**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington
      D.C. 20549**









**FORM
      10-KSB**




**(Mark
      One)**




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




**For
      the Fiscal Year Ended:** **December
      31, 2007**




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




**For
      the Transition Period From _____________ to _____________**




**Commission
      File No. 000-33483**




**CHINA
      MOBILE MEDIA TECHNOLOGY INC.**




(Exact
      Name of Registrant as Specified in its Charter)


**Nevada**
            
            **88-0496645**(State
                or other Jurisdiction of Incorporation or
              Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)**9th
                Floor, Block C, Intelligence-International Plaza**
              **18,
                Zhongguancun East Road**
              **Haidian,
                Beijing**
              **PRC**
              (Address
                of principal executive offices)
            
            **100083**
              (Zip
                Code)Issuer’s
                telephone number, Including Area Code:**+86
                10 8260 1927**
              
              Securities
                registered under to Section 12(b) of the Act:**None**
              
              Securities
                registered under to Section 12(g) of the Act:
              
              **Common
                Stock, par value $0.001 per share**
              (Title
                of Class)




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


Yes
oNo
x




Indicated
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.  Yes
oNo
x




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




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer” and “large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


Large
                  Accelerated Filer o
              Accelerated
                  Filer o
              Non-Accelerated
                  Filer x




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




Yes
oNo
x




As
      of
      December 31, 2007 the aggregate market value of the voting and non-voting equity
      held by non-affiliates was approximately $28,758,507.30.




As
      of
      March 31, 2008, there were 60,935,122 shares of Common Stock
      outstanding.




**DOCUMENTS
      INCORPORATED BY REFERENCE**




None.







**TABLE
      OF CONTENTS**


**Page**PART
                I.
            
            
            1Item
                1.
            Description
                of Business
            1Item
                1A.
            Risk
                Factors
            8Item
                1B.
            Unresolved
                Staff Comments
            17Item
                2.
            Properties
            17Item
                3.
            Legal
                Proceedings
            17Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            18PART
                II.
            
            
            18Item
                5.
            Market
                for Common Equity and Related Stockholder Matters and Purchasers
                of Equity
                Securities
            18Item
                6.
            Selected
                Consolidated Financial Data
            19Item
                7.
            Management’s
                Discussion and Analysis or Plan of Operation
            20Item
                7A.
            Quantitative
                and Qualitative Disclosure about Market Risk
            22Item
                8.
            Financial
                Statements
            23Item
                9.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            23Item
                9A.
            Controls
                and Procedures
            23Item
                9B.
            Other
                Information
            24PART
                III.
            
            
            25Item
                10.
            Directors,
                Executive Officers and Corporate Governance.
            25Item
                11.
            Executive
                Compensation
            26Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholders Matters
            27Item
                13.
            Certain
                Relationships and Related Transactions
            28Item
                14.
            Exhibits
            31Item
                15.
            Principal
                Accountant Fees and Services
            32INDEX
                TO FINANCIAL STATEMENTS
            36




i




**Forward-Looking
      Information**




This
      Annual Report on Form 10-KSB contains forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, and Section 21E of the
      Securities Exchange Act of 1934. These statements relate to future events or
      the
      Company’s future financial performance. The Company has attempted to identify
      forward-looking statements by terminology including “anticipates”, “believes”,
“expects”, “can”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”,
“plans”, “potential”, “predict”, “should” or “will” or the negative of these
      terms or other comparable terminology. These statements are only predictions.
      Uncertainties and other factors, including the risks outlined under Risk Factors
      contained in Item 1A of this Annual Report may cause the Company’s actual
      results, levels of activity, performance or achievements to be materially
      different from any future results, levels or activity, performance or
      achievements expressed or implied by these forward-looking statements. Although
      the Company believes that the expectations reflected in the forward-looking
      statements are reasonable, the Company cannot guarantee future results, levels
      of activity, performance or achievements. The Company expectations are as of
      the
      date this Form 10-KSB is filed, and the Company does not intend to update any
      of
      the forward-looking statements after the date this Annual Report on Form 10-KSB
      is filed to confirm these statements to actual results, unless required by
      law.




**Availability
      of SEC Filings**




The
      Company files annual reports on Form 10-KSB, quarterly reports on Form 10-QSB,
      current reports on Form 8-K and proxy and information statements and amendments
      to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the
      Securities Exchange Act of 1934, as amended. The public may read and copy these
      materials at the Securities and Exchange Commission’s (“SEC”) Public Reference
      Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain
      information on the operation of the public reference room by calling the SEC
      at
      1-800-SEC-0330. The SEC also maintains a website (http://www.sec.gov) that
      contains reports, proxy and information statements and other information
      regarding the Company and other companies that file materials with the SEC
      electronically. You may also obtain copies of the Company’s reports filed with
      the SEC, free of charge, on our website at http://www.htwchina.com.




ii




**PART
      I.**




**ITEM
      1. BUSINESS**




China
      Mobile Media Technology Inc. ( “we”, “us”, “our”, the “Company”, or “CHMO”) was
      incorporated under the laws of the State of Nevada on January 14, 2000 under
      the
      name of Pro-Active Solutions Inc. On July 7, 2004, we changed our name to
      General Components Inc. On October 27, 2006, CHMO consummated an exchange of
      shares (the “Magical Share Exchange”) pursuant to a Share Exchange Agreement
      dated as of September 6, 2006 (the “Magical Share Exchange Agreement”)with
      Magical Insight Investments Ltd. (“Magical Insight”), which resulted in the
      acquisition by CHMO of the assets and operations of Magical Insight. Pursuant
      to
      the Magical Share Exchange Agreement, CHMO issued an aggregate of 17,986,721
      shares of its common stock and warrants to purchase an additional 28,013,279
      shares of its common stock in exchange for the sole outstanding share of Magical
      Insight. On April 25 2007, we changed our name to Hi-Tech Wealth Inc and on
      November 15, 2007, we changed our name to China Mobile Media Technology Inc.




Our
      subsidiary, Magical Insight, through its primary operating company, Beihai
      Hi-Tech Wealth Technology Development Company Limited (“HTW”), is a leading
      Chinese integrated multi-channel sales and marketing company that develops
      and
      sells proprietary branded digital mobile devices.  At the time of the
      Magical Share Exchange, HTW was 90% owned by Magical Insight. As a result of
      a
      subsequent capital contributions and a purchase of outstanding capital, HTW
      is
      currently 100% owned.




HTW
      markets and sells its products through a TV-based direct response platform
      and
      an off-line distribution network.   HTW concentrates on marketing,
      sales and product innovation while outsourcing product design and manufacturing.
      HTW does not engage in traditional research and development associated with
      developing new products and does not manufacture any products.  HTW
      operates a flexible and scalable business model that management believes can
      handle rapid growth.




**Recent
      Events**




On
        March
        26, 2008, the Company’s subsidiary Beijing Hi-Tech Wealth Communication
        Technology Development Ltd submitted registration application to the Chinese
        Government Intellectual Patent Agency as the new owner of 5 approved solar
        power
        technology patents to replace Beijing Hi-Tech Wealth Investment Limited.
        Two
        patent registration have been accomplished and the other three patent
        registration should be accomplished in short term future.




On
      January 11, 2008, we completed a financing through the issuance of RMB
      150,000,000 (US$20,661,157) aggregate principal amount of USD-Settled Guaranteed
      Senior Notes due 2014 (the “Notes”) by Magical Insight pursuant to an Indenture
      dated January 11, 2008 (the “Indenture”) between Magical Insight, as issuer, the
      Company, as guarantor and The Hong Kong and Shanghai Banking Corporation, as
      Trustee and Collateral Agent, and the issuance by the Company of warrants to
      purchase an aggregate of 12,000,000 shares of common stock of the Company (the
      “Warrants”) to Abax Lotus Ltd. (the “Purchaser”). The Notes initially do not
      bear interest during the first year following their issuance and bear interest
      at the rate of 9.5% per annum thereafter, subject to increase by an additional
      5% per annum in the event that the Company’s common stock is not listed on
      a recognized stock exchange by January 12, 2009. Magical Insight’s obligations
      under the Notes are guaranteed by the Company, and are secured by the pledge
      by
      the Company of 100% of the stock of Magical Insight, the pledge by Zhang
      Zhengyu, the Company’s Chief Executive Officer, of all of his equity interest in
      Star Cluster Incorporated, a company organized under the laws of the British
      Virgin Islands (“Star Cluster”), the pledge by Star Cluster of all of its equity
      interest in Hi-Tech Wealth Holding Limited, and the pledge of equity interests
      in each of Beihai Hi-Tech Wealth Technology Development Co., Ltd. and Beijing
      Hi-Tech Wealth Communication Technology Co., Ltd, each a wholly foreign owned
      enterprise formed under the laws of the People’s Republic of China. The Warrants
      are exercisable at any time prior to June 30, 2014 and enable the holder thereof
      to purchase shares of CHMO’s common stock at an exercise price of $2.00 per
      share (the “Exercise Price”), subject to a downward adjustment on the six month
      anniversary of the issuance thereof and at the expiration of each six month
      period thereafter if the volume weighted average closing price of the Company’s
      common stock for the 20-day trading period immediately prior to the reset date
      is less than the Exercise Price, at such lower volume weighted average closing
      price (the “Reset Price”), provided that such Reset Price shall not be lower
      than $0.80 per share. Holders of the Notes are entitled to the protection of
      certain customary covenants, including negative covenants generally limiting
      the
      Company’s ability to incur additional indebtedness (including pursuant to sale
      and leaseback transactions), prohibiting the payment of dividends on (or the
      repurchase of) shares of its common stock, prohibiting the incurrence of liens,
      limiting Magical’s ability to sell assets and enter into transactions with its
      affiliates, restricting the ability of Magical to enter into arrangements
      limiting the ability of its subsidiaries to pay dividends, and require the
      Company to apply the proceeds from the issuance of the Notes only to pursue
      multichannel sales and marketing activities in the People’s Republic of China.
      The Notes are mandatorily redeemable in tranches commencing on the third
      anniversary of the issuance date in the amounts and at the times set forth
      in
      the Indenture. In addition, Magical is obligated to make an offer to all holders
      of Notes to repurchase their securities in the event of a change of control,
      sales of significant assets or a delisting of the Company’s common stock at
      purchase prices of 105%, 100% and 105%, respectively, of the principal amount
      thereof.




1




The
        fair
        value of the Warrants at the issuance date will be calculated using the
        Black-Scholes option-pricing model.  This fair value will be recorded as a
        discount to the face amount of the Guaranteed Senior Notes and will be amortized
        over the life of the Notes.  The arrangement fee and service fee will be
        recorded as debt issue cost and will be amortized over the life of the
        Notes.




The
      principal shareholders of the Company have also entered into arrangements with
      Abax Lotus Ltd. that generally grant broad management veto rights in favor
      of
      Abax Lotus Ltd., including prohibitions on changes in senior management, the
      right to appoint one member of the board of directors (so long as Abax Lotus
      Ltd. and any of its affiliates collectively holds more than 5% of the Company’s
      common stock on a fully diluted basis), prohibiting the Company from entering
      into transactions outside of the ordinary course of business, limiting the
      Company’s ability to expend funds in excess of 20% of approved budget amounts
      and rights of first refusal and tag-along rights on sales of securities by
      either the Company or its current major shareholders, in each (unless otherwise
      indicated) so long as Abax Lotus Ltd. and any of its affiliates collectively
      holds at least RMB 15 million of the Notes or 3.5% of the Company’s common stock
      (on a fully diluted basis). In addition, the major shareholders of the Company
      may not transfer more than 10% of the shares of common stock they own so long
      as
      Abax Lotus Ltd. and any of its affiliates collectively holds more than 5% of
      the
      Company’s common stock on a fully diluted basis.




The
      Company has agreed to register the resale of the shares of common stock issuable
      upon exercise of the Warrants on any registration statement it files with the
      Securities and Exchange Commission (subject to customary exclusions). Abax
      Lotus
      Ltd. received an arrangement fee of $2,000,000 and a service fee of $150,000
      in
      connection with the financing.




On
        March
        14, 2008, the Company agreed to issue 6% preferred stock dividends Series
        B
        preferred stockholders of $764,373 in form of 1,415,507 shares of common
        stock
        for the year ended December 31, 2007.




**Our
      Strategy**





Our
      strategy to successfully compete in the mobile phone industry is to capture
      the
      rapid growth of smart phone sales in China. We intend to adopt differentiation
      strategies in terms of targeted consumer groups, consumer needs, products,
      sales
      channels and brand name building:





**Differentiation
      in the targeted consumer groups**





In
      China,
      about 10% of mobile phone users are government officials (public servants),
      private business owners or state-owned enterprises managers, most of whom use
      smart phones. Since this group of customers is insensitive to the selling price,
      providing tailor-made products to them should generate high profit margins.





**Differentiation
      in the consumer needs**





Our
      target group of mobile phone users has a special need for information security,
      privacy protection and social contact management (restriction). The Company
      first identified this need and invested in developing special software to
      provide a satisfactory solution to this group of customers. The Company has
      successfully created a market segment for information safety and has become
      the
      leader and pioneer in this market segment.




2





**Differentiation
      in the products**




Solar
      powered mobile phone is an innovative product and the first one in history.
      The
      benefit of such mobile phones either for users and environment are obvious.
      Since quite a long time, we see solar powered electronic calculators, but not
      mobile phones. This is mainly due to two reasons: a) mobile phones have much
      higher power consumption level than calculators do; b) the lithium (whether
      polymer or not) batteries used by mobile phones have restrictions on the life
      cycle of charging and discharging.





Information
      security phones focus on three key features. 1) Information Security - The
      mobile phone will never be accessed by unauthorized third party. 2) Invisibility
      - The user will never be disturbed by unknown phone calls as the mobile phone
      is
      able to filter out unknown and identified calls. 3) Remote Access and Control
      -
      If the mobile phone is lost, the information and data on the lost phone can
      be
      retrieved by using a different mobile phone. Furthermore, the lost mobile phone
      can be locked remotely and restricted so that the holder is not able to make
      any
      calls from the lost mobile phone.




**Our
      Products**




CHMO,
      through HTW, is an integrated multi-channel sales and marketing company in
      China
      that develops and sells proprietary branded digital mobile devices.  HTW’s
      product strategy is predicated on identifying “high end” customer needs and
      supplying products with differentiated features specifically tailored to meet
      those needs.   For example, the Company’s current F8 “Information
      Secure” smart phone is targeted at business owners and government officials who
      are concerned about information security and privacy. Beihai HTW has sold over
      150,000 Information Secure phones since they were launched in February
      2006.  Beihai HTW’s other current products include the F88, an upgraded
      version of the original Information Secure phone, and the U8, a new smart phone
      targeted towards women, which includes many of the F8’s features along with
      digital music and MP3 capability.  The Company anticipates continued
      innovation within the smart phone market and also expects that its product
      offering in the future will expand beyond smart phones.









3




**Product
      Distribution in China**





In
      1999,
      the management team of HTW launched a Personal Digital Assistant (“PDA”) product
      in the PRC under the “Shang Wu Tong” brand.  HTW’s current products are
      branded under this name and HTW plans to leverage this unique premium brand
      through brand extensions and co-branding.




HTW’s
      use
      of direct response TV creates brand and product awareness while enabling
      consumers to directly purchase its products throughout China.  HTW’s
      current ad campaign broadcasts 15 and 30 second commercials to build general
      awareness and 1, 4 and 5 minute infomercials to educate consumers on the
      features of its products.  These commercials and infomercials are
      broadcasted on 3 nationwide CCTV channels, 19 national satellite TV channels,
      5
      international satellite channels operating in China and 10 local channels for
      a
      total of approximately 2,000 minutes per month.




HTW’s
      off-line distribution network consists of over 1,000 exclusive distributors
      in
      over 300 cities and covers all provinces of China. This distribution network
      supplies over 4,000 retail stores.  The Company manages the network to
      eliminate conflicts among distributors and facilitate the sale of products
      with
      uniform pricing across China.  Each distributor is responsible for local
      advertising while benefiting from the national advertising and sponsorship
      provided by HTW.







4










We
      have
      entered into an exclusive arrangement with Shanghai Xiang Guo Wang Lu Technology
      Development Limited Co. and Shanghai Xiang Guo Advertising Limited for the
      marketing and distribution of Beihei HTW’s information secure phone, including
      the F8, U8 and F88 under the Acorn International brand. **** In
      exchange for their commitment to advertise the product every day for at least
      three hours every day for two months, we have agreed to provide a commercial
      subsidy for each phone sold by Acorn through the TV advertising. The agreement
      expired on April 10, 2007; however, we are in negotiations regarding an
      extension of our commercial arrangement and at the same time are also seeking
      other appropriate partners to continue our strategy on TV marketing to maintain
      our market share. This effort was not fruitful due to the failure of the first
      solar powered mobile phone S116 launched in Q2/2007.




HTW’s
      management believes its flexible supply chain positions it to efficiently handle
      a growing and dynamic market. HTW leverages outsourced manufacturing and design
      and believes this model will improve time to market and help preempt
      competition.




