UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 ---------------

                                   FORM 10-KSB

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark One)

|X|  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 2006

OR

|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from __________________ to _____________________


                        Commission file number 000-50340

                          NAVSTAR MEDIA HOLDINGS, INC.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

             Nevada                                      75-2980786
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)



                         26, Chaowai Road, Suite A2205,
                    Chaoyang District, Beijing, 100020, China
               (Address of principal executive offices) (Zip Code)

                               Phone: 646.688.4413
                                Fax: 646.349.3864
                           (Issuer's telephone number)

                             All Correspondence to:

                          Navstar Media Holdings, Inc.
                            c/o Baker & McKenzie LLP
                                             Attn. Howard Jiang, Esq.
                           1114 Avenue of the Americas
                               New York, NY 10036
                                 (212) 891 3982


<PAGE>

Securities registered pursuant to Section 12(b) of the Exchange Act:

                                      None

Securities registered pursuant to Section 12(g) of the Exchange Act:

                         Common stock, $0.001 Par Value

Check whether the issuer is not required to file reports pursuant to Section 13
or Section 15(d) of the Exchange Act. |_|

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

The issuer's revenues for the fiscal year ended December 31, 2006 were
$2,300,276.

The aggregate market value of the voting and non-voting common equity held by
nonaffiliates computed by reference to the price at which the common equity was
last sold as of the last business day of the registrant's most recently
completed fiscal year-end (December 31, 2006) is $6,205,540 based upon the
closing sale price of $0.23 per share on December 31, 2006.

As of December 31, 2006, there were 26,980,609 shares of our common stock issued
and outstanding.

Transitional Small Business Disclosure Format: Yes: [ ] No: |X|




<PAGE>

                                TABLE OF CONTENTS
                         TO ANNUAL REPORT ON FORM 10-KSB
                        FOR YEAR ENDED DECEMBER 31, 2006

PART I                                                                      Page
-------                                                                     ----
Item 1.       Description of Business                                         5
Item 2.       Description of Property                                        18
Item 3.       Legal Proceedings                                              18
Item 4.       Submission of Matters to a Vote of Security Holders            18

PART II
Item 5.       Market for Common Equity and Related Stockholder Matters       18
Item 6.       Management's Discussion and Analysis or Plan of Operation      20
Item 7.       Financial Statements                                           25
Item 8.       Changes in and Disagreements with Accountants on Accounting
              and Financial
              Disclosure                                                     25
Item 8A.      Controls and Procedures                                        25
Item 8B.      Other Information                                              28

PART III
Item 9.       Directors, Executive Officers, Promoters and Control Persons;
              Compliance with Section 16(a) of the Exchange Act              28
Item 10.      Executive Compensation                                         32
Item 11.      Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters                     34
Item 12.      Certain Relationships and Related Transactions                 34
Item 13.      Exhibits                                                       34
Item 14.      Principal Accountant Fees and Services                         35





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<PAGE>


                  CAUTION REGARDING FORWARD-LOOKING INFORMATION

All statements contained in this Form 10-KSB, other than statements of
historical facts, that address future activities, events or developments are
forward-looking statements, including, but not limited to, statements containing
the words "believe," "anticipate," "expect" and words of similar import. These
statements are based on certain assumptions and analyses made by us in light of
our experience and our assessment of historical trends, current conditions and
expected future developments as well as other factors we believe are appropriate
under the circumstances. However, whether actual results will conform to the
expectations and predictions of management is subject to a number of risks and
uncertainties that may cause actual results to differ materially.

Such risks include, among others, the following: international, national and
local general economic and market conditions: our ability to sustain, manage or
forecast our growth; raw material costs and availability; new product
development and introduction; existing government regulations and changes in, or
the failure to comply with, government regulations; adverse publicity;
competition; the loss of significant customers or suppliers; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business disruptions; the ability to attract and retain
qualified personnel; the ability to protect technology; and other factors
referenced in this and previous filings.

Consequently, all of the forward-looking statements made in this Form 10-KSB are
qualified by these cautionary statements and there can be no assurance that the
actual results anticipated by management will be realized or, even if
substantially realized, that they will have the expected consequences to or
effects on our business operations.

As used in this Form 10-KSB, unless the context requires otherwise, "we" or "us"
or the "Company" means Navstar Media Holdings, Inc. and its subsidiaries.

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<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

INTRODUCTION

Navstar Media Holdings, Inc. ("Navstar" or the "Company") is a United States
based corporation that owns 100% of Navstar Communications Holdings, Ltd, a Hong
Kong company, which in turns owns majority interests in firms specializing in
media content production and distribution in the People's Republic of China
("PRC"). Navstar subsidiaries generate revenues through producing television
serials and other programs for the PRC market and through advertising revenues
generated from the broadcast and distribution of such programs, and other media
and broadcasting production ad management services.

CORPORATE HISTORY

Navistar Communications Holdings, Ltd, a Hong Kong Corporation, ("NCHL") was
originally established as a Holding Company for equity ownership investments in
mainland China media companies. During 2004, NCHL acquired a 55% equity
ownership interest in Happy Times Media, Inc. (HTM.) During 2005, NCHL increased
its ownership interest in HTM to 70%. Based on an agreement with the original
shareholders and management of HTM, on December 27, 2006, the Company
reorgaanized its content productions by absorbing useful and non-redundant
assets of Happytimes into Beijing and spun off Happytimes with its liabilities
to its original shareholders with no additional consideration paid to them and
HTM ceased to be a subsidiary of the Company.


Navstar Media Holdings, Inc. ("Navstar" or the "Company") was incorporated on
January 28, 2002 as Premier Document Services, Inc. (OTCBB: PDSV), a Nevada
corporation, which provided document preparation and signatory services to
mortgage, real estate and other financial services firms in the Las Vegas,
Nevada market. On November 30, 2005, the Company acquired 100% of the capital
stock of NCHL. Prior to the Merger, no director, officer or affiliate of the
Company had any material relationship with any director, officer or affiliate of
NCHL. Upon completion of the merger the officers and directors of Premier
resigned and were replaced by the Company's current management team and board of
directors.

As a result of the Merger and a simultaneous forward stock split, 19,000,009
shares of the Company's Common Stock were issued to the shareholders of NCHL. As
of December 31, 2006, there were 26,980,609 shares of Common Stock of the
Company outstanding.

The Company's common stock is registered under Section 12(g) of the Securities
Act of 1934 and is currently listed on the over the counter bulletin board under
the symbol NVMH.OB.

DESCRIPTION OF NAVSTAR'S BUSINESS

Navstar exists as a holding company for various media companies that serve the
PRC market. Consistent with PRC regulations, the Company's ownership percentage
of its PRC-based subsidiaries is limited to seventy percent (70%.) Products of
the Company's subsidiaries include production and distribution of television
programs and movies, and advertising through TV commercials, newspapers,
magazines and outdoor media. One hundred percent of the Company's revenues come
from these media sources.

BEIJING BROADCASTING AND TELEVISION MEDIA CO., LTD


Beijing Broadcasting and Television Media Co., Ltd ("Beijing Media") is a media
content production and distribution company located in the People's Republic of
China ("PRC"). Beijing Media generates revenues through producing television
series and movies for the PRC market, TV syndicated programming production and
other media and broadcasting production and management services.

BEIJING LUCKY STAR CENTURY ADVERTISEMENT CO. LTD.

Beijing Lucky Star Century Advertisement Co. Ltd. ("Lucky Star") was established
on October 20, 2001 in Beijing, the People's Republic of China ("PRC"). Lucky
Star is a Chinese registered limited liability company with a legal structure
similar to a limited liability company organized under state laws in the United
States of America. The Company principally engages in the advertising business
in TV commercials, newspapers, magazines, and outdoor media in China.


                                       5
<PAGE>
CONTENT PRODUCTION

Content production is performed at the Beijing Media Production Center
("Production Center") in Beijing. Its capabilities include film creation, scene
filming and post-production editing. Currently, Beijing Media produces various
TV programs for CCTV, BTV and several other major TV channels in China. In
addition to TV programs, the Production Center has produced a large number of TV
advertisements, product promotion programming and related public relations
services. Beijing Medias production team utilizes advanced post visual/audio
production equipment, enabling provision of an integrated service to customers,
including screen shoots, broadcasting and post visual/audio production.

SALES AND DISTRIBUTION

Navstar subsidiaries sell and distribute its media content throughout the PRC to
various provincial television authorities and the nationwide China Central
Television (CCTV.) Primary offices for its operating subsidiaries are located in
Beijing, with selling efforts engaged in throughout the country. Currently,
Navstar subsidiaries only sell to customers in PRC.

CONCENTRATION OF CUSTOMERS

As of December 31, 2006, Navstar subsidiaries sell their entire output of media
content production to various governmental broadcasting organizations within the
PRC. The primary buyer is CCTV, followed by the various provincial broadcasting
authorities. Because of the credit-worthiness of these governmental customers,
there is a high level of confidence in the collectibility of outstanding
receivables. The loss of any specific customer, including CCTV, could have a
material adverse effect on the financial performance of one or all of Navstar's
subsidiaries.

BACKLOG

The Company has no backlog of orders. Production of Television serials and
movies are performed under contract from distributors and state-owned entities.

COMPETITION

Although the market has increased dramatically, the Chinese TV media industry is
still in the early stages of development. Like many industries since there are
so many gaps and opportunities in the market, most TV media companies have
enjoyed profitable operations. However, due to long-established state ownership
and control, the TV media industry has not been efficient. This resulted in many
of these newly created production companies to be niche oriented and to operate
on a small scale, with limited capacity and sophistication. Few companies are
strong, fully integrated competitors, with most lacking in one or more of the
basic components of the industry, including channel ownership and operation,
production, distribution and advertising.

One of Navstar's strategies is to acquire larger, more successful integrated
producers, in an attempt to become a nationwide provider of quality content and
other related services. While we were able to execute on this strategy in the
past, there can be no guarantee that we will be able to acquire or negotiate
successfully such companies in the future.

PRIVATE TELEVISION PRODUCTION COMPANIES

In terms of program provision, Navstar primarily competes with existing private
program providers for the various TV stations and networks and with distributors
of overseas films. The industry is fragmented and most are small operators and
regionally-based.

STATE-OWNED TELEVISION COMPANIES

Currently, Navstar's main competitors are state-owned entrenched companies. The
key state-owned program providers are TV Department of CRI (subordinated to
State Ministry of Radio, Film and Television) and Audio-Visual Center of Xinhua
News Agency. These providers specialize in international and domestic news. This
is a tightly state-controlled sector that has not demonstrated a history of
profitable operations. Navstar is not in the television news business and, as
such, do not consider these providers to be full competitors. The large
state-owned content producers such as CCTV, CCID TV and Perspective Orient
(Hunan TV& Broadcast Intermediary), focus primarily on IT and Financial News
programming, also Hengyi TV and Guanghua Film & TV.


                                       6
<PAGE>
OVERSEAS (FOREIGN TO CHINA) MEDIA GROUPS

International media companies currently produce highly specialized feature
programming for export to China. Such specialized content does not tend to
encroach upon political and cultural sensitivities. Through these channels,
limited high-content programming is distributed through Chinese media firms.
Networks distributed through this method include ESPN, MTV, NGC and Discovery
Channel. One international organization that recently entered into a joint
venture to produce local content is Viacom, through a contract with Shanghai
Media, a large state-owned media content producer.

COMPETITIVE SUMMARY

While the Media content industry as a whole in China is in a state of change and
still dominated by state-owned entities, the opportunities for companies such as
ours to penetrate the market inefficiencies exist. Through this period of
tremendous growth and opportunity may not exist for an extended period of time.
To the extent, more nimble and better-funded organizations competing in this
market may have a materially adverse affect on our company. The Company plans to
continue acquiring content, assets and companies that would address the
opportunities and gaps that exist within markets it competes.

GOVERNMENTAL REGULATION

Our Company operates from facilities that are located in the People's Republic
of China. Accordingly, we must conform to the governmental regulations and rules
of China. In the case of media content produced for viewing in China, stringent
rules have been put in place by the government to ensure the cultural and
political appropriateness of films and shows. The Company must carefully obey
these rules so that it may continue to produce and distribute its content within
the Chinese market. To the extent that the Company violates these rules and
regulations, it is possible that major, state-owned customers will decline to
continue purchasing the Company's content. Such an event could have a materially
adverse on the operations of the Company and on its future prospects. Following
is a general discussion of the unique characteristics of the Chinese market

DOING BUSINESS IN CHINA AND GOVERNMENT REGULATIONS IN CHINA
-----------------------------------------------------------

GOVERNMENTAL REGULATION OF OUR OPERATIONS IN CHINA

Our subsidiary companies operate from facilities that are located in the
People's Republic of China. Accordingly, our subsidiaries' operations must
conform to the governmental regulations and rules of China.

THE CHINESE LEGAL SYSTEM

The practical effect of the People's Republic of China legal system on our
business operations in China can be viewed from two separate but intertwined
considerations.

First, as a matter of substantive law, the Foreign Invested Enterprise laws
provide significant protection from government interference. In addition, these
laws guarantee the full enjoyment of the benefits of corporate Articles and
contracts to Foreign Invested Enterprise participants. These laws, however, do
impose standards concerning corporate formation and governance, which are not
qualitatively different from the General Corporation Laws of the several states.
Therefore, as a practical matter, a Foreign Invested Enterprise needs to retain
or have ready access to a local Chinese law firm for routine compliance
purposes.

Similarly, the People's Republic of China accounting laws mandate accounting
practices, that are not consistent with U.S. generally accepted accounting
principles. The China accounting laws require that an annual "statutory audit"
be performed in accordance with People's Republic of China accounting standards
and that the books of account of Foreign Invested Enterprises are maintained in
accordance with Chinese accounting laws. Article 14 of the People's Republic of
China Wholly Foreign-Owned Enterprise Law requires a Wholly Foreign-Owned
Enterprise to submit certain periodic fiscal reports and statements to designate
Financial and tax authorities, at the risk of business license revocation. As a
practical matter, a Foreign Invested Enterprise must retain a local Chinese
accounting firm that has experience with both the Chinese standards and U.S.
generally accepted accounting principles. This type of accounting firm can serve
the dual function of performing the annual Chinese statutory audit and preparing
the Foreign Invested Enterprise's financial statements in a form acceptable for
an independent U.S. certified public accountant to issue an audit report in
accordance with auditing standards of the Public Company Accounting Oversight
Board.


                                       7
<PAGE>
Second, while the enforcement of substantive rights may appear less clear than
United States procedures, the Foreign Invested Enterprises and Wholly
Foreign-Owned Enterprises are Chinese registered companies which enjoy the same
status as other Chinese registered companies in business-to-business dispute
resolution. All business disputes pertaining to Foreign Invested Enterprises are
to be resolved by the Arbitration Institute of the Stockholm Chamber of Commerce
in Stockholm, Sweden applying Chinese substantive law. Any award rendered by
this arbitration tribunal is, by the express terms of the respective Articles of
Association, enforceable in accordance with the "United Nations Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (1958)." Therefore,
as a practical matter, although no assurances can be given, the Chinese legal
infrastructure, while different in operation from its United States counterpart,
should not present any significant impediment to the operation of Foreign
Invested Enterprises.

EARNINGS AND DISTRIBUTIONS OF THE FIE'S

Foreign-Owned Enterprise laws provide for and guarantee the distribution of
profits to foreign investors in Chinese Foreign Invested Enterprises. Article 19
of the People's Republic of China Wholly Foreign Owned Enterprise Law provides
that a foreign investor may remit abroad profits that are earned by a Foreign
Invested Enterprise, as well as other funds remaining after the enterprise is
liquidated.


Because our Chinese businesses are controlled foreign corporations, for U.S.
federal income tax purposes, we may be required to include in our gross income
for U.S. tax purposes:

     o    Those companies' "Subpart F" income, which includes certain passive
          income and income from certain transactions with related persons,
          whether or not this income is distributed to it; and

     o    Increases in those companies' earnings invested in certain U.S.
          property.

Based on the current and expected income, assets, and operations of Chinese
businesses, we believe that it will not have significant U.S. federal income tax
consequences under the controlled foreign corporation rules.

POLITICAL AND TRADE RELATIONS WITH THE UNITED STATES

Political and trade relations between the United States and Chinese governments
within the past five years have been volatile and may continue to be in the
future. Issues surrounding the sovereignty of Taiwan remain within the public
discourse. While none of these events have had a direct connection to our
organization, other issues, including the protection of intellectual property
rights within China and sensitivity to technology transfers from the United
States to China have closer potential connection to the Company's operations.
There can be no assurance that the political and trade ramifications of these
issues or the emergence of new issues will not cause future difficulties for our
operations within China.

ECONOMIC REFORM ISSUES

Ever since the reform began 27 years ago, the Chinese government has implemented
economic reform measures that emphasize decentralization and encourage private
economic activity. Now most of the Chinese economy is market driven. However,
there are no assurances that:

     o    We will be able to capitalize on economic reforms;

     o    The Chinese government will continue its pursuit of economic reform
          policies;

     o    The economic policies, even if pursued, will be successful;

     o    Economic policies will not be significantly altered from time to time;
          and

     o    Business operations in China will not become subject to the risk of
          nationalization.

Negative impact upon economic reform policies or nationalization could result in
a total investment loss in our common stock.

