**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**For      the quarterly period ended June 30, 2008**

**000-27763**

**SITESTAR      CORPORATION**

| **NEVADA**(State                or other jurisdiction ofincorporation                or organization) |   | **88-0397234**(I.R.S.                Employer Identification No.) |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|

**7109      Timberlake Road, Lynchburg, VA  24502**

**(434)      239-4272**

| Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Report Company o |
|---------------------------|---------------------|-------------------------|-------------------------------|

----

**SITESTAR      CORPORATION **

|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  Page                  Number |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|
|  PART                  I.  FINANCIAL                  INFORMATION                                                                                                                                                                                                                                                                                                                                                 |   |                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  1.  Financial Statements                                                                                 |   |                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Condensed                  Consolidated Balance Sheets as of June 30, 2008 (unaudited) and                  December                  31, 2007                  (audited)                                                                                                                                                                                                                                                                                 |   | 3-4                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Condensed                  Consolidated Statements of Income for the three months ended June                  30, 2008                  and 2007 (unaudited)                                                                                                                                                                                                                                                                                    |   | 5                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Condensed                  Consolidated Statements of Income for the six months ended June                  30, 2008                  and 2007 (unaudited)                                                                                                                                                                                                                                                                                                |   | 6                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Condensed                  Consolidated Statements of Cash Flows for the six months ended                  June 30,                  2008 and 2007 (unaudited)                                                                                                                                                                                                                                                                                            |   | 7-8                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Notes                  to unaudited Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                           |   | 9-26                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  2.   Management's Discussion and Analysis                                                                                                                                                                                                                                                                                                                                              |   | 27-34                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  3.   Controls and Procedures                                                                                                                                                                                                                                                                                                                                                           |   | 35                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Part                  II.  OTHER INFORMATION                                                                                                                                                                                                                                                                                                                    |   | 36                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  1.  Legal Proceedings                                                                                                                                                                                                                                                                                                                                    |   | 36                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  2.  Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                       |   | 36                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  3.  Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                      |   | 36                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  4.  Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                          |   | 36                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  5.  Other Information                                                                                                                                                                                                                                     |   | 36                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| Item                  6.  Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 37                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                               |
| SIGNATURES                                                                                                                                                                                                                                   |   | 38                                 |

----

**PART      I. FINANCIAL INFORMATION**

**Item      1.**     **Financial      Statements**

**SITESTAR      CORPORATION AND SUBSIDIARIES **

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**JUNE      30, 2008 AND DECEMBER 31, 2007**

|                                                                                                                                                                                                      |   | 2008                              |      | 2007            |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|-----------------|--------|
|                                                                                                                                                                                                      |   |                  (Unaudited) |      |  (Audited) |   |
| **ASSETS**                                                                                                                                                                                                |   |                              |      |            |   |
|                                                                                                                                                                                                      |   |                              |      |            |   |
| CURRENT                ASSETS                                                                                                                                                                             |   |                              |      |            |   |
| Cash                and cash equivalents                                                                                                                                                                  |   | $                                 | 347,391   |            | $      | 232,249 |   |
| Accounts                receivable, net of allowance of $61,556 and                $22,641                                |   |                              | 680,346   |            |   | 299,863 |   |
| Prepaid                expenses                                                                                                                                                                           |   |                              | 43,905    |            |   | 16,529 |   |
|                      Total current assets                                                                                                                                        |   |                              | 1,071,642 |            |   | 548,641 |   |
|                                                                                                                                                                                                      |   |                              |           |            |   |  |   |
| PROPERTY                AND EQUIPMENT, net                                                                                                                                                                |   |                              | 229,664   |            |   | 236,782 |   |
| CUSTOMER                LIST, net of accumulated amortization                of $6,603,388 and $5,237,054                                                                                            |   |                              | 4,763,176 |            |   | 5,480,635 |   |
| GOODWILL,                net of impairment                                                                                                                                                                |   |                              | 1,288,559 |            |   | 1,288,559 |   |
| OTHER                ASSETS                                                                                                                                                                               |   |                              | 645,933   |            |   | 677,267 |   |
|                                                                                                                                                                                                      |   |                              |           |            |   |  |   |
| TOTAL                ASSETS                                                                                                                                                                               |   | $                                 | 7,998,974 |            | $      | 8,231,884 |   |