**Brief
      History**





This
      history of HTW since inception and its management team upon entering the PDA
      market is briefly described below:










**1998,**Beijing Hi-Tech Wealth Electronic Products Company Limited (“BJ HEP”)
                founded
              **2000**,
                Started JV with Siemens to develop an integrated PDA &
                phone
              **June
                2000**,
                BJ HEP cooperated with Microsoft to enter high end PDA market
              **2001**,
                BJ HEP was one of 10 non-state owned companies awarded the “Most
                Influential Enterprise”
              **April
                2001**,
                Windows CE based “Shang Wu Tong” PDA launched and over 2 million units
                sold
              **1999-2002**,
                BJ HEP was the No. 1 PDA provider in China 4 years in a row with
                a peak
                market share of 70%
            
            **2002**,
                BJ HEP awarded Microsoft’s “Year 2002 Best Co-operative
                Partner”
              **2002**,
                Launched integrated PDA & phone developed by JV with
                Siemens
              **2002**,
                Started development of light energy phone
              **2003**,
                BeihaiHTW founded; BeihaiHTW cooperated with ZTE and launched first color PDA and pen-based
                smart phone
              **December
                2004**,
                F6 was launched by BeihaiHTW
            
            **February
                2006**,
                BeihaiHTW spin-off of software design business to Warburg Pincus
                to focus
                on core competencies
              **April
                2006**,
                TV shopping network relationship established by
                BeihaiHTW
              **October
                2006**,
                GCPO completes acquisition of Magical Insight and its subsidiaries,
                including BeihaiHTW
              **2006**,
                Over 160k units sold in 2006 through September by BeihaiHTW
              
              **On
                2007****:**
              
              **January
                2007**,
                HTW launched F88, the new information security phone
              **May
                2007**,
                HTW launched S116, the first solar powered mobile phone and L100,
                the
                English learning phone
              **October
                2007**,
                HTW granted the first contract with China Unicom for its model
                C66
              **2007**,
                About 200k units sold in 2007




5




**Our
      Industry**




The
      increasing purchasing power of the Chinese consumer is a trend that should
      greatly benefit CHMO.  China’s GDP growth, as illustrated in the chart
      below, shows a strong and developing potential market for our products as
      increases in disposable income typically encourage Chinese consumers to purchase
      branded products.









The
      retail market for consumer products reached $834.5 billion in 2005 according
      to
      China’s National Bureau of Statistics, while growing at a compound annual growth
      rate (“CAGR”) of 12.7% from 1998 to 2005.  According to industry reports,
      China’s smart phone market grew over 100% from 2004 to 2005. In 2005, 5.2
      million smart phones were sold by the industry in China, which represents 5.9%
      of the total mobile phone market. We believe we are well positioned to directly
      sell to consumers looking to buy smart phones through direct response TV and
      its
      off-line distribution network.




6





Mobile
      subscriber penetration and growth is a good indicator of demand for our
      products. Although China’s handset penetration rate is low compared to that of
      developed countries, growth in the penetration rate of handset subscribers
      combined with the sheer size of China’s population (1.3 billion) will continue
      to drive substantial unit growth.




**Competition**




Companies
        operating in the smart phone business can be grouped in three tiers. According
        to Pday, a third party research firm in China, Nokia and Motorola (the first
        tier companies) accounted for 31% and 21% market share, respectively, for
        the
        period from July 2006 to June 2007. In the second tier, there are approximately
        3 companies with market share between 5-10 %. The remaining companies are
        in the
        third tier and account for approximately 25% market share.
  According
          to CCID Consulting Co., Ltd. (“CCID”), a Chinese marketing research consulting
          company, 5.2 million units of smart phones were sold in China during 2005,
          representing growth of 100% from the previous year. During the same time
          period,
          total mobile phone sales in China only increased by 12.8%, highlighting
          the
          greater demand for smart phones as compared to ordinary mobile phones.
          CCID
          projects that smart phone sales will exceed 20 million units in 2008, and
          the
          percentage of smart phones sales will increase from 6% in 2005 to over
          20% in
          2008.


**2002-2008
      Proportion of Smart Phone Sales (Source: CCID)**


**(units
      in millions, except percentages)**





2002
            
            2003
            
            2004
            
            2005
            
            2006
            
            2007
            
            2008ESmart
                Phone Sales
            
            
            0.6
            
            
            1.3
            
            
            2.6
            
            
            5.2
            
            
            10.4
            
            
            14.4
            
            
            23Total
                Sales
            
            
            62
            
            
            74
            
            
            79
            
            
            88
            
            
            99
            
            
            149
            
            
            206Proportion
                of Smart Phone Sales
            
            
            1.0
            %
            
            1.8
            %
            
            3.3
            %
            
            5.9
            %
            
            10.5
            %
            
            9.7
            %
            
            11.2
            %




7


**Intellectual
      Property**





Under
      the
      name of HTW, the Company possesses over 100 patents, trademarks and copyrights
      registered in China, including approximately 90 registered trademarks and 1
      trademark currently under registration, 7 registered patent application and
      outlook designs, 7 registered software copyrights and 38 registered websites
      for
      internet, mobile and SMS networks.




**Research
      and Development**





Although
      HTW does not engage in traditional research and development activities, in
      order
      to develop products and marketing strategies that meet with strong market
      acceptance, the Company maintains an Innovation Team and a Product Specification
      Team that seek to identify concepts, trends and features to incorporate into
      new
      product offerings.




**Employees**




As
        of
        April 14, 2008, we employed approximately 242 people on a full-time basis
        in
        China. Of the total, approximately 30 were in product research and development,
        approximately 60 in sales and marketing, approximately 50 in quality assurance
        and distribution, and approximately 100 in general and administration.


Our
      success is highly dependent on our ability to attract and retain qualified
      employees. We plan to hire additional employees for marketing and sales,
      customer service and manufacturing and assembly as we grow our business. None
      of
      our employees are represented by a labor union and subject to collective
      bargaining agreements.




**ITEM
      1A. Risk Factors**




*In
      addition to the other information in this annual report, our business is subject
      to numerous risks which should be considered carefully in evaluating our
      business and prospects.*




8




**Risks
      Related to Our Business**




***Our
      operating results fluctuate from quarter to quarter.*** **




Our
      quarterly revenue, income and other operating results have fluctuated in the
      past and may fluctuate significantly in the future due to a number of factors,
      including the following:





·
            The
                ability of our suppliers to meet our supply
                requirements;


·
            Competitive
                pressures;


·
            The
                time required for research and
                development;


·
            Changing
                design requirements resulting from rapid technology shifts;
                and


·
            Industry
                trends impacting the overall end user
                market.




As
      a
      result of these and other factors, our results of operations may vary on a
      quarterly basis and net revenue may be adversely affected from period to period.
      Our results of operations for a particular quarter may not be indicative of
      our
      future performance. If our operating results in a quarter fall below our
      expectations or the expectations of market analysts or investors, the price
      of
      our common stock is likely to decrease.




***Our
      operating results are substantially dependent on the development of new
      products.*** **




We
      may be
      unable to develop new products in a timely or cost-efficient manner, and these
      new products may fail to meet the requirements of our customers’ end-markets. If
      we fail to develop new products that will meet our targeted customers’ needs,
      our results of operations will be materially and adversely affected.




***If
      our customers do not purchase our newly-launched products, our net revenue
      will
      be adversely affected.*** **




While
      most of our new products have been attractive to our customers, there is no
      guarantee that our new products will receive positive market response. We
      dedicate personnel, management and financial resources into developing new
      products. If a new product is not sold over a certain amount, we will fail
      to
      capitalize on the invested resources, time and effort that we expended on the
      product.




***Reliance
      on our suppliers makes us vulnerable to the loss of one or more key suppliers
      or
      the delivery capabilities of our suppliers.*** **




We
      typically rely on a limited number of key suppliers. Although we have developed
      good long-term relationships with our suppliers and EMS (Electronics
      Manufacturing Services) OEM third party alliance, there can be no assurance
      that
      we will always be able to obtain components and have our products completed
      and
      delivered to the market in a timely base. Such delay could make our products
      become obsolete or unattractive with our customers and consequently, our results
      of operations will be materially and adversely affected.





***If
      we fail to attract and retain key personnel, particularly our chief executive
      officer, our business will be materially impaired and our financial condition
      and results of operations will suffer.*** **




Our
      business greatly relies on the continued services of Dr. Zhang Zhengyu, our
      principal shareholder and chief executive officer and our senior management
      team. Many new product concepts and technology innovation are generated by
      Dr.
      Zhang and our senior management team. Our future success will depend to a
      significant degree upon the performance and contribution of Dr. Zhang and
      other members of our senior management team in areas including sales, new
      product specification, finance and customer services. Therefore, our business
      and results of operations may be materially and adversely affected if
      Dr. Zhang or another member of our senior management team leaves us. In
      addition, we will incur additional expenses to recruit and develop senior
      management members if one or more of our key employees are unwilling or unable
      to continue their employment with us. We do not maintain key man life insurance
      covering our senior management or any of our key employees.




Our
      future success also depends on our ability to identify, attract, hire, train,
      retain and motivate highly-skilled personnel. If we cannot attract and retain
      the personnel we require at a reasonable cost, our cost of revenue will increase
      and the profitability of our business could be negatively affected. Our business
      is especially dependent on sales, marketing and new product specification
      personnel. Competition in China for executive-level and skilled technical and
      sales and marketing personnel is strong, and recruiting, training, and retaining
      qualified key personnel are important factors affecting our ability to meet
      our
      growth objectives. Should key employees leave our company, we may lose both
      an
      important internal asset and net revenue from customer projects in which those
      employees were involved.




9




***Loss
      of the current TV direct sales strategic alliance may adversely impact our
      net
      revenue.*** **




On
      April
      24, 2006, we entered into a strategic alliance agreement with Acorn
      International Shopping Network (“Acorn”). Our current ad campaign broadcasts 15
      and 30 second commercials to build general awareness and 1, 4 and 5 minute
      infomercials to educate consumers on the features of our products. These
      commercials and infomercials are currently broadcasted on 3 nationwide CCTV
      channels, 19 national satellite TV channels, 5 international satellite channels
      operating in China and 10 local channels. Our ads are broadcasted no more than
      500 minutes per day, and the total airtime currently aggregates approximately
      9,000 minutes per month.




In
        2006,
        this TV direct sales platform generated about 30% of our total sales. The
        agreement with Acorn expired on April 10, 2007; however, we are in negotiations
        regarding an extension of our commercial arrangement and at the same time
        are
        also seeking other appropriate partners to continue our strategy on TV marketing
        to maintain our market share. If we do not renegotiate such contract on mutually
        acceptable terms, it may have an adverse impact on our financial results.
        We
        still cooperate with TV-shopping companies, but the landscape in this area
        has
        been dramatically changed, with media cost significantly increased since
        the
        second half of 2007


***The
      end-markets in which we operate are highly competitive and fragmented. We expect
      competition to intensify in the future, and if we fail to compete effectively,
      our business will be harmed.*** **




Pressures
      from current or future competitors could cause our products to lose market
      acceptance or require us to reduce our sales prices to keep and attract
      customers. Our competitors often have longer operating histories, stronger
      customer and supplier relationships, larger technical staffs and sales forces,
      and/or greater financial, technical and marketing resources than we do. Although
      we believe that there are no direct competitors of any meaningful size who
      operate using the same business model as ours, we may still face the risk of
      fierce competition.




***We
      may not have sufficient funds to pay our accounts payable when due, which could
      adversely affect our operations and net revenue.*** **




We
      experience a time lag in our accounts payable and accounts receivable cycles.
      Consequently, we may experience periods during which our cash from operations
      is
      insufficient to fund our working capital requirements. We have historically
      funded our working capital requirements through cash on hand, operating cash
      flows, as well as short-term credit facilities. As we grow and our working
      capital requirements increase, these facilities may not be sufficient to meet
      our needs. We may be unable to maintain these liquidity sources or obtain
      additional liquidity sources on commercially reasonable terms to meet our
      increased funding requirements.




10




***The
      unauthorized use of our software or other innovative technology, and new product
      ideas could have a material adverse impact on our net
      revenue.*** **




Although
      we typically will apply for patent or intellectual property protection for
      our
      software and technology, before the patent or protection come into effect,
      we
      may have significant risks with respect to the unauthorized use of our
      technology. We typically do not have non-disclosure or confidentiality
      agreements with most of the design houses or other technology partners to keep
      our new specifications and ideas confidential. Design houses may attempt to
      circumvent us by providing our new product ideas directly to our competitors.





***If
                the quality of our products does not meet our customers’ expectations,
                then our sales and operating earnings, and ultimately our reputation,
                could be adversely
                affected.***




Some
      of
      the new products we sell may have quality issues resulting from the design
      or
      manufacture of the product, or from the software used in the product. Often
      these issues are identified prior to the shipment of the products and may cause
      delays in shipping products to customers, or even the cancellation of orders
      by
      customers. Sometimes, we discover quality issues in the products after they
      have
      been shipped to our distributors or end-user customers, requiring us to resolve
      such issues in a timely manner that is the least disruptive to our customers.
      Such pre-shipment and post-shipment quality issues can have legal and financial
      ramifications, including: delays in the recognition of revenue, loss of revenue
      or future orders, customer-imposed penalties on us for failure to meet
      contractual requirements, increased costs associated with repairing or replacing
      products, and a negative impact on our goodwill and brand name reputation.





In
      some
      cases, if the quality issue affects the product’s safety or regulatory
      compliance, then such a “defective” product may need to be recalled. Depending
      on the nature of the defect and the number of products in the field, it can
      cause us to incur substantial recall costs, in addition to the costs associated
      with the potential loss of future orders, and the damage to our goodwill or
      brand/reputation. In addition, we may be required, under certain customer
      contracts, to pay damages for failed performance that might exceed the revenue
      that we receive from the contracts. Recalls involving regulatory agencies can
      also result in fines and additional costs. Finally, recalls can result in
      third-party litigation, including class action litigation by persons alleging
      common harm resulting from the purchase of the products.




***Going
        concern***
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. The Company has a net loss
        of
        $24,733,048 and a negative cash flow from operations of $13,607,191 for the
        year
        ended December 31, 2007, and has a working capital deficiency of $1,033,683
        and
        a retained deficit of $20,142,287 at December 31, 2007.
 
 The
        company will need to obtain additional financing in addition to the funds
        already raised through the sale of equity securities to fund our cash needs
        and
        continue our operations beyond March 2009. Additional financing, whether
        through
        public or private equity or debt financing, arrangements with stockholders
        or
        other sources to fund operations, may not be available, or if available,
        may be
        on terms unacceptable to us. Our ability to maintain sufficient liquidity
        is
        dependent on our ability to raise additional capital. If we issue additional
        equity securities to raise funds, the ownership percentage of our existing
        stockholders would be reduced. New investors may demand rights, preferences
        or
        privileges senior to those of existing holders of our common stock. Debt
        incurred by us would be senior to equity in the ability of debt holders to
        make
        claims on our assets. The terms of any debt issued could impose restrictions
        on
        our operations. If adequate funds are not available to satisfy either medium
        or
        long-term capital requirements, our operations and liquidity could be materially
        adversely affected and we could be forced to cut back our operations. The
        fundraising realized on January 2008 has allowed the Company to pay back
        the
        $10,000,000 secured note and fundraising expenses, the net proceeds give
        the
        Company sufficient working capital to launch new products toward the end
        of the
        second quarter of 2008.




***We
      became a public company through a share exchange with a non-operating public
      shell company, where we were the accounting acquirer and assumed all known
      and
      unknown potential liabilities of our predecessor
      entity.*** **




Our
      September 2006 share exchange was accounted for as a reverse merger in which
      Magical Insight was deemed the accounting acquirer and Hi-Tech Wealth Inc.
      was
      deemed the legal acquirer. Although by December 2006, we disposed of our
      previous businesses and operations (other than those operated by Magical
      Insight), we may still be responsible for any unknown liabilities relating
      to
      those prior businesses.





**Risks
      Related to Our Industry**





***Our
      inability to respond quickly and effectively to rapid technological advances
      and
      market demands would adversely impact our competitive position and our results
      of operations.*** **





The
      mobile handset market is characterized by rapid technological advances, intense
      competition, frequent introduction of new products and services and consumer
      demand for greater functionality, lower costs, smaller products and better
      performance. We must constantly seek out new products and develop new products
      to maintain in our portfolio. We expect our customers’ demands for improvements
      in product performance to increase, which means that we must continue to improve
      our products and develop new products to remain competitive and grow our
      business. Our failure to compete successfully for customers will result in
      price
      reductions, reduced margins or loss of market share, any of which would harm
      our
      business, results of operations and financial condition.




11




***Substantially
      all of our net revenue currently comes from sales from mobile handsets, and
      cyclical downturns could harm our operating results.*** **




The
      mobile handset market is highly cyclical and has experienced severe and
      prolonged downturns, often in connection with maturing product cycles and
      declines in general economic conditions. These downturns have been characterized
      by diminished product demand, production overcapacity, high inventory levels
      and
      accelerated erosion of average selling prices. The impact of slowing
      end-customer demand was compounded by higher than normal levels of inventories
      among our distributors and our distributors’ adjustments in their order levels,
      resulting in increased pricing pressure.




***The
      mobile handset end-market is characterized by a short product lifecycle, making
      time-to-market and sensitivity to customer needs critical to our success and
      our
      failure to respond will harm our business.*** **




Mobile
      handsets typically have a lifecycle of approximately six months before the
      technology becomes obsolete. Time-to-market, both with respect to our ability
      to
      supply consumers with timely and marketable products and provide our customers
      with a wide array of latest generation customized module design solutions,
      is
      critical to our success. As design cycles in the industry shorten, we face
      logistical challenges in providing our solutions in an increasingly shorter
      timeframe. If we are unable to respond to the shortened lifecycles and
      time-to-market, our business will suffer.