Since 1978, the Chinese government has been engaged in a reformation of its
economic systems. Because many reforms are unprecedented or experimental, they
are expected to be refined and improved. Other political, economic and social
factors may result in fluctuations in the rate of economic growth, increases in
unemployment or inflation, or can engender wealth disparities between regions
within China. Such outcomes could lead to further adjustment of the reform
measures and may negatively affect our operations.

Over more than two decades, China's economy has registered a high growth rate.

To date, reforms to China's economic system have not adversely impacted our
company's operations and are not expected to adversely impact operations in the
foreseeable future. There can be no assurance, however, that the reforms to
China's economic system will continue or that we will not be adversely affected
by changes in China's economic and social conditions or by changes in policies
of the Chinese government.

                                        8
<PAGE>

CURRENCY CONVERSION AND EXCHANGE

The currency in China is designated as the Renminbi. Although the
Renminbi/United States dollar exchange rate has been relatively stable in the
past two years and recently the Renminbi has been steadily gaining against the
dollar, there can be no assurance that the exchange rate will not become
volatile or that the Renminbi will not sharply appreciate or depreciate against
the United States dollar.

Exchange rate fluctuations may adversely affect our financial performance
because of our foreign currency denominated assets and liabilities, and may
reduce the value, translated or converted, as applicable into United States
dollars, of our net fixed assets and our earnings. We do not engage in any
hedging activities in order to minimize the effect of exchange rate risks.

ENVIRONMENTAL COMPLIANCE

Our Company is subject to the People's Republic of China's National
Environmental Protection Law, which was enacted on December 26, 1989, as well as
a number of other national and local laws and regulations regulating air, water,
and noise pollution and setting pollutant discharge standards. Violation of such
laws and regulations could result in warnings, fines, orders to cease
operations, and even criminal penalties, depending on the circumstances of such
violation. We believe that our operations are in compliance with all applicable
environmental laws, including those laws relating to air, water, and noise
pollution. The Company believes that the cost of compliance with the applicable
environmental laws does not have a material effect on the company's capital
expenditures, earnings or the Company's competitive position.

PRODUCT DEVELOPMENT

The Company plans to increase its capacity to produce media content, subject
only to market and logistical constraints. To be successful, it will be
necessary for the Company to seek other sources of funding. Should such sources
be unavailable or too costly, the Company could sustain a material adverse
impact upon its financial performance and a loss of competitive position within
the marketplace.

EMPLOYEES

As of the date of this filing, Navstar and is subsidiaries have 56 full time
employees plus three corporate officers, consisting of the Chief Executive
Officer, the Chief Financial Officer and the Corporate Secretary.

AVAILABLE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act
of 1934. Accordingly, we file annual, quarterly and other reports and
information with the Securities and Exchange Commission. You may read and copy
these reports and other information we file at the Securities and Exchange
Commission's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also
available to the public from commercial document retrieval services and the
Internet worldwide website maintained by the Securities and Exchange Commission
at www.sec.gov . Public information (including reports we file with the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act) concerning the Company
is also made available through our website at: www.cesv-inc.com.

                                       9
<PAGE>

RISK FACTORS:

     An investment in our common stock involves a high degree of risks. You
should carefully consider the risk factors described below, together with all
other information in this prospectus before making an investment decision.
Additional risks and uncertainties not presently foreseeable to us may also
impair our business operations. If any of the following risks actually occurs,
our business, financial condition or operating results could be materially and
adversely affected. In such case, the trading price of our common stock could
decline, and you could lose all or part of your investment.

     Forward-Looking Statement Risks - The discussion of the business and
industry of our company contains various forward-looking statements within the
meaning of applicable federal securities laws and are based upon our company's
current expectations and assumptions concerning future events, which are subject
to many risks and uncertainties that could cause actual results to differ
materially from those anticipated.

The Company has a Limited Operating History and it is difficult to evaluate it
operating performance

     The Company began offering its products and services under Happytimes Media
Ltd. in Beijing in 1998. Accordingly, it has a limited operating history upon
which investors can evaluate its performance. In addition, the Company's senior
management and employees have worked together for only a short period of time.
As an early stage company in the China media market, the Company faces numerous
risks and uncertainties. Some of these risks relate to its ability to:

     o    increase advertising revenues and successfully build content
          production and distribution services businesses, given the early stage
          of development of the China media industry;

     o    maintain current and develop new, strategic relationships to increase
          revenue streams, as well as product and service offerings, and

     o    control costs associated with the operations, new project launches and
          being a public company.

Intense competition from existing and new entities may adversely affect our
revenues and profitability.

      In general, the media business in China is intensely competitive and
highly fragmented. We compete with various companies, many of which are
developing or can be expected to develop products similar to ours. Many of our
competitors are more established than we are and have significantly greater
financial, technical, marketing and other resources than we presently possess.
Some of our competitors have greater name recognition and a larger customer
base. . For example, Shanghai Media, one of the largest state-owned media
companies, have much more resources and capital than we do and may be favored by
the government. These competitors may be able to respond more quickly to new or
changing opportunities and customer requirements and may be able to undertake
more extensive promotional activities, offer more attractive terms to customers,
and adopt more aggressive pricing policies. We intend to create greater
awareness for our brand name so that we can successfully compete with our
competitors. We cannot assure you that we will be able to compete effectively or
successfully with current or future competitors or that the competitive
pressures we face will not harm our business.

     The Company derives a significant portion of its revenue from the
production and sale of made-for-TV programs. The ability of the Company to
generate and maintain significant revenues will depend upon its products and
distribution partners' products being attractive to its users and to
advertisers. The quality of its productions and the ability of the Company's
distribution network will determine revenue growth. Currently, the two largest
customers are CCTV and Beijing TV, CCTV being the national TV network monopoly
and Beijing TV the local monopoly in Beijing. Both of them are state-owned. The
Company strives to broaden its customer base. But it is difficult to predict how
successful this effort can be given the current market strcuture.

                                       10
<PAGE>
Operating Results May Differ From Market Expectations and Fall below your
Expectations.

     The Company's annual and quarterly operating results may vary significantly
in the future, due to a number of factors which could have an adverse impact on
the Company, such as a reliance on media, expansion costs, acquisition costs and
financing costs. The Chinese media industry is in an early stage of development
and future growth of the industry and the Company is not known and the Company
will continue to be subject to government regulations that may change at any
time or without notice.

     It is anticipated that year-to-year and quarter-to-quarter comparisons of
the Company's operating results will not be a good indication of its future
performance. It is likely that in some future quarter(s), operating results will
be below the expectations of public market analysts and investors. In this
event, the trading price of the Company's common stock may fall.

The Success of the Company is Dependent upon Content Providers.

     In addition to the Company's own production, success depends significantly
on relationships it customers that may continue to pay for its production
content and with leading global content producers for licensing or distributing
their products. Competitors may seek to establish the same relationships as the
Company, which may adversely affect Navistar and/or its subsidiaries. The
Company may be unable to maintain these relationships or replace them on
commercially attractive terms.

The Company depends on certain key executives and employees and business may be
disrupted if it loses the services of key executives and employees.

     The future success of the Company is heavily dependent upon the continued
service of its key executives and management employees. The Company will be
dependent on the expertise of key management and on their relationships with the
relevant regulatory authorities, customers and suppliers. If one or more of
these key executives and employees are unable or unwilling to continue in their
present positions, the Company may not be able to easily replace them and it may
face significant difficulties. Each of the executive officers of Navistar and
its subsidiaries has entered into an employment agreementconfidentiality,
non-compete and non-solicitation. However, the degree of protection afforded to
an employer pursuant to confidentiality and non-competition undertakings
governed by PRC law may be more limited when compared to the degree of
protection afforded under the laws of other jurisdictions. In addition, the
Company does not and does not intend to maintain key-man life insurance for any
of its key executives. As such, the loss of key personnel may significantly
impact the performance of the Company in the future.

The Company will need Additional Management in order to meet Growth Expectations

     The Company has an aggressive growth strategy. This growth strategy is
subject to matters beyond management's control including, but not limited to,
general economic conditions, launching new product initiatives, and attracting
qualified personnel. The success of its growth strategy will depend in part on
the Company's ability to observe and manage its future growth, if any. To do so,
the Company will be required to add personnel, expand and integrate its
management information and accounting control systems and carefully monitor and
control its operating expenses. If the Company is unable to manage its growth
effectively, its operating results could be adversely affected.

The Company has limited operational, administrative and financial resources,
which may be inadequate to sustain the growth it wants to achieve.

     As its customer base increases, the demands of the audience/customers will
require the Company to increase the investment in its facilities and other areas
of operation. If the Company is unable to manage its growth and expansion
effectively, the quality of its services could deteriorate and business may
suffer. The future success of the Company will depend on, among other things,
its ability to:

     o    adapt its services and maintain and improve the quality of its
          products and services;

     o    continue training, motivating and retaining its existing employees and
          attract and integrate new employees; and

     o    develop and improve its operational, financial, accounting and other
          internal systems and controls.

The Company may not be able to obtain additional capital on acceptable terms.

     The Company intends to use the proceeds of its fund raises to fund
acquisitions, expand into new areas of media, for working capital, and for other
general corporate purposes. Although it is anticipated that additional funding
will be required to achieve the projected growth estimates, if growth occurs at
a more rapid pace than projected, additional funding beyond may be required. No
assurance can be made that the Company will be able to obtain additional
financing (if required), or that such financing can be obtained on conditions
favorable to the Company and its shareholders. The Company may have to accept
financing on terms undesirable to the Company and ist shareholders from time to
time.


                                       11
<PAGE>
There are risks associated with the Company's strategy of expansion through
internal growth

     The Company intends to follow a strategy of dual expansion, through
internal organic growth and external acquisitions. Even though internal organic
growth may seem to be less risky as compared to acquisitions, it may still
carries many risks with the key risk being whether such internal growth is
achievable with its existing talent pool and wehther such internal growth can be
well managed and focused so as to benefit the long gorwth goals of the Company.
The ability of current maanagement to enter into new areas of growth and
expansion by relying on its existing resources can also be a challenge given the
lack of experience and expertise in such fields.

There are risks associated with the Company's strategy of expansion through
acquisitions, each of which may result in a material adverse effect on its
operating or financial performance.

     The Company is in the process of acquiring other operating entities and
intends to actively identify and acquire additional assets, technologies and
businesses in the future that are complementary to its existing core media
business. Such selection of acquisition targets may be flawed caqusing financial
and damages to the Company's operations. These acquisitions could result in the
use of substantial amounts of cash, potentially dilutive issuances of equity
securities, significant impairment losses related to goodwill or amortization
expenses related to intangible assets and exposure to undisclosed or potential
liabilities of acquired companies. Moreover, the resources expended in
identifying and consummating acquisitions may be significant. Furthermore, any
acquisitions the Company decides to pursue may be subject to the approval of the
relevant PRC governmental authorities, as well as any applicable PRC rules and
regulations. In additiona, the Company may have significant problems integrating
and digesting such acquisition targets even after successful initial
acquisitions, producing negative impact on the Company's business operqations
and performance.

The Company is Dependent on its Distributions for its Cash Needs

     The Company may have to rely on dividends and other distributions on equity
paid by its subsidiaries to fund any cash requirements the Company may have.
Navstar is a holding company with no operating assets other than investments in
Chinese operating entities. Furthermore, dividends received from subsidiaries
would be subject to taxation in China and the United States. Lastly, the Company
may not be able to obtain cash from distributions to the extent that such
distributions are restricted or may become restricted by PRC law or future debt
covenants.

Intellectual property is important to the Company's Success and any unauthorized
use of intellectual property by third parties may adversely affect the Company.

     The Company regards its copyrights, service marks, trademarks, trade
secrets and other intellectual property as critical to its success. Unauthorized
use of intellectual property by third parties may adversely affect its business
and reputation. The Company relies on trademark and copyright law, trade secret
protection and confidentiality agreements with its employees, customers,
business partners and others to protect its intellectual property rights.
Despite its precautions, it may be possible for third parties to obtain and use
the Company's intellectual property without authorization. Furthermore, the
validity, enforceability and scope of protection of intellectual property in
media and internet-related industries is uncertain and still evolving. In
particular, the laws of the PRC and other countries may not protect intellectual
property rights to the same extent as do the laws of the United States.
Moreover, litigation may be necessary in the future to enforce the Company's
intellectual property, to protect trade secrets or to determine the validity and
scope of the proprietary rights of others. As a result, future litigation could
result in substantial costs and diversion of resources from protecting the
Company's intellectual property.

Navstar's profitability is highly dependent on the program ratings received by
the channel with which it works.

     In general, viewer interest in programming offered on a television channel
determines the audience ratings a channel receives. Ratings are a significant
factor in the amount of revenues Navstar generates as ratings impact the pricing
that Navstar can charge to its advertisers. Because television stations
generally make the final decision as to which programs they will broadcast, if
the television stations choose poor quality programming, or due to competitive
forces are unable to secure popular programs, their channel ratings could be
negatively affected. The failure by the television stations to achieve good
ratings for their programs could have a material adverse affect on the
profitability of Navstar.

The Company is Dependent on Thrid Party Partners and Contractors for Delivering
its Future Services

     In case of a launch of its TV shopping operations, the Company will depend
on thrid party service providers to deliver and/or process TV shopping orders
and on the production of such products. The Company cannot control their service
and production and these thrid parties' unsatisfactory performance of their
obligations towards the Company may cause negative impact on the Company's
relationship with its customers.


                                       12
<PAGE>
CHINA RELATED RISKS

There Are Risks Associated with Conducting Business in China.

     The Company faces risk related to changes in the policies of the Chinese
government that could have a significant impact upon the business the Company
may conduct in China and this may impact the profitability of the Company.

     The economy of China is in a transition from a planned economy to a
market-oriented economy. Policies of the Chinese government may have significant
effects on the economic conditions of China. The Chinese government has
confirmed that economic development will follow a model of market economy, under
socialism. It is anticipated that the PRC will continue to strengthen its
economic and trading relationships with foreign countries and business
development in China will follow market forces. Although it appears this trend
will continue, there can be no assurance that this will be the case. A change in
policies by the Chinese government could adversely affect the Company's
interests through changes in laws, regulations or the interpretation thereof,
confiscatory taxation, restrictions on currency conversion, imports or sources
of supplies, or the expropriation or nationalization of private enterprises.
Although the Chinese government has been pursuing economic reform policies for
approximately two decades, there is no assurance that the government will
continue to pursue such policies or that such policies may not be significantly
altered, especially in the event of a change in leadership, social or political
disruption, or other circumstances affecting China's political, economic and
social life.

     The PRC laws and regulations governing the Company's current business
operations and contractual arrangements are uncertain, and if it is found to be
in violation, it could be subject to sanctions. In addition, any changes in such
PRC laws and regulations may have a material and adverse effect on its business.

     A slowdown or other adverse developments in the PRC economy may materially
and adversely affect its customers, demand for its services and its business.
All of the Company's operations are conducted in the PRC and all of its revenue
is generated from sales to businesses operating in the PRC. Although the PRC
economy has grown significantly in recent years, there is no assurance that such
growth will continue.

The PRC's economic, political and social conditions, as well as government
policies, could affect its business.

     The Company's assets and operations are located in China and all of its
revenue is derived from its operations in China. Accordingly, the Company could
be adversely impacted by changes in political, economic or social conditions in
China, adjustments in PRC government policies or changes in laws and
regulations.

     The economy of China differs from the economies of most countries belonging
to the Organization for Economic Cooperation and Development in a number of
respects, including:

     o    structure;
     o    level of government involvement;
     o    level of development;
     o    level of capital reinvestment;
     o    growth rate;
     o    control of foreign exchange; and
     o    methods of allocating resources.

     Since 1949, China has been primarily a planned economy subject to a system
of macroeconomic management. Although the Chinese government still owns a
significant portion of the productive assets in China, economic reform policies
since the late 1970s have emphasized decentralization, autonomous enterprises
and the utilization of market mechanisms. The Company cannot predict what
effects that economic reform and macroeconomic measures adopted by the Chinese
government will have on the business or operational results.

Uncertainties in the PRC Legal System could limit the legal protections
available to the Company.

     The PRC legal system is a civil law system based on written statutes.
Unlike common law systems, it is a system in which decided legal cases have
little precedential value. In 1979, the PRC government began to promulgate a
comprehensive system of laws and regulations governing economic matters in
general. The Company's PRC operating subsidiaries, Happytimes and DFZY, are
foreign owned enterprises, which are incorporated in mainland China and owned by
its indirect subsidiary, Navistar. Hong Kong is subject to laws and regulations
applicable to foreign investment in mainland China. However, these laws,
regulations and legal requirements are relatively recent, and their
interpretation and enforcement involve uncertainties. These uncertainties could
limit the legal protection available to the Company and other foreign investors,
including investors in our Company. It is difficult to predict the impact of
future developments in the PRC legal system, particularly with regard to the
Internet, including the promulgation of new laws, changes to existing laws or
the interpretation or enforcement thereof, or the preemption of local
regulations by national laws.