----

**SITESTAR      CORPORATION AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS, continued**

**JUNE      30, 2008 AND DECEMBER 31, 2007**

**LIABILITIES      AND STOCKHOLDERS’ EQUITY **

|                                                                                                                                                                                                                                                                     |   | 2008              |        | 2007      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-------------|-----------|--------|
|                                                                                                                                                                                                                                                                     |   |  (Unaudited) |        | (Audited) |   |
| CURRENT                LIABILITIES                                                                                                                                                                                                                                       |   |              |        |      |   |
|                                                                                                                                                                                                                                                                     |   |              |        |      |   |
| Accounts                payable                                                                                                                                                                                                                                          |   | $                 | 35,027      |      | $      | 78,713 |   |
| Accrued                expenses                                                                                                                                                                                                                                          |   |              | 120,548     |      |   | 138,021 |   |
| Deferred                revenue                                                                                                                                                                                                                                          |   |              | 1,365,811   |      |   | 1,361,606 |   |
| Notes                payable                                                                                                                                                                                                                                             |   |              | 739,500     |      |   | 1,268,866 |   |
|                                                                                                                                                                                                                                                                     |   |              |             |      |   |  |   |
| Total                current liabilities                                                                                                                                                                                                                                 |   |              | 2,260,886   |      |   | 2,847,206 |   |
|                                                                                                                                                                                                                                                                     |   |              |             |      |   |  |   |
| NOTES                PAYABLE, less current portion                                                  |   |              | 1,434,377   |      |   | 1,694,836 |   |
| NOTES                PAYABLE - STOCKHOLDERS, less current portion                                                                                                                                                                                                        |   |              | 599,677     |      |   | 686,687 |   |
|                                                                                                                                                                                                                                                                     |   |              |             |      |   |  |   |
| TOTAL                LIABILITIES                                                                                                                                                                                                                                         |   |              | 4,294,940   |      |   | 5,228,729 |   |
|                                                                                                                                                                                                                                                                     |   |              |             |      |   |  |   |
| STOCKHOLDERS'                EQUITY                                                                                                                                                                                                                                      |   |              |             |      |   |  |   |
| Preferred                Stock, $.001 par value, 10,000,000 shares authorized,                0 shares issued and outstanding                                                                                                                                            |   |              | -           |      |   | - |   |
| Common                stock, $.001 par value, 300,000,000 shares authorized,                91,326,463 and 91,326,463 shares issued and outstanding                on June 30, 2008 December 31, 2007 respectively                                                  |   |              | 91,326      |      |   | 91,326 |   |
|   Additional                paid-in capital                                                                                                                                                                                                                    |   |              | 13,880,947  |      |   | 13,880,947 |   |
| Treasury                stock, $.001 par value, 2,955,147 common shares on                June 30,  2008 and December 31, 2007                                                                                                                                 |   |              | (63,030     | )         |   | (63,030 | ) |
| Accumulated                deficit                                                                                                                                                                                                                                       |   |              | (10,205,209 | )         |   | (10,906,088 | ) |
|                                                                                                                                                                                                                                                                     |   |              |             |      |   |  |   |
|  Total                stockholders’ equity                                                                                                                                                                                                                    |   |              | 3,704,034   |      |   | 3,003,155 |   |
|                                                                                                                                                                                                                                                                     |   |              |             |      |   |  |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                |   | $                 | 7,998,974   |      | $      | 8,231,884 |   |

----

**SITESTAR      CORPORATION AND SUBSIDIARIES **

**CONDENSED      CONSOLIDATED STATEMENTS OF INCOME**

**FOR      THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007**

**(UNAUDITED)**

|                                                                                           |   | 2008   |       | 2007   |   |
|------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
| REVENUE                                                                                        |   | $      | 2,614,699  |   | $      | 1,528,733 |   |
|                                                                                           |   |   |            |   |   |  |   |
| COST                OF REVENUE                                                                 |   |   | 562,583    |   |   | 539,981 |   |
|                                                                                           |   |   |            |   |   |  |   |
| GROSS                PROFIT                                                                    |   |   | 2,052,116  |   |   | 988,752 |   |
|                                                                                           |   |   |            |   |   |  |   |
| OPERATING                EXPENSES:                                                             |   |   |            |   |   |  |   |
| Selling                general and administrative expenses                                     |   |   | 1,618,940  |   |   | 845,150 |   |
|                                                                                           |   |   |            |   |   |  |   |
| INCOME                FROM OPERATIONS                                                          |   |   | 433,176    |   |   | 143,602 |   |
|                                                                                           |   |   |            |   |   |  |   |
| OTHER                INCOME (EXPENSES)                                                         |   |   | (36,297    | )      |   | (54,082 | ) |
|                                                                                           |   |   |            |   |   |  |   |
| INCOME                BEFORE INCOME TAXES                                                      |   |   | 396,879    |   |   | 89,520 |   |
|                                                                                           |   |   |            |   |   |  |   |
| INCOME                TAXES                                                                    |   |   | -          |   |   | - |   |
|                                                                                           |   |   |            |   |   |  |   |
| NET                INCOME                                                                      |   | $      | 396,879    |   | $      | 89,520 |   |
|                                                                                           |   |   |            |   |   |  |   |
| BASIC                AND DILUTED EARNINGS PER SHARE                                            |   | $      | 0.00       |   | $      | 0.00 |   |
|                                                                                           |   |   |       |   |   |   |   |
| WEIGHTED                  AVERAGE SHARES OUTSTANDING - BASIC AND                  DILUTED |   |   | 91,326,463 |   |   | 88,063,305 |   |