**Risks
      Related to Doing Business in China**




There
      are
      substantial risks associated with doing business in China, including those
      set
      forth in the following risk factors.




***Our
      operations may be adversely affected by China’s economic, political and social
      conditions.*** **




Substantially
      all of our operations and assets are located in China and substantially all
      of
      our net revenues are derived from our operations in China. Accordingly, our
      results of operations and future prospects are subject to economic, political
      and social developments in China. In particular, our results of operations
      may
      be adversely affected by:




·
            changes
                in China’s political, economic and social
                conditions;


·
            changes
                in policies of the government or changes in laws and regulations,
                or the
                interpretation of laws and regulations;


·
            changes
                in foreign exchange regulations;


·
            measures
                that may be introduced to control inflation, such as interest rate
                increases; and


·
            changes
                in the rate or method of taxation.




The
      economy of the People’s Republic of China (“PRC”) has historically been a
      planned economy. The majority of productive assets in China are still owned
      by
      various levels of the PRC government. In recent years the government has
      implemented economic reform measures emphasizing decentralization, utilization
      of market forces in the development of the economy and a high level of
      management autonomy. Such economic reform measures may be inconsistent or
      ineffectual, and we may not benefit from all such reforms. Furthermore, these
      measures may be adjusted or modified, possibly resulting in such economic
      liberalization measures being applied inconsistently from industry to industry,
      or across different regions of the country.




In
      the
      past twenty years, China has been one of the world’s fastest growing economies
      in terms of gross domestic product, or GDP. This growth may not be sustainable.
      Moreover, a slowdown in the economies of the United States, the European Union
      and certain Asian countries may adversely affect economic growth in China which
      depends on exports to those countries. Our financial condition and results
      of
      operations, as well as our future prospects, would be materially and adversely
      affected by an economic downturn in China.




***Our
      financial results benefit from tax concessions granted by the PRC government,
      the change to or expiration of which would materially change our results of
      operations.*** **




Our
      results of operation may be adversely affected by changes to or expiration
      of
      preferential tax concessions that some of our PRC operating companies currently
      enjoy or expect to enjoy in the future. The statutory tax rate generally
      applicable to Chinese companies is 33%. As a result of preferential tax rate
      incentives, our operations have been subject to relatively low tax
      liabilities.




12





On
      March
      16, 2007, the National People’s Congress of the PRC passed the Enterprise Income
      Tax Law of the People’s Republic of China, which law has taken effect as of
      January 1, 2008. In accordance with the new law, a unified enterprise income
      tax
      rate of 25% and unified tax deduction standards will be applied equally to
      both
      domestic-invested enterprises and foreign-invested enterprises such as HTW.
      Enterprises established prior to March 16, 2007, eligible for preferential
      tax
      treatment in accordance with the currently prevailing tax laws and
      administrative regulations shall, under the regulations of the State Council,
      gradually become subject to the new tax rate over a five-year transition period
      starting from the date of effectiveness of the new law. We expect details of
      the
      transitional arrangement for the five-year period from January 1, 2008 to
      December 31, 2012 applicable to enterprises approved for establishment prior
      to
      March 16, 2007, such as HTW, to be set out in more detailed implementing rules
      to be adopted in the future. In addition, certain qualifying “High Technology
      Enterprises” may still benefit from a preferential tax rate of 15% under the new
      tax law if they meet the definition of “Qualifying High Technology Enterprise”
to be set forth in the more detailed implementing rules when they are adopted.
      As a result, if HTW qualifies as a “Qualifying High Technology Enterprise”, it
      will continue to benefit from a preferential tax rate of 15%, subject to any
      transitional period rules implemented starting from January 1, 2008. Otherwise,
      HTW’s applicable tax rate may gradually increase from its existing rate of 15%
      to the unified tax rate of 25% by January 1, 2013 under the new tax law and
      in
      accordance with more detailed implementing rules to be adopted in the future.
      Any increase in our effective tax rate as a result of the above may adversely
      affect our operating results. However, details regarding implementation of
      this
      new law are expected to be provided in the form of one or more implementing
      regulations to be promulgated by the PRC government and the timing of the
      issuance of such implementing regulations is currently unclear.




***PRC
      government control of currency conversion may affect our ability to meet foreign
      currency obligations.*** **




Because
      the majority of our net revenue is denominated in Renminbi, any restrictions
      on
      currency exchange may limit our ability to use revenue generated in Renminbi
      to
      meet our foreign currency obligations, primarily denominated in U.S. dollars.
      The principal regulation governing foreign currency exchange in China is the
      Foreign Currency Administration Rules (1996), or the Rules, as amended. Under
      the Rules, once certain procedural requirements are met, Renminbi is convertible
      for current account transactions, including trade and service-related foreign
      exchange transactions and dividend payments, but not for capital account
      transactions, including direct investment, loans or investments in securities
      outside China, without prior approval of the State Administration of Foreign
      Exchange of PRC, or its local counter-parts. Since a significant amount of
      our
      future revenues will continue to be denominated in Renminbi, any existing and
      future restrictions on currency exchange may limit our ability to utilize
      revenue generated in China to fund our business activities outside of China,
      if
      any, or expenditures denominated in foreign currencies, or our ability to meet
      our foreign currency obligations, which could have a material adverse effect
      on
      our business, financial condition and results of operations. We cannot be
      certain that the PRC regulatory authorities will not impose more stringent
      restrictions on the convertibility of Renminbi with respect to foreign exchange
      transactions.




***Our
      acquisition strategy depends on government regulatory approvals in
      China.*** **




Regulations
      have been promulgated by the State Development and Reform Commission (“SDRC”)
      and the State Administration of Foreign Exchange (“SAFE”) that require
      registration with, and approval from, PRC government authorities in connection
      with direct or indirect offshore investment activities by individuals who are
      PRC residents and PRC corporate entities. These regulations may apply to
      our equity interests in offshore companies held by our PRC shareholders who
      are
      considered PRC residents. We intend to make all required applications and
      filings, and will require the shareholders of the offshore entities in our
      corporate group who are considered PRC residents to make the applications and
      filings, as required under these regulations and under any implementing rules
      or
      approval practices that may be established under these regulations. However,
      because these regulations lack implementing rules or reconciliation with other
      approval requirements, it remains uncertain how these regulations, and any
      future legislation concerning offshore or cross-border transactions, will be
      interpreted and implemented by the relevant government authorities. The approval
      criteria by SDRC agencies for outbound investment by PRC residents are not
      provided under the relevant SDRC regulations. Also, the criteria for
      registration with SAFE agencies, and whether such registration procedure is
      discretionary, are still uncertain as the criteria, if any, are not provided
      for
      under relevant SDRC regulations. Furthermore, there is a lack of relevant
      registration precedents for us to determine the registration criteria in
      practice. Accordingly, we cannot provide any assurances that we will be able
      to
      comply with, qualify under or obtain any registration or approval as required
      by
      these regulations or other related legislations. Further, we cannot assure
      you
      that our shareholders would not be considered PRC residents, given uncertainties
      as to what constitutes a PRC resident for the purposes of the regulation, or
      that if they are deemed PRC residents, they would or would be able to comply
      with the requirements. Our failure or the failure of our PRC resident
      shareholders to obtain these approvals or registrations may restrict our ability
      to acquire a company outside of China or use our entities outside of China
      to
      acquire or establish companies inside of China, which could negatively affect
      our business and future prospects.




13





***PRC
      laws and our corporate structure may restrict our ability to receive dividends
      and payments from, and transfer funds to, our PRC operating companies, which
      may
      negatively affect our results of operations and restrict our ability to act
      in
      response to changing market conditions.*** **




Substantially
      all of our operations are conducted through our PRC operating companies. The
      ability of our PRC operating companies to make dividend and other payments
      to us
      may be restricted by factors such as changes in applicable foreign exchange
      and
      other laws and regulations. For example, under the SAFE regulations discussed
      in
      the previous risk factor, the foreign exchange activities of our present or
      prospective PRC subsidiaries are conditioned upon the compliance with the SAFE
      registration requirements by the shareholders of our offshore entities who
      are
      PRC residents. Failure to comply with these SAFE registration requirements
      may
      substantially restrict or prohibit the foreign exchange inflow to and outflow
      from our PRC subsidiaries, namely Beihai Hi-Tech Wealth Technology Development
      Co. Ltd. and Beijing Hi-Tech Wealth Software Technology Ltd., including,
      remittance of dividends and foreign-currency- denominated borrowings by these
      PRC subsidiaries. In addition, our PRC operating companies are required, where
      applicable, to allocate a portion of their net profit to certain funds before
      distributing dividends, including at least 10% of their net profit to certain
      reserve funds until the balance of such fund has reached 50% of their registered
      capital. These reserves can only be used for specific purposes, including
      making-up cumulative losses of previous years, conversion to equity capital,
      and
      application to business expansion, and are not distributable as dividends.
      Our
      PRC operating companies are also required, where applicable, to allocate an
      additional 5% to 10% of their net profits to a statutory common welfare fund.
      The net profit available for distribution from our PRC operating companies
      is
      determined in accordance with generally accepted accounting principles in China,
      which may materially differ from a determination performed in accordance with
      U.S. Generally Accepted Accounting Principles (“GAAP”). As a result, we may not
      receive sufficient distributions or other payments from these entities to enable
      us to make dividend distributions to our shareholders in the future, even if
      our
      U.S. GAAP financial statements indicate that our operations have been
      profitable.





Apart
      from the dividend distribution from our PRC subsidiaries to us, the transfer
      of
      funds from our company to our PRC operating companies, either as a shareholder
      loan or as an increase in registered capital or otherwise, is subject to
      registration or approval with or by PRC governmental authorities, including
      the
      relevant administration of foreign exchange and/or other relevant examining
      and
      approval authorities. These limitations on the free flow of funds between us
      and
      our PRC operating companies may restrict our ability to act in response to
      changing market conditions.




***Fluctuations
      in the value of the Renminbi relative to foreign currencies could affect our
      financial condition, results of operations and the price of our common
      stock.*** **




The
      majority of our net revenue is denominated in Renminbi. Since 1994, the official
      exchange rate of Renminbi to U.S. dollars has been based on rates set by the
      People’s Bank of China and generally has been stable. However, in July 2005, the
      PRC government decoupled the Renminbi from the U.S. dollar, and the PRC
      government relinquished the U.S. dollar peg and increased the current trading
      range. Future movements in the exchange rate of Renminbi and other currencies
      may have an adverse effect on our financial condition and results of operations.
      For example, a depreciation of the Renminbi relative to the U.S. dollar would
      have the effect of reducing our U.S. dollar-translated net revenue and
      increasing the debt servicing requirements for our U.S. dollar-denominated
      debt.
      On the other hand, the appreciation of the Renminbi would make our products
      more
      expensive if our customers are involved in the export of mobile phones outside
      China, which could adversely affect their sales, thereby eroding our customer
      base and adversely affecting our results of operations.




14





***The
      legal system in China has inherent uncertainties that may limit the legal
      protections available to you as an investor or to us in the event of any claims
      or disputes with third parties.*** **




The
      legal
      system in China is based on written statutes. Prior court decisions may be
      cited
      for reference but have limited precedential value. Since 1979, the central
      government has promulgated laws and regulations dealing with economic matters
      such as foreign investment, corporate organization and governance, commerce,
      taxation and trade. As China’s foreign investment laws and regulations are
      relatively new and the legal system is still evolving, the interpretation of
      many laws, regulations and rules is not always uniform and enforcement of these
      laws, regulations and rules involve uncertainties, which may limit the remedies
      available to you as an investor and to us in the event of any claims or disputes
      with third parties. In addition, any litigation in China may be protracted
      and
      result in substantial costs and diversion of resources and management attention.





***You
      may experience difficulties in effecting service of legal process and enforcing
      judgments against us and our management.*** **




Substantially
      all of our operations and assets are located in China. In addition, most of
      our
      directors, executive officers and some of the experts named in this document
      reside within China, and many of the assets of these persons are also located
      within China. As a result, it may not be possible to effect service of process
      within the United States or elsewhere outside China upon these directors or
      executive officers or some of the experts named in this document, including
      with
      respect to matters arising under U.S. federal securities laws or applicable
      state securities laws. Moreover, China does not have treaties with the United
      States or many other countries providing for the reciprocal recognition and
      enforcement of court judgments. As a result, recognition and enforcement in
      China of judgments of a court of the United States or any other jurisdiction,
      including judgments against us or our directors, executive officers, or the
      named experts, may be difficult or impossible.




**Risks
      Related to Our Common Stock**




***Our
      principal shareholder and chief executive officer beneficially owns a
      substantial majority of our common stock. As a result, the trading price for
      our
      shares may be depressed due to market perception, and our principal shareholder
      and chief executive officer will be able to take actions that may be adverse
      to
      your interests.*** **




Dr.
      Zhang
      Zhengyu, our principal shareholder and chief executive officer, directly and
      through entities he controls, currently beneficially owns approximately [35.7]%
      of our issued and outstanding common stock. This significant concentration
      of
      share ownership may adversely affect the trading price of our common stock
      because investors often perceive a disadvantage in owning shares in a company
      with only one or very few controlling shareholders. Furthermore, Dr. Zhang
      has
      the ability to control the outcome of all matters requiring shareholder
      approval, including the election of directors and approval of significant
      corporate transactions, such as mergers, consolidations or the sale of
      substantially all of our assets. This concentration of ownership may have the
      effect of delaying or preventing a change of control, including a merger,
      consolidation or other business combination involving us, or discouraging a
      potential acquirer from making a tender offer or otherwise attempting to obtain
      control, even if such a change of control would benefit you.




***Efforts
      to comply with recently enacted changes in securities laws and regulations
      will
      increase our costs and require additional management resources. Our failure
      to
      comply could adversely affect our stock price.*** **




As
      a
      closely-held company with no prior public reporting obligations prior to our
      share exchange with General Components Inc. in September 2006, we had committed
      limited personnel and resources to the necessary development of our internal
      controls and systems. In connection with our fiscal year 2006 financial
      statement audit, our independent auditors identified various internal control
      deficiencies and provided us with comments and recommendations for improvement
      in a number of areas with respect to our internal accounting systems and
      disclosure controls. These areas included, among other things: segregating
      duties in some sales and administrative functions; the creation of formal
      internal controls; policies and procedures in some administrative and accounting
      areas; an increase in accounting department resources; finalizing documentation
      to our existing internal controls and systems; and improving system controls
      related to information and technology systems matters. While we do not believe
      that any of the identified internal control deficiencies will materially
      adversely affect our financial statements, we cannot assure you that this will
      be the case.




15




We
        have
        only recently begun to evaluate our internal controls over financial reporting.
        Given the status of our efforts, coupled with the fact that guidance from
        regulatory authorities in the area of internal controls continues to evolve,
        substantial uncertainty exists regarding our ability to comply by applicable
        deadlines. If we are unable to conclude that we have effective internal controls
        over financial reporting, or if our independent auditors are unable to provide
        us with an unqualified report as to the effectiveness of our internal controls
        over financial reporting before the deadline, as required by Section 404 of
        the Sarbanes-Oxley Act, we could experience delays or inaccuracies in our
        reporting of financial information, or non-compliance with SEC reporting
        and
        other regulatory requirements. This could subject us to regulatory scrutiny
        and
        result in a loss of public confidence in our management, which could, among
        other things, adversely affect our stock price.




***There
      has not been significant trading in our common stock, and our stock price may
      fluctuate dramatically in the future.*** **




Our
      common stock is quoted on the Over-The-Counter Market, or on the Electronic
      Bulletin Board of the Over-The-Counter Market, or OTCBB. To date, there has
      been
      a limited trading market for our common stock. There is a significant risk
      that
      our stock price may fluctuate dramatically in the future in response to any
      of
      the following factors, some of which are beyond our control:




·
            variations
                in our quarterly operating results;




·
            announcements
                that our net revenue or income are below research analysts’
                expectations;




·
            general
                economic slowdowns;




·
            changes
                in market valuations of similar
                companies;




·
            sales
                of large blocks of our common
                stock;




·
            announcements
                by us or our competitors of significant contracts, acquisitions,
                strategic
                partnerships, joint ventures or capital commitments;
                and




·
            fluctuations
                in stock market prices and volumes, which are particularly common
                among
                highly volatile securities of China-based
                companies.




***Future
      sales of shares could have an adverse effect on the market price of our common
      stock.*** **




A
      significant portion of our shares are held by a small number of shareholders.
      Historically, trading volume of our shares has been relatively low. Sales by
      our
      current shareholders of a substantial number of shares could significantly
      reduce the market price of our common stock. These sales could also impede
      our
      ability to raise future capital.





***Issuance
      of “earn-out” shares will dilute the ownership of our existing
      shareholders***




The
      Share
      Exchange Agreement that we entered into in September of 2006 (as amended)
      provides for the issuance of up to an additional 80,000,000 shares of common
      stock to the former shareholders of Magical Insight in the event certain
      earnings and operational thresholds are achieved in the next 36 months. Any
      such
      issuance of shares will cause dilution in the interests of our
      stockholders.