                                       13
<PAGE>
     The PRC legal system is based upon written statutes. Prior court decisions
may be cited for reference; however, these rulings are not binding on subsequent
cases and have limited value as precedents. Since 1979, the PRC legislative
bodies have promulgated laws and regulations dealing with economic matters such
as foreign investment, corporate organization and governance, commerce, taxation
and trade. However, the PRC has not developed a fully integrated legal system
and the array of new laws and regulations may not be sufficient to cover all
aspects of economic activities in the PRC. These laws and regulations are
relatively new, and the limited volume of published decisions. The non-binding
nature, interpretation and enforcement of these laws and regulations involve
numerous uncertainties. In addition, published government policies and internal
rules may have retroactive effects and, in some cases, the policies and rules
are not published at all. As a result, the Company may not be aware of its
violation of these policies and rules until after rulings have gone into effect.
The laws of the PRC govern the contractual arrangements of the Company with its
affiliated entities. The enforcement of the contracts and the interpretation of
the laws governing these relationships are subject to uncertainty.

If relations between the United States and China worsen, our stock price may
decrease and we may have difficulty accessing the U.S. capital markets.

     At various times during recent years, the United States and China have had
disagreements over political and economic issues. Controversies may arise in the
future between these two countries. Any political or trade controversies between
the United States and China could adversely affect the market price of our
common stock and our ability to access U.S. capital markets.

There is a risk that Inflation could slow economic growth in China.

     While the Chinese economy has experienced rapid growth, such growth has
been uneven among various sectors of the economy and in different geographical
areas of the country. Rapid economic growth can lead to growth in the money
supply and result in rising inflation. If prices for the Company's products rise
at a rate slower than the rise in the costs of supplies, it will have an adverse
effect on profitability. In order to control inflation in the past, the Chinese
government has imposed controls on bank credits, limits on loans for fixed
assets and restrictions on state bank lending. Such a policy can lead to a
slowdown in economic growth. In October 2004, the People's Bank of China,
China's central bank, raised interest rates for the first time in nearly a
decade and suggested in a statement that the measure was prompted by
inflationary concerns in the Chinese economy. Repeated increases in interest
rates by the central bank will likely slow economic activity in China which
could, in turn, materially increase Company expenses and reduce demand for its
products.

The dividends and other distributions on equity Navstar may receive from its
subsidiaries or other payments it may receive from future strategic partners are
subject to restrictions under PRC law or agreements that these entities may
enter into with third parties.

     Navstar relies on dividends and other distributions on equity paid by its
subsidiaries and from future service fees from its strategic partners. If any of
the subsidiaries incurs debt in the future, the instruments governing the debt
may restrict the subsidiaries ability to pay dividends or make other
distributions to us. In addition, PRC law requires that payment of dividends by
subsidiaries that are incorporated in China can only be made out of its net
income, if any, determined in accordance with PRC accounting standards and
regulations. Under PRC law, those subsidiaries are also required to set aside a
portion, of up to 10% of their after-tax net income each year to fund certain
reserve funds, and these reserves are not distributable as dividends. Any
limitation on the payment of dividends by its subsidiaries could materially
adversely affect Navstar's ability to grow, fund investments, make acquisitions,
pay dividends, and otherwise fund and conduct business.

The Company may experience risks associated with currency exchange losses.

     Although a majority of the Company's revenue is denominated in Renminbi,
its reporting currency is the U.S. Dollar. The Company's revenue and earnings
are expressed in its U.S. Dollar financial statements and will decline in value
if the Renminbi depreciates relative to the U.S. Dollar. Very limited hedging
transactions are available in China to reduce its exposure to exchange rate
fluctuations. To date, the Company has not entered into any hedging transactions
in an effort to reduce its exposure to foreign currency exchange risk. While the
Company may decide to enter into hedging transactions in the future, the
availability and effectiveness of these hedges may be limited and it may not be
able to successfully hedge its exposure, if at all. In addition, the Company's
currency exchange losses may be magnified by PRC exchange control regulations
that restrict its ability to convert Renminbi into U.S. Dollars.

Investors may experience difficulties in effecting service of legal process and
enforcing judgments against Navstar and its management.


                                       14
<PAGE>
     Although the Company is incorporated in the State of Nevada, a significant
portion of its assets are located in the PRC. As a result, it may be difficult
for investors to enforce any actions brought against the Company outside the
United States including actions predicated upon the civil liability provisions
of the federal securities laws of the United States or of the securities laws of
any state of the United States. In addition, several of the Company's executive
officers are non-U.S. residents and many of the assets of these persons are
located outside of the United States. As a result, it may not be possible to
effect service of process within the United States upon these executive
officers, including with respect to matters arising under U.S. federal
securities laws or applicable state securities laws. China does not have
treaties with the United States or many other countries providing for the
reciprocal recognition and enforcement of court judgments. As a result,
recognition and enforcement in China, or elsewhere outside of the United States
of judgments of a court of the United States or any other jurisdiction,
including judgments against the Company or its directors and executive officers,
may be difficult or impossible. The Company has been advised by its PRC counsel
that enforceability in the PRC is questionable, in original actions or in
actions for enforcement of judgments of United States courts, of civil
liabilities predicated solely upon the federal securities laws of the United
States or the securities laws of any state of the United States.

FOREIGN EXCHANGE CONTROL RISKS

Government control of currency conversion may adversely affect the Company's
financial condition and results of operations.

     The PRC government imposes controls on the convertibility of Renminbi into
foreign currencies and, in certain cases, the remittance of currency out of the
PRC. The Company receives substantially all of its revenue in Renminbi, which is
currently not a freely convertible currency. Shortages in the availability of
foreign currency may restrict the Company's ability to remit sufficient foreign
currency to pay dividends, or otherwise satisfy foreign currency denominated
obligations. Under existing PRC foreign exchange regulations, payments of
current account items, including profit distributions, interest payments and
expenditures from the transaction, can be made in foreign currencies without
prior approval from the PRC State Administration of Foreign Exchange by
complying with certain procedural requirements. However, approval from
appropriate governmental authorities is required where Renminbi is to be
converted into foreign currency and remitted out of China to pay capital
expenses such as the repayment of bank loans denominated in foreign currencies.

     The PRC government may also at its discretion restrict access in the future
to foreign currencies for current account transactions. If the foreign exchange
control system prevents the Company from obtaining sufficient foreign currency
to satisfy its currency demands, it may not be able to pay certain expenses in a
timely manner.


The fluctuation of the Renminbi may materially and adversely affect your
investment.

     The value of the Renminbi against the U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in the PRC's political
and economic conditions. Any significant revaluation of the Renminbi may
materially and adversely affect our cash flows, revenues and financial
condition. For example, to the extent that we need to convert U.S. dollars we
receive from this offering of our common stock into Renminbi for our operations,
appreciation of the Renminbi against the U.S. dollar could have a material
adverse effect on our business, financial condition and results of operations.

     Conversely, if we decide to convert our Renminbi into U.S. dollars for the
purpose of making payments for dividends on our common shares or for other
business purposes and the U.S. dollar appreciates against the Renminbi, the U.S.
dollar equivalent of the Renminbi we convert would be reduced. Any significant
devaluation of Renminbi may reduce our operation costs in U.S. dollars but may
also reduce our earnings in U.S. dollars. In addition, the depreciation of
significant U.S. dollar denominated assets could result in a charge to our
income statement and a reduction in the value of these assets.

     Since 1994 the PRC has pegged the value of the Renminbi to the U.S. dollar.
We do not believe that this policy has had a material effect on our business.
There can be no assurance that Renminbi will not be subject to devaluation. We
may not be able to hedge effectively against Renminbi devaluation, so there can
be no assurance that future movements in the exchange rate of Renminbi and other
currencies will not have an adverse effect on our financial condition.

     In addition, there can be no assurance that we will be able to obtain
sufficient foreign exchange to pay dividends or satisfy other foreign exchange
requirements in the future.

Restrictions on foreign currency exchange may limit the Company's ability to
obtain foreign currency or to utilize Revenue effectively.

     Substantially all of the Company's revenue and operating expenses are
denominated in Renminbi. The Renminbi is freely convertible under the "current
account", which includes dividends, trade and service related foreign exchange
transactions. However, it is not freely convertible under the "capital account",
which includes foreign direct investment.

     Currently, the Company's subsidiaries may purchase foreign exchange for
settlement of "current account transactions", including payment of dividends,
without the approval of the State Administration for Foreign Exchange, or SAFE.
Such subsidiaries may also retain foreign exchange in their current account
(subject to a ceiling approved by the SAFE) to satisfy foreign exchange
liabilities or to pay dividends. The relevant PRC governmental authorities may
limit or eliminate the Company's ability to purchase and retain foreign
currencies in the future.


                                       15
<PAGE>
         Since a significant amount of future revenue will be in the form of
Renminbi, the existing and any future restrictions on currency exchange may
limit its ability to utilize revenue generated in Renminbi to fund its business
activities outside China, if any, or expenditures denominated in foreign
currencies. Foreign exchange transactions under the capital account are still
subject to limitations and require approvals from the SAFE.

REGULATORY RISKS

Violations of PRC Regulations Could Result in Severe Penalties

     The PRC recently enacted regulations applying to media-related services.
While many aspects of these regulations remain unclear, they purport to limit
and require licensing and censoring of various aspects of the provision of media
services and media products. If Company operations or products are found to be
inconsistent with these regulations, business will be severely impaired and the
Company could be subject to severe penalties.

     The Bureau of Broadcasting and Television is the authority directly in
charge of the media industry. However, as the Company grows it may be subject to
regulation by various PRC government authorities. Various government authorities
have stated publicly that they are in the process of preparing new laws and
regulations that will govern these activities. The areas of regulation currently
include movie production, local content, online advertising, online publishing
and content distribution that the Company may be involved. In addition, other
aspects of the business may be subject to regulation in the future.

     Operations may not be consistent with these new regulations when put into
effect and, as a result, the Company could be subject to severe penalties.

The laws and regulations governing the Internet industry in China are developing
and subject to future changes, and substantial uncertainties exist as to the
interpretation and implementation of those laws and regulations.

     In recent years, the PRC government has begun to enact laws and regulations
applicable to Internet-related services and activities, many of which are
relatively new and untested and subject to future changes. In addition, various
regulatory authorities of the central PRC government, such as the State Council,
the MII, the State Administration of Industry and Commerce, or SAIC, the State
News and Publication Administration, or SNPA, and the Ministry of Public
Security, are empowered to issue and implement regulations to regulate certain
aspects of Internet-related services and activities. See "Regulation."
Furthermore, some local governments have also promulgated local rules applicable
to Internet companies operating within their respective jurisdictions. As the
Internet industry itself is at an early stage of development in China, there
will likely be new laws and regulations adopted in the future to address issues
that arise from time to time. As a result of the foregoing, substantial
uncertainties exist regarding the interpretation and implementation of current
and future PRC Internet laws and regulations. While Navstar believes that is in
compliance with all applicable PRC laws and regulations currently in effect, it
cannot assure investors you that it will not be found in violation of any
current or future PRC laws and regulations due to these substantial
uncertainties.

Risks Related to the Company's Common Stock

To Fulfill its long term business plan the Company will need additional funding.

     The continued growth of the Company and the successful completion of the
acquisition of DFZY is dependent upon its ability to raise capital from outside
sources. The Company may be unable to obtain necessary financing on a timely
basis and on acceptable terms, and its failure to do so may adversely affect its
financial position, competitive position, growth and profitability. Its ability
to obtain acceptable financing at any time may depend on a number of factors,
including:

     o    The Company's financial condition and its result of operations;

     o    The condition of the PRC economy and the media industry in the PRC;
          and

     o    Conditions in relevant financial markets in the U.S., the PRC and
          elsewhere in the world.


                                       16
<PAGE>
Continued growth will heighten the need for effective controls and management of
Navstar's growth.

     If the Company's business and markets grow and develop, it will be
necessary for it to finance and manage expansion in an orderly fashion. This
growth will lead to an increase in the responsibility of existing personnel, the
hiring of additional personnel and the expansion of its scope of operations.
There can be no assurance that it will be able to raise the required financing
or control and manage its future growth.

Officers and Directors may together have certain controls of the decisions of
the Company.

     Officers, directors and affiliates of the Company have control of certain
aspects of the Company through stock ownership and the position(s) they hold.
The interest of the Officers and Directors and the key shareholders may differ
from other shareholders. The Company intends to retain any future earnings for
use in the operation and expansion of its business. The Company does not expect
to pay any cash dividends in the foreseeable future; however, the officers and
directors will review this policy as circumstances dictate.

If an active trading market for the Company's Shares does not develop, the price
of the Shares may suffer and may decline below the offering price.

     The Company's common stock is now listed on the over-the-counter Bulletin
Board (OTCBB). There is currently a limited trading market for its common stock
and it is not known if any trading market will ever develop. As such, it may be
difficult to sell shares due to the absence of a trading market.

     In addition, broker-dealers that recommend the Company's common stock to
customers or qualifying investors must follow special sales procedures,
including getting the purchaser's written consent prior to the sale. The common
stock is also subject to the "penny stock" rules, which require delivery of a
schedule explaining the penny stock market and the associated risks before any
sale. These requirements may further limit the investor's ability to sell
his/her shares.

Future sales of restricted shares may have an adverse impact on the market price
of the Company's Shares.

     The Company may issue additional shares of Common Stock from time to time
to raise additional capital for its growth and operation purposes. The sale of
such shares of the Common Stock to be issued in the future create additional
downward pressure on the market price for the Common Stock.

Stock prices of Media-related companies have fluctuated widely in recent years,
and the trading prices of Navstar's Common Stock is likely to be volatile, which
could result in substantial losses to investors.

     The market price of the Company's common stock could fluctuate
substantially due to a variety of factors, including market perception of its
ability to achieve its planned growth, quarterly operating results of other
publicly-held media-related businesses, trading volume of the common stock,
changes in general conditions in the economy and the financial markets or other
developments affecting competition of the Company. In addition, the stock market
is subject to extreme price and volume fluctuations. This volatility has had a
significant effect on the market price of securities issued by many companies
for reasons unrelated to its operating performance and could have the same
effect on its common stock.

                Special note regarding forward-looking statements

     This report contains forward-looking statements. These statements relate to
our growth strategy and our future financial performance, including our
operations, economic performance, financial condition and prospects, and other
future events. We generally identify forward-looking statements by using such
words as "anticipate," "believe", "can", "continue", "could", "estimate",
"expect", "intend", "may", "plan", "potential", "seek", "should", "will", or
variations of such words or other similar expressions and the negatives of such
words. These forward-looking statements are only predictions and are based on
our current expectations.

     In addition, a number of known and unknown risks, uncertainties and other
factors could affect the accuracy of these statements, including the risks
outlined under "Risk factors" and elsewhere in this prospectus. Some of the more
significant known risks that we face are uncertainty regarding market acceptance
of our products and services and our ability to generate revenue or profit.
Other important factors to consider in evaluating our forward-looking statements
include:

     >>   our possible inability to execute our strategy due to changes in our
          industry or the economy generally;
     >>   our possible inability to execute our strategy due to changes in
          political, economic and social conditions in the markets in which we
          operate;
     >>   uncertainties associated with currency exchange fluctuations;
     >>   changes in laws and regulations governing our business and operations
          or permissible activities;
     >>   changes in our business strategy; and
     >>   the success of our competitors and the emergence of new competitors.

                                       17
<PAGE>
     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee our future results, levels of
activity or performance. Any or all of our forward-looking statements in this
prospectus may turn out to be inaccurate. We have based these forward-looking
statements on our current expectations and projections about future events and
financial, political and social trends and assumptions we made based on
information currently available to us. These statements may be affected by
inaccurate assumptions we might have made or by known or unknown risks and
uncertainties, including the risks and uncertainties described in "Risk
factors." In light of these assumptions, risks and uncertainties, the
forward-looking events and circumstances discussed in this prospectus may not
occur as contemplated and actual results could differ materially from those
anticipated or implied by the forward-looking statements.

     Forward-looking statements contained herein speak only as of the date of
this prospectus. Unless required by law, we undertake no obligation to update
publicly or revise any forward-looking statements to reflect new information or
future events or otherwise. You should, however, review the factors and risks we
describe in the reports we will file from time to time with the Securities and
Exchange Commission (SEC) after the date of this prospectus. See "Where you can
find more information."


ITEM 2.   DESCRIPTION OF PROPERTY

The Company's subsidiaries lease space for production and office activities,
including from state-owned enterprises. Some of the Companies leases include the
use of CCTV production resources and facilities. In the United States, the
Company does not lease any facilities, relying instead on home offices of
Officers and temporary meeting facilities at our law firm.

As a general rule, we do not anticipate investing in real estate, including but
not limited to interests in real estate, real estate mortgages, real estate
investment trusts or interests in persons primarily engaged in real estate
activities. While we currently have no formal investment policy, we do not
intend to investment in real estate as a part of our normal operations or for
speculation.

ITEM 3.   LEGAL PROCEEDINGS

We are not aware of any material pending legal proceedings involving us or any
of our subsidiaries.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our security holders during the last
quarter of the fiscal year ended December 31, 2006.

                                     PART II

ITEM 5.   MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock was initially listed on Over the Counter Bulletin Board (OTCBB)
as of November 2, 2004. The following table sets forth the high and low bid
information for the Common Stock for each quarter since the listing commenced.

                                       18
<PAGE>

                                     TABLE 1

                       QUARTERLY COMMON STOCK PRICE RANGES

QUARTER ENDED                                       HIGH           LOW
December 31, 2005                                  $ 9.50         $0.25
March 31, 2006                                     $ 0.93         $0.90
June 30, 2006                                      $ 0.35         $0.35
September 30, 2006                                 $ 0.35         $0.22
December 31, 2006                                  $ 0.54         $0.23

These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions. As of December 31,
2006, there were approximately 130 stockholders of record of our Common Stock.