----

**SITESTAR      CORPORATION AND SUBSIDIARIES **

**CONDENSED      CONSOLIDATED STATEMENTS OF INCOME**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007**

**(UNAUDITED)**

|                                                                                           |   | 2008   |       | 2007   |   |
|------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
| REVENUE                                                                                        |   | $      | 5,159,244  |   | $      | 2,968,714 |   |
|                                                                                           |   |   |            |   |   |  |   |
| COST                OF REVENUE                                                                 |   |   | 1,387,801  |   |   | 931,006 |   |
|                                                                                           |   |   |            |   |   |  |   |
| GROSS                PROFIT                                                                    |   |   | 3,771,443  |   |   | 2,037,708 |   |
|                                                                                           |   |   |            |   |   |  |   |
| OPERATING                EXPENSES:                                                             |   |   |            |   |   |  |   |
| Selling                general and administrative expenses                                     |   |   | 2,984,032  |   |   | 1,553,545 |   |
|                                                                                           |   |   |            |   |   |  |   |
| INCOME                FROM OPERATIONS                                                          |   |   | 787,411    |   |   | 484,163 |   |
|                                                                                           |   |   |            |   |   |  |   |
| OTHER                INCOME (EXPENSES)                                                         |   |   | (86,532    | )      |   | (86,075 | ) |
|                                                                                           |   |   |            |   |   |  |   |
| INCOME                BEFORE INCOME TAXES                                                      |   |   | 700,879    |   |   | 398,088 |   |
|                                                                                           |   |   |            |   |   |  |   |
| INCOME                TAXES                                                                    |   |   | -          |   |   | - |   |
|                                                                                           |   |   |            |   |   |  |   |
| NET                INCOME                                                                      |   | $      | 700,879    |   | $      | 398,088 |   |
|                                                                                           |   |   |            |   |   |  |   |
| BASIC                AND DILUTED EARNINGS PER SHARE                                            |   | $      | 0.01       |   | $      | 0.01 |   |
|                                                                                           |   |   |       |   |   |   |   |
| WEIGHTED                  AVERAGE SHARES OUTSTANDING - BASIC AND                  DILUTED |   |   | 91,326,463 |   |   | 88,063,305 |   |

----

**SITESTAR      CORPORATION AND SUBSIDIARIES **

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007**

**(UNAUDITED) **

|                                                                                                                 |   | 2008   |       | 2007   |   |
|----------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                                 |   |   |       |   |   |
| Net                income                                                                                            |   | $      | 700,879    |   | $      | 398,088 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |   |   |            |   |   |  |   |
| Depreciation                and amortization expense                                                                 |   |   | 1,486,286  |   |   | 658,676 |   |
| Bad                debt expense                                                                                      |   |   | 38,914     |   |   | 3,723 |   |
| (Increase)                decrease in:                                                                               |   |   |            |   |   |  |   |
| Accounts                receivable                                                                                   |   |   | (419,398   | )      |   | (46,115 | ) |
| Prepaid                expenses                                                                                      |   |   | (27,376    | )      |   | 4,189 |   |
| Increase                (decrease) in:                                                                               |   |   |            |   |   |  |   |
| Accounts                payable                                                                                      |   |   | (43,686    | )      |   | (76,101 | ) |
| Accrued                expenses                                                                                      |   |   | (17,474    | )      |   | (205,606 | ) |
| Deferred                revenue                                                                                      |   |   | 4,207      |   |   | 51,819 |   |
|                                                                                                                 |   |   |            |   |   |  |   |
| Net                cash provided by operating activities                                                             |   |   | 1,722,352  |   |   | 788,673 |   |
|                                                                                                                 |   |   |            |   |   |  |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                 |   |   |            |   |   |  |   |
| Other                assets held for resale                                                                          |   |   | 500        |   |   | 24,834 |   |
| Purchase                of property and equipment                                                                    |   |   | (12,000    | )      |   | (21,033 | ) |
| Purchase                of non-compete                                                                               |   |   | (70,000    | )      |   | (40,000 | ) |
| Purchase                of customer list                                                                             |   |   | (648,875   | )      |   | (987,585 | ) |
|                                                                                                                 |   |   |            |   |   |  |   |
| Net                cash (used in) investing activities                                                               |   |   | (730,375   | )      |   | (1,023,784 | ) |
|                                                                                                                 |   |   |            |   |   |  |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                                 |   |   |            |   |   |  |   |
| Net                proceeds from notes payable                                                                       |   |   | 350,855    |   |   | 675,043 |   |
| Repayment                of notes payable - stockholders                                                             |   |   | (87,010    | )      |   | (55,753 | ) |
| Repayment                of notes payable                                                                            |   |   | (1,140,680 | )      |   | (280,644 | ) |
|                                                                                                                 |   |   |            |   |   |  |   |
| Net                cash provided by (used in) financing activities                                                   |   |   | (876,835   | )      |   | 338,646 |   |
|                                                                                                                 |   |   |            |   |   |  |   |
| NET                INCREASE IN                CASH AND CASH EQUIVALENTS                                         |   |   | 115,142    |   |   | 103,535 |   |
|                                                                                                                 |   |   |            |   |   |  |   |
| CASH                AND CASH EQUIVALENTS -BEGINNING OF PERIOD                                                        |   |   | 232,249    |   |   | 129,453 |   |
|                                                                                                                 |   |   |            |   |   |  |   |
| CASH                AND CASH EQUIVALENTS -END OF PERIOD                                                              |   | $      | 347,391    |   | $      | 232,988 |   |