16




Moreover,
      we may need to raise additional funds in the future to finance new developments
      or expand existing operations. If we raise additional funds through the issuance
      of new equity or equity-linked securities, other than on a pro rata basis to
      our
      existing stockholders, the percentage ownership of the existing stockholders
      may
      be reduced.





**ITEM
      1B. UNRESOLVED STAFF COMMENTS.**





Not
      applicable.




**ITEM
      2. DESCRIPTION OF PROPERTY**




The
      Company has a manufacturing factory and facilities located in Beihai, China
      on
      339,112.10 square meters of land. According to Chinese law, the government
      owns
      all of the land in China and companies or individuals are authorized to use
      the
      land only through land use rights granted by the Chinese government. The Company
      has long term leases with the Chinese government affording them the use of
      this
      land through April 2053. We own a manufacturing plant and buildings located
      on
      this land for manufacturing, office, warehouse and staff
      facilities.




We
      maintain our primary executive offices at 10 th Floor,
      Tower C, Intelligence International Plaza, No 18 Zhongguancun East Road, Haidian
      District, Beijing, China which is for general and administrative services
      including office space, utilities and secretarial support. The following sets
      forth the additional properties which are used by us in connection with the
      operation of our business:




**Address**
            
            **Expiry
                Date**
            
            **Area
                in Sq. Meters**
            
            **Monthly
                Rental US$**Beijing
                Office
            
            
            Room
                507, 5thFloor, Building C, Intelligence International Plaza, No 18 Zhongguancun
                East Road, Haidian District, Beijing, China 100083
            
            
            February
                22, 2009
            
            
            86.36
            
            $
            1,020Beijing
                Office
            
            
            Room
                506, 5thFloor, Building C, Intelligence International Plaza, No 18 Zhongguancun
                East Road, Haidian District, Beijing, China 100083
            
            
            August
                27, 2008
            
            
            69.59
            
            $
            778Beijing
                Office
            
            
            9thand 10thFloor, Building C, Intelligence International Plaza, No 18 Zhongguancun
                East Road, Haidian District, Beijing, China 100083
            
            
            March
                19, 2009 & December 10, 2009
            
            
            1726.36
            
            $
            25,128




**ITEM
      3. LEGAL PROCEEDINGS**





We
      were
      named as a defendant in patent infringement suit filed by Panduit Corp.
      (“Panduit”) in connection with its patent entitled "Angled Patch Panel With
      Cable Support Bar For Network Cable Racks". On March 15, 2005, Panduit filed
      a
      complaint in the United States District Court for the Northern District of
      Illinois, Eastern Division on March 15, 2005. Panduit also named Leviton
      Manufacturing Company, Inc., The Siemon Company, Tyco Electronics Corporation,
      Molex, Inc. and AESP, Inc. as defendants in the case. The suit was dismissed
      without prejudice in June 2005 and, to our knowledge, a new suit has not been
      initiated.




17




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




None.




**PART
      II.**




**ITEM
      5.** **MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
      OF EQUITY SECURITIES**




**Market
      Information**





Our
      common stock is currently listed on the Over the Counter Bulletin Board, or
      OTCBB, under the symbol “CHMO” after December 26, 2007. For the period from May
      2, 2007 to that day, our common stock qualified for listing on OTCBB and was
      listed under the symbol "HITW". For the period from February 14, 2007 to May
      1,
      2007, our common stock qualified for listing on OTCBB and was listed under
      the
      symbol "GCPN". For the period from October 26, 2004 to February 13, 2007, our
      common stock qualified for listing on the OTCBB and was listed under the symbol
      "GCPN”. Prior to that period of time the Company was quoted on the Pink Sheets
      L.L.C. under the symbol “PAVS”. The table below sets forth, for the calendar
      quarters indicated, the high and low prices of our common stock as reported
      on
      the OTCBB. The OTC market quotations reported below reflect inter-dealer prices,
      without markup, markdown or commissions and may not represent actual
      transactions.





**OTC
                Bulletin Board****High**
            
            **Low****2007
                First Quarter**
            
            $
            3.00
            
            $
            1.00**2007
                Second Quarter**
            
            $
            3.60
            
            $
            1.75**2007
                Third Quarter**
            
            $
            3.00
            
            $
            2.25**2007
                Fourth Quarter**
            
            $
            2.95
            
            $
            0.39





**OTC
                Bulletin Board****High**
            
            **Low****2006
                First Quarter**
            
            $
            17.80
            
            $
            7.50**2006
                Second Quarter**
            
            $
            7.50
            
            $
            0.70**2006
                Third Quarter**
            
            $
            1.60
            
            $
            0.50**2006
                Fourth Quarter**
            
            $
            2.30
            
            $
            0.60




**Holders**




As
        of
        March 31, 2008, there were 60,935,122 **** holders
        of record of our common stock.




**Dividends**




We
        have
        not paid any dividends on our common stock to date and do not currently intend
        to pay dividends in the future, except for preferred stockholders. The payment
        of dividends in the future will be contingent upon our revenues and earnings,
        if
        any, capital requirements and general financial condition. It is the present
        intention of our board of directors to retain all earnings, if any, for use
        in
        our business operations and, accordingly, our board does not anticipate
        declaring any dividends in the foreseeable future.


18




**Recent
      Sales of Unregistered Securities; Use of Proceeds from Registered Securities**




All
      recent sales of unregistered securities of CHMO have been previously reported
      on
      Current Reports on Form 8-K.




**Issuer
      Purchases of Equity Securities.**




None.




**Equity
      Compensation Plan Information**





None.




**ITEM
      6. SELECTED CONSOLIDATED FINANCIAL DATA**





The
      selected consolidated financial data presented below has been derived from
      our
      audited consolidated financial statements as of and for the years ended
      December 31, 2007, 2006 included herein, and in the opinion of management,
      include all adjustments necessary to present fairly the data for such periods.
      The historical results are not necessarily indicative of results to be expected
      in any future period. See the notes to the audited consolidated financial
      statements, as well as Management’s Discussion and Analysis or Plan of Operation
      included elsewhere in the prospectus for more information.


**Year
                  Ended December**
                **31,
                  2007**
              
              
              **Year
                  Ended December**
                **31,****2006****STATEMENT
                  OF OPERATIONS DATA**Revenues,
                  net
              
              $
              43,506,827
              
              $
              60,097,086Net
                  (loss) income attributable to common stockholders
              
              $
              (24,733,048
              )
              $
              4,549,642Net
                  (loss) income per share, basic
              
              $
              (0.46
              )
              $
              0.23Net
                  (loss) income per share, diluted
              
              $
              (0.46
              )
              $
              0.18







19
 **December
                    31, 2007**
                
                **December
                    31, 2006****BALANCE
                    SHEET DATA**Working
                    (deficit) capital
                
                $
                (1,033,683
                )
                $
                548,526Total
                    current assets
                
                $
                33,066,231
                
                $
                29,332,052Total
                    current liabilities
                
                $
                34,099,914
                
                $
                28,783,526Total
                    stockholders’ equity
                
                $
                16,701,870
                
                $
                17,797,959




**ITEM
      7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.**




The
      following discussion should be read in conjunction with our Financial Statements
      and footnotes thereto contained elsewhere in this annual report.




**Forward
      Looking Statements**




The
      statements discussed in this annual report include forward looking statements
      that involve risks and uncertainties, including the timely delivery and
      acceptance of our products and the other risks detailed from time to time under
      the heading “Risk Factors” in Item 1 above.




**Critical
        Accounting Policies and Estimates**
 
 This
        section should be read together with the Summary of Significant Accounting
        Policies included as Note 3 to the consolidated financial statements included
        in
        our Annual Report on Form 10-K for the fiscal year ended 31, 2007.
 
 ***Estimates
        affecting accounts receivable and inventories***
 
 The
        preparation of our consolidated financial statements requires management
        to make
        estimates and assumptions that affect our reporting of assets and liabilities
        (and contingent assets and liabilities). These estimates are particularly
        significant where they affect the reported net realizable value of the Company’s
        accounts receivable and inventories.
 
 At
        December 31, 2007, the Company provided a $5,661,556 reserve against accounts
        receivable. Management’s estimate of the appropriate reserve on accounts
        receivable at December 31, 2007 was based on the aged nature of these accounts
        receivable. In making its judgment, management assessed its customers’ ability
        to continue to pay their outstanding invoices on a timely basis, and whether
        their financial position might deteriorate significantly in the future which
        would result in their inability to pay their debts to the Company.
 
 At
        December 31, 2007, the Company provided an allowance against its inventories
        amounting to $1,084,001. Management’s determination of this allowance was based
        on potential impairments to the current carrying value of the inventories
        due to
        potential obsolescence of aged inventories. In making its estimate, management
        considered the probable demand for our products in the future and historical
        trends in the turnover of our inventories.
 
 While
        the
        Company currently believes that there is little likelihood that actual results
        will differ materially from these current estimates, if customer demand for
        our
        products decreases significantly in the near future, or if the financial
        condition of our customers deteriorates in the near future, the Company could
        realize significant write downs for slow-moving inventories or uncollectible
        accounts receivable.
 
 **Policy
        affecting recognition of revenue**
 
 Among
        the
        most important accounting policies affecting our consolidated financial
        statements is our policy of recognizing revenue in accordance with the SEC’s
        Staff Accounting Bulletin (“SAB”) No. 104. Under this policy, all of the
        following criteria must be met in order for us to recognize
        revenue:
 
 1.
        Persuasive evidence of an arrangement exists;
 2.
        Delivery has occurred or services have been rendered;
 3.
        The
        seller’s price to the buyer is fixed or determinable; and
 4.
        Collectibility is reasonably assured.
 
 The
        majority of the Company’s revenue results from sales contracts with distributors
        and revenue is recorded upon the shipment of goods. Management conducts credit
        background checks for new customers as a means to reduce the subjectivity
        of
        assuring collectibility. Based on these factors, the Company believes that
        it
        can apply the provisions of SAB 104 with minimal subjectivity.
  **Recent
        Accounting Pronouncements**
 
 In
        September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements,"
        which
        provides enhanced guidance for using fair value to measure assets and
        liabilities. SFAS No. 157 provides a common definition of fair value and
        establishes a framework to make the measurement of fair value in generally
        accepted accounting principles more consistent and comparable. SFAS No. 157
        also
        requires expanded disclosures to provide information about the extent to
        which
        fair value is used to measure assets and liabilities, the methods and
        assumptions used to measure fair value, and the effect of fair value measures
        on
        earnings. SFAS No. 157 is effective for financial statements issued in fiscal
        years beginning after November 15, 2007 and to interim periods within those
        fiscalyears. The Company is currently in the process of evaluating the effect,
        if any, the adoption of SFAS No. 157 will have on its consolidated results
        of
        operations, financial position, or cash flows.
 
 In
        February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option
        for
        Financial Assets and Financial Liabilities — including an amendment of FASB
        Statement No. 115 (“FAS 159”). FAS 159, which becomes effective for the Company
        on January 1, 2008. This standard permits companies to choose to measure
        many
        financial instruments and certain other items at fair value and report
        unrealized gains and losses in earnings. Such accounting is optional and
        is
        generally to be applied instrument by instrument. The Company does not
        anticipate that election, if any, of this fair-value option will have a material
        effect on the
 consolidated
        results or operations or financial position.
 
 In
        December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and
        SFAS
        No.160, Non-controlling Interests in Consolidated Financial Statements. SFAS
        No.
        141 (R) requires an acquirer to measure the identifiable assets acquired,
        the
        liabilities assumed, and any non-controlling interest in the acquired entity
        at
        their fair values on the acquisition date, with goodwill being the excess
        value
        over the net identifiable assets acquired. SFAS No.160 clarifies that a
        non-controlling interest in a subsidiary should be reported as equity in
        the
        consolidated financial statement. The calculation of earnings per share will
        continue to be based on income amounts attributable to the parent. SFAS No.141
        (R) and SFAS No.160 are effective for financial statements issued for fiscal
        years beginning after December 15, 2008. Early adoption is prohibited. We
        have
        not yet determined the effect on our consolidated financial statements, if
        any,
        upon adoption of SFAS No.141 (R) or SFAS No. 160. We are aware that our
        accounting for minority interest will change and we are considering those
        effects now but believe the effects will only be a reclassification of minority
        interest from mezzanine equity to our stockholder's equity section in the
        balance sheet; in any case, we do not believe the implementation of SFAS
        160
        will be material to our financial position. SFAS 141(R) will significantly
        affect the accounting for future business combinations and we will determine
        the
        accounting as new combinations are determined.
 Business
        Overview


**Business
      Overview**





The
      Company operated in the mobile phone market for the second year in 2007. This
      year was marked by the launch of the first solar powered mobile phone S116
      and a
      significant quality deficiency of this product.





The
      Solar
      mobile phone is a product with global appeal. Due to its complexity, this
      product has technical risk which interferes with the functionality of the mobile
      phone. Consequently, when product quality deficiencies arose, it was difficult
      to judge whether the deficiency was the result of software or hardware problems.
      The market practice is to resolve a certain number of bugs, then to market
      the
      product even if it still has some bugs. By the time the sales increase, a new
      version of the applicable software with fewer bugs will be used in newly sold
      products and in the meantime can be used to upgrade already-sold products.
      We
      have adopted the same strategy with respect to S116, but we were unable to
      resolve the quality problem in time to address climbing sales.





Furthermore,
      our Information security phones are reaching their life cycle. The unit sold
      is
      about 190,000.




**Business
      Outlook**





In
      2008,
      the Company plans to launch several security phones with functions focusing
      on
      home security, car security and family member security.





The
      Company is developing a second generation solar powered mobile phone with high
      conversion efficiency.




20





On
      the
      marketing strategy, the Company is going to combine TV-shopping and on-ground
      distribution channels. The TV-shopping landscape in China has dramatically
      changed and many TV stations are providing TV shopping services, so we plan
      to
      cooperate with diversified TV-shopping services providers.




**Results
      of Operations for the Years ended December 31, 2007 and
      2006.**




**Revenues.** Revenues
      were $ 43,506,827 for the
      year ended December 31, 2007, as compared to $60,097,086 for the same period
      in
      2006 **.** This
      significant decrease is attributable to the failure of S116 and ISM reaching
      life cycle.




**Gross
      margin.** Our
      gross margin decreased from 34.9% in 2006 to 15.6% in 2007. This significant
      decrease is attributable to the failure of solar mobile phone and information
      security phones reaching life cycle.




**Gross
      profit** .
      Gross
      profit was $6,800,011 in the year ended December 31, 2007, as compared to
      $20,947,498 for the same period in 2006. This decrease was attributable to
      the
      failure of solar powered phone and the deterioration in gross margins on our
      products which are reaching life cycle.




**Operating
      income (loss).** For
      the
      year ended December 31, 2007, operating income was a loss of $16,009,698 as
      compared to an operating income of $4,050,804 for the same period in 2006.
      This
      deterioration was due to the same reasons explained above.




**Selling
      and distribution.** Selling
      and distribution expenses were $2,786,511 for the year ended December 31, 2007,
      as compared to $356,940 for the same period in 2006. This increase was primarily
      attributable to an increase in the cost of the distribution channel building
      with the launch of solar mobile phone.




**Advertising.** Advertising expenses were $6,184,486 for the year ended December 31, 2007,
      as
      compared to $13,677,979 for the same period in 2006. This major decrease was
      due
      to less advertising right after solar mobile phone quality deficiency was
      discovered and failure to market innovative new models.




**Research
      and development costs.** Research
      and development costs of $862,784 were incurred for the year ended December
      31,
      2007, as compared to $50,885 for the same period in 2006. The increase was
      mostly caused by the R&D fees paid to third party design houses for solar
      mobile phone projects.




**General
      and administrative.** General
      and administrative expenses were $7,314,372 for the year ended December 31,
      2007, as compared to $2,810,890 for the same period in 2006. This increase
      was
      primarily attributable to an increase in technical consultants’ fees, auditors’
fees, legal fees, salary expenses and office fees for new companies,
      depreciation expenses, D&O insurance, and the provision for
      inventory.




**Increase/**
            
            %**2007**
            
            **2006**
            
            **(Decrease)**
            
            **Change****General
                and administrative**Legal
                and professional fees
            
            $
            2,672,377
            
            $
            1,036,574
            
            $
            1,635,803
            
            
            158
            %Entertainment
                & traveling expenses
            
            
            311,387
            
            
            203,460
            
            
            107,927
            
            
            53
            %Depreciation
                expenses
            
            
            651,032
            
            
            457,293
            
            
            193,739
            
            
            42
            %Managers’
                salaries
            
            
            413,234
            
            
            -
            
            
            413,234
            
            
            100
            %Salaries
            
            
            946,040
            
            
            271,606
            
            
            674,434
            
            
            248
            %Inventory
                provision
            
            
            1,084,001
            
            
            -
            
            
            1,084,001
            
            
            100
            %Office
                expense
            
            
            742,342
            
            
            602,421
            
            
            139,921
            
            
            23
            %Other
            
            
            493,959
            
            
            239,536
            
            
            254,423
            
            
            106
            %Total
            
            
            7,314,372
            
            
            2,810,890
            
            
            4,503,482
            
            
            160
            %


Legal
        and
        Professional fees - These fees include audit fees, legal fees, consultancy
        fees,
        testing and technical service fees for mobile phones. During 2007, the
        significant increase was caused by the expenses related to the launch of
        a new
        model of mobile phones and the legal and professional fees paid in connection
        with financings.