DIVIDEND POLICY

We have never paid any dividends on the Common Stock. We currently anticipate
that any future earnings will be retained for the development of our business
and do not anticipate paying any dividends on the Common Stock in the
foreseeable future.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

While the Company plans to institute an equity compensation plan, such a plan
has not yet been developed or implemented.

SALES OF UNREGISTERED SECURITIES

On January 31, 2006, the company issued $1,000,000 of 8% Convertible
Subordinated Debentures ("Notes") in the form of forty $25,000 units. The
proceeds will be used for working capital and acquisition purposes.

On January 31, 2006 we issued $1,000,000 of 8% Convertible Subordinated
Debentures ("Notes"), convertible into shares of the Company's common stock at a
price of $1.00 and with a maturity date of 180 days from the Notes issuance, in
the form of forty $25,000 units. Each unit includes the face value of Notes
($25,000), plus 5,000 shares of Common Stock of the Company (`Unit Shares") and
25,000 Stock Purchase Warrants ("Warrants"). The Warrants will be exercisable,
in whole or in part, for four years from the date of initial funding and shall
enable the holder to purchase shares of our Common Stock at the lower of $1.25
per share or the exercise price stipulated for any subsequent capital raise
completed within 180 days of the closing of the offering. These Notes were
extended on July 31, 2006 for a four (4) month period with an increase of
US$200,000 in principal as a bonus payment to the Note holders as well as arrant
and reduced conversion price of the Notes at US$0.40 and reduced warrant
exercise price at US$0.50. These Notes were again extended for another four (4)
months till April 30, 2007 with the conversion price further reduced to US$0.20
and warrant exerciwe price reduced to US$0.30.


                                       19
<PAGE>

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this report. This
Annual Report on Form 10-KSB contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements involve known
and unknown risks and uncertainties, many of which are beyond the Company's
control, including adverse changes in economic, political and market conditions,
losses from the Company's market-making and trading activities arising from
counter-party failures and changes in market conditions, the possible loss of
key personnel, the impact of increasing competition, the impact of changes in
government regulation, the possibility of liabilities arising from violations of
federal and state securities laws and the impact of changes in technology in the
securities and commodities trading industries. Although the Company believes
that its forward-looking statements are based upon reasonable assumptions
regarding its business and future market conditions, there can be no assurances
that the Company's actual results will not differ materially from any results
expressed or implied by the Company's forward-looking statements. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Readers are cautioned that any forward-looking statements are not guarantees of
future performance.

OVERVIEW

Navstar Media Holdings, Inc. ("the Company") owns majority interests in firms
specializing in media content production and distribution in the People's
Republic of China ("PRC"). Navstar subsidiaries generate revenues through
television program production and distribution and through advertising revenues
generated the broadcast and distribution of such programs, outdoor billboard
advertising and other media and broadcasting production and management services.

On March 11, 2006, the Company entered into an agreement with the shareholders
of Beijing Broadcasting and Television Media Co., Ltd ("Beijing Media") to
acquire 70% ownership interest and operational control of Beijing Media, a media
content production and distribution company located in Beijing, PRC. Pursuant to
the agreement, the Company issued 2,400,000 shares of its common stock to the
existing shareholders of Beijing Media, of which 900,000 shares were to be
returned and cancelled if certain condition were not met. In June 2006, the
Company waived the requirement to meet the conditions. The consolidated 2006
financial statements of the Company as presented in this Report include the
results of Beijing Media for a period of nine months from April to December.

On July 9, 2006, the Company entered into a definitive agreement to acquire 70%
of ownership interest in Beijing Lucky Star Advertising Company ("Lucky Star").
Founded in 1992, Lucky Star is engaged in advertising business in the following
areas: TV commercials, newspaper, magazines, and outdoor media. The purchase
price is 2,800,000 shares of the Company's common stock. The Company believes
Lucky Star will bring additional revenue and income to the Company and will
supplement its advertising capabilities. The consolidated 2006 financial
statements of the Company as presented in this Report include the results of
Lucky Star for a period of six months from July to December.

On July 31, 2006, the subordinated debenture of $1,000,000 was extended till
November 30, 2006 with its conversion price adjusted to $0.40 and warrant price
adjusted to $0.50 per shares. In addition, there is an increase of 20% of the
principal and additional 20% warrants issued to the debenture holders. These
Debentures were again extended for another four months until March 31, 2007 with
the conversion price further reduced to $0.20 per share and Warrant exercise
price reduced to $0.30 per share. On January 30, 2007, the Company has filed a
registration statement with SEC covering the underlying shares of common stock
in connection with the debentures.

On September 30, 2006, the Company through its subsidiary and its exclusive
agent signed an agreement with CCTV TV Shopping Co., Ltd., the TV shopping arm
of the state monopoly CCTV network to apply for special permits from the 2008
Olympic Committee for selling 2008 Olympic Games products over a jointly
developed TV shopping program as a start to launch a nation-wide TV shopping
program in China. According to the State Statistics Bureau of China, TV shopping
in China constitutes approximately 0.1% of the national retail sales (as
compared to 7% in U.S. and Europe and 10% in Japan and Korean), which reached
US$850 billion in 2005. Retail sales have been growing at approximately 10% per
year for the last four years with accelerating growth. There is no national
leader in the TV shopping market in China. The Company currently produces TV
shopping related TV programs for CCTV and the Company intends to break into the
nascent TV shopping market in China and open up a major sustainable source of
revenues and income.

On December 28, 2006, the Company entered into an agreement with the minority
shareholders of Happy Times Media Inc. ("HTM") to transfer its interest HTM.
Pursuant to the agreement all consideration paid to the shareholders of 600,000
shares of the Company's common stock will be returned to the Company. In return,
the 70% ownership interest of HTM will be returned to HTM's shareholders or its
designated party. As a result, HTM would no longer be a subsidiary of the
Company and its financial results ceased to be consolidated into the Company's
2006 financial statements. The Company believes that in view of the
unsatisfactory performance of HTM, this recission of the agreement and the
disposal of HTM's operations will have a positive impact on the Company's
performance and financial results in the long run.

                                       20
<PAGE>
RESULTS OF OPERATIONS:

NET SALES

Net sales for 2006 totaled $2,300,276 compared to $3,307,346 for 2005, a
decrease of $1,007,070 or approximately 30%. This change was due to business
restructuring of the Company in 2006 with the restructuring of HTM on December
28, 2006 and acquisition of 70% ownership interest in Beijing Media and Lucky
Star on March 11 and July 9 respectively. HTM's variable interest entity,
Beijing Hui Ying International Advertising Co., Ltd.'s ("BHYIA"), financial
results, being part of the Company's consolidated financial statements as of the
date of the latest 2006 10QSB filing, ceased to be consolidated into the
Company's financials. Reduced sales due to the discontinuation of former HTM
Movie Channel was partially offset by additional incomes from Beijing Media and
Luck Star, although the reported consolidated financial statements for the
Company represent performance of Beijing Media for nine months (April -
December) and of Lucky Star for six months (July - December).

COST OF SALES

Cost of sales for 2006 totaled $1,575,184 or 68.5% of net sales compared to
$2,405,781 or 72.7% of net sales for 2005. This decrease in cost of sales as a
percentage of sales was mostly related to lower programming costs after
discontinuation of HTM movie channel program and reorganization of content
production and programming operation into Beijing Media. Cost of sales
associated with revenues generated by Lucky Star also contributed to the
decrease of cost of sales as percentage of sales.

OPERATING EXPENSE

Selling, general and administrative expenses for 2006 totaled $2,356,721, an
increase of $1,390,725 or 144%, compared to $965,996 for 2005. This largely
reflects the increased administrative costs at the parent level associated with
operating a public entity, including professional services, travel and filing
costs. The reorganization initiative, including restructuring of HTM operations
and acquisition of majority ownership interest in Beijing Media and Lucky Star,
also added to the operating expenses. The Company incurred total financing cost
of $777,361 for 2006.

While the major causes of our operating loss have been addressed as of this
analysis and we believe is associated with specific events, we will continue to
aggressively find ways to reduce cost while addressing the rapidly expanding
market for media in China. There can be no guarantee, however, that we will be
successful in reducing such costs relative to our level of sales.

INCOME (LOSS) FROM OPERATIONS

For 2006 the Company lost $1,631,629 from its continuing operations, compared
with loss from operations of $64,431 for 2005, an increase of $1,567,198 or
2,432%. This was largely due to financing and general and administrative costs
as well as professional service costs related to acquisitions and other costs
related to the operating of a public entity, of which some are one time costs.
Additional costs were incurred in the preparation of the launching of a TV
shopping program. The company continued aggressively addressing the issues
associated with these costs and expenses during 2005, with the goal of improving
operations measurably for 2007.

COMPREHENSIVE INCOME (LOSS)

After accounting for the various components of the income statement, the company
recorded for 2006 a loss of $2,358,163 or $0.10 per share versus a loss of
$273,601, or $0.01 per share for 2005. As of December 31, 2006, there were
26,980,609 shares outstanding. As management, we are committed to improving
performance for the coming year and believe that we have already taken steps to
make the Company run more efficiently and effectively.

                                       21
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

While cash has historically been generated from operations, 2006 required an
inflow of cash to complete the funding of the Happy Times movie channel program,
acquisition of Beijing Media and Lucky Star and to support the increased
administrative costs of operating a public company. Cash and cash equivalents
were $743,565 on December 31, 2006 and current assets totaled $2,425,654 on that
same date. The Company's total current liabilities were $2,527,488 on December
31, 2006, making working capital (current assets less current liabilities) a
negative $101,834. We believe that we currently generate sufficient cash from
operating activities to support our existing operations.

Historically, the Company's existing subsidiaries, i.e., Beijing Media and Lucky
Star, have been running on a profitable basis and been able to maintain positive
cash flows and profit margins. However, in view of its expansion plan for 2007
and beyond including the launch of its co-op TV shopping business with China
state-owned monopoly CCTV, the management determines that additional financing,
currently in the form of private placement offering of equity securities, will
be required to fulfill the Company's growth plan.

In 2006, net cash provided by operating activities was $41,822, cash received
from financing activities $1,000,000 and cash used in investing activities
$520,596. The net effect of exchange rates added $26,761 to cash during 2006.


WORKING CAPITAL REQUIREMENTS

Historically operations and short term financing have been sufficient to meet
our cash needs. We believe that we will be able to generate net working capital
from our operations and through a planned private placement offering of equity
securities. Together, these components should provide the necessary cash flow to
meet the Company's requirements over the coming year and beyond. It should be
noted, however, that our actual working capital needs for the long and short
term will depend upon numerous factors, including operating results,
competition, and the availability of credit facilities, none of which can be
predicted with certainty. Future expansion and operating plans may be limited by
less than optimal operating performance and/or any limitation of our ability to
raise additional capital.

OFF BALANCE SHEET ARRANGEMENTS

We have not entered into any off-balance sheet financing arrangements and have
not established any special purpose entities. We have not guaranteed any debt or
commitments of other entities or entered into any options on non-financial
assets.

                                       22
<PAGE>

CRITICAL ACCOUNTING POLICES

The preparation of consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. We evaluate our estimates on an on-going basis. We base our
estimates on current information, historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from the estimates we used under different assumptions
or conditions. We believe the following concentrations and critical accounting
policies relate to our more significant judgments and estimates used in the
preparation of our consolidated financial statements.

REVENUE RECOGNITION

Revenue from the sales or licensing of proprietary content, third party
programming, imported TV and films, and sales and distribution of advertisement
programs are recognized upon meeting all recognition requirements of Statement
of Position (SOP) 00-2 "Accounting by Producers or Distributors of Films".

Revenue from sales of advertisement designs and products are recognized when the
products are delivered and title has passed.

Cash payments received are recorded as deferred revenue until all the conditions
of revenue recognition have been met.

EFFECTS OF INFLATION

The company is not subject to measurable risks from inflation. It is, however,
subject to changes in relative values of currencies.

EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

Our operating subsidiaries are located in China, and our Company pays for its
operational costs in China and sells virtually all its products in China,
utilizing Chinese Renminbi as the functional currency. Based on China government
regulations, all foreign currencies under the category of current accounts are
allowed to be freely exchanged with hard currencies. During the past three years
of operation, there were no significant changes in exchange rates; however,
unforeseen developments may cause a significant change in exchange rates.

The following table summarizes our contractual obligations (including interest
expense) and commitments as of December 31, 2006:

<TABLE>
<CAPTION>

                                     TABLE 3
                             CONTRACTUAL OBLIGATIONS
Contractual
Obliga                 Total          Less than 1      1-3 Years   3-5 Years   More than 5 Years
                       Year


<S>                     <C>            <C>              <C>         <C>         <C>
Long-Term Debt          N/A            N/A              N/A         N/A         N/A
Obligations

Capital Lease           N/A            N/A              N/A         N/A         N/A
Obligations

Operating Lease         $ 76,332       $ 76,332         $ 0         $ 0         $ 0
Obligations

Purchase Obligations    N/A            N/A              N/A         N/A         N/A

Other Long-Term         N/A            N/A              N/A         N/A         N/A
Liabilities Reflected
on the Registrant's
Balance Sheet under
GAAP
</TABLE>

                                       23
<PAGE>
<TABLE>
<CAPTION>

                                     TABLE 4
                             SELECTED FINANCIAL DATA


                                             For the Year Ended
                                                December 31,                2006 vs. 2005
                           -------------------------------------------------------------------
                                    2006                       2005
                                 $          % of        $          % of          Change
                                           sales                   sales      $         %
                           -------------------------------------------------------------------
<S>                        <C>            <C>       <C>            <C>     <C>             <C>
Sales                      $ 2,300,276       --     $ 3,307,346       --   $(1,007,070)   -30%

Cost of sales                1,575,184     68.5%      2,405,781     72.7%     (830,597)   -35%
                           -------------------------------------------------------------------

Gross Profit                   725,092     31.5%        901,565     27.3%     (176,473)   -20%


Operating expenses           2,356,721   -102.5%        965,996    -29.2%    1,390,725    144%
                           -------------------------------------------------------------------

Income (Loss) from
operations                  (1,631,629)   -71.0%        (64,431)   -1.9%    (1,567,198) -2,432%


Financing expenses            (777,361)   -33.8%             --      --      (777,361)   -100%

Merger transaction
expense                             --       --         (70,373)   -2.1%       70,373     100
Gain on disposal
of assets                       78,332      3.4%             --      --        78,332     100%

Other expense, net of
other income                  (206,108)   -9.0%        (135,874)   -4.1%      (70,234)    -52%
                           -------------------------------------------------------------------
Income (Loss) before
provision
for income taxes and
minority interest           (2,536,766)   -110.3%      (270,678)   -8.2%   (2,266,088)   -837%


Provision for Income
Taxes                           54,251      2.4%          4,528    0..1%       49,723   1,098%
                           -------------------------------------------------------------------


Net Income (Loss) before
Minority Interest           (2,591,017)   -112.6%      (275,206)   -8.3%   (2,315,811)   -841%


Minority Interest              177,487      7.7%         20,479     0.6%      157,008     767%
                           -------------------------------------------------------------------

Net Income (Loss)           (2,413,530)   -104.9%      (254,727)   -7.7%   (2,158,803)   -847%

Other Comprehensive
Income
(Loss) Effect of Foreign
Currency Conversion             55,367      2.4%        (18,874)   -0.6%       74,241     393%
                           -------------------------------------------------------------------

Comprehensive Income
(Loss)                     $(2,358,163)  -102.5%    $  (273,601)   -8.3%   (2,084,562)   -762%
                           -------------------------------------------------------------------

Earnings (Loss) per
share, basic
and diluted                $    (0.10)              $     (0.01)
</TABLE>




                                       24
<PAGE>


ITEM 7.    FINANCIAL STATEMENTS

Our financial statements appear at the end of this report beginning with the
Index to Financial Statements on page F-1 of this report.

ITEM 8.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

There have been no disagreements with auditors for any and all of the fiscal
years hereby presented.

ITEM 8A.   CONTROLS AND PROCEDURES

Management's Report on Assessment of Internal Control Over Financial Reporting

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's reports that
it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.

As of December 2005, the Company carried out an evaluation, with the
participation of management, including its Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the disclosure controls and
procedures pursuant to the Exchange Act Rule 13a-15(b). Based upon this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were not effective as of December
31, 2005 because of the material weaknesses disclosed below in "Management's
Report on Internal Control over Financial Reporting."



                                       25
<PAGE>

In light of these material weaknesses, the Company performs additional analyses
and other pre and post-closing procedures to ensure that our consolidated
financial statements are presented fairly in all material respects in accordance
with generally accepted accounting principles in the United States. These
procedures include monthly business reviews led by our Chief Executive Officer
and monthly operating and financial statement reviews by various levels of our
management team, including our executive officers. Accordingly, management
believes that the consolidated financial statements and schedules included in
this Form 10-KSB fairly present in all material respects our financial position,
results of operations and cash flows for the periods presented.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Exchange Act Rule 13a-15(f). The
Company's internal controls over financial reporting are designed to provide
reasonable assurance concerning the reliability of financial data used in the
preparation of our financial statements. All internal control systems, no matter
how well designed, have inherent limitations and may not prevent or detect
misstatements. Controls considered to be operating effectively in one period may
become inadequate in future periods because of changes in conditions or
deterioration in the degree of compliance with policies or procedures.