----

**SITESTAR      CORPORATION AND SUBSIDIARIES **

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**FOR      THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007 (continued)**

**(UNAUDITED)**

**SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION**
**:**

**NON-CASH      INVESTING AND FINANCING TRANSACTIONS:**

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1 — BASIS OF PRESENTATION**

**NOTE      2 — EARNINGS PER SHARE**

|                                                       |   | 2008   |       | 2007   |   |
|------------------------------------------------------------|--------|--------|------------|--------|--------|
| Net                income available to common shareholders |   | $      | 396,879    |   | $      | 89,520 |   |
| Weighted                average number of common shares    |   |   | 91,326,463 |   |   | 88,063,305 |   |
| Basic                and diluted income per share          |   | $      | .00        |   | $      | .00 |   |

|                                                       |   | 2008   |       | 2007   |   |
|------------------------------------------------------------|--------|--------|------------|--------|--------|
| Net                income available to common shareholders |   | $      | 700,879    |   | $      | 398,088 |   |
| Weighted                average number of common shares    |   |   | 91,326,463 |   |   | 88,063,305 |   |
| Basic                and diluted income per share          |   | $      | .01        |   | $      | .01 |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      3 — COMMON STOCK**

**NOTE      4 — SEGMENT INFORMATION**

| June                30, 2008                 |
|----------------------------------------------|
|                                         |   | Corporate |   | Internet |   | Consolidated |   |
| Revenue                                      |   | $ | - |   | $ | 2,614,699 |   | $ | 2,614,699 |   |
| Operating                Income (loss)       |   | $ | (26,239 | ) | $ | 459,415 |   | $ | 433,176 |   |
| Depreciation                and amortization |   | $ | - |   | $ | 763,876 |   | $ | 763,876 |   |
| Interest                expense              |   | $ | - |   | $ | 38,832 |   | $ | 38,832 |   |
| Intangible                assets             |   | $ | - |   | $ | 6,427,429 |   | $ | 6,427,429 |   |
| Total                assets                  |   | $ | - |   | $ | 7,998,974 |   | $ | 7,998,974 |   |

| June                30, 2007                 |
|----------------------------------------------|
|                                         |   | Corporate |   | Internet |   | Consolidated |   |
| Revenue                                      |   | $ | - |   | $ | 1,528,733 |   | $ | 1,528,733 |   |
| Operating                Income (loss)       |   | $ | (40,247 | ) | $ | 183,850 |   | $ | 143,603 |   |
| Depreciation                and amortization |   | $ | - |   | $ | 353,438 |   | $ | 353,438 |   |
| Interest                expense              |   | $ | - |   | $ | 49,713 |   | $ | 49,713 |   |
| Intangible                assets             |   | $ | - |   | $ | 3,526,436 |   | $ | 3,526,436 |   |
| Total                assets                  |   | $ | - |   | $ | 4,551,859 |   | $ | 4,551,859 |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      4 — SEGMENT INFORMATION, continued**

| June                30, 2008                 |
|----------------------------------------------|
|                                         |   |   |   |   |   |   |   |
|                                         |   | Corporate |   | Internet |   | Consolidated |   |
| Revenue                                      |   | $ | - |   | $ | 5,159,244 |   | $ | 5,159,244 |   |
| Operating                Income (loss)       |   | $ | (69,708 | ) | $ | 857,119 |   | $ | 787,411 |   |
| Depreciation                and amortization |   | $ | - |   | $ | 1,486,286 |   | $ | 1,486,286 |   |
| Interest                expense              |   | $ | - |   | $ | 110,518 |   | $ | 110,518 |   |
| Intangible                assets             |   | $ | - |   | $ | 6,427,429 |   | $ | 6,427,429 |   |
| Total                assets                  |   | $ | - |   | $ | 7,998,974 |   | $ | 7,998,974 |   |

| June                30, 2007                 |
|----------------------------------------------|
|                                         |   |   |   |   |   |
|                                         |   | Corporate |   | Internet |   | Consolidated |   |
| Revenue                                      |   | $ | - |   | $ | 2,968,714 |   | $ | 2,968,714 |   |
| Operating                Income (loss)       |   | $ | (43,726 | ) | $ | 527,889 |   | $ | 484,163 |   |
| Depreciation                and amortization |   | $ | - |   | $ | 658,676 |   | $ | 658,676 |   |
| Interest                expense              |   | $ | - |   | $ | 85,182 |   | $ | 85,182 |   |
| Intangible                assets             |   | $ | - |   | $ | 3,526,436 |   | $ | 3,526,436 |   |
| Total                assets                  |   | $ | - |   | $ | 4,551,859 |   | $ | 4,551,859 |   |

**NOTE      5 — RECENTLY ISSUED ACCOUNTING PROUNCEMENTS**

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      5 — RECENTLY ISSUED ACCOUNTING PROUNCEMENTS, continued**

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      5 — RECENTLY ISSUED ACCOUNTING PROUNCEMENTS, continued**