21





Entertainment
      & traveling expenses - These expenses were incurred for the development of
      distribution networks over the country.





Depreciation
      expenses - Increase in depreciation expenses was mainly caused by the additional
      of building by transferring from construction in progress of $2,218,612 during
      2007.





Salary
      -
      Increase in salary was due to the increase of headcount and salaries paid to
      management.




Inventory
        provision - The significant increase was occurred mostly for the components
        purchased for solar powered mobile phones. Due to quality deficiency on the
        design of the first model S116, some of these components are not entirely
        sure
        to be usable for new solar powered mobile phone models.
 
 **Bad
        debt provision** - The
        significant increase is due to a provision on the Company’s accounts receivable.
        During 2007, the Company was forced to sell some of its information security
        phone inventory of old models and the Company granted credit terms to get,
        in
        return of higher sales prices. The two major purchasers were under business
        restructuring and the sales of these products by these two purchasers have
        been
        slow. The Company has difficulties to get payments on time and has made full
        provision on these two accounts receivable of $5,661,556. The Company will
        seek
        to recover them in 2008.
 
 **Other
        Income (Expense)** **-** Other
        expenses, net were $6,121,633 for the year ended December 31, 2007, as compared
        to other expenses, net of $701,842 for the same period in 2006. This big
        increase was mainly attributable to non
        cash interest expense from amortization of discount on convertible notes
        and
        secured notes of $3,333,821 and non
        cash liquidated damages of
        $ 1,445,750 .
 
 **Discontinued
        operations.**  Net loss from discontinued operations was $1,650,030
        for the year ended December 31, 2007. It consisted of the disposal of software
        business purchased on 2006 due to preferred income tax policy reached maturity
        for this company. The Company has, through its subsidiary Magical Insight,
        set
        up a new software company which has been granted the preferred income tax
        policy
        by the Chinese Authority.
  **Net
        (loss) income.** Net loss was $24,733,048 for the year ended December 31, 2007, as compared
        to
        net profit of $4,549,642 for the same period in 2006. This change was
        attributable to the factors discussed above.
  **Income
        Taxes**
  Income
        taxes were $852,428 for the year ended December 31, 2007, as compared to
        $338,877 for the same period in 2006. The increase was due to that valuation
        allowance $577,012 of net deferred tax assets of HTW which was proposed in
        2007.
        The Company’s effective tax rate were 7.5% and 15% for the years ended December
        31, 2007 and 2006, respectively, on the pre-tax income of Beihai HTW and
        HCT
        under the China Tax Law.
  **Liquidity
        and Capital Resources**
  The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. The Company has a net loss
        of
        $24,733,048 and a negative cash flow from operations of $13,607,191 for the
        year
        ended December 31, 2007, and has a working capital deficiency of $1,033,683
        and
        a retained deficit of $20,142,287 at December 31, 2007.
 
 On
        February 8, 2007, the Company raised $13,250,000 in a private placement in
        the
        form of a sale of shares of Series B, convertible preferred stock (See Note
        16).
        On January 11, 2008, MIL sold in a private placement of $20,661,157
        (Rmb150,000,000) principal amount of 9.57% per annum global notes due January
        10, 2014 (the “Global Notes”), with common stock purchase warrants, granted by
        the Company, to purchase 12,000,000 shares of the Company’s common stock at an
        exercise price of $2.00 per share (the “Exercise Price”), exercisable any time
        after January 1, 2008 through June 30, 2014.
 
 The
        Company will need to obtain additional financing in addition to the funds
        already raised through the sale of equity securities to fund our cash needs
        and
        continue our operations beyond March 2009. Additional financing, whether
        through
        public or private equity or debt financing, arrangements with stockholders
        or
        other sources to fund operations, may not be available, or if available,
        may be
        on terms unacceptable to us. Our ability to maintain sufficient liquidity
        is
        dependent on our ability to raise additional capital. If we issue additional
        equity securities to raise funds, the ownership percentage of our existing
        stockholders would be reduced. New investors may demand rights, preferences
        or
        privileges senior to those of existing holders of our common stock. Debt
        incurred by us would be senior to equity in the ability of debt holders to
        make
        claims on our assets. The terms of any debt issued could impose restrictions
        on
        our operations. If adequate funds are not available to satisfy either medium
        or
        long-term capital requirements, our operations and liquidity could be materially
        adversely affected and we could be forced to cut back our
        operations.
  Overall,
        cash increased in 2007 by 81%, from $165,849 in 2006 to $300,224  in 2007.
        There was a net outflow of cash from operations of $13,607,191 in 2007 in
        comparison to a net inflow of $3,851,892 in 2006. With respect to cash flow
        from
        investing, we have a net cash outflow of $7,796,698 in 2007 from $5,007,366
        in 2006, which was mainly attributable to the  increase in notes
        receivable of $5,306,521. The cash provided by financing activities was
        increased to $20,314,517 in 2007 versus $742,906 in 2006, which was mainly
        attributable to  the proceeds from secured notes and preferred stocks
        of $16,266,233.
  **Off-Balance
        Sheet Arrangements**




We
      do not
      have any off-balance sheet arrangements **.**




**ITEM
            7A.** **QUANTITATIVE
            AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.**




**Foreign
      Exchange Exposure**




**Translations**




Our
      reporting currency is USD. The functional currency of our operating subsidiary
      in the PRC is RMB and our operating subsidiary also maintains its books and
      records in RMB. Accordingly, we are exposed to foreign currency translation
      effects as described in our consolidated financial statements.




22




**Transactions**




We
      are,
      to a certain extent, exposed to transaction foreign currency exposure arising
      from our operations in the PRC.




Our
      foreign currency exchange risk arises mainly from this mismatch between the
      currency of our sales, purchases and operating expenses. To the extent that
      our
      sales, purchases and operating expenses are not matched in exactly the same
      currency, we may be susceptible to foreign exchange exposure.




In
      addition, we also maintain a US dollars account with a financial institution
      for
      our US dollars receipts and US dollars payments. We may also incur foreign
      exchange gains or losses when we convert the US dollars balances into
      RMB.




Currently,
      we do not have a formal foreign currency hedging policy as our foreign exchange
      gains and losses in 2006 and 2007 were insignificant. Our management believes
      that it is more efficient for us to assess the hedging need of each transaction
      on a case-by-case basis. We will continue to monitor our foreign exchange
      exposure in the future and will consider hedging any material foreign exchange
      exposure should such need arise.




**ITEM
          8.** **FINANCIAL
          STATEMENTS AND SUPPLEMENTARY DATA.**




The
      following financial statements and the footnotes thereto are included in the
      section beginning on page F-1.


1.
            Report
                of Independent Registered Public Accounting
                Firm. 2.
            Consolidated
                Balance Sheets as of December 31, 2007 and
                2006. 3.
            Consolidated
                Statements of (Loss) Income and Comprehensive (Loss) Income for the
                years
                ended December 31, 2007 and 2006. 4.
            Consolidated
                Statements of Changes in Shareholders’ Equity for years ended December 31,
                2007 and 2006. 5.
            Consolidated
                Statements of Cash Flows for the years ended December 31, 2007 and
                2006. 6.
            Notes
                to Consolidated Financial Statements as of December 31, 2007 and
                2006.




**ITEM
          9.** **CHANGES
          IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
          (we
          are documenting the walking test and should be able to provide
          shortly)**




There
      were no changes in or disagreements with accountants on accounting and financial
      disclosure.




**ITEM
      9A(T). CONTROLS AND PROCEDURES**




**Conclusion
      Regarding the Effectiveness of Disclosure Controls and
      Procedures**




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of our disclosure controls and procedures, as such term is defined
      in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
      Based on this evaluation, our
      principal executive officer and principal financial officer have concluded
      that
      during the period covered by this report, such disclosure controls and
      procedures were effective to detect the inappropriate application of US
      GAAP.




23




**Management’s
      Report on Internal Control Over Financial Reporting**




This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the Securities and Exchange
      Commission that permit us to provide only management’s report in this annual
      report.




As
        required by Rule 13a-15(b) promulgated under the Exchange Act, our management,
        with the participation of our Chief Executive Officer and Chief Financial
        Officer, evaluated the design and operating effectiveness as of December
        31,
        2007 of our disclosure procedures, as defined in Rule 13a-15(e) promulgated
        under the Exchange Act. Based on this evaluation our Chief Executive Officer
        and
        Chief Financial Officer concluded that, because of the material weaknesses
        in
        our internal control over financial reporting described below, as of December
        31, 2007 our disclosure controls and procedures were not effective.
 
 Notwithstanding
        management’s assessment that our internal control over financial reporting was
        ineffective as of December 31, 2007 and the material weaknesses described
        below,
        we believe that the consolidated financial included in this Annual Report
        on
        Form 10-K correctly present our financial condition, results of operations
        and
        cash flows for the fiscal years covered thereby in all material
        respects.
 
 Internal
        Control Over Financial Reporting
 
 Management’s
        Report on Internal Control Over Financial Reporting
 
 Our
        management is responsible for establishing and maintaining adequate internal
        control over financial reporting, as defined in Rule 13a-15(f) promulgated
        under
        the Exchange Act. Internal control over financial reporting is a process
        designed to provide reasonable assurance regarding the reliability of financial
        reporting and the preparation of an issuer’s financial statements for external
        purposes in accordance with accounting principles generally accepted in the
        United States of America (“GAAP”). Internal control over financial reporting
        includes policies and procedures that:
 
 · Pertain
        to the maintenance of records that, in reasonable detail, accurately and
        fairly
        reflect the transactions and dispositions of an issuer’s assets;
 
 · Provide
        reasonable assurance that transactions are recorded as necessary to permit
        preparation of financial statements in accordance with GAAP, and that an
        issuer’s receipts and expenditures are being made only in accordance with
        authorizations of its management and directors; and
 
 · Provide
        reasonable assurance regarding prevention or timely detection of unauthorized
        acquisition, use or disposition of an issuer’s assets that could have a material
        effect on the financial statements.
 
 Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent detect misstatements. Also, the application of any evaluation of
        effectiveness to future periods is subject to the risk that controls may
        become
        inadequate because of changes in conditions, or that complication with the
        policies or procedures may deteriorate.
 
 As
        required by Rule 13a-15(c) promulgated under the Exchange Act, our management,
        with the participation of our Chief Executive Officer and Chief Financial
        Officer, evaluated the effectiveness of our internal control over financial
        reporting as of December 31, 2007. Management’s assessment was based on criteria
        set forth by the Committee of Sponsoring Organizations of the Treadway
        Commission in Internal Control-Integrated Framework (“COSO”). Our assessment
        identified deficiencies that were determined to be material
        weaknesses.
 
 A
        material weakness is a control deficiency, or combination of control
        deficiencies, that results in more than a remote likelihood that a material
        misstatement of the annual or interim financial statements will not be prevented
        or detected. Because of the material weaknesses described below, management
        concluded that our internal control over financial reporting was not effective
        as of December 31, 2007.
 
 The
        specific material weaknesses identified by management as of December 31,
        2007
        are described as follows:
 
 (1)
        Ineffective anti-fraud systems that are insufficient to assess the fraud
        risk in relation to internal controls over financial reporting, (2) lack of
        capable accounting and reporting personnel and insufficient
        policies and procedures for financial reporting under US GAAP.
  Remediation
        of Material Weaknesses
  The
        Company is in the process of developing and implementing remediation plans
        to
        address our material weaknesses. Management has taken the following actions
        to
        improve internal controls over financial reporting:
  (1)
        Establishment of an audit committee function and relevant policies and
        procedures to strengthen the fraud risk assessment and anti-fraud systems
        and to
        strengthen the internal controls over financial reporting, (2) establishment
        of
        more detailed policies and procedures for the preparation of financial
        statements under US GAAP, (3) improvement of communication between headquarters
        and subsidiaries dealing with supervision over subsidiaries.
  Our
        management anticipates remedying of these deficiencies in
        2008.




**Changes
      in Internal Control over Financial Reporting**




There
      have been no changes in our internal controls over financial reporting that
      occurred during the year ended December 31, 2007 that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.




**ITEM
      9B. OTHER INFORMATION**




None.




24




**PART
      III.**




**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE.**




Our
      current directors and executive officers are as follows:




**Name**
            
            **Age**
            
            **Title**Zhang
                Zhengyu
            
            50
            
            Chairman
                and Chief Executive Officer of the Company and DirectorMa
                Qing
            
            45
            
            Chief
                Financial Officer, Treasurer and DirectorLi
                Ming
            
            43
            
            Secretary,
                President and DirectorDai
                Xiaoquan
            
            36
            
            Director




**Dr.
      Zhang Zhengyu** ,
      50, has
      served as Chairman and Chief Executive Officer of the Company since November
      2006. Dr. Zhang is founder, Chairman and Chief Executive Officer of the HTW.
      Prior to the incorporation of HTW-HK in 1997, Dr. Zhang was general manager
      of
      Beijing Star Technology Development Center, a technical service firm in various
      businesses, ranging from software design, dealer for Dell, to the design of
      marble cutting machines. That firm became the sole dealer in the PRC for a
      Hong
      Kong electronic dictionary manufacturer in March 1992 and became dealer for
      other electronic organizers in January 1995. Dr Zhang has also actively
      participated the public and social services. Dr. Zhang is committee member
      of
      National Committee of the Chinese People's Political Consultative Conference
      and
      the Chinese People's Political Consultative Conference Beijing Committee, and
      Vice President of Beijing Municipal Chamber of Commerce and China Youth
      Entrepreneurs Association. In 1993, Dr. Zhang has been awarded for China
      National Outstanding Contributions Young Professional, China Central Bureau
      Top
      10 Outstanding Youth, and Central China Outstanding Youth Entrepreneur. Dr.
      Zhang obtained a Bachelor of Science (Space Science) degree from the Beijing
      Institute of Technology and a Ph.D. degree in artificial intelligence from
      Beijing University of Aeronautics & Astronautics.





**Ma
      Qing** ,
      45, has
      served as Chief Financial Officer and Treasurer of the Company since November
      2006. Mr. Ma is Chief Financial Officer and a Vice President of HTW. He founded
      Euro Asia Arbitrage Investment Limited, a company incorporated in Hong Kong
      in
      January 1998, which was subsequently acquired by the holding company of HTW
      in
      August 2000. Prior to 1999, Mr. Ma held various management positions at the
      Hong
      Kong, Paris and Chicago offices of Dresdner Kleinwort Benson. He has many years'
      experience in the banking industry. Mr. Ma obtained a Bachelor of Science degree
      from Beijing University, a DEA (Equivalent to Master of Science) degree in
      Artificial Intelligence from the University of Paris and a Diplome en
      (Equivalent to Master of Finance) degree from Ecole Superieur de Commerce de
      Paris.





**Li
      Ming** ,
      43, has
      served as Secretary and President of the Company since November 2006. Ms. Li
      is
      a founder, Chief Operating Officer, Director and President of HTW. Prior to
      joining HTW in October 1998, Ms. Li was General Manageress of Hong Kong
      Representative Office of Beijing Star Technology Development Center. Ms. Li
      has
      also worked as an instructor of Communication for Officer of the People's
      Liberation Army during 1977 to 1993. Ms. Li has also actively participated
      the
      public and social services. Ms. Li is committee member of the Beihai Committee
      of Chinese People's Political Consultative Conference and All-China Federation
      of Youth, and also a Standing Committee member of Guangxi Municipal Chamber
      of
      Commerce and Central Bureau Federation of Youth. Ms. Li holds an MBA degree
      from
      Murdoch University of Australia.




**Dai
        Xiaoquan, 36,** has
        served as a Director of the Company since October 2007. Mr. Dai was Chief
        Executive Officer of Cellon, a leading mobile phone design house, from 2002
        to
        now. Prior to that, he served as General Manager of Infrastructure Business
        of
        Capitel Group, supervising 200 people, from 2001 to 2002. He worked as senior
        manager in wireless R&D of Huawei technologies, a Chinese telecom giant,
        supervising 300 engineers from 2000 to 2001. Mr. Dai began his career in
        the
        mobile phone sector from Nokia China as project manager from 1996 to 2000
        and
        spent about 2 years in Finland as Project Manager at Nokia China R&D
        Department, supervising 10 engineers. Mr. Dai has a masters degree in
        engineering from Beijing University of Posts & Telecommunications (BUPT)
        .




25




**Code
      of Ethics**




In
      March
      2005, we adopted a Code of Ethics and Business Conduct and Insider Trading
      Policy (“Code”) that applies to our principal executive officer, principal
      financial officer, principal accounting officer or controller or persons
      performing similar functions. A copy of such Code is incorporated by reference
      as Exhibit 14.1 to this annual report. A copy of the Code will be made available
      to any stockholder, free of charge, upon written request to us at 10 th Floor,
      Tower C, Intelligence International Plaza, 18 Zhongguancun East Road, Haidian,
      Beijing 100083, PRC.