Management assessed the effectiveness of the Company's internal control over
financial reporting as of December 31, 2006 using the criteria described in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. As a result of our assessment,
Management has identified one material weakness, as described below, and
therefore has concluded that our internal controls over financial reporting were
not effective as of December 31, 2006.

A material weakness is defined within the Public Company Accounting Oversight
Board's Auditing Standard No. 2 as a control deficiency or combination of
control deficiencies that results in a more than remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.

In the process of its assessment, our management identified the following
material weaknesses in our internal control over financial reporting:

     1.   Accounting and Finance Personnel Weaknesses --The operation of the
          Chinese subsidiaries is in China, hence the presentation of their
          financial statements does not fully comply with the USGAAP. The
          Company had insufficient resources to perform the accounting and
          financial reporting functions and such resources lacked the
          appropriate level of accounting knowledge, experience and training in
          the application of accounting principles generally accepted in the
          United States of America and were inadequately supervised. The lack of
          sufficient and adequately trained accounting and finance personnel
          resulted in an ineffective segregation of duties relative to key
          financial reporting functions.



                                       26
<PAGE>

Since December 2005, the Company has tested the internal control structure and
has identified several controls, including those controls listed above, as
material weaknesses that require further remediation. The Company will continue
the implementation of policies, processes and procedures regarding the review of
complex, non-routine transactions and the hiring of additional accounting
personnel.

Management believes that the controls and procedures will continue to improve as
a result of the further implementation of these measures.

The Company's management has identified the steps necessary to address the
material weaknesses existing as of 2006 described above, as follows:

     1.   Hiring additional accounting and operations personnel and engaging
          outside contractors with technical accounting expertise, as needed,
          and reorganizing the accounting and finance department to ensure that
          accounting personnel with adequate experience, skills and knowledge
          relating to complex, non-routine transactions are directly involved in
          the review and accounting evaluation of our complex, non-routine
          transactions;

     2.   Involving both internal accounting and operations personnel and
          outside contractors with technical accounting expertise, as needed,
          early in the evaluation of a complex, non-routine transaction to
          obtain additional guidance as to the application of generally accepted
          accounting principles to such a proposed transaction;

     3.   Documenting to standards established by senior accounting personnel
          and the principal accounting officer the review, analysis and related
          conclusions with respect to complex, non-routine transactions; and

     4.   Requiring senior accounting personnel and the principal accounting
          officer to review complex, non-routine transactions to evaluate and
          approve the accounting treatment for such transactions.

     5.   Interviewing prospective new Directors for our Board including a
          member who is appropriately credentialed as a financial expert with a
          goal to establish both an Audit and Compensation committee as well as
          sufficient independent Directors.

     6.   Evaluating the internal audit function in relation to the Company's
          financial resources and requirements.

The Securities and Exchange Commission, or the SEC, as required by Section 404
of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company
to include a management report on such company's internal controls over
financial reporting and we are required to be compliant with Section 404 by July
2007. The Company will begin to execute the remediation plans identified above
in the first fiscal quarter of 2006 and will attempt to be compliant with
Section 404 by July 2007.

There was no change in our internal control over financial reporting during the
year ended December 31, 2006 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting,
other than the remediation measures which are described above.

                                       27
<PAGE>

ITEM 8B.   OTHER INFORMATION

None.

                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The following table sets forth the names, ages, and positions of our directors
and officers.

                                     TABLE 4

Directors           Age         Position

Ranny Liang         51          Chairman

Yang Wenquan        44          Chief Executive Officer, Director

Edward Meng         47          Chief Financial Officer, Director

John Chen           35          Director

Lester Schecter     73          Director

Ross Warner         42          Director

John Wong           40          Director



The directors named above will serve until the next annual meeting of our
stockholders or until their successors are duly elected and have qualified.
Directors will be elected for one-year terms at the annual stockholders meeting.
Officers will hold their positions at the pleasure of the board of directors,
absent any employment agreement. There is no arrangement or understanding
between any of our directors or officers and any other person pursuant to which
any director or officer was or is to be selected as a director or officer, and
there is no arrangement, plan or understanding as to whether non-management
stockholders will exercise their voting rights to continue to elect the current
board of directors. There are also no arrangements, agreements or understandings
between non-management stockholders that may directly or indirectly participate
in or influence the management of our affairs.

There are no family relationships among the foregoing directors and executive
officers. None of the directors or executive officers has, during the past five
years: (a) had any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (b) been convicted in a
criminal proceeding or subject to a pending criminal proceeding; (c) been
subject to any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his involvement in any type
of business, securities, futures, commodities or banking activities; and (d)
been found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a Federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.

BIOGRAPHICAL INFORMATION

Ranny Liang, Chairman of Navistar Communications Holdings, Ltd. Ms. Liang was
the original founder of Navistar and is responsible for overall strategy and
Chinese investor relations. She formerly served as the General Manager of The
SinoAmerican Times and the Executive Director of Asian Cultural Enterprises,
Inc. where she is responsible for print and TV media program production. Prior
to this position, Ms. Liang was an Account Executive at the New York Daily Times
and a reporter for The World Journal, a major newspaper and magazine in China.
In addition, Ms. Liang was a teacher of Guangzhou College and at the same time
served as a free lance columnist for several major newspapers and magazines in
China. Ms. Liang holds a Bachelor of Arts in Chinese Literature and Language
from The South China Normal University.

                                       28

<PAGE>


Yang Wenquan has extensive experience in managing media operations in China and
has played an important role in spearheading the company's TV shopping effort.
He is a veteran in the China media industry. Prior to his positions with the
company, Mr. Yang served respectively as the Marketing Manager of Beijing
Industry Development Group and prior to that as the General Manager of Beijing
Yuixing Advertisement Co., Ltd. and as an official in the Beijing Municipal
Government Foreign Affairs Service. Mr. Yang majored in law at the Central
Communist Party School. He has produced many TV series, TV programs and movies,
such as the 30 episode Fenglin Pavilion, the movie The Person Loving Me is Gone
and a daily TV show At Your Service. Mr.Yang brings with him extensive
experience in dealing with media and content in China and insight on management
and operation control.

Edward Meng has more than 10 years of experience managing, leading and advising
corporations through complex restructurings, international market expansion and
capital markets transactions. He has a strong track record in leadership for
improved financial performance, heightened productivities, and enhanced
compliance assurance. He is currently a senior financial consultant to Shell
(China) Limited. He was the chief financial officer of Koch Materials (China)
Co., a subsidiary of Koch Industries, Inc. prior to its acquisition by Royal
Dutch Shell. Before Koch Materials (China) Co., Mr. Meng served 6 years as the
director of finance at Intelsat Global Service Co. Mr. Meng obtained his MNA
from Georgetown University and B.A. from Sichuan International Studies
University. Mr. Meng brings with his extensive financial and operation
experience and expertise to the company.

John Wong an accountant by profession with more than 16 years of experience in
auditing and corporate finance work. Mr. Wong is currently the Director of TMF
China. He currently serves as non-executive director on the board of directors
of the following companies: Golden Resources Development International Limited
and Ecogreen Fine Chemicals Group Limited both listed on the Hong Kong Stock
Exchange, CDW Holdings listed on the Singapore Stock Exchange and General Steel
Holdings Inc listed on OTC Bulletin Board in the U.S. He prior to the positions
listed above, Mr. Wong served as director for Deloitte Touche Corporate Finance
based in Shanghai, being one of the founding members of Deloitte Touche
corporate finance office in Shanghai. Mr. Wong graduated from the University of
Melbourne with a B.A. of Commerce. He is a fellow member of the Australian
Society of Certified Public Accountants and the Hong Kong Institute of Certified
Public Accountants. He also obtained a PRC Certificate of Independent
Directorship in 2002. Mr. Wong is expected to serve on the audit committee.

Lester Schecter, director. Mr. Schecter is president of LS Public Relations, a
New York based public relations agency that specializes in the entertainment
industry. Mr. Schecter has created and executed public relations campaigns on
behalf of many Broadway and Off Broadway productions, television series and
specials. He has publicized more than 30 Broadway, and Off Broadway productions
including Irene, starring Debbie Reynolds; Athol Fugard's Sizwe Banzi Is Dead
and The Island; and Oh! Calcutta!. Mr. Schecter has won two special Emmy Awards
for his contributions in helping to produce and market national primetime Emmy
Awards telecasts and has introduced and publicized many classic public
television series, including Live From Lincoln Center (ten years), Nature (ten
years) and American Playhouse (14 years). He has also supervised the marketing
for a number of public television children's series, among them "The Adventures
of Dudley, the Dragon" and "The Hug-A-Bug Club." Mr. Schecter holds a Bachelor
of Science in Mechanical Engineering from City College of New York and has been
a guest lecturer on theatrical marketing and publicity at New York University.

John Chen currently serves as the chief financial officer of General Steel
Holdings, Inc. Prior to his current position, he was a senior accountant at
Moore Stephens Wurth Frazer & Torbet, LLP. Mr. Chen obtained his Bachelor of
Science, Business Administration in Accounting from California State Polytechnic
University and is a member of California State Certified Public Accountants,
American Institute of Certified Public Accountants and California Society of
Accountants. Mr. Chen is expected to serve on the audit committee.

Ross Warner has over 13 years management, training and consulting experience
with international companies. He has served on various positions for Our Chinese
Daughters Foundation, EF English First as the country manager for China,
business manager at TTI China and Infotechnology Group, Inc. He currently serves
on the board of General Steel Holdings, Inc. Mr. Warner obtained a Master of
International Management from American Graduate School of International
Management at Thunderbird and Bachelor of Business Administration from Pacific
Lutheran University & University of Copenhagen, Denmark.

BOARD OF DIRECTORS

The Company's Board of Directors is comprised of Ranny Liang, Yang Wenquan,
Edward Meng, Ross Warner, John Chen, John Wong and Lester Schecter. The Board of
Directors will meet approximately four times annually and on an as needed basis.
Outside Directors will be compensated $15,000 annually, plus a one-time stock
grant of 30,000 common shares. The Board of Directors does not currently have a
specifically-designated audit committee. Issues related to the audit are
administered by the two outside Directors at the moment.

                                       29
<PAGE>

MANAGEMENT INCENTIVE STOCK OWNERSHIP PLAN

Management is currently deriving an incentive stock ownership program to give
incentive to management and employees.

RELATED PARTY TRANSACTIONS

On March 11, 2006, the Company entered into an agreement with the shareholders
of Beijing Broadcasting and Television Media Co., Ltd. ("Beijing Media") to
acquire a 70% ownership interest and operational control of Beijing Media.
Pursuant to the Agreement, the Company agreed to issue 2,400,000 shares of its
common stock valued at $1.00 per share to the existing shareholders of Beijing
Media, of which 900,000 shares were to be returned and cancelled if certain
condition were not met. In June 2006, the Company waived the requirement to meet
the conditions.

On July 9, 2006, the Company entered into a definitive agreement to acquire a
70% ownership interest in Beijing Lucky Star Century Advertisement Co. Ltd.
("Lucky Star"). The purchase price is 2,800,000 shares of the Company's common
stock.

As of December 28, 2006, the Company entered into an agreement with the minority
shareholders of Happy Times Media Inc. ("HTM") to transfer its interest in HTM.
Pursuant to the agreement all consideration paid to the shareholders of HTM
consisting of 600,000 shares of the Company's common stock will be returned to
the Company. The Company will have no other obligations to HTM or its current
shareholders. Simultaneously the Company's 70% ownership interest in HTM will be
returned to HTM's shareholders or their designated party. As a result, HTM will
cease to be a subsidiary of the Company and the Company will no longer be the
primary beneficiary of BHYIA business operation after the restructuring the
operations of HTM.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires our directors and executive officers, and persons who beneficially own
more than ten percent of a registered class of our equity securities, to file
with the Securities and Exchange Commission (the "Commission") initial reports
of beneficial ownership and reports of changes in beneficial ownership of our
Common Stock. The rules promulgated by the Commission under Section 16(a) of the
Exchange Act require those persons to furnish us with copies of all reports
filed with the Commission pursuant to Section 16(a). The information in this
section is based solely upon a review of Forms 3, Forms 4, and Forms 5 received
by us. Our Chief Executive Officer Don Lee was not able to timely file his Form
5. In addition, the following persons were not able to file their Form 3 within
10 days after he/she was elected an officer or director of the Company or became
a more than 10% shareholder of the Company: Ranny Liang, Lester Schecter and
Jeffrey Spear.

The following table sets forth information regarding the beneficial ownership of
Navstar Media Holdings, Inc. as of December 31, 2005 and is adjusted to reflect:
o each person or entity known to be the beneficial owner of more than 5% of the
outstanding shares of common stock; o each of its officers and directors; and o
all of its officers and directors as a group.

Unless otherwise indicated, all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially owned
by them.

                                       30
<PAGE>

                                     TABLE 5
                             PRINCIPAL STOCKHOLDERS

PRINCIPAL STOCKHOLDERS

     The following table sets forth information regarding the beneficial
ownership of Navstar Media Holdings, Inc. as of March 31, 2007 by: (i) each
person or entity known to be the beneficial owner of more than 5% of the
outstanding shares of common stock; (ii) each of its officers and directors; and
(iii) all of its officers and directors as a group.

     Unless otherwise indicated, all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially
owned by them.

<TABLE>
<CAPTION>


Name and Address of       Title        Amount and Nature of    Approximate Percentage of
Beneficial Owner                       Beneficial Ownership    Outstanding Common Stock
                                                               Before Offering
------------------------- ------------ ----------------------- ----------------------------
<S>                                    <C>                     <C>
Whalehaven Capital Fund   N/A          2,040,000               7.1%
Limited (1)
------------------------- ------------ ----------------------- ----------------------------
Forum Global              N/A          2,040,000               7.1%
Opportunities Master
Fund, L.P. (2)
------------------------- ------------ ----------------------- ----------------------------
Ranny Liang               Chairman     2,168,300               8%
------------------------- ------------ ----------------------- ----------------------------
Yang Wenquan              CEO,         3,952,000 (3)           14.6%
                          Director
------------------------- ------------ ----------------------- ----------------------------
Edward Meng               CFO,         0                       0%
                          Director
------------------------- ------------ ----------------------- ----------------------------
Lester Schecter           Director     90,000                  *
------------------------- ------------ ----------------------- ----------------------------
John Chen                 Director     0                       0%
------------------------- ------------ ----------------------- ----------------------------
Ross Warner               Director     0                       0%
------------------------- ------------ ----------------------- ----------------------------
John Wong                 Director     0                       0%
------------------------- ------------ ----------------------- ----------------------------
All directors and         N/A          6,210,300               23.0%
executive officers as a
group (7 individuals)
------------------------- ------------ ----------------------- ----------------------------
</TABLE>

*    Less than 1%

(1)  The address of Whalehaven Capital Fund Limited is : Attn: Edena Soper,
     Research Capital, Suite 564, 1055 Dunsmuir St., Vancouver, BC V7X 1L4.
(2)  The address of Forum Global Opportunities Master Fund, L.P. is c/o LW Asset
     Management, 551 Fifth Avenue, Suite 1923, New York, NY 10176.
(3)  Mr. Yang holds persuasion influence over the voting 5,600,000 shares. His
     wife and daughter own collectively 3,952,000 shares.




                                       31
<PAGE>


CODE OF BUSINESS ETHICS AND CONDUCT

Pursuant to the requirements of Section 406 of the Sarbanes-Oxley Act of 2002
and related SEC rules, we have adopted a Code of Business Ethics and Conduct, or
Code of Ethics. Our Code of Ethics has been filed herewith as Exhibit 14.

Our Code of Ethics contains written standards designed to deter wrongdoing and
to promote:

     o    honest and ethical conduct, including the ethical handling of actual
          or apparent conflicts of interest between personal and professional
          relationships;
     o    full, fair, accurate, timely, and understandable disclosure in reports
          and documents filed with the SEC and in other public announcements;
     o    compliance with applicable governmental laws, rules and regulations;
     o    the prompt internal reporting of violations of our Code of Ethics to
          an appropriate person or persons identified in our Code of Ethics; and
     o    accountability for adherence to our Code of Ethics.

ITEM 10.   EXECUTIVE COMPENSATION

The following executive compensation disclosure reflects all compensation
awarded to, earned by or paid to the executive officers below, for the fiscal
years ended December 31, 2006, 2005, and 2004. None of our executive officers
received compensation in excess of $100,000 for the fiscal years 2006, 2005 or
2004, respectively. The following table summarizes all compensation received by
our Chief Executive Officer(s) and Chief Financial Officer for the fiscal years
2006, 2005 and 2004.

                                       32
<PAGE>

                                     TABLE 6
                             EXECUTIVE COMPENSATION

Executive Compensation

         The following table sets forth certain information concerning the
compensation paid to our chief executive officer and our four other most highly
compensated executive officers and our independent director during the periods
described below:
<TABLE>
<CAPTION>

--------------------- ------------------------------------------------- ------------------------- -----------------
      NAME AND                      ANNUAL COMPENSATION                  LONG TERM COMPENSATION         All
 PRINCIPAL POSITION                                                                                    OTHER
                                                                                                    COMPENSATION
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       YEAR    SALARY($)   BONUS($)        OTHER           AWARDS       PAYOUTS
                                                           ANNUAL
                                                        COMPENSATION
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                                                                         SECURITIES
                                                                         UNDERLYING
                                                                         OPTIONS(#)
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
<S>                             <C>            <C>     <C>                    <C>          <C>           <C>
    Yang Wenquan                60,000         0       250,000 shares         0            0             0
                                                            (1)
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       2004                    0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       2005                    0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
    Edward Meng        2003        0           0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       2004                    0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       2005                    0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
  Lester Schecter      2003        0           0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       2004                    0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
                       2005                    0             0                0            0             0
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
   Jeffrey Spear       2003        0           0       20,000 shares          0            0             0
                                                            (1)
--------------------- ------- ------------ ---------- ----------------- -------------- ---------- -----------------
</TABLE>


(1) Paid quarterly.