**NOTE      6 - ACQUISITIONS**

**Magnolia      Internet Services**

| Customer                list          |   | $      | 93,992  |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Non-compete                agreement                                               |   |   | 10,000  |   |
| Equipment                                                                          |   |   | 10,000  |   |
| Deferred                revenue                                                    |   |   | (5,522  | )      |
| Purchase                price                                                      |   | $      | 108,470 |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 3,023,928 |   |
| Gross                profit                                 |   | $    | 2,078,171 |   |
| Selling,                general and administrative expenses |   | $    | 1,584,665 |   |
| Net                income                                   |   | $    | 407,431   |   |
| Basic                income per share                       |   | $    | 0.00      |   |

**OW      Holdings, Inc.**

| Accounts                receivable                                                 |   | $      | (2,098   | )      |
|------------------------------------------------------------------------------------|--------|--------|----------|--------|
| Customer                list          |   |   | 870,680  |   |
| Non-compete                agreement                                               |   |   | 25,000   |   |
| Equipment                                                                          |   |   | 10,000   |   |
| Deferred                revenue                                                    |   |   | (101,130 | )      |
| Purchase                price                                                      |   | $      | 802,452  |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 3,489,856 |   |
| Gross                profit                                 |   | $    | 2,422,055 |   |
| Selling,                general and administrative expenses |   | $    | 1,779,152 |   |
| Net                income                                   |   | $    | 556,828   |   |
| Basic                income per share                       |   | $    | 0.01      |   |

**AlaNet      Internet Services**

| Accounts                receivable                                                 |   | $      | 3,880   |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Customer                list          |   |   | 58,549  |   |
| Non-compete                agreement                                               |   |   | 5,000   |   |
| Deferred                revenue                                                    |   |   | (21,800 | )      |
| Purchase                price                                                      |   | $      | 45,629  |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 3,012,248 |   |
| Gross                profit                                 |   | $    | 2,069,364 |   |
| Selling,                general and administrative expenses |   | $    | 1,574,506 |   |
| Net                income                                   |   | $    | 408,212   |   |
| Basic                income per share                       |   | $    | 0.00      |   |

**United      Systems Access, Inc. **

| Customer                list          |   | $      | 4,292,656 |   |
|------------------------------------------------------------------------------------|--------|--------|-----------|--------|
| Non-compete                agreement                                               |   |   | 350,000   |   |
| Deferred                revenue                                                    |   |   | (892,656  | )      |
| Purchase                price                                                      |   | $      | 3,750,000 |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 5,414,537 |   |
| Gross                profit                                 |   | $    | 3,832,067 |   |
| Selling,                general and administrative expenses |   | $    | 2,837,206 |   |
| Net                income                                   |   | $    | 836,354   |   |
| Basic                income per share                       |   | $    | 0.01      |   |

**Comcation,      Inc. **

| Customer                list          |   | $      | 62,223  |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Non-compete                agreement                                               |   |   | 5,000   |   |
| Accounts                receivable                                                 |   |   | 2,343   |   |
| Deferred                revenue                                                    |   |   | (22,858 | )      |
| Purchase                price                                                      |   | $      | 46,708  |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 3,014,532 |   |
| Gross                profit                                 |   | $    | 2,075,328 |   |
| Selling,                general and administrative expenses |   | $    | 1,600,071 |   |
| Net                income                                   |   | $    | 387,043   |   |
| Basic                income per share                       |   | $    | 0.00      |   |

**N2      the Net, LLC**

| Customer                list          |   | $      | 40,512  |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Non-compete                agreement                                               |   |   | 5,000   |   |
| Accounts                receivable                                                 |   |   | 2,328   |   |
| Equipment                                                                          |   |   | 10,000  |   |
| Deferred                revenue                                                    |   |   | (12,019 | )      |
| Purchase                price                                                      |   | $      | 45,821  |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 3,017,652 |   |
| Gross                profit                                 |   | $    | 2,081,752 |   |
| Selling,                general and administrative expenses |   | $    | 1,560,864 |   |
| Net                income                                   |   | $    | 434,080   |   |
| Basic                income per share                       |   | $    | 0.00      |   |

**Dial      Assurance, Inc.**

| Customer                list          |   | $      | 250,000 |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Non-compete                agreement                                               |   |   | 5,000   |   |
| Deferred                revenue                                                    |   |   | (25,100 | )      |
| Purchase                price                                                      |   | $      | 229,900 |   |

----

**SITESTAR      CORPORATION**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      6 — ACQUISITIONS, continued**

|                                                        |   | 2007 |      |
|-------------------------------------------------------------|--------|------|-----------|
| Net                sales                                    |   | $    | 3,063,214 |   |
| Gross                profit                                 |   | $    | 2,122,779 |   |
| Selling,                general and administrative expenses |   | $    | 1,575,355 |   |
| Net                income                                   |   | $    | 459,305   |   |
| Basic                income per share                       |   | $    | 0.01      |   |

**United      Systems Access, Inc.**

| Customer                list          |   | $      | 277,965 |   |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Non-compete                agreement                                               |   |   | 50,000  |   |
| Deferred                revenue                                                    |   |   | (64,208 | )      |
| Purchase                price                                                      |   | $      | 263,757 |   |