**Board
      Committees and Designated Directors**




We
      are
      currently traded on the OTC Bulletin Board and are therefore not required to
      have an audit or nominating committee or a compensation committee. We will
      evaluate establishing such committees in the future **.**




**ITEM
      11. EXECUTIVE COMPENSATION**




**Summary
      Compensation of Named Executive Officers**




**Name
                and Principal Position**
            
            **Fiscal
                Year**
            
            **Options**
            
            **Salary**
            
            **Bonus**
            
            **All
                Other Awards**
            
            **Total
                ($)**2007
            
            
            —
            
            $
            83,547
            
            
            —
            
            
            —
            
            $
            83,547Zhang
                Zhengyu
            
            
            2006
            
            
            —
            
            $
            10,076
            
            
            —
            
            
            —
            
            $
            10,076*Chairman
                and CEO*
            
            
            2005
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —2007
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Simon
                Mu
            
            
            2006
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —*Former
                Chairman and CEO*
            
            
            2005
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —2007
            
            
            —
            
            $
            20,619
            
            
            —
            
            
            —
            
            $
            20,619Ma
                Qing
            
            
            2006
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —*CFO
                and Treasurer*
            
            
            2005
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —2007
            
            
            —
            
            $
            53,767
            
            
            —
            
            
            —
            
            $
            53,767Li
                Ming
            
            
            2006
            
            
            —
            
            $
            17,633
            
            
            —
            
            
            —
            
            $
            17,633*President
                and Secretary*
            
            
            2005
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —




During
      each of the last three fiscal years, none of our other officers had salary
      and
      bonus greater than $100,000. In addition, our executive officers and/or their
      respective affiliates will be reimbursed by us for any out-of-pocket expenses
      incurred in connection with activities conducted on our behalf. There is no
      limit on the amount of these out-of-pocket expenses and there will be no review
      of the reasonableness of such expenses by anyone other than our Board of
      Directors, which includes persons who may seek reimbursement, or a court of
      competent jurisdiction if such reimbursement is challenged.




26




Since
      our
      formation, we have not granted any stock options or stock appreciation rights
      or
      any awards under long-term incentive plans.




***Director
      Compensation***




Our
      directors are reimbursed for expenses incurred by them in connection with
      attending Board of Directors’ meetings, but they do not receive any other
      compensation for serving on the Board of Directors.




**EMPLOYMENT
      CONTRACTS AND TERMINATION OF EMPLOYMENT, AND
      CHANGE-IN-CONTROL**




**Pension
      Benefits**




We
      do not
      sponsor any qualified or non-qualified defined benefit plans.




**Nonqualified
      Deferred Compensation**




We
      do not
      maintain any non-qualified defined contribution or deferred compensation
      plans.




**ITEM
              12.**
            ******SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGMEMENT AND RELTAED
                STOCKHOLDER MATTERS**




The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of April , 2008 by:




·
            each
                person known by us to be the beneficial owner of more than 5% of
                our
                outstanding shares of common stock;




·
            each
                of our officers and directors; and




·
            all
                our officers and directors as a group.




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




**Names
                and Addresses**
              **of
                Beneficial Owners**
            
            **Amount
                and Nature**
              **of
                Beneficial Ownership(1)**
            
            **Percent
                of Class**Full
                Talent Limited
            
            
            17,450,000
            
            
            29.4
            %Smooth
                Wealth Group Limited
            
            
            9,500,000
            
            
            16.0
            %Marvel
                Sight Limited
            
            
            5,500,000
            
            
            9.3
            %Full
                Wisdom International Limited
            
            
            3,750,000
            
            
            6.3
            %Zhang
                Zhengyu (2) (3)
            
            
            21,200,000
            
            
            35.7
            %Li
                Ming (2) (4)
            
            
            9,500,000
            
            
            16.0
            %Ma
                Qing (2) (5)
            
            
            5,500,000
            
            
            9.3
            %Dai
                Xiaoquan
            
            
            0
            
            
            0
            %**All
                directors and executive officers as a group (4
                persons)**
            
            
            **36,200,000**
            
            
            **61**
            **%**







(1)  Unless
      otherwise noted, the Company believes that all persons named in the table have
      sole voting and investment power with respect to all shares of the Common Stock
      beneficially owned by them. A person is deemed to be the beneficial owner of
      securities which may be acquired by such person within 60 days from the date
      indicated above upon the exercise of options, warrants or convertible
      securities. Each beneficial owner’s percentage of ownership is determined by
      assuming that options, warrants or convertible securities that are held by
      such
      person (not those held by any other person) and which are exercisable within
      60
      days of the date indicated above, have been exercised.




27




(2)  Indicates
      a director and/or executive officer of the Company. The address of each such
      individuals is c/o
      China
      Mobile Media Technology Inc, 10 th Floor,
      Tower C, Intelligence International Plaza, 18 Zhongguancun East Road, Haidian,
      Beijing 100083, PRC.




(3)  Includes
      17,450,000 shares owned by Full Talent Limited and 3,750,000 shares owned by
      Full Wisdom International Limited. In his capacity as sole owner of Full Talent
      Limited and Full Wisdom International Limited, Mr. Zhang has voting and
      investment power over the securities beneficially owned by Full Talent Limited
      and Full Wisdom International Limited. All of such shares have been pledged
      to
      support obligations of such individual under a non-compete
      agreement.




(4)  Includes
      9,500,000 shares owned by Smooth Wealth Group Limited. In her capacity as sole
      owner of Smooth Wealth Group Limited, Ms. Li has voting and investment power
      over the securities beneficially owned by Smooth Wealth Group Limited. All
      of
      such shares have been pledged to support obligations of such individual under
      a
      non-compete agreement.




(5)  Includes
      5,500,000 shares owned by Marvel Sight Limited. In his capacity as sole owner
      of
      Marvel Sight Limited, Mr. Ma has voting and investment power over the securities
      beneficially owned by Marvel Sight Limited. All
      of
      such shares have been pledged to support obligations of such individual under
      a
      non-compete agreement.




**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**




Beijing
      Hi-Tech Wealth Electronic Product Co. Ltd (“BJ HEP”) is a company controlled by
      a director of the Company. In 2007 and 2006, the Company purchased raw materials
      and goods from BJ HEP in the amount of $6,122,935 and $30,256,399, respectively.
      In 2007, HTW sold goods to BJ HEP in the amount of $504,689.




In
      2006,
      BJ HEP paid subcontracting fees on behalf of HTW in the amount of $434,274.




Nanjing
      Hengzhi Communication Equipment Co. Ltd. (“NHC”) has been controlled by a
      relative of a director of HTW. In 2007 and 2006, HTW sold goods to NHC in the
      amount of $1,061,479 and $3,353,655, respectively. The remaining balance was
      interest free, unsecured and has no fixed repayment term.




Beijing
      Mobil XP Technology Co., Ltd (“BMT”) is a company controlled by the director of
      MIL. In 2007, HTW purchased material and goods from BMT in the amount of
      $349,695. In 2006, HTW sold goods to BMT in the amount of $1,226,663. The
      remaining balance is interest free, unsecured and has no fixed repayment
      term.




Beihai
      Hi-Tech Wealth Electronic Product Co. Ltd. (“BH HEP”) is a company controlled by
      a director of MIL. In 2007, the company purchased raw materials and goods from
      BH HEP in the amount of $14,807. The remaining balance is interest free,
      unsecured and has no fixed repayment term.





On
      October 27, 2006, the Company consummated an exchange of shares (the “Share
      Exchange”) pursuant to a Share Exchange Agreement dated as of September 6, 2006
      (the “Share Exchange Agreement”) with Magical Insight Investments Ltd. (“Magical
      Insight”) and the shareholders of Magical Insight, which resulted in the
      acquisition by the Company of the assets and operations of Magical Insight.
      Pursuant to the Share Exchange Agreement, the Company issued an aggregate of
      17,986,720 shares of its common stock and warrants to purchase an additional
      28,013,280 shares of its common stock in exchange for the sole outstanding
      share
      of Magical Insight. There are several post-closing obligations on the part
      of
      the Company, including the effecting of a 1 for 10 reverse split of its
      outstanding common stock, the sale of the remainder of its existing businesses
      (other than those operated by Magical Insight) and the closing of a financing
      of
      at least $5 million in gross proceeds. These last two conditions had been
      satisfied prior to December 31, 2006 and the Company effected a 1 for 10 reverse
      split of its outstanding common stock, effective February 13, 2007.




28





The
      Share
      Exchange Agreement also originally provided for the issuance of up to an
      additional 40,000,000 shares of common stock to the CEO of Magical Insight
      in
      the event certain earnings and operational thresholds are achieved in the next
      18 months (with a decrease in the number of contingent shares that may be issued
      if certain net earnings targets are not met) and the consideration issued in
      the
      share exchange may also be increased in the event the net income of the Company
      (including the operations of Magical Insight, but excluding any of the Company’s
      pre-existing operations) exceeds $40 million in 2006. In connection with the
      issuance of the Company’s Series B preferred stock as further described below,
      the Company, Magical Insight and the former shareholders of Magical Insight
      entered into an amendment to the Share Exchange Agreement dated as of February
      8, 2007 which revised the earnings and operational thresholds that must be
      achieved prior to the issuance of the contingent shares described above,
      increased the number of shares that may be issued to 80,000,000 and extended
      the
      periods in respect of which the achievement of specified levels of net income
      may result in the issuance of such contingent shares through 2008 and 2009.
      As
      amended, the thresholds are as follows:





·
            10,000,000
                shares in the event net income for the first six months of 2007 exceeds
                $12 million;·
            10,000,000
                shares if 10,000 solar powered phones are sold by the end of the
                second
                quarter of 2007;·
            10,000,000
                shares in the event 10,000 English language learning phones are sold
                by
                the end of the second quarter of 2007;·
            10,000,000
                shares in the event net income for 2007 exceeds $40 million;·
            20,000,000
                shares in the event net income for 2008 exceeds $60 million;
                and·
            20,000,000
                shares in the event net income for 2009 exceeds $90
                million.





The
      Share
      Exchange Agreement was also amended such that the contingent shares will be
      paid
      out pro rata to all of the former shareholders of Magical Insight or to a trust
      established for their benefit.





Contemporaneously
      with entering into the amendment to the Share Exchange Agreement, the Company,
      Magical Insight and Beijing Hi-Tech Wealth Investment and Development Company
      Limited (“Beijing Hi-Tech Wealth”) entered into an Asset Purchase Agreement
      dated February 8, 2007, as amended on February 15, 2007 (the “Asset Purchase
      Agreement”), pursuant to which Magical Insight agreed to purchase the
      approximate 8% interest it didn’t already own in the registered capital of
      Beihai Hi-Tech Wealth Technology Development Co. Ltd., its primary operating
      subsidiary in the People’s Republic of China in exchange for 3,000,000 shares of
      common stock of the Company. The transactions contemplated by the Asset Purchase
      Agreement was consummated on March 27, 2007. The Company contributed 3,000,000
      shares of its common stock to Magical Insight, which contribution was recorded
      as an increase in the share capital of Magical Insight equal to the fair market
      value of such shares on the date of contribution.





In
      addition, on February 8, 2007, Magical Insight and Beijing Hi-Tech Wealth
      entered into a binding term sheet (the “Binding Term Sheet”) whereby Beijing
      Hi-Tech Wealth agreed to sell, and Magical Insight agreed to purchase, the
      technology, patents and all intellectual property rights related to solar
      powered mobile phones owned by Beijing Hi-Tech Wealth for $10,000,000. The
      purchase price is payable in 10 equal installments of $1,000,000, with each
      installment due and payable following the sale by Beijing Hi-Tech Wealth of
      100,000 solar power phones. The parties have agreed to formalize their
      obligations by way of a definitive agreement that will contain customary
      representations and warranties and closing conditions for transactions of this
      kind.




On
      January 11, 2008, the Company completed a financing through the issuance of
      RMB
      150,000,000 aggregate principal amount of USD-Settled Guaranteed Senior Notes
      due 2014 (the “Notes”) by Magical Insight pursuant to an Indenture dated January
      11, 2008 (the “Indenture”) between Magical Insight, as issuer, the Company, as
      guarantor and The Hong Kong and Shanghai Banking Corporation, as Trustee and
      Collateral Agent, and the issuance by the Company of warrants to purchase an
      aggregate of 12,000,000 shares of common stock of the Company (the “Warrants”)
      to Abax Lotus Ltd. (the “Purchaser”). The Notes initially do not bear interest
      during the first year following their issuance and bear interest at the rate
      of
      9.5% per annum thereafter, subject to increase by an additional 5% per annum
      in
      the event (i) the Company’s common stock is not listed on a recognized stock
      exchange by January 12, 2009, Magical Insight’s obligations under the Notes are
      guaranteed by the Company, and are secured by the pledge by the Company of
      100%
      of the stock of Magical Insight, the pledge by Zhang Zhengyu, the Company’s
      Chief Executive Officer, of all of his equity interest in Star Cluster
      Incorporated, a company organized under the laws of the British Virgin Islands
      (“Star Cluster”), the pledge by Star Cluster of all of its equity interest in
      Hi-Tech Wealth Holding Limited, and the pledge of equity interests in each
      of
      Beihai Hi-Tech Wealth Technology Development Co., Ltd. and Beijing Hi-Tech
      Wealth Communication Technology Co., Ltd, each a wholly foreign owned enterprise
      formed under the laws of the People’s Republic of China. The Warrants are
      exercisable at any time prior to June 30, 2014 and enable the holder thereof
      to
      purchase shares of CHMO’s common stock at an exercise price of $2.00 per share
      (the “Exercise Price”), subject to a downward adjustment on the six month
      anniversary of the issuance thereof and at the expiration of each six month
      period thereafter if the volume weighted average closing price of the Company’s
      common stock for the 20-day trading period immediately prior to the reset date
      is less than the Exercise Price, at such lower volume weighted average closing
      price (the “Reset Price”), provided that such Reset Price shall not be lower
      than $0.80 per share. Holders of the Notes are entitled to the protection of
      certain customary covenants, including negative covenants generally limiting
      the
      Company’s ability to incur additional indebtedness (including pursuant to sale
      and leaseback transactions), prohibiting the payment of dividends on (or the
      repurchase of) shares of its common stock, prohibiting the incurrence of liens,
      limiting Magical’s ability to sell assets and enter into transactions with its
      affiliates, restricting the ability of Magical to enter into arrangements
      limiting the ability of its subsidiaries to pay dividends, and require the
      Company to apply the proceeds from the issuance of the Notes only to pursue
      multichannel sales and marketing activities in the People’s Republic of China.
      The Notes are mandatorily redeemable in tranches commencing on the third
      anniversary of the issuance date in the amounts and at the times set forth
      in
      the Indenture. In addition, Magical is obligated to make an offer to all holders
      of Notes to repurchase their securities in the event of a change of control,
      sales of significant assets or a delisting of the Company’s common stock at
      purchase prices of 105%, 100% and 105%, respectively, of the principal amount
      thereof.




29




The
      principal shareholders of the Company have also entered into arrangements with
      Abax Lotus Ltd. that generally grant broad management veto rights in favor
      of
      Abax Lotus Ltd., including prohibitions on changes in senior management, the
      right to appoint one member of the board of directors (so long as Abax Lotus
      Ltd. and any of its affiliates collectively holds more than 5% of the Company’s
      common stock on a fully diluted basis), prohibiting the Company from entering
      into transactions outside of the ordinary course of business, limiting the
      Company’s ability to expend funds in excess of 20% of approved budget amounts
      and rights of first refusal and tag-along rights on sales of securities by
      either the Company or its current major shareholders, in each (unless otherwise
      indicated) so long as Abax Lotus Ltd. and any of its affiliates collectively
      holds at least RMB 15 million of the Notes or 3.5% of the Company’s common stock
      (on a fully diluted basis). In addition, the major shareholders of the Company
      may not transfer more than 10% of the shares of common stock they own so long
      as
      Abax Lotus Ltd. and any of its affiliates collectively holds more than 5% of
      the
      Company’s common stock on a fully diluted basis.




The
      Company has agreed to register the resale of the shares of common stock issuable
      upon exercise of the Warrants on any registration statement it files with the
      Securities and Exchange Commission (subject to customary exclusions). Abax
      Lotus
      Ltd. received an arrangement fee of $2,000,000 and a service fee of $150,000
      in
      connection with the financing.




30




**ITEM
      14. EXHIBITS**




The
      following Exhibits are filed as part of this report.





Exhibit
                No.
            
            Description2.1
            
            Share
                Exchange Agreement by and between General Components Inc., a Nevada
                corporation and Magical Insight Investments Limited., a British Virgin
                Islands corporation dated September 6, 2006.(1)2.2
            
            Asset
                Purchase Agreement by and between General Components Inc. and ZGS
                Corporation dated September 6, 2006 (2)2.3
            
            Stock
                Purchase Agreement by and between General Components Inc. and General
                Components International Ltd. (3)2.4
            
            Share
                Exchange Agreement by and between General Components Inc., a Nevada
                corporation and General Components, Inc., a Cayman Islands corporation
                dated September 24, 2004.(4)2.5
            
            Stock
                Purchase Agreement by and among General Components Inc. and certain
                Investors listed on Exhibit A thereto dated September 24,
                2004.(4)2.6
            
            Agreement
                and Plan of Merger dated as of July 7, 2004 between Pro-Active Solutions
                Inc., a Nevada corporation (“Parent”), and General Components Inc., a
                Nevada corporation and a direct wholly-owned subsidiary of
                Parent.(5)2.7
            
            Asset
                Purchase Agreement dated as of February 8, 2007 (7)2.8
            
            Amendment
                to Asset Purchase Agreement dated February 15, 2007 (9)2.9
            
            Amendment
                to the Share Exchange Agreement, dated as of September 6, 2006 by
                and
                among General Components Inc., Magical Insight Investments Ltd. and
                each
                of the persons listed as a shareholder thereon (7)3.1
            
            Certificate
                of Incorporation.(6)3.2
            
            Certificate
                of Designation of General Components Inc.(4)3.3
            
            Certificate
                of Designation of General Components Inc relating to Series B Preferred
                Stock (7)3.4
            
            Amended
                and Restated By-laws4.1
            
            Form
                of Common Stock Certificate (6)4.2
            
            Convertible
                Promissory Note dated November 1, 2006 (2)4.3
            
            Common
                Stock Purchase Warrant dated November 1, 2006 (2)4.4
            
            Form
                of Convertible Note dated December 11, 2006(8)4.5
            
            Form
                of Warrant dated December 11, 2006 (8)4.6
            
            Common
                Stock Purchase Warrant dated as of February 8, 2007 issued to Broadband
                Capital Management LLC (7)4.7
            
            Common
                Stock Purchase Warrant dated as of February 8, 2007 issued to Comtech
                Global Investments Inc. (7)10.1
            
            Form
                of Subscription Agreement dated as of February 8, 2007 by and among
                General Components Inc. and the investors listed on the signature
                pages
                thereto (7)10.2
            
            Registration
                Rights Agreement dated February 8, 2007 by and among General Components
                Inc. and the Holders named therein (7)10.3
            
            Cooperative
                Agreement dated as of as of April 10, 2006 between Beihai Hi-Tech
                Weiye
                Limited Co., Shanghai Xiang Guo Wang Lu Technology Development Limited
                Co.
                and Shanghai Xiang Guo Advertising Limited Co.10.4
            
            Form
                of Working Capital Loan Agreement14.1
            
            Code
                of Ethics and Insider Trading Policy.31.1*
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.




31


31.2*
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1*
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2*
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.99.1
            
            Binding
                Term Sheet between Magical Insight Investments Ltd. and Beijing Hi-Tech
                Wealth Investment and Development Company Limited dated as of February
                8,
                2007 (7)







*
      Filed
      herewith.




†
      Indicates management contract or compensatory plan or arrangement.




(1)
            Incorporated
                by reference herein to the Report on Form 8-K filed on November 2,
                2006.




(2)
            Incorporated
                by reference herein to the Report on Form 8-K filed on November 17,
                2006.




(3)
            Incorporated
                by reference herein to the Report on Form 8-K filed on December 29,
                2006.




(4)
            Incorporated
                by reference herein to the Report on Form 8-K filed on January 20,
                2005.




(5)
            Incorporated
                by reference herein to the Report on Form 8-K filed on July 8,
                2004.




(6)
            Incorporated
                by reference herein to the General Form for Registration of Securities
                of
                Small Business Issuers filed on Form 10-SB January 9,
                2002.




(7)
            Incorporated
                by reference herein to Report on Form 8-K filed on February 13,
                2007.




(8)
            Incorporated
                by reference herein to the Report on Form 8-K filed on December 20,
                2006.




(9)
            Incorporated
                by reference herein to the Report on Form 8-K filed on April 9,
                2007.




**ITEM
      15. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




The
      firm
      of BDO McCabe Lo Limited, formerly known as BDO McCabe Lo & Company acted as
      our principal accountant through December 28, 2006. The Company has now engaged
      Weinberg & Company, P.A. (“Weinberg”) as its principal independent
      accountants, which engagement became effective as of December 28, 2006. The
      following is a summary of fees paid to our principal accountants for services
      rendered.




AUDIT
      FEES




The
        aggregate fees incurred for each of the last two years for professional services
        rendered by the independent registered public accounting firm for the audits
        of
        our annual consolidated financial statements and reviews of consolidated
        financial statements included in our Form 10-KSB and Form 10-QSB reports
        and
        services normally provided in connection with statutory and regulatory filings
        or engagements were as follows:
 
 December
                  31, 2007
              
              December
                  31, 2006$
              418,475
              $
              223,973




TAX
      FEES




During
      the years ended December 31, 2006 and 2007, our principal accountant did not
      render services to us for tax compliance, tax advice and tax
      planning **.**




32




AUDIT
        RELATED FEES
  The
          aggregate fees in each of the last two years for the assurance and related
          services provided by the principal accountant that are not reasonably related
          to
          the performance of the audit or review of the Company’s financial statements and
          are not reported in paragraph (1) were approximately:
 
 December
                  31, 2007
              
              December
                  31, 2006$
              22,776
              $
              -
   BOARD
        OF
        DIRECTORAPPROVAL




We
        do not
        have an audit committee currently serving and as a result our board of directors
        performs the duties of an audit committee. Our board of directors evaluates
        and
        approves in advance the scope and the cost of the engagement of an auditor
        before the auditor renders audit and non-audit services. We do not rely on
        any
        pre-approval policies and procedures.




33


**SIGNATURES**




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




**CHINA
                MOBILE MEDIA TECHNOLOGY INC.**Principal
                Executive Officer:Date:
                May 14 , 2008
            By:
            /s/
              Zhang ZhengyuName:
                Zhang ZhengyuTitle:
                Chief Executive Officer




Principal
                  Financial and Accounting Officer:Date:
                  May 14, 2008
            By:
            /s/
              Ma QingName:
                  Ma QingTitle:
                  Chief Financial Officer





In
      accordance with Section 13 or 15(d) of the Exchange Act, this report has been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.




Date:
                  May 14, 2008
            By:
            /s/
              Zhang ZhengyuZhang
                    ZhengyuChief
                    Executive Officer and Chairman of theBoard




Date:
                  May 14, 2008
            By:
            /s/
              Ma QingMa
                      QingChief
                      Financial Officer, Treasurer andDirector




Date:
                  May 14, 2008
            By:
            /s/
              Li
              MingLi
                        MingDirector




Date:
                  May 14, 2008
            By:Dai
                          XiaoquanDirector




34


**CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 **FOR
        THE YEARS ENDED**
 **DECEMBER
        31, 2007 AND 2006**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 
 
 
 
 **CONTENTS**
 
 
 PAGE
              F-1
              REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
                  FIRM
 
 PAGE
              F-2
              CONSOLIDATED
                  BALANCE SHEETS AS OF DECEMBER 31, 2007 AND
                  2006
 
 PAGE
              F-3
                  - F-4
              CONSOLIDATED
                  STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME FOR
                  THE YEARS
                  ENDED DECEMBER 31, 2007 AND 2006
 
 PAGE
              F-5
              CONSOLIDATED
                  STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER
                  31, 2007 AND 2006
 
 PAGES
              F-6
                  - F-10
              CONSOLIDATED
                  STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007
                  AND
                  2006
 
 PAGES
              F-11
                  - F-61
              NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007 AND
                  2006
 
 
  
 **Report
        of Independent Registered Public Accounting Firm**
 
 
 To
        the
        Board of Directors and Stockholders of:
 China
        Mobile Media Technology Inc. and Subsidiaries
 
 We
        have
        audited the accompanying consolidated balance sheets of China Mobile Media
        Technology Inc. (Formerly Hi-Tech Wealth Inc.) and subsidiaries (the “Company”)
        as of December 31, 2007 and 2006, and the related consolidated statements
        of
        (loss) income and comprehensive (loss) income, changes in shareholders' equity
        and cash flows for the years then ended. These consolidated financial statements
        are the responsibility of the Company's management. Our responsibility is
        to
        express an opinion on these consolidated financial statements based on our
        audits.
 
 We
        conducted our audits in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall financial statement presentation.
        We believe that our audits provide a reasonable basis for our
        opinion.
 
 We
        were
        not engaged to examine management’s assertion about the effectiveness of the
        Company’s internal control over financial reporting as of December 31, 2007
        included in the Company’s Item 9A(T) “Controls and Procedures” in the Annual
        Report on Form 10-KSB and, accordingly, we do not express an opinion
        thereon.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of China Mobile
        Media Technology Inc. (Formerly Hi-Tech Wealth Inc.) and subsidiaries as
        of
        December 31, 2007 and 2006 and the consolidated results of their operations
        and
        their cash flows for the years then ended in conformity with accounting
        principles generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. The Company has a net loss
        of
        $24,733,048 and a negative cash flow from operations of $13,607,191 for the
        year
        ended December 31, 2007, and has a working capital deficiency of $1,033,683
        and
        a retained deficit of $20,142,287 at December 31, 2007. These matters raise
        substantial doubt about the Company’s ability to continue as a going concern.
        Management’s plans in regards to these matters are described in Note 2. The
        consolidated financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
  /s/
        Weinberg & Company, P.A.
 Weinberg
        & Company, P.A.
 
 Boca
        Raton, Florida
 April
        24,
        2008
 
 F-1
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 
 ******ASSETS**December
                  31,2007
              
              December
                  31,2006**CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              300,224
              
              $
              165,849Accounts
                  receivable, net of allowance for doubtful accounts of $5,661,556
                  at
                  December 31, 2007
              
              
              11,413,957
              
              
              2,454,077Notes
                  receivable, net of discount of $237,066 at December 31, 2007
              
              
              5,408,806
              
              
              452,572Inventories,
                  net of provision of $1,084,001 at December 31, 2007
              
              
              7,385,441
              
              
              13,455,461Due
                  from related parties
              
              
              146,909
              
              
              2,788,928Deferred
                  tax assets
              
              
              -
              
              
              937,682Prepayments
                  for goods
              
              
              6,012,788
              
              
              1,910,271Debt
                  issue costs
              
              
              468,208
              
              
              -Other
                  receivables, prepaid expenses, and other assets
              
              
              1,823,962
              
              
              3,442,139Due
                  from employees
              
              
              105,936
              
              
              76,330Assets
                  of discontinued operations
              
              
              -
              
              
              3,648,743Total
                  current assets
              
              
              33,066,231
              
              
              29,332,052Plant
                  and equipment, net
              
              
              16,085,217
              
              
              15,261,129Land
                  use right, net
              
              
              2,285,904
              
              
              2,336,328Long-term
                  investment
              
              
              4,000
              
              
              4,000Goodwill
              
              
              4,240,842
              
              
              -Deferred
                  tax assets
              
              
              -
              
              
              46,610Assets
                  of discontinued operations
              
              
              -
              
              
              1,343,449Total
                  long-term assets
              
              
              22,615,963
              
              
              18,991,516******TOTAL
                  ASSETS**
              
              $
              55,682,194
              
              $
              48,323,568**LIABILITIES
                  AND SHAREHOLDERS’ EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              9,333,376
              
              $
              959,459Other
                  payables and accrued liabilities
              
              
              3,445,546
              
              
              3,300,548Short-term
                  bank loans
              
              
              3,144,611
              
              
              1,152,561Current
                  portion of long-term loans
              
              
              1,093,778
              
              
              8,106,343Convertible
                  notes, net of discount of $0 and $2,279,313 at December 31, 2007
                  and 2006,
                  respectively
              
              
              -
              
              
              3,885,687Secured
                  notes, net of discount of $1,132,399
              
              
              8,867,601
              
              
              -Notes
                  payable
              
              
              2,191,333
              
              
              1,267,817Customer
                  deposits
              
              
              3,783,680
              
              
              5,402,047Due
                  to related parties
              
              
              561,275
              
              
              957,410Taxes
                  payable
              
              
              -
              
              
              278,698Due
                  to employees
              
              
              115,719
              
              
              -Liquidated
                  damages payable
              
              
              1,445,750
              
              
              -Deferred
                  tax liabilities
              
              
              117,245
              
              
              406,817Liabilities
                  of discontinued operations
              
              
              -
              
              
              3,066,139Total
                  current liabilities
              
              
              34,099,914
              
              
              28,783,526**LONG-TERM
                  LIABILITIES**Long-term
                  bank loans
              
              
              4,744,261
              
              
              -Deferred
                  tax liabilities
              
              
              136,149
              
              
              136,149Total
                  long-term liabilities
              
              
              4,880,410
              
              
              136,149**TOTAL
                  LIABILITIES**
              
              
              38,980,324
              
              
              28,919,675Minority
                  interests
              
              
              -
              
              
              1,605,934**COMMITMENTS****SHAREHOLDERS’
                  EQUITY**Series
                  B Preferred stock, stated value $50,000 per share; authorized 300
                  shares,
                  288.65 and 0 sharesissued
                  and outstanding at December 31, 2007 and 2006,
                  respectively
              
              
              14,432,500
              
              
              -Common
                  stock, par value $0.001 per share; authorized 280,000,000 shares,
                  59,394,615 and 27,999,935 shares issued and outstanding at December
                  31,
                  2007 and 2006, respectively
              
              
              59,395
              
              
              28,000Additional
                  paid-in capital
              
              
              20,574,138
              
              
              12,624,622Retained
                  (deficit) earnings (the restricted portion is $1,202,599 and $1,202,599
                  atDecember
                  31, 2007 and 2006, respectively)
              
              
              (20,142,287
              )
              
              4,590,761Accumulated
                  other comprehensive income
              
              
              1,778,124
              
              
              554,576**TOTAL
                  SHAREHOLDERS’ EQUITY**
              
              
              16,701,870
              
              
              17,797,959**TOTAL
                  LIABILITIES AND SHAREHOLDERS’ EQUITY**
              
              $
              55,682,194
              
              $
              48,323,568
  See
          accompanying notes to the consolidated financial statements.
  F-2
  **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF (LOSS) INCOME**
 **AND
          COMPREHENSIVE (LOSS) INCOME**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
 **2007**
              
              **2006****REVENUES,
                  NET**
              
              $
              43,506,827
              
              $
              60,097,086**COST
                  OF GOODS SOLD**
              
              
              36,706,816
              
              
              39,149,588**GROSS
                  PROFIT**
              
              
              6,800,011
              
              
              20,947,498Selling
                  and distribution
              
              
              2,786,511
              
              
              356,940Advertising
              
              
              6,184,486
              
              
              13,677,979Research
                  and development
              
              
              862,784
              
              
              50,885General
                  and administrative
              
              
              7,314,372
              
              
              2,810,890Bad
                  debt allowance
              
              
              5,661,556
              
              
              -**(LOSS)
                  INCOME FROM OPERATIONS**
              
              
              (16,009,698
              )
              
              4,050,804**OTHER
                  INCOME (EXPENSES)**Interest
                  expense, net
              
              
              (1,452,968
              )
              
              (1,253,459
              )Non
                  cash interest expense from amortization of discount on convertible
                  and
                  secured notes
              
              
              (3,333,821
              )
              
              -Amortization
                  of debt issue costs for secured notes
              
              
              (515,558
              )
              
              -Non
                  cash liquidated damages
              
              
              (1,445,750
              )
              
              -Government
                  grants
              
              
              359,331
              
              
              517,917Value
                  added tax refund
              
              
              229,150
              
              
              -Other
                  income, net
              
              
              37,983
              
              
              33,700**Total
                  Other Income (Expenses)**
              
              
              (6,121,633
              )
              
              (701,842
              )**(LOSS)
                  INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY
                  INTERESTS**
              
              
              (22,131,331
              )
              
              3,348,962**INCOME
                  TAXES**
              
              
              (852,428
              )
              
              (338,877
              )**(LOSS)
                  INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY
                  INTERESTS**
              
              
              (22,983,759
              )
              
              3,010,085**MINORITY
                  INTERESTS’ SHARE OF NET INCOME**
              
              
              (99,259
              )
              
              (339,156
              )**(LOSS)
                  INCOME FROM CONTINUING OPERATIONS**
              
              
              (23,083,018
              )
              
              2,670,929**DISCONTINUED
                  OPERATIONS**(Loss)
                  gain from disposition of discontinued operations
              
              
              (3,014,440
              )
              
              374,506Income from
                  discontinued operations
              
              
              1,364,410
              
              
              1,504,207**NET
                  (LOSS) GAIN FROM DISCONTINUED OPERATIONS**
              
              
              (1,650,030
              )
              
              1,878,713**NET
                  (LOSS) INCOME**
              
              
              (24,733,048
              )
              
              4,549,642**OTHER
                  COMPREHENSIVE INCOME**Foreign
                  currency translation gain
              
              
              1,223,548
              
              
              404,975**OTHER
                  COMPREHENSIVE INCOME BEFORE INCOME TAXES**
              
              
              1,223,548
              
              
              404,975**INCOME
                  TAXES RELATED TO OTHER COMPREHENSIVE INCOME**
              
              
              -
              
              
              (60,746
              )**OTHER
                  COMPREHENSIVE INCOME, NET OF INCOME TAXES**
              
              
              1,223,548
              
              
              344,229**COMPREHENSIVE
                  (LOSS) INCOME**
              
              $
              (23,509,500
              )
              $
              4,893,871
 
  See
        accompanying notes to the consolidated financial statements.
   F-3
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF (LOSS) INCOME**
 **AND
          COMPREHENSIVE (LOSS) INCOME**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
 
 **2007**
              
              **2006****Weighted
                  average shares outstanding****-
                  Basic**
              
              
              53,826,115
              
              
              19,797,505**-
                  Diluted**
              
              
              53,826,115
              
              
              25,406,362**(Loss)
                  income per share from continuing operations****-
                  Basic**
              
              $
              (0.43
              )
              $
              0.13**-
                  Diluted**
              
              $
              (0.43
              )
              $
              0.11**(Loss)
                  income per share from gain (loss) from disposition of discontinued
                  operations****-
                  Basic**
              
              $
              (0.06
              )
              $
              0.02**-
                  Diluted**
              
              $
              (0.06
              )
              $
              0.01**Income
                  per share from gain from discontinued operations****-
                  Basic**
              
              $
              0.03
              
              $
              0.08**-
                  Diluted**
              
              $
              0.03
              
              $
              0.06**Net
                  (loss) income per share****-
                  Basic**
              
              $
              (0.46
              )
              $
              0.23**-
                  Diluted**
              
              $
              (0.46
              )
              $
              0.18
  See
          accompanying notes to the consolidated financial statements.
  F-4
  **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
 **Accumulated****Additional**
                  
                  **Retained**
                  
                  **Other****Series
                      B Preferred Stock**
                  
                  **Common
                      Stock**
                  
                  **Paid-in**
                  
                  **(Deficit)**
                  
                  **Comprehensive****Shares**
                  
                  **Par
                          Value**
                  
                  **Shares**
                  
                  **Par
                      Value**
                  
                  **Capital**
                  
                  **Earnings**
                  
                  **Income**
                  
                  **Total****BALANCE,
                      JANUARY 1, 2006**
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  17,986,935
                  
                  $
                  17,987
                  
                  $
                  10,533,436
                  
                  $
                  41,119
                  
                  $
                  210,347
                  
                  $
                  10,802,889Common
                      stock issued to a shareholder
                  
                  
                  -
                  
                  
                  -
                  
                  
                  10,000
                  
                  
                  10
                  
                  
                  (10
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Recapitalization
                  
                  
                  -
                  
                  
                  -
                  
                  
                  10,003,000
                  
                  
                  10,003
                  
                  
                  (481,975
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  (471,972
                  )Warrants
                      issued with convertible notes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  311,821
                  
                  
                  -
                  
                  
                  -
                  
                  
                  311,821Beneficial
                      conversion feature with convertible notes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,261,350
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,261,350Foreign
                      currency translation gain
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  344,229
                  
                  
                  344,229Net
                      income
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  4,549,642
                  
                  
                  -
                  
                  
                  4,549,642**BALANCE,
                      DECEMBER 31, 2006**
                  
                  
                  -
                  
                  
                  -
                  
                  
                  27,999,935
                  
                  
                  28,000
                  
                  
                  12,624,622
                  
                  
                  4,590,761
                  
                  
                  554,576
                  
                  
                  17,797,959Issuance
                      of Series B preferred stock in private placement
                  
                  
                  145.00
                  
                  
                  7,250,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  7,250,000Conversion
                      of convertible notes into Series B preferred stock
                  
                  
                  125.60
                  
                  
                  6,280,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  6,280,000Issuance
                      of Series B preferred stock and warrants for placement services
                      fee
                  
                  
                  18.55
                  
                  
                  927,500
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (927,500
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  -Issuance
                      of warrants for financial advisory services
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  488,022
                  
                  
                  -
                  
                  
                  -
                  
                  
                  488,022Conversion
                      of warrants into common stock
                  
                  
                  -
                  
                  
                  -
                  
                  
                  28,013,280
                  
                  
                  28,013
                  
                  
                  (27,733
                  )
                  
                  -
                  
                  
                  -
                  
                  
                  280Issuance
                      of common stock for acquisition
                  
                  
                  -
                  
                  
                  -
                  
                  
                  3,000,000
                  
                  
                  3,000
                  
                  
                  6,027,000
                  
                  
                  -
                  
                  
                  -
                  
                  
                  6,030,000Issuance
                      of warrants with secured notes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,186,909
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,186,909Conversion
                      of convertible notes and accrued interest into common
                      stock
                  
                  
                  -
                  
                  
                  -
                  
                  
                  356,400
                  
                  
                  357
                  
                  
                  177,843
                  
                  
                  -
                  
                  
                  -
                  
                  
                  178,200Conversion
                      of Series B preferred stock into common stock
                  
                  
                  (0.50
                  )
                  
                  (25,000
                  )
                  
                  25,000
                  
                  
                  25
                  
                  
                  24,975
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Foreign
                      currency translation gain
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,223,548
                  
                  
                  1,223,548Net
                      loss
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (24,733,048
                  )
                  
                  -
                  
                  
                  (24,733,048
                  )**BALANCE,
                      DECEMBER 31, 2007**
                  
                  
                  288.65
                  
                  $
                  14,432,500
                  
                  
                  59,394,615
                  
                  $
                  59,395
                  
                  $
                  20,574,138
                  
                  $
                  (20,142,287
                  )
                  $
                  1,778,124
                  
                  $
                  16,701,870
  See
          accompanying notes to the consolidated financial statements.
  F-5
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  **2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  (loss) income
              
              $
              (24,733,048
              )
              $
              4,549,642Adjustments
                  to reconcile net (loss) income to net cash (used in) provided by
                  operating
                  activities:Depreciation
                  and amortization
              
              
              1,250,170
              
              
              796,438Amortization
                  of discounts to convertible notes and secured notes
              
              
              3,333,822
              
              
              293,858Amortization
                  of debt issue cost
              
              
              515,558
              
              
              -Warrants
                  issued to financial advisors
              
              
              488,022
              
              
              -Provision
                  for slow-moving inventories
              
              
              1,084,001
              
              
              -Deferred
                  taxes
              
              
              713,132
              
              
              (133,121
              )Provision
                  for doubtful accounts
              
              
              5,661,556
              
              
              -Notes
                  receivable discount
              
              
              342,049
              
              
              -Amortization
                  of notes receivable discount
              
              
              (104,984
              )
              
              -Liquidated
                  damages
              
              
              1,445,750
              
              
              -Minority
                  interests’ share of net income
              
              
              99,259
              
              
              339,156Loss
                  (gain) on disposal of discontinued operations
              
              
              3,014,440
              
              
              (374,506
              )Discontinued
                  operations
              
              
              282,884
              
              
              (430,351
              )**Changes
                  in operating assets and liabilities, net of effects of
                  acquisition:****(Increase)
                  Decrease In:**Accounts
                  receivable
              
              
              (14,621,435
              )
              
              4,730,876Inventories
              
              
              4,986,019
              
              
              (9,666,486
              )Other
                  receivables, prepaid expenses, and other assets
              
              
              1,654,466
              
              
              (3,436,438
              )Prepayments
                  for goods
              
              
              (4,102,517
              )
              
              (1,848,981
              )Due
                  from employees
              
              
              (29,606
              )
              
              (16,996
              )Discontinued
                  operations
              
              
              1,757,527
              
              
              408,494**Increase
                  (Decrease) In:**Accounts
                  payable
              
              
              8,373,917
              
              
              666,642Other
                  payables and accrued liabilities
              
              
              438,196
              
              
              2,865,618Due
                  to employees
              
              
              115,719
              
              
              (17,544
              )Taxes
                  payable
              
              
              (318,241
              )
              
              151,193Customer
                  deposits
              
              
              (1,618,367
              )
              
              1,178,716Discontinued
                  operations
              
              
              (3,635,480
              )
              
              3,795,682Net
                  cash (used in) provided by operating activities
              
              
              (13,607,191
              )
              
              3,851,892**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Purchases
                  of plant and equipment
              
              
              (1,901,091
              )
              
              (999,416
              )Proceeds
                  from notes receivable
              
              
              113,223
              
              
              5,293,380Increase
                  of notes receivable
              
              
              (5,306,521
              )
              
              (3,668,985
              )Purchase
                  of a subsidiary, net of cash acquired
              
              
              -
              
              
              46,855Proceeds
                  from disposal of subsidiaries, net of cash disposed
              
              
              204,558
              
              
              -Discontinued
                  operations
              
              
              (906,867
              )
              
              (5,679,200
              )Net
                  cash used in investing activities
              
              
              (7,796,698
              )
              
              (5,007,366
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from short-term bank loans
              
              
              3,144,611
              
              
              3,073,495Repayments
                  of short-term bank loans
              
              
              (3,175,945
              )
              
              (4,409,124
              )Proceeds
                  from long-term bank loans
              
              
              5,838,039
              
              
              -Repayment
                  of long-term bank loans
              
              
              (6,082,959
              )
              
              -Proceeds
                  from notes payable
              
              
              1,036,477
              
              
              1,270,015Repayments
                  for notes payable
              
              
              (112,960
              )
              
              (67,873
              )Proceeds
                  from convertible notes
              
              
              -
              
              
              6,000,000Proceeds
                  from secured notes
              
              
              9,016,233
              
              
              -Proceeds
                  from issuance of preferred stock
              
              
              7,250,000
              
              
              -Cash
                  received (repayment) to/from related parties, net
              
              
              2,245,884
              
              
              (5,123,607
              )Proceeds
                  from warrants exercised
              
              
              280
              
              
              -Discontinued
                  operations
              
              
              1,154,857
              
              
              -Net
                  cash provided by financing activities
              
              
              20,314,517
              
              
              742,906**NET
                  DECREASE IN CASH AND CASH EQUIVALENTS**
              
              
              (1,089,372
              )
              
              (412,568
              )Effect
                  of exchange rate changes on cash
              
              
              1,223,747
              
              
              498,713Cash
                  and cash equivalents at beginning of year
              
              
              165,849
              
              
              79,704**CASH
                  AND CASH EQUIVALENTS AT END OF YEAR**
              
              $
              300,224
              
              $
              165,849**SUPPLEMENTARY
                  CASH FLOW INFORMATION:**Interest
                  paid
              
              $
              815,646
              
              $
              371,435Income
                  taxes paid
              
              $
              386,043
              
              $
              311,274
  See
          accompanying notes to the consolidated financial statements.
 F-6
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  **SUPPLEMENTAL
        NON-CASH DISCLOSURES:**
 
 1.
              During
                  2007, $6,000,000 of convertible notes with accrued interest of
                  $280,000
                  through February 8, 2007 were converted into 125.6 shares of Series
                  B
                  preferred stock. Also see Notes 12 and
                  16.
 
 2.
              During
                  2007, $927,500 of Series B preferred stock (18.55 shares) was issued
                  to
                  the placement agent for placement services for the private placement.
                  Also
                  see Note 16.
 
 3.
              During
                  2007, $165,000 of convertible notes with accrued interest of $13,200
                  through September 5, 2007 were converted into 356,400 shares of
                  common
                  stock. Also see Notes 12 and 16.
 
 4.
              During
                  2007, $25,000 of Series B preferred stock (0.5 shares) was converted
                  into
                  25,000 shares of common stock. Also see Notes 12 and
                  16.
 
 5.
              On
                  December 28, 2006, Beihai Hi-Tech Wealth Technology Development
                  Co., Ltd
                  (“HTW”) entered into an agreement to sell its 50% interest in Beijing
                  Mobile Communication Technology Co., Ltd (“BMCT”) to another owner of BMCT
                  for $0. The transaction was approved by the PRC Government and
                  consummated
                  on March 28, 2007. Also see Note
                  18.
 
 The
        following represents the assets and liabilities sold at the date of the
        disposal:
  **March
                    28,****2007**Asetss
                
                $
                2,871Total
                    assets sold
                
                
                2,871Liabilities
                
                
                (325
                )Total
                    liabilities sold
                
                
                (325
                )Total
                    net assets
                
                
                2,546Share
                    percentage
                
                
                50
                %Net
                    assets disposed
                
                $
                1,273Consideration
                
                
                0Gain
                    on disposal
                
                $
                1,273
  See
          accompanying notes to the consolidated financial
          statements.
  F-7
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  **SUPPLEMENTAL
        NON-CASH DISCLOSURES (CONTINUED):**
 
 6.
              On
                  June 13, 2007, HTW entered into an agreement to sell its 90% interests
                  on
                  Beihai Hi-Tech Wealth Electronic Products Co., Ltd (“HEP”), a 90%
                  subsidiary of HTW, to Beijing Hi-Tech Wealth Investment and Development
                  Company Limited (“BJ HID”) for $237,554. The transaction was approved by
                  PRC Government and consummated on July 3, 2007. Also see Note
                  18.
 
 The
        following represents the assets and liabilities sold at the date of the
        disposal:
 
 **July
                  3,****2007**Plant
                  and equipment, net
              
              $
              6,575Cash
                  and cash equivalents
              
              
              31,219Amounts
                  due from related companies
              
              
              236,596Total
                  assets sold
              
              
              274,390Other
                  payables
              
              
              (43
              )Amount
                  due to related companies
              
              
              (74,436
              )Total
                  liabilities sold
              
              
              (74,479
              )Net
                  assets sold
              
              $
              199,911Share
                  percentage
              
              
              90
              %Net
                  assets disposed
              
              $
              179,920Consideration
              
              
              237,554Gain
                  on disposal
              
              $
              57,634
 
 7.
              During
                  2007, 1,500,000 of common stock warrants were issued with the issuance
                  of
                  $10,000,000 of Secured Notes (the “Warrants”) to investors in a private
                  placement, and the fair value of the Warrants was $2,186,908. The
                  fair
                  value amount of $2,186,908 of the Warrants was recorded as discount
                  to the
                  notes and is being amortized over the term of the notes. Also see
                  Notes 13
                  and 17.
 
 8.
              During
                  2007,$983,767
                  of placement costs were deducted directly from the proceeds of$10,000,000
                  of Secured Notes and recorded as a discount and is being amortized
                  over
                  the term of the notes. Also see Note
                  13.
  See
          accompanying notes to the consolidated financial
          statements.
 F-8
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND
          2006**
  **SUPPLEMENTAL
        NON-CASH DISCLOSURES (CONTINUED):**
 
 9.
              During
                  2006, the operations of Voice Over Internet Protocol and General
                  Components Inc., a Cayman Islands corporation, were disposed off
                  for
                  $581,000 and $1, respectively. The consideration consists of shares
                  of a
                  private company valued at $81,000, settlement of an outstanding
                  accounts
                  payable of $150,000, and the balance of cash proceeds and account
                  receivables of $100,001 and
                  $250,000.
 
 10.
              On
                  October 27, 2006, MIL acquired 100% of the equity interest of Euro
                  Asia
                  Arbitrage Investment Limited (“Euro Asia”), a Hong Kong corporation, for
                  HK$100,000, equivalent to $12,838. Prior to the acquisition, Euro
                  Asia was
                  a 100% holding company of Beijing Hi-Tech Wealth Software Co.,
                  Limited
                  (“BJ HTS”), which has a common director with MIL. The following represents
                  the assets purchased and liabilities assumed at the date of the
                  acquisition:
 
 **October
                  27,****2006**Plant
                  and equipment, net
              
              $
              11,091Cash
                  and cash equivalents
              
              
              59,693Other
                  receivable and prepayments
              
              
              3,046Amounts
                  due from related parties
              
              
              2,326,342Other
                  assets
              
              
              443,357Total
                  assets purchased
              
              $
              2,843,529Other
                  payables and accrued expenses
              
              $
              (2,535,908
              )Deferred
                  taxes
              
              
              (198,713
              )Other
                  liabilities
              
              
              (96,070
              )Total
                  liabilities assumed
              
              $
              (2,830,691
              )Total
                  net assets
              
              $
              12,838Share
                  percentage
              
              
              100
              %Net
                  assets acquired
              
              $
              12,838Total
                  consideration paid
              
              $
              12,838
 
 See
        accompanying notes to the consolidated financial statements.
  F-9
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  **SUPPLEMENTAL
        NON-CASH DISCLOSURES (CONTINUED):**
 
 11.
              During
                  2006, $2,218,612 was transferred from construction in progress
                  to plant
                  and equipment.
 
 12.
              On
                  October 29, 2007, MIL disposed 100% of the equity interest of Euro
                  Asia, a
                  Hong Kong corporation, for HK$100,000, equivalent to $12,838. Prior
                  to the
                  acquisition, Euro Asia was a 100% holding company of BJ HTS. Also
                  see Note
                  18.
 
 The
        following represents the assets and liabilities sold at the date of the
        disposal:
 
 **October
                  29,****2007**Plant
                  and equipment, net
              
              $
              49,708Cash
                  and cash equivalents
              
              
              14,615Notes
                  receivable
              
              
              6,540,115Other
                  assets
              
              
              421,155Total
                  assets sold
              
              $
              7,025,593Notes
                  payable
              
              $
              (1,154,857
              )Customers
                  deposits
              
              
              (1,419,005
              )Other
                  payables
              
              
              (1,003,756
              )Payroll
                  payables
              
              
              (364,336
              )Total
                  liabilities sold
              
              $
              (3,941,954
              )Total
                  net assets
              
              $
              3,083,639Share
                  percentage
              
              
              100
              %Net
                  assets sold
              
              $
              3,083,639Consideration
              
              
              12,838Loss
                  on sale
              
              $
              (3,070,801
              )
  See
          accompanying notes to the consolidated financial
          statements.
 F-10
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **1.**
              **ORGANIZATION
                  AND PRINCIPAL ACTIVITIES**
  China
        Mobile Media Technology Inc. (formerly Hi-Tech Wealth Inc.) (“CMMT”) was
        incorporated under the laws of the State of Nevada on January 14, 2000, under
        the name of Pro-Active Solutions, Inc. (“Pro-Active”), which had only limited
        operations and had been a development stage company. On July 7, 2004, Pro-Active
        changed its name to General Components, Inc. (“GCI”). On April 25, 2007, GCI
        changed its name from General Components, Inc. to Hi-Tech Wealth Inc. On
        November 15, 2007, CMMT changed its name from Hi-Tech Wealth Inc. to China
        Mobile