OPTIONS/SAR GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 2005

We did not grant any options/stock appreciation rights during the fiscal year
ended December 31, 2005.

COMPENSATION OF DIRECTORS

Effective January 1, 2007, Directors receive compensation of $15,000 per year
and a one-time grant of common stock in the amount of 30,000 shares.

EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

We currently have employment agreements with our executive officers, but not
compensatory plans or arrangements resulting from the resignation, retirement or
any other termination of any of our executive officers, from a
change-in-control, or from a change in any executive officer's responsibilities
following a change-in-control.


                                       33
<PAGE>
ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
           SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The Company has not established an equity compensation plan and, as such, has
yet to authorize any shares for issuance under such a plan.

BENEFICIAL OWNERSHIP

Reference is made to TABLE 5 above where beneficial ownership of shares is
disclosed. That table sets forth certain information regarding beneficial
ownership of our common stock as of March 15, 2006, determined in accordance
with Rule 13d-3 and 13d-5 of the Exchange Act by (i) each person who is known by
us to own beneficially more than five percent (5%) of the outstanding shares of
our voting securities, (ii) each of our directors and officers, and (iii) all of
our directors and executive officers as a group. Unless otherwise indicated on
said table, to our knowledge, all persons listed therein have sole voting and
investing power with respect to their shares of common stock, except to the
extent authority is shared by spouses under applicable community property laws.

ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


ITEM 13.   EXHIBITS

The following documents are filed as part of this report:

(1)  Financial Statements -- See Index to Consolidated Financial Statements on
     page F-1 of this report.

(2)  Exhibits -- See Index to Exhibits.

Exhibit   Description
Number

3.1       Certificate of Incorporation (1)
3.2       Bylaws
14        Code of Business Ethics (2)
21.1      Subsidiaries of Registrant (2)
31.1      Certification of Chief Executive Officer Pursuant to 302 of the
          Sarbanes-Oxley Act of 2002 (3)
31.2      Certification of Chief Financial Officer Pursuant to 302 of the
          Sarbanes-Oxley Act of 2002 (3)
32.1      Certification of Chief Executive Officer Pursuant to 906 of the
          Sarbanes-Oxley Act of 2002 (3)
32.2      Certification of Chief Financial Officer Pursuant to 906 of the
          Sarbanes-Oxley Act of 2002 (3)






                                       34
<PAGE>


ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES

The aggregate fees billed for each of Fiscal Year 2005 and Fiscal Year 2006 for
professional services rendered by our principal accountants for the audit of our
annual financial statements, review of financial statements included in our Form
10-QSBs and other services provided by the accountant in connection with
statutory and regulatory filings are as follows:

Fiscal Year 2005: $90,000
Fiscal Year 2006: $210,000

AUDIT RELATED FEES

The aggregate fees billed for each of Fiscal Year 2005 and Fiscal Year 2006 for
assurance and related services by our principal accountant that are reasonably
related to the performance of the audit or review of our financials statements
are as follows:

Fiscal Year 2005: $ -0-
Fiscal Year 2006: $ -0-

TAX FEES

The aggregate fees billed for each of Fiscal Year 2005 and Fiscal Year 2006 for
professional services rendered by our principal accountants for tax compliance,
tax advice and tax planning are as follows:

Fiscal Year 2005: $5,000;
Fiscal Year 2006: $5,000;

                            ALL OTHER ACCOUNTANT FEES

The aggregate fees billed for each of Fiscal Year 2005 and Fiscal Year 2006 for
other professional services rendered by our principal accountants are as
follows:

Fiscal Year 2005: $0;
Fiscal Year 2006: $0.



                            [SIGNATURES PAGE FOLLOWS]




                                       35
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             NAVSTAR MEDIA HOLDINGS, INC.
                                             (Registrant)

Date: April 1, 2007                          By: /s/ Yang Wenquan
                                                 ----------------
                                                  Yang Wenquan
                                                  Chief Executive Officer



Date: April 1, 2007                          By: /s/ Edward Meng
                                                 ---------------
                                                  Edward Meng
                                                  Chief Financial Officer

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

Name                       Title                                  Date


/s/ Yang Wenquan           Chief Executive Officer / Director     April 1, 2007
----------------
Yang Wenquan

/s/ Edward Meng            Chief Financial Officer /Director      April 1, 2007
---------------
Edward Meng

/s/ Lester Schecter        Director                               April 1, 2007
-------------------
Lester Schecter

/s/ Ranny Liang            Chairman / Director                    April 1, 2007
---------------
Ranny Liang

/s/ Ross Warner            Director                               April 1, 2007
---------------
Ross Warner

/s/ John Chen              Director                               April 1, 2007
-------------
John Chen

/s/ John Wong              Director                               April 1, 2007
-------------
John Wong







                                       36


<PAGE>

                                  EXHIBIT INDEX

Exhibit   Description
Number

3.1       Certificate of Incorporation (1)
3.2       Bylaws
14        Code of Business Ethics (2)
21.1      Subsidiaries of Registrant (2)
31.1      Certification of Chief Executive Officer Pursuant to 302 of the
          Sarbanes-Oxley Act of 2002 (3)
31.2      Certification of Chief Financial Officer Pursuant to 302 of the
          Sarbanes-Oxley Act of 2002 (3)
32.1      Certification of Chief Executive Officer Pursuant to 906 of the
          Sarbanes-Oxley Act of 2002 (3)
32.2      Certification of Chief Financial Officer Pursuant to 906 of the
          Sarbanes-Oxley Act of 2002 (3)


                                       37




<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES
               (Formerly known as Premier Document Services, Inc.)

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page

Report of Independent Registered Public Accounting Firm                     F-2

Consolidated Balance Sheets                                                 F-3

Consolidated Statements of Operations and Other Comprehensive Income (Loss) F-4

Consolidated Statement of Stockholders' Equity                              F-5

Consolidated Statements of Cash Flows                                       F-6

Footnotes                                                                   F-7

                                       F-1





<PAGE>




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of
Navstar Media Holdings, Inc. and subsidiaries


We have audited the accompanying consolidated balance sheet of Navstar Media
Holdings, Inc. and subsidiaries as of December 31, 2006 and the related
consolidated statements of operations and other comprehensive loss,
stockholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Navstar Media
Holdings, Inc. and subsidiaries as of December 31, 2006, and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 2006 in conformity with accounting principles generally accepted in
the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, as discussed in Note 16 to the
consolidated financial statements. Management's plans regarding those matters
are also described in Note 16. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.





/s/ Moore Stephens Wurth Frazer and Torbet, LLP
-----------------------------------------------

Walnut, California
March 28, 2007



                                      F-2

<PAGE>
<TABLE>
<CAPTION>


                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                             AS OF DECEMBER 31, 2006

                                     ASSETS
                                                                                  2006
                                                                              -----------
CURRENT ASSETS:
<S>                                                                           <C>
    Cash                                                                      $   743,565
    Accounts receivable, net of allowance for doubtful accounts of $253,290       393,127
    Accounts receivable - related party                                           260,922
    Inventories-production costs                                                      414
    Other receivables                                                             115,569
    Other receivables - related parties                                           405,249
    Prepaid expenses                                                              506,808
                                                                              -----------
       Total current assets                                                     2,425,654

EQUIPMENT, net                                                                  1,414,465

GOODWILL                                                                          641,417
                                                                              -----------

          Total assets                                                        $ 4,481,536
                                                                              ===========

                 LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable and accrued expenses                                     $   609,085
    Other payables                                                                 67,564
    Other payables - related party                                                 36,684
    Taxes payable                                                                 574,513
    Deferred revenue                                                              520,721
    Convertible debentures payable, net of discount                               718,921
                                                                              -----------
       Total current liabilities                                                2,527,488
                                                                              -----------

COMMITMENTS AND CONTINGENCIES                                                          --
                                                                              -----------

MINORITY INTEREST                                                                 644,040
                                                                              -----------

SHAREHOLDERS' EQUITY:
    Common Stock, $.001 par value, 60,000,000 shares authorized,
       26,980,609 issued and outstanding                                           26,980
    Paid-in-capital                                                             3,958,947
    Accumulated deficit                                                        (2,787,497)
    Statutory reserves                                                             75,085
    Accumulated other comprehensive income                                         36,493
                                                                              -----------
       Total shareholders' equity                                               1,310,008
                                                                              -----------

          Total liabilities and shareholders' equity                          $ 4,481,536
                                                                              ===========
</TABLE>


See report of independent registered public accounting firm
The accompanying notes are an integral part of this statement.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

       CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005



                                                           2006            2005
                                                       ------------    ------------
<S>                                                    <C>             <C>
REVENUES                                               $  2,300,276    $  3,307,346

COST OF REVENUES                                          1,575,184       2,405,781
                                                       ------------    ------------

GROSS PROFIT                                                725,092         901,565

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES             2,356,721         965,996
                                                       ------------    ------------

LOSS FROM OPERATIONS                                     (1,631,629)        (64,431)

OTHER EXPENSE (INCOME), NET
     Financing expenses                                     777,361              --
     Merger transaction expense                                  --          70,373
     Other expense, net of (income)                         206,108         135,874
     Gain on disposal of assets                             (78,332)             --
                                                       ------------    ------------
          Total other expense (income), net                 905,137         206,247
                                                       ------------    ------------

LOSS BEFORE PROVISION FOR INCOME TAXES
     AND MINORITY INTEREST                             $ (2,536,766)   $   (270,678)

PROVISION FOR INCOME TAXES                                   54,251           4,528
                                                       ------------    ------------

NET LOSS BEFORE MINORITY INTEREST                      $ (2,591,017)   $   (275,206)

LESS MINORITY INTEREST                                     (177,487)        (20,479)
                                                       ------------    ------------

NET LOSS                                               $ (2,413,530)   $   (254,727)

OTHER COMPREHENSIVE INCOME (LOSS):
    Foreign currency translation adjustment                  55,367         (18,874)
                                                       ------------    ------------

COMPREHENSIVE INCOME (LOSS)                            $ (2,358,163)   $   (273,601)
                                                       ============    ============

LOSS PER SHARE, BASIC AND DILUTED                      $      (0.10)   $      (0.01)
                                                       ============    ============

WEIGHTED AVERAGE NUMBER OF SHARES, BASIC AND DILUTED     23,940,428      21,220,009
                                                       ============    ============
</TABLE>


See report of independent registered public accounting firm
The accompanying notes are an integral part of this statement.

                                      F-4

<PAGE>
<TABLE>
<CAPTION>


                                   NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                  FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005



                                                                                                                 Accumu-
                                                                                                                  lated
                                              Common stock                   Retained earnings                    other
                                          --------------------             ----------------------                compreh-
                                                                                                                  ensive
                                             Number              Paid-in   Statutory               Subscriptions  income
                                           of shares  Par value  capital   reserves   Unrestricted receivable     (loss)      Total
                                          ----------  --------- ---------  ---------  ------------ -----------   --------  ---------
<S>                                       <C>         <C>       <C>        <C>        <C>          <C>           <C>       <C>
BALANCE, December 31, 2004                21,220,009  $ 21,220  $ 369,420  $    --    $   153,751  $ (200,000)   $     --  $ 344,391

 Adjustment to statutory reserve                                             30,250       (30,250)                                --
 Sales of rights to purchase common stock                         207,500                                                    207,500
 Subscription receivable received                                                                     200,000                200,000
 Net loss                                                                                (254,727)                         (254,727)
 Business combination adjustment                                   67,040                                                     67,040
 Foreign currency translation loss                                                                                (18,874)  (18,874)
                                          ----------  --------- ---------  ---------  ------------ -----------   --------  ---------
BALANCE, December 31, 2005                21,220,009  $ 21,220  $ 643,960  $ 30,250   $  (131,226) $       --    $(18,874) $ 545,330

 Issued in connection with subordinated
 debenture offering:
   Common shares issued to placement agent   220,000       220     65,780                                                     66,000
   Common shares issued to notes holders     200,000       200     59,800                                                     60,000
   Common stock purchase warrants issued
    to placement agent                                             12,000                                                     12,000
   Common stock purchase warrants issued
    to notes holders                                              530,893                                                    530,893
   Common shares issued to notes holders
    for debenture interest                   145,600       145     29,189                                                     29,334
   Transfer of existing shares from
    management to notes holders                                   132,000                                                    132,000
 Beneficial conversion feature of
  debenture note                                                  380,720                                                    380,720
 Shares issued for services                   15,000        15      4,485                                                      4,500
 Issuance of common stock to Beijing
  Broadcasting and
   Television Media Co., Ltd shareholders  2,400,000     2,400  1,402,900    18,722       (18,722)                         1,405,300
 Issuance of common stock to Beijing
  Lucky Star Advertisement
   Century Co., Ltd. shareholders          2,800,000     2,800    697,200    56,363       (56,363)                           700,000
 Effect of Beijing Hui Ying International
   equity did not get consolidated due to
   restructuring of Happy Time Media Inc.                                   (30,250)     (167,656)                         (197,906)
 Net loss                                                                              (2,413,530)                       (2,413,530)
 Shares cancelled                            (20,000)      (20)        20                                                        --
 Foreign currency translation gain                                                                                 55,367     55,367
                                          ----------  --------- ---------  ---------  -----------  ----------    --------  ---------
BALANCE, December 31, 2006                26,980,609  $ 26,980 $3,958,947  $ 75,085   $(2,787,497) $       --    $ 36,493 $1,310,008
                                          ==========  ======== ==========  =========  ===========  ==========    ======== ==========
</TABLE>


See report of independent registered public accounting firm
The accompanying notes are an integral part of this statement.


                                      F-5


<PAGE>



<TABLE>
<CAPTION>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005


                                                                 2006           2005
                                                             -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                          <C>            <C>
 Net loss                                                    $(2,413,530)   $  (254,727)
 Adjustment to reconcile net income (loss)
 to cash provided by (used in) operating activities:
    Minority interest                                           (177,487)       (20,479)
    Depreciation                                                 214,182         80,151
    Amortization                                                 476,816        280,043
    Write off on intangible assets                               639,278             --
    Loss on long term investment                                      --        146,640
    Gain on disposal of assets                                   (78,332)            --
    Allowance for bad debt                                       117,187             --
    Shares issued for services                                     4,500             --
    Shares issued for interest                                    29,334             --
    Amortization of discount on convertible debentures           490,534             --
    Amortization of convertible debenture origination cost       311,000             --
  (Increase) decrease in assets:
    Accounts receivable                                          537,412       (798,625)
    Inventories-production cost                                     (205)         6,044
    Other receivables                                             55,773         (4,967)
    Other receivables - related parties                         (203,631)        45,017
    Deferred expenses                                                 --        (25,000)
    Prepaid expense                                             (458,281)         9,469
    Other assets                                                      --         36,360
  Increase (decrease) in liabilities:
    Accounts payable and accrued expenses                        251,332        765,109
    Other payables                                                22,356         13,874
    Other payables - related party                              (144,193)            --
    Dividend payable                                                  --        (10,000)
    Taxes payable                                                106,337         95,002
    Deferred revenue                                             261,440         71,172
                                                             -----------    -----------
      Net cash provided by operating activities                   41,822        435,083
                                                             -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of equipment                                          (249,188)       (24,273)
 Purcahse of licensed programming                               (519,698)      (921,297)
 Proceeds from long-term investment                                   --         49,400
 Cash acquired from Beijing Broadcasting and Television
  Media Co., Ltd acquisition                                     201,329             --
 Cash acquired from Beijing Lucky Star Advertisement
  Century Co., Ltd acquisition                                    46,961             --
                                                             -----------    -----------
      Net cash used in investing activities                     (520,596)      (896,170)
                                                             -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from convertible debentures                          1,000,000             --
 Proceeds from sale of rights to purchase common stock                --        207,500
 Proceeds from stock subscriptions                                    --        200,000
                                                             -----------    -----------
      Net cash provided by financing activities                1,000,000        407,500
                                                             -----------    -----------

EFFECTS OF EXCHANGE RATE ON CASH                                  26,761          9,934
                                                             -----------    -----------

INCREASE (DECREASE) IN CASH                                      547,987        (43,653)

CASH, beginning of year                                          195,578        239,231
                                                             -----------    -----------

CASH, end of year                                            $   743,565    $   195,578
                                                             ===========    ===========
</TABLE>


See report of independent registered public accounting firm
The accompanying notes are an integral part of this statement.



                                      F-6

<PAGE>




                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006



Note 1 -- ORGANIZATION AND NATURE OF OPERATIONS

Nature of operations
--------------------
Navstar Media Holdings, Inc. ("Navstar" or the "Company") is a United States
based corporation that owns majority interests in companies specializing in
media content production and distribution in the People's Republic of China
("PRC"). Navstar subsidiaries generate revenues through producing television
series and movies for the PRC market and through advertising revenues generated
from the broadcast and distribution of such programs and movies, and other media
and broadcasting production and management services.

Organization
------------
Navistar Communications Holdings, Ltd, a Hong Kong Corporation, ("NCHL") was
originally established as a holding company for equity ownership investments in
mainland China media companies. During 2004, NCHL acquired a 55% equity
ownership interest in Happy Times Media, Inc. ("HTM"). During 2005, NCHL
increased its ownership interest in HTM to 70%. Based in Beijing, HTM since 1998
has produced content for government-owned television stations in China, while
acting as a distributor of television series and movies for the Chinese market.

Navstar Media Holdings, Inc. was incorporated on January 28, 2002 as Premier
Document Services, Inc. (OTCBB: PDSV), a Nevada corporation, which provided
document preparation and signatory services to mortgage, real estate and other
financial services firms in the Las Vegas, Nevada market. On November 30, 2005,
the Company acquired 100% of the capital stock of NCHL. In conjunction with the
merger, Premier's former Secretary and President, Crystal Kim Han, purchased
PDSV's existing document services business, including all assets and
liabilities. Prior to the merger, no director, officer or affiliate of the
Company had any material relationship with any director, officer or affiliate of
NCHL. Upon completion of the merger, the officers and directors of Premier
resigned and were replaced by the Company's current management team and board of
directors.

Under the terms of the Agreement, NCHL is a 100% owned subsidiary of the
Company. The transaction is a "tax-free" reorganization pursuant to the
provisions of Section 351 and 368(a) (1) (A) of the Internal Revenue Code of
1986, as amended. The original stockholders of NCHL, as of the closing date of
the merger own approximately 90% of the Company's common stock.

The accounting for these transactions is identical to that resulting from a
reverse-acquisition, except that no goodwill or other intangible asset is
recorded. Accordingly, the financial statements of NCHL are the historical
financial statements of HTM.


See report of independent registered public accounting firm

                                      F-7

<PAGE>



                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006



HTM generates revenue from sales and distribution of its proprietary content,
third party programming, and imported TV and film productions in China.

In addition, HTM distributes European content from providers such as TVE (UK)
and Strawberry Films from France, as well as American content from providers
including Miramax. HTM's customers include approximately 300 Provincial and
local TV stations throughout China, China Central TV ("CCTV") stations.
Additionally, HTM has developed advertising relationships with various Chinese
and foreign companies.

In January 2005, HTM contributed a total of RMB 500,000 for the investment in
Beijing Hui Ying International Advertising Co. Ltd. ("BHYIA"). BHYIA is
considered a variable interest entity under FASB Interpretation No. 46(R),
"Consolidation of Variable Interest Entities", which requires consolidation of
business enterprises of variable interest entities meeting certain
characteristics. HTM is the primary beneficiary of BHYIA business operations and
qualifies to be consolidated under FIN 46(R).

BHYIA was established on December 15, 2004, in Beijing, People's Republic of
China by four Chinese citizens (the "Registered Shareholders") as a Chinese
limited liability company. The duration of the operation is 20 years. BHYIA
generates revenue from sales and distribution of advertisements produced by
others and sales of advertising designs and products. BHYIA is also a sales
agent for advertisements to be broadcast on various television stations in the
People's Republic of China.

To comply with China laws and regulations that prohibits or restricts foreign
ownership of companies that provide advertising services, HTM established BHYIA
which is legally owned by the registered shareholders. Mr. Yang Xiao Bin and Mr.
Kang Sui Jin are the legal registered shareholders of HTM. Mr. Liu Zhu Jiu and
Mr. Shi Rian are the local Chinese citizens. Mr. Liu Zhu Jiu is the company's
legal representative. The arrangements with the registered shareholders have
been undertaken solely to satisfy China regulations, which prohibits foreign
companies from owning or operating advertising businesses in China.

As of December 28, 2006, the Company entered into an agreement with the minority
shareholders of Happy Times Media Inc. ("HTM") to divest itself of HTM. Pursuant
to the agreement all consideration paid to the shareholders of HTM consisting of
600,000 shares of the Company's common stock will be returned to the Company.
The Company will have no other obligations to HTM or its current shareholders.
Simultaneously the Company's 70% ownership interest in HTM will be returned to
HTM's shareholders or their designated party. As a result, HTM will cease to be
a subsidiary of the Company and the Company will no longer be the primary
beneficiary of BHYIA business operation after the restructuring of HTM. See Note
13 for further discussion of the restructuring.

See report of independent registered public accounting firm

                                      F-8

<PAGE>


                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


Note 2 -- SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
---------------------
The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America. The consolidated
financial statements reflect activities of the Company and the following
subsidiaries:


Company name                                Place of incorporation   Ownership
------------------------------------------------------------------------------
Navistar Communications Holdings, Ltd.      Hong Kong                100%

Beijing Broadcasting and Television
Media Co., Ltd.                             The People's Republic
                                            of China                  70%

Beijng Lucky Star Century
Advertisement Co. Ltd.                      The People's Republic
                                            of China                  70%


All material inter-company transactions and balances are eliminated in
consolidation.

Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results, when ultimately realized could
differ from those estimates.

Fair Value of Financial Instruments
-----------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments," requires certain disclosures regarding the fair
value of financial instruments. Accounts receivable, accounts payable, accrued
liabilities and convertible debentures payable are reflected in the financial
statements at fair value because of the short-term maturity of the instruments.

Political and Economic Risk
---------------------------
The Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, and by the general state
of the PRC's economy.



See report of independent registered public accounting firm

                                      F-9

<PAGE>



                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

The Company's operations in the PRC are subject to specific considerations and
significant risks not typically associated with companies in the North America
and Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The
Company's results may be adversely affected by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation, among other
things.

Income Taxes
------------
The Company has adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109). SFAS 109 requires the recognition of
deferred income tax liabilities and assets for the expected future tax
consequences of temporary differences between income tax basis and financial
reporting basis of assets and liabilities. Provision for income taxes consist of
taxes currently due plus deferred taxes. There are no deferred taxes at December
31, 2006 and December 31, 2005.

The charge for taxation is based on the results for the year as adjusted for
items, which are non-assessable or disallowed. It is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of assessable tax profit. In
principle, deferred tax liabilities are recognized for all taxable temporary
differences, and deferred tax assets are recognized to the extent that it is
probably that taxable profit will be available against which deductible
temporary differences can be utilized.

Deferred tax is calculated using tax rates that are expected to apply to the
period when the asset is realized or the liability is settles. Deferred tax is
charged or credited in the income statement, except when it is related to items
credited or charged directly to equity, in which case the deferred tax is also
dealt with in equity.

Deferred tax assets and liabilities are offset when they related to income taxes
levied by the same taxation authority and the Company intends to settle its
current tax assets and liabilities on a net basis.

Equipment
---------
Equipment is carried at cost less accumulated depreciation. The costs of repairs
and maintenance are expensed as incurred; major replacements and improvements
are capitalized. When assets are retired or disposed of, the cost and
accumulated depreciation are removed from the accounts, and any resulting gains
or losses are included in the income statement in the year of disposition.


See report of independent registered public accounting firm

                                      F-10


<PAGE>



                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

Depreciation is calculated on a straight-line basis over the estimated useful
life of the assets. Estimated useful lives of the assets are as follows:

                                                              Estimated
                                                             Useful life
                                                         --------------------
Leasehold improvements                                         5 years
Machinery and equipment                                      5 -10 years
Furniture and Office equipment                                 5 years


Impairment of Long Lived Assets
-------------------------------
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of", a long-lived assets and certain identifiable intangible assets
held and used by the Company are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. For the purposes of evaluating the recoverability of long-lived
assets, the recoverability test is performed using undiscounted net cash flows
related to the long-lived assets. The Company has determined the carrying values
at December 31, 2006 are not impaired.

Foreign Currency Translation
----------------------------
The reporting currency of the Company is the US dollar. The Company uses their
local currency, Renminbi (RMB), as their functional currency. Results of
operations and cash flow are translated at average exchange rates during the
period, and assets and liabilities are translated at the unified exchange rate
as quoted by the People's Bank of China at the end of each reporting period.
Equity accounts are translated at their historical rate. This quotation of the
exchange rates does not imply free convertibility of RMB to other foreign
currencies.

All foreign exchange transactions continue to take place either through the
People's Bank of China or other banks authorized to buy and sell foreign
currencies at the exchange rate quoted by the People's Bank of China. Approval
of foreign currency payments by the Bank of China or other institutions requires
submitting a payment application form together with invoices, shipping documents
and signed contracts.

Translation adjustments amounted to $36,493 and ($18,874) as of December 31,
2006 and December 31, 2005, respectively. The balance sheet amounts with the
exception of equity at December 31, 2006 were translated at 7.80 RMB to $1.00
USD as compared to 8.06 RMB at December 31, 2005. The average translation rates
applied to income statement accounts for the years ended December 31, 2006 and
2005 were 7.96 RMB and 8.18 RMB, respectively.

See report of independent registered public accounting firm

                                      F-11
<PAGE>


                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


Transaction gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency are
included in the results of operations as incurred. These amounts are not
material to the consolidated financial statements.

Cash and Concentration of Risk
------------------------------
Cash includes cash on hand and demand deposits in accounts maintained with
state-owned banks within the People's Republic of China. Total cash in these
banks at December 31, 2006 and December 31, 2005, amounted to $949,852 and
$170,171, respectively, of which no deposits are covered by insurance. The
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant risks on its cash in bank accounts.

Earnings (Loss) Per Share
-------------------------
The Company reports earnings per share in accordance with the provisions of SFAS
No. 128, "Earnings per Share." SFAS No. 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing such earnings per share. Basic earnings per share is computed
by dividing income available to common stockholders by the weighted average
common shares outstanding during the period. Diluted earnings per share takes
into account the potential dilution that could occur if securities or other
contracts to issue common stock were exercised and converted into common stock.

Because the Company had losses in 2006, 1,320,000 warrants and approximately
6,000,000 million of shares issuable upon conversion of the debentures have been
excluded from the calculation of dilutive earnings per share because of their
antidilutive nature. No warrants or options were outstanding in 2005.

Revenue Recognition
-------------------
Revenue from the sales or licensing of proprietary content, third party
programming, imported TV and films, and sales and distribution of advertisement
programs are recognized upon meeting all recognition requirements of Statement
of Position (SOP) 00-2 "Accounting by Producers or Distributors of Films".

Revenue from sales of advertisement designs and products are recognized when the
products are delivered and title has passed.

Cash payments received are recorded as deferred revenue until all the conditions
of revenue recognition have been met.




See report of independent registered public accounting firm

                                      F-12

<PAGE>


                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

Stock-Based Compensation
------------------------
Previously, pursuant to Accounting Principles Board Opinion No.25, "Accounting
for Stock Issued to Employees", the Company accounted for stock based employee
compensation arrangements using the intrinsic value method.

Effective January 1, 2006, the Company adopted SFAS No.123 (revised 2004),
"Shares Based Payment" ("SFAS No. 123R") which eliminates the use of APB 25 and
the intrinsic value method of accounting, and requires companies to recognize
the cost of employee services received in exchange for awards of equity
instruments, based on the grant date fair value of those awards, in the
financial statements. The Company has adopted the modified prospective method
whereby compensation cost is recognized in the financial statements beginning
with the effective date based on the requirements of SFAS No. 123R for all
share-based payments granted after that date. The Company did not issue any
stock options prior to the effective date, and therefore there was no impact to
the Company's operations, cash flow or financial condition.

Recently issued accounting pronouncements
-----------------------------------------
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments" ("FAS 155"), which amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("FAS 133") and SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" ("FAS 140"). FAS 155 provides guidance to simplify the
accounting for certain hybrid instruments by permitting fair value remeasurement
for any hybrid financial instrument that contains an embedded derivative, as
well as, clarifies that beneficial interests in securitized financial assets are
subject to FAS 133. In addition, FAS 155 eliminates a restriction on the passive
derivative instruments that a qualifying special-purpose entity may hold under
FAS 140. FAS 155 is effective for all financial instruments acquired, issued or
subject to a new basis occurring after the beginning of an entity's first fiscal
year that begins after September 15, 2006. The adoption of SFAS No. 155 is not
expected to have a material effect on the Company's financial position or
results of operations.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of
Financial Assets" ("FAS 156"), which amends SFAS No. 140. FAS 156 specifically
provides guidance addressing the recognition and measurement of separately
recognized servicing assets and liabilities, common with mortgage securitization
activities, and provides an approach to simplify efforts to obtain hedge
accounting treatment. FAS 156 is effective for all separately recognized
servicing assets and liabilities acquired or issued after the beginning of an
entity's fiscal year that begins after September 15, 2006, with early adoption
being permitted. The adoption of SFAS No. 156 is not expected to have a material
effect on the Company's financial position or results of operations.




See report of independent registered public accounting firm

                                      F-13

<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" ("FIN
48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized
in a company's financial statements in accordance with FAS 109, "Accounting for
Income Taxes". FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure and transition. The requirements of FIN 48 are
effective for our fiscal year beginning January 1, 2007.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements,"
which addresses the measurement of fair value by companies when they are
required to use a fair value measure for recognition or disclosure purposes
under GAAP. SFAS No. 157 provides a common definition of fair value to be used
throughout GAAP which is intended to make the measurement of fair value more
consistent and comparable and improve disclosures about those measures. SFAS No.
157 will be effective for an entity's financial statements issued for fiscal
years beginning after November 15, 2007. The Company is currently evaluating the
effect SFAS No. 157 will have on its consolidated financial position, liquidity,
or results of operations.

In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 158, "Employer's Accounting for Defined Benefit Pension and Other
Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
132(R)" ("SFAS 158"). SFAS 158 requires an employer to recognize the overfunded
or underfunded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial
position and to recognize changes in that funded status in the year in which the
changes occur through comprehensive income of a business entity or changes in
unrestricted net assets of a not-for-profit organization. The standard also
requires an employer to measure the funded status of a plan as of the date of
its year-end statement of financial position, with limited exceptions. An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006. An employer without publicly traded equity securities is
required to recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after June 15, 2007. The adoption of SFAS 158 is not expected to have a material
effect on the Company's financial position or results of operations.

Reclassification
----------------
Certain prior year amounts have been reclassified to conform to the current
presentation and there is no effect on net income or cash flows.




See report of independent registered public accounting firm


                                      F-14
<PAGE>


                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


Note 3 -- ACCOUNTS RECEIVABLE

Accounts receivable as of December 31,consisted of the following:


                                                        2006
                                                    ---------------
Accounts receivable                                 $       646,417
Less:  allowance for doubtful accounts                      253,290
                                                    ---------------
     Total                                          $       393,127
                                                    ===============

The Company presents accounts receivable, net of allowance for doubtful
accounts. The allowance is calculated based on review of the accounts receivable
aging report. When accounts receivable are determined to be uncollectible, the
Company will charge off the accounts receivable against the allowance for
doubtful accounts.

Note 4 -- EQUIPMENT

Equipment as of December 31, 2006 consisted of the following:

Leasehold improvements                               $      32,274
Machinery and equipment                                   2,191,710
Furniture and Office equipment                               47,348
                                                     --------------
     Subtotal                                             2,271,332
Less:  accumulated depreciation                             856,867
                                                     --------------
     Total                                           $    1,414,465
                                                     ==============


Depreciation expense for the years ended December 31, 2006 and 2005 was $214,182
and $80,151, respectively.

Note 5 -- ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses mainly consist of payments to be made for
expenses incurred for the Company's operating activities. Accounts payable and
accrued expenses as of December 31, 2006 consisted of the following:

Accounts payable                                     $      437,727
Accrued expenses                                             56,222
                                                     ---------------
     Total                                           $      493,949
                                                     ===============

Note 6 -- TAXES PAYABLE

Taxes payable mainly consisted of income taxes payable and sales taxes payable.
Total taxes payable amounted to $574,513 as of December 31, 2006.


See report of independent registered public accounting firm



                                      F-15
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006



Note 7 -- INCOME TAX

The Company's subsidiaries, Beijing Media and Lucky Star, are governed by the
Income Tax Law of the People's Republic of China (PRC) and various local income
tax laws (the Income Tax Laws). Under the local Income Tax laws, the Company
generally is subject to income tax at an effective rate of 33% (30% state income
taxes plus 3% local income taxes) on income as reported in their statutory
financial statements after appropriate tax adjustments.

Thus, Beijing Media is engaged in broadcasting and media service business, the
Company is subject to an income tax at an effective rate of 33% based upon 11%
of the gross revenue.

Beijing Media and Lucky Star are also subject to general business taxes of 5.5%
and 8.5%, respectively, of its total gross sales. The Company's business taxes
are accounted-for-as a reduction of revenues.

The provision for income taxes for the years ended December 31 consisted of the
following:

                                                  2006            2005
                                             ---------------    ------------
Provision for US Income Tax                  $            -     $         -
Provision for China Income Tax                       49,319           4,116
Provision for China Local Tax                         4,932             412
                                             ---------------    ------------
      Total provision for income taxes       $       54,251     $     4,528
                                             ===============    ============


The provision for income taxes is derived solely from the Company's 70%
subsidiaries Beijing Media and Lucky Star.

The following table reconciles the U.S. statutory rates to the Company's
effective tax rate:

                                                2006        2005
                                             ----------    --------
U.S. Statutory rates                              34.0%       34.0%
Foreign income not recoginized in USA            (34.0)      (34.0)
China income taxes                                33.0        33.0
China income tax exemption                        (1.2)      (31.5)
                                             ----------    --------
      Total provision for income taxes            31.8%        1.5%
                                             ==========    ========



See report of independent registered public accounting firm

                                      F-16
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


The Company has a net operating loss carry forward of $295,685 for United States
income tax purposes that will expire during the year 2025. The Company has
recorded a valuation allowance for the entire amount of the loss carry forward.
Since the Company's main operations are located in the PRC and any income
subject to US income taxes will be dependent upon the Company having operations
in the US or other US taxable events will have to occur. Since the Company is
not sure at this time that the Company will be able utilize the tax benefits of
this operating loss, management has decided to record a valuation allowance for
the entire amount of the operating loss.

Note 8 -- DEFERRED REVENUE

Deferred revenue consisted of cash payments advanced from customers. Cash
payments received are recorded as deferred revenue until all the conditions of
revenue recognition have been met. Total deferred revenue amounted to $520,721
as of December 31, 2006.

Note 9 -- SUBORDINATED DEBENTURES

On January 31, 2006, the Company issued $1,000,000 of 8% convertible
subordinated debentures due July 30, 2006, in the form of forty $25,000 units.
Each unit included a $25,000 note plus 5,000 shares of common stock of the
Company ("Unit Shares") and 25,000 warrants. Thus, the Company issued 200,000
shares of common stock and 1,000,000 warrants. The placement agent received
$120,000 cash, 220,000 shares of common stock and 120,000 warrants.

The warrants are exercisable, through January 2010 at the lower of $1.25 per
share or the exercise price stipulated for any subsequent capital raise
completed within 180 days of the closing of the offering.

The Company agreed to file a registration statement with the SEC covering the
underlying shares of common stock and warrants. In the event that the
registration statement was not declared effective by July 30, 2006, as of the
1st of each month thereafter, (1) the conversion price will be reduced by $0.05
per share, and (2) an additional 5% of the original number of warrants will be
required to be issued.





See report of independent registered public accounting firm

                                      F-17

<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006




In July 31, 2006, the Company paid a total of $40,000 in interest to the holders
of the convertible subordinated debentures, and the holders agreed to extend the
debentures to November 30, 2006 under following terms: (1) principal payment of
debentures increased by 20% to $1,200,000; (2) $32,000 payment to the holders;
(3) The conversion price decreased to $0.40 per share; (4) The number of
warrants increased to 1,200,000 shares; (5) The exercise price of the warrant is
reduced to $0.50 per share; (6) The Company shall file a registration statement
with the SEC covering the underlying shares of common stock in connection with
the debentures within 45 days of this agreement or 15 days after the closing of
the next round of financing, whichever is later, but not later than September
30, 2006. The Company shall pay penalties as follows for each month (as of the
first of every month) the securities are not registered: (1) The conversion
price will be reduced by $0.05 per share (2) An additional 5% of the original
number of warrants will be issued.

On November 30, the Company entered to an agreement with holders of the
convertible subordinated debentures to extend the maturity of these debentures
to March 31, 2007 under following terms: (1) the company will promptly pay the
current accrued interest due in 145,000 shares of common stock of the Company
valued at $0.20 per share to the Noteholders upon the execution of the
Agreement; (2) the Company will transfer ownership of 15,000 shares from the
Company's management team, and not from the Company itself, for each $25,000
original note face value, and the Company shall escrow the payable interest from
the proceeds of the next round of financing; (3) the conversion set price of the
note will be reduced to $0.20 per share; (4) the exercise price of the warrant
will be reduced to $0.35 per share; (5) the Company shall file a registration
statement covering the underlying shares no later than 60 days from November 30,
2006.

On January 30, 2007, the Company filed a registration statement with SEC
covering the underlying shares of common stock in connection with the
debentures.

The notes were discounted for the fair value of warrants issued with the notes,
pursuant to APB 14 "Accounting for Convertible Debt and Debt Issued with Stock
Purchase Warrants". The notes were further discounted for the intrinsic value of
the beneficial conversion feature, pursuant to EITF 98-5 "Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios." The discount is being amortized over the life of
the notes.

The fair value of the warrants was determined using the Black-Scholes option
pricing model, using the following assumptions:

Expected volatility                            287.0%
Expected term in years                          3.17
Risk-free interest rate                        4.905%
Expected dividend yield                            0%


See report of independent registered public accounting firm


                                      F-18
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006



Expected volatilities are calculated using the historical prices of the
Company's common stock and based on the historical volatility of a similar
company's common stock that has similar characteristic in terms of revenue and
share price and other factors. The expected term of warrants granted is based on
the term of the exercisable periods. The risk-free interest rates are based on
the U.S. Treasury yield for a period consistent with the expected term of the
option in effect at the time of grant.

The fair value of all warrants and common stocks issued to debenture holders has
been discounted from the face value of the notes and is being amortized to
interest expense over the life of the notes. Through December 31, 2006, $395,354
has been amortized to interest expense.

The intrinsic value of the beneficial conversion feature has been discounted
from the face value of the notes and is being amortized to interest expense over
the life of the notes. Through December 31, 2006, $95,180 has been amortized to
interest expense.

The cost associated with originating the notes and each renewal includes
warrants and common stocks issued to placement agent, shares transferred from
controlling shareholders to debenture holders, and $200,000 increase in
principal due at maturity. These amounts were deferred under FAS 91, Accounting
for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans
and Initial Direct Costs of Leases, and will be amortized over the life of
notes. Through December 31, 2006, $311,000 has been amortized to financing
expense.

Note 10 -- RELATED PARTY TRANSACTIONS

Accounts receivables - related parties
--------------------------------------
Accounts receivable from related party represents amounts due from an entity
owned by Mr. Wenquan Yang, our chief executive officer, for equipment rental.
Related party accounts receivable totaled $260,922 as of December 31, 2006.

The afore-mentioned receivable balance is the result of transactions prior to
the Company's acquisition of controlling majority ownership in Beijing Media, in
which our chief executive officer was the majority owner. In its efforts to step
up Internal Control, the Company has identified the related party transactions
as above and has mandated settlement in the form of cash no later than December
31, 2007. It is the Company's policy that related party transactions shall only
be conducted on an arms-length basis and in full compliance with local and state
regulatory requirements.



See report of independent registered public accounting firm

                                      F-19

<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006



Other receivables - related parties
-----------------------------------
Other receivables due from related parties represents amounts due from Mr.
Wenquan Yang, our chief executive officer, for operating purpose, and due from
other related operating entities, which are owned by the Company's chief
executive officer, Mr. Wenquan Yang, for temporary cash flow needs. These
transactions are recurring in nature. Due to their short term nature, the
Company does not charge interest on these receivables and they are included in
the current portion of the receivables. As of December 31, 2006, total
receivables due from related parties were $405,249.

The afore-mentioned receivable balance is the result of transactions prior to or
immediately after the Company's acquisition of controlling majority ownership in
Beijing Media and Lucky Star, in which our Chief executive officer was the
majority owner. In its efforts to step up Internal Control, the Company has
identified the related party transactions as above and has mandated settlement
in the form of cash no later than December 31, 2007. It is the Company's policy
that related party transactions shall only be conducted on an arms-length basis
and in full compliance with local and state regulatory requirements.

Other payables - related party
------------------------------
Other payables due to related party represent amounts due to an entity owned by
Mr. Wenquan Yang, our chief executive officer, for temporary cash flow needs.
These transactions are recurring in nature. Due to their short term nature, the
Company does not pay interest on these advances. As of December 31, 2006 and
2005, total payables due to related party were $36,684 and $0, respectively.

Lease of office
---------------
The Company signed two operating lease agreements with Mr. Wenquan Yang, our
chief executive officer, to lease our Beijing offices. According to the
agreements, the total lease payment is approximately $65,296, or RMB 520,000,
per year. The agreement is renewable annually and the rental period was renewed
through July 31, 2007. Rental expense for the years ended December 31, 2006 and
2005 were $35,997 and $0, respectively.

Note 11 -- SHAREHOLDER'S EQUITY

On January 31, 2006, the Company issued 420,000 shares of common stock in
related to the subordinated debentures. See Note 9 for discussion of the
subordinated debentures.

On February 27, 2006, the Company issued 15,000 shares of common stock for
investor relation services. The Company has valued the shares at $4,500 for the
service performed and recorded a charge to selling, general and administrative
expense for the year ended December 31, 2006.


See report of independent registered public accounting firm

                                      F-20
<PAGE>



                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006

On March 11, 2006, the Company issued 2,400,000 shares of common stock in
related to the acquisition of Beijing Broadcasting and Television Media Co.,
Ltd. ("Beijing Media"). See Note 12 for further discussion of the business
combination.

On July 9, 2006, the Company issued 2,800,000 shares of common stock in related
to the acquisition of Beijing Lucky Star Century Advertisement Co. Ltd. ("Lucky
Star"). See Note 12 for further discussion of the business combination.

On December 27, 2006, the Company issued 145,600 shares of common stock for
interest expense and recorded a charge to financing expenses for the year ended
December 31, 2006.

Note 12 -- BUSINESS COMBINATIONS

Dong Fang acquisition
---------------------
On December 18, 2005, the Company entered into a Master Agreement with the
shareholders of Dong Fang Zheng Yi Film & TV Communication Co., Ltd. and Beijing
Dong Fang Zheng Yi Film Investment Consulting Co., Ltd. (collectively, "Dong
Fang Group") to acquire operation control and 70% ownership interest in Dong
Fang Group. Pursuant to the Master Agreement, the Company, contingent upon the
results of their due diligence procedures, agreed to issue 6.2 million shares of
its common stock to the existing shareholders of Dong Fang Group and also agreed
to pay $800,000 to such shareholders, while committing to invest another $1.6
million into Dong Fang Group operations.

On March 31, 2006, the Master Agreement was rescinded, the shares were cancelled
and the Company paid $500,000 Dong Fang Group for licensing fees for certain
programming assets. Based on its latest valuation by December 31, 2006 of the
acquired programming assets, the Company believed the programming assets were
impaired; therefore, the entire carrying value was written off.

Beijing Media acquisition
-------------------------
On March 11, 2006, the Company entered into an agreement with the shareholders
of Beijing Media to acquire a 70% ownership interest and operational control of
Beijing Media. Pursuant to the Agreement, the Company agreed to issue 2,400,000
shares of its common stock valued at $1.00 per share to the existing
shareholders of Beijing Media, of which 900,000 shares were to be returned and
cancelled if certain condition were not met. In June 2006, the Company waived
the requirement to meet the conditions.



See report of independent registered public accounting firm

                                      F-21
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


Assets acquired and debts assumed of the transaction are listed as below:

                       Item             Fair Value          Acquired (Assumed)
                                                              by the Company
----------------------------------    ------------------    ------------------
Current Assets                        $       1,458,603     $       1,021,022
Property, plant, and equipment                1,263,150               884,205
                                      ------------------    ------------------
Total assets                                  2,721,753             1,905,227
                                      ------------------    ------------------

Current liabilities                             714,182               499,927
                                      ------------------    ------------------

Net assets                            $       2,007,571     $       1,405,300
                                      ==================    ==================


The Board of Directors and management evaluated the fair value of Beijing
Media's 2,400,000 shares based on the Company's trading history. The value of
the shares approximated the fair value of the net assets acquired. Therefore, no
goodwill was recorded as a result of this transaction.

Beijing Media is a media content production and distribution company located in
the People's Republic of China ("PRC"). Beijing Media generates revenues through
producing television series and movies for the PRC market, TV syndicated
programming production and other media and broadcasting production and
management services.

Lucky Star acquisition
----------------------
On July 9, 2006, the Company entered into a definitive agreement to acquire a
70% ownership interest in Lucky Star. The purchase price is 2,800,000 shares of
the Company's common stock.

Assets acquired and debts assumed are listed below:

                       Item           Fair Value      Acquired (Assumed)
                                                        by the Company
--------------------------------     -------------    -----------------
Current Assets                       $    547,299      $       383,109
Property, plant, and equipment             50,087               35,061
                                     -------------    -----------------
Total assets                              597,386              418,170
                                     -------------    -----------------

Current liabilities                       513,696              359,587
                                     -------------    -----------------

Net assets                           $     83,690      $        58,583
                                     =============    =================



See report of independent registered public accounting firm


                                      F-22
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


The Board of Directors and management evaluated the fair value of the 2,800,000
shares based upon the stock trading history and concluded the value was $0.25
per share or $700,000. This determination generated goodwill of approximately
$641,417 from this transaction.

Lucky Star was established on October 20, 2001 in Beijing, the People's Republic
of China ("PRC"). Lucky Star is a Chinese registered limited liability company
with a legal structure similar to a limited liability company organized under
state laws in the United States of America. The Company principally engages in
the advertising business in TV commercials, newspapers, magazines, and outdoor
media in China.

Note 13 -- RESTRUCTURING OF SUBSIDIARY

Restructuring of Happy Times Media Inc.
---------------------------------------
During 2006, the Company evaluated the operations of its subsidiary, Happy Times
Media Inc., ("HTM") and noted efficiency would be obtained by consolidating the
operations of HTM into Beijing Media.

As of December 28, 2006, the Company entered into an agreement with the minority
shareholders of HTM to transfer its interest in HTM. Pursuant to the agreement,
all consideration paid to the shareholders of HTM of 600,000 shares of the
Company's common stock will be returned to the Company and the Company is no
longer obligated to contribute the remaining of $651,500 contribution payable
and any other obligations to HTM. Simultaneously the 70% ownership interest of
HTM will be returned to HTM's shareholders or its designated party. As a result,
HTM will cease to be a subsidiary of the Company. In addition, Beijing Hui Ying
International Advertising Co., Ltd. ("BHYIA") is which had been considered a
variable interest entity under FASB Interpretation number 46(R), "Consolidation
of Variable Interest Entities", will no longer to be included in the
consolidation in the Company's consolidated financial statements.

After the restructuring of HTM, the Company still has significant continuing
involvement in the historical operations of the media and broadcasting through
Beijing Media, which fail the test in paragraph 42 of FAS 144 "Accounting for
the Impairment or Disposal of Long-Lived Assets". The failure of this test
therefore does not require the classification of the restructuring of HTM as
discontinued operations.

Note 14 -- COMMITMENTS AND CONTINGENCIES

Operating leases
----------------
The Company entered into noncancelable operating leases for office and
production space that expires 2007. Rent expense amounted to $38,117 and $38,320
for the years ended December 31, 2006 and 2005, respectively.




See report of independent registered public accounting firm


                                      F-23
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


The Company has also signed two operating lease agreements with Mr. Wenquan
Yang, our chief executive officer, to lease our Beijing offices. According to
the agreements, the total lease payment is approximately $65,296, or RMB
520,000, per year. The agreement is renewable annually and the rental period was
renewed through July 31, 2007. Rental expense for the years ended December 31,
2006 and 2005 were $35,997 and $0, respectively.

At December 31, 2006, future minimum lease payments for all noncancelable
operating leases are as follows:

Year Ended December 31,
-----------------------
        2007                             $      76,332
     Thereafter                                     --


Note 15 -- MINORITY INTEREST

Minority interest represents the outside shareholders' 30% interest in Beijing
Media and Lucky Star.

Note 16 -- GOING CONCERN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred cumulative
operating losses through December 31, 2006 of $2,712,412, which raises
substantial doubt about the Company's ability to continue as a going concern.

Management believes that the Company's best chance for continuing operations
will require additional capital formation either through debt or equity
financing so as to endeavor to expedite the growth of its operations and to
achieve profitable operations.

The financial statements do not include any adjustments that might result from
the outcome of this uncertainty

Note 17 -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Total interest expense paid for the year ended December 31, 2006 and 2005
amounted to $42,686 and $4, respectively.

Total income tax payments of $32,025 and $2,087 were paid for the years ended
December 31, 2006 and 2005, respectively.

Note 18 -- MAJOR CUSTOMERS

For the year ended December 31, 2006, four customers accounted for approximately
82%, of the Company's sales, these customers accounted for approximately 18% of
the Company's accounts receivable as of December 31, 2006.



See report of independent registered public accounting firm

                                      F-24
<PAGE>

                  NAVSTAR MEDIA HOLDINGS, INC. AND SUBSIDIARIES

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2006


For the year ended December 31, 2005, three customers accounted for
approximately 70%, of the Company's sales, these customers accounted for
approximately 75% of the Company's accounts receivable as of December 31, 2005.

Note 19 -- SUBSEQUENT EVENTS

On January 30, 2007, the Company filed a registration statement with SEC
covering the underlying shares of common stock in connection with the
debentures. The due date of the debentures was extended until March 31, 2007
with the conversion price reduced to $0.20 per share and warrant exercise price
reduced to $0.30 per share.

The Company entered into a loan agreement on January 30, 2007 with TS Telver Sky
Partners L.P. ("Lender") to borrow up to $2,500,000. These loans will bear an
interest rate of 2% a year for period of four years. The loans are convertible
into shares of common stock at the price of $0.15 per share and carry warrants
to purchase additional shares of common stock at an exercise price of $0.25 per
share. Such loans are secured by all the assets of the Company. The loans are
subject to certain contractual participation rights of certain prior investors
and will not be provided to the Company until such rights have been waived or
exercised.

The primary purpose for the loans is to support the TV shopping project launch
by the Company. Management is evaluating the accounting treatment of these
transactions under APB14, FAS 150, FAS 133, EITF 0-19, EITF 98-5 and EITF 00-27.







See report of independent registered public accounting firm

                                      F-25
<PAGE>