
|--------|--------------------------------------|--------|----------|---------|--------|--------------------------|--------|-----------|-----------------------|--------|--------|--------|--------|
|   | 12%      convertible promissory note |   | $        | 74,466  |   |                     | $      | -         |                  |   | $      | 19,301 |   |   | $ | 93,767 |   |
|   | 3%      convertible promissory notes |   |     | 35,456  |   |                     |   | 4,727,272 |                  |   |   | 9,856  |   |   |   | 4,772,584 |   |
|   | Total                                |   | $        | 109,922 |   |                     | $      | 4,727,272 |                  |   | $      | 29,157 |   |   | $ | 4,866,351 |   |

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ART III  

| ITEM      13. | EXHIBITS |
|---------------|----------|

| 23.1 | Consent      of independent auditors Webb & Company, P.A. *                                                                                                         |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 23.2 | Consent      of independent auditors Jimmy C.H. Cheung & Co. *                                                                                                      |
| 24.1 | Power      of Attorney (included in the Signatures section of this      report).                                                                                        |
| 31.1 | Rule      13a-15(e)/15d-15(e) Certification by the Chief Executive Officer.      *                                                                                      |
| 31.2 | Rule      13a-15(e)/15d-15(e) Certification by the Chief Financial Officer.      *                                                                                      |
| 32.1 | Certification      by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.      * |
| 32.2 | Certification      by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.      * |

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| NETWORK      CN INC.         |
|------------------------------|
| By:      /s/ Godfrey Hui     |
| Godfrey      Hui             |
| Chief      Executive Officer |

| Name                 |   | Title                                     | Date                      |
|----------------------|--------|-------------------------------------------|---------------------------|
|                 |   |                                      |                      |
| /s/      Godfrey Hui |   | Director      and Chief Executive Officer | August 11,      2008 |
| Godfrey      Hui     |   |                                      |                      |
|                 |   |                                      |                      |
| /s/      Daley Mok   |   | Director      and Chief Financial Officer | August 11,      2008 |
| Daley      Mok       |   |                                      |                      |
|                 |   |                                      |                      |
| /s/      Daniel So   |   | Managing      Director                    | August 11,      2008 |
| Daniel      So       |   |                                      |                      |
|                 |   |                                      |                      |
| /s/      Stanley Chu |   | Director                                  | August 11,      2008 |
| Stanley      Chu     |   |                                      |                      |
|                 |   |                                      |                      |
| /s/      Peter Mak   |   | Director                                  | August 11,      2008 |
| Peter      Mak       |   |                                      |                      |

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