----

**SITESTAR        CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        6 —        ACQUISITIONS, continued**

|                                                          |   |   | 2007      |   |
|---------------------------------------------------------------|--------|--------|-----------|--------|
| Net                  sales                                    |   | $      | 3,102,412 |   |
| Gross                  profit                                 |   | $      | 2,158,066 |   |
| Selling,                  general and administrative expenses |   | $      | 1,583,428 |   |
| Net                  income                                   |   | $      | 488,563   |   |
| Basic                  income per share                       |   | $      | 0.01      |   |

**AdaNet**

| Customer                  list          |   | $      | 15,428 |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Non-compete                  agreement                                               |   |   | 5,000  |   |
| Accounts                  receivable                                                 |   |   | 164    |   |
| Equipment                                                                            |   |   | 2,000  |   |
| Deferred                  revenue                                                    |   |   | (4,050 | )      |
| Purchase                  price                                                      |   | $      | 18,542 |   |

----

**SITESTAR        CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        6 — ACQUISITIONS, continued**

|                                                          |   |   | 2007      |   |
|---------------------------------------------------------------|--------|--------|-----------|--------|
| Net                  sales                                    |   | $      | 2,975,291 |   |
| Gross                  profit                                 |   | $      | 2,043,813 |   |
| Selling,                  general and administrative expenses |   | $      | 1,554,602 |   |
| Net                  income                                   |   | $      | 403,136   |   |
| Basic                  income per share                       |   | $      | 0.00      |   |

**Velocity        West, Inc.**

| Customer                  list          |   | $      | 400,000 |   |
|--------------------------------------------------------------------------------------|--------|--------|---------|--------|
| Non-compete                  agreement                                               |   |   | 10,000  |   |
| Deferred                  revenue                                                    |   |   | (50,000 | )      |
| Purchase                  price                                                      |   | $      | 360,000 |   |

----

**SITESTAR        CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        7 — PROVISION FOR INCOME TAXES**

**NOTE        8 — INTANGIBLE ASSETS**

**NOTE        9 — DEFERRED REVENUE**

----

**SITESTAR        CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        9 — DEFERRED REVENUE, continued**

**Revenue        Recognition**

**NOTE        10 — NOTES PAYABLE**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   | 2008   |   |   | 2007   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Bank                    note payable in monthly interest and principal payments of $1,784.                    Interest is payable prime plus 4.5%, (9.75% and 9.75% as of June                    30, 2008                    and December 31, 2007 respectively).  The note is guaranteed by a                    stockholder of the Company and secured by a deed of trust against                    personal                    residences of three stockholders.  Also, the bank has a blanket lien                    against all other current and future assets of                    Sitestar.net. |   |   | 46,702 |   |   | 58,242 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |    |   |   |    |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|
| Bank                      line of credit reissued on April 12, 2008 with a principal                      limit of                      $300,000. Interest is payable at an annual rate of prime plus                      .25% (7.50%                      as of December 31, 2007). The note is secured by a deed of                      trust on the                      Company’s building and is personally guaranteed by officers and directors                      of the Company. |   |   | -       |   |   | 300,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |         |   |   |         |   |
| Non-interest                      bearing amount due on acquisition of AlaNet Internet Services                      payable in                      eleven monthly installments of $4,276 through April 2008.                                                                                                                                                                                                                                                                                     |   |   | -       |   |   | 20,807  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |    |   |   |    |   |
| Bank                      note payable in twelve monthly interest and principal payments                      of $30,650.                      Interest is payable at an annual rate of 9.25%.  The note is                      guaranteed by officers and directors of the Company and secured                      by shares                      of Company stock owned by the officers and directors of the                      Company.                                                |   |   | 149,756 |   |   | 322,048 |   |

----

**SITESTAR        CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        10 — NOTES PAYABLE**
**,        continued**

| Bank                  note payable in twenty four monthly interest and principal payments                  of                  $21,167. Interest is payable at an annual rate of 8.5%.  The note is                  guaranteed by officers and directors of the Company and secured                  by shares                  of Company stock owned by officers and directors of the                  Company.                                                                                                                                         |   |   | 327,951   |   |   | 438,264    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Bank                  bridge note originally payable on February 1, 2008. Interest is                  payable at                  an annual rate of 8.5%. The note was refinanced on February 21,                  2008 at an                  annual interest rate of 8.5% and is payable in twelve payments                  of $21,760                  and is personally guaranteed by officers and directors of the Company                  and                  secured by real estate owned by officers and directors of the                  Company. |   |   | 168,777   |   |   | 250,000    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Non-interest                  bearing amount due on acquisition of USA Telephone payable in thirty                  six                  monthly installments starting January 2008.                                                                                                                                                                                                                                                                                                                                                                            |   |   | 1,315,615 |   |   | 1,574.341  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Non-interest                  bearing amount due on acquisition of Comcation payable in five                  monthly                  installments starting April 2008.                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 7,827     |   |   | -          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Non-interest                  bearing amount due on acquisition of N2theNet payable in eleven                  monthly                  installments starting May 2008.                                                                                                                                                                                                                                                                                                                                                                                         |   |   | 34,813    |   |   | -          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Non-interest                  bearing amount due on acquisition of Dial Assurance payable in                  six monthly                  installments starting June 2008                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 57,441    |   |   | -          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Non-interest                  bearing amount due on acquisition of AdaNet payable in five monthly                  installments starting July 2008                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 14,705    |   |   | -          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Non-interest                  bearing amount due on acquisition of USA Telephone payable in 60                  days from                  closing.                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 50,290    |   |   | -          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |      |   |   |       |   |
| Less                  current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | (739,500  | )      |   | (1,268,866 | )      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |           |   |   |            |   |
| Long-term                  portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $      | 1,434,377 |   | $      | 1,694,836  |   |

----

**SITESTAR        CORPORATION**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE        10 — NOTES PAYABLE**
**,        continued**

| Twelve                  months ending June 30, 2009 |   | $      | 739,500   |   |
|-----------------------------------------------------|--------|--------|-----------|--------|
| Twelve                  months ending June 30, 2010 |   |   | 1,429,774 |   |
| Twelve                  months ending June 30, 2011 |   |   | 4,603     |   |
| Twelve                  months ending June 30, 2012 |   |   | -         |   |
| Twelve                  months ending June 30, 2013 |   |   | -         |   |
| Thereafter                                          |   |   | -         |   |
| Total                                               |   | $      | 2,173,877 |   |

**NOTE        11 — ALLEVIATION OF GOING CONCERN **

----

**SITESTAR        CORPORATION**

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

**General**

**Overview**

----

**SITESTAR        CORPORATION**

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

**Results        of operations**

|                                                |   | For                  the six months ended June 30, 2008 (unaudited) |    |
|-----------------------------------------------------|--------|---------------------------------------------------------------------|---------|
|                                                |   | Corporate                                                           |    | Internet |   | Total |   |
| Revenue                                             |   | $                                                                   | -       |   | $ | 5,159,244 |   | $ | 5,159,244 |   |
| Cost                  of revenue                    |   |                                                                | -       |   |   | 1,387,801 |   |   | 1,387,801 |   |
|                                                |   |                                                                |         |   |   |  |   |   |  |   |
| Gross                  profit                       |   |                                                                | -       |   |   | 3,771,443 |   |   | 3,771,443 |   |
|                                                |   |                                                                |         |   |   |  |   |   |  |   |
| Operating                  expenses                 |   |                                                                | 69,708  |   |   | 2,914,324 |   |   | 2,984,032 |   |
| Income                  (loss) from operations |   |                                                                | (69,708 | ) |   | 857,119 |   |   | 787,411 |   |
| Other                  income (expense)             |   |                                                                | -       |   |   | (86,532 | ) |   | (86,532 | ) |
|                                                |   |                                                                |    |   |   |   |   |   |   |   |
| Net                  income (loss)                  |   | $                                                                   | (69,708 | ) | $ | 770,587 |   | $ | 700,879 |   |

----

**SITESTAR        CORPORATION**

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

|                                                |   | For                  the six months ended June 30, 2007 (unaudited) |    |
|-----------------------------------------------------|--------|---------------------------------------------------------------------|---------|
|                                                |   | Corporate                                                           |    | Internet |   | Total |   |
| Revenue                                             |   | $                                                                   | -       |   | $ | 2,968,714 |   | $ | 2,968,714 |   |
| Cost                  of revenue                    |   |                                                                | -       |   |   | 931,006 |   |   | 931,006 |   |
|                                                |   |                                                                |         |   |   |  |   |   |  |   |
| Gross                  profit                       |   |                                                                | -       |   |   | 2,037,708 |   |   | 2,037,708 |   |
|                                                |   |                                                                |         |   |   |  |   |   |  |   |
| Operating                  expenses                 |   |                                                                | 43,726  |   |   | 1,509,819 |   |   | 1,553,545 |   |
| Income                  (loss) from operations |   |                                                                | (43,726 | ) |   | 527,889 |   |   | 484,163 |   |
| Other                  income (expense)             |   |                                                                | -       |   |   | (86,075 | ) |   | (86,075 | ) |
|                                                |   |                                                                |    |   |   |   |   |   |   |   |
| Net                  income (loss)                  |   | $                                                                   | (43,726 | ) | $ | 441,814 |   | $ | 398,088 |   |

|                               |   | For                  the six months ended June 30,                  2008 |    |
|------------------------------------|--------|--------------------------------------------------------------------------|---------|
|                               |   | Corporate                                                                |    | Internet |   | Total |   |
| EBITDA                             |   | $                                                                        | (69,708 | ) | $ | 2,367,391 |   | $ | 2,297,683 |   |
| Interest                  expense  |   |                                                                     | -       |   |   | (110,518 | ) |   | (110,518 | ) |
| Taxes                              |   |                                                                     | -       |   |   | - |   |   | - |   |
| Depreciation                       |   |                                                                     | -       |   |   | (19,118 | ) |   | (19,118 | ) |
| Amortization                       |   |                                                                     | -       |   |   | (1,467,168 | ) |   | (1,467,168 | ) |
| Net                  income (loss) |   | $                                                                        | (69,708 | ) | $ | 770,587 |   | $ | 700,879 |   |

----

**SITESTAR        CORPORATION**

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

|                               |   |   | For                  the six months ended June                  30, 2007 |   |
|------------------------------------|--------|--------|-------------------------------------------------------------------------------|--------|
|                               |   |   | Corporate                                                                     |   |   | Internet |   |   | Total |   |
| EBITDA                             |   | $      | (43,726                                                                       | )      | $ | 1,186,279 |   | $ | 1,142,553 |   |
| Interest                  expense  |   |   | -                                                                             |   |   | (85,182 | ) |   | (85,182 | ) |
| Taxes                              |   |   | -                                                                             |   |   | - |   |   | - |   |
| Depreciation                       |   |   | -                                                                             |   |   | (30,731 | ) |   | (30,731 | ) |
| Amortization                       |   |   | -                                                                             |   |   | (628,552 | ) |   | (628,552 | ) |
| Net                  income (loss) |   | $      | (43,726                                                                       | )      | $ | 441,814 |   | $ | 398,088 |   |

**SIX        MONTHS ENDED JUNE 31, 2008 COMPARED TO JUNE 30, 2007        (Unaudited)**

**REVENUE**

**COST        OF REVENUE**

----

**SITESTAR        CORPORATION**

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

**OPERATING        EXPENSES.**

**GAIN        ON SALE OF ASSETS**

**INTEREST        EXPENSE**

**JUNE        30, 2008 (Unaudited) COMPARED TO DECEMBER 31, 2007        (Audited)**

**FINANCIAL        CONDITION.**

----

**SITESTAR        CORPORATION**

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

**LIQUIDITY        AND CAPITAL RESOURCES**

|                                                             |   |   | 2008       |   |   | 2007      |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|-----------|--------|
| EBITDA for                    the six months ended June 30, |   | $      | 2,297,683  |   | $      | 1,142,553 |   |
| Interest                    expense                              |   |   | (110,518   | )      |   | (85,182   | )      |
| Taxes                                                            |   |   | -          |   |   | -         |   |
| Depreciation                                                     |   |   | (19,118    | )      |   | (30,731   | )      |
| Amortization                                                     |   |   | (1,467,168 | )      |   | (628,552  | )      |
| Net                    income for the six months ended June 30,  |   | $      | 700,879    |   | $      | 398,088   |   |

|                        |   | 2008   |    | 2007   |   |
|-----------------------------|--------|--------|---------|--------|--------|
| Current                     |   | $      | 307,983 |   |   | 45 | % | $ | 171,446 |   |   | 57 | % |
| 30                  < 60 |   |   | 191,975 |   |   | 28 | % |   | 72,337 |   |   | 24 | % |
| 60                  +       |   |   | 180,388 |   |   | 27 | % |   | 56,080 |   |   | 19 | % |
| Total                       |   | $      | 680,346 |   |   | 100 | % | $ | 299,863 |   |   | 100 | % |

----

**SITESTAR        CORPORATION**

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

**OFF-BALANCE        SHEET TRANSACTIONS**

**Forward-looking        statements**

----

**SITESTAR        CORPORATION**

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

**CRITICAL        ACCOUNTING POLICY AND ESTIMATES**

----

**SITESTAR        CORPORATION**

**Item        3.    Controls and Procedures**

**Disclosure        Controls and Internal Control over Financial Reporting **

**Inherent        Limitations of the Effectiveness of Internal Control **

----

**SITESTAR        CORPORATION**

**Controls        and Procedures, continued**

**Changes        in Internal Control over Financial Reporting **

**PART        II.  OTHER INFORMATION**

**Item        1.     Legal Proceedings**

**Item        2.     Unregistered Sales of Equity Securities and use of        Proceeds**

**Item        3.     Defaults Upon Senior Securities**

**Item        4.     Submission of Matters to a Vote of Security        Holders**

**Item        5.     Other Information**

----

**SITESTAR        CORPORATION**

**OTHER        INFORMATION, continued**

**Item        6.     Exhibits **

| 31.1 | Certification                  of President Pursuant to the Securities Exchange Act of 1934, Rules                  13a-14                  and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley                  Act                  of 2002. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification                  of Chief Financial Officer Pursuant to the Securities Exchange                  Act of                  1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302                  of the                  Sarbanes-Oxley Act of 2002. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32 | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002 |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

|                                      |                                                                                                                                                                                    |                                        |
|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|
|                                      | SITESTAR CORPORATION                                                                                                                                                                    |
|                                 |                                                                                                                                                                               |                                   |
| Date: August                19, 2008 | By:                                                                                                                                                                           | /s/ Frank                Erhartic, Jr. |
|                                      | Frank                  Erhartic, Jr.President,                  Chief Executive Officer(Principal                  Executive Officer and Principal                  Accounting Officer) |

|                                      |                                                                                                                  |                                                   |
|-------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
| Date: August                19, 2008 | By:                                                                                                         | /s/ Daniel                A.                Judd. |
|                                      | Daniel                  A. JuddChief                  Financial Officer(Principal                  Financial Officer) |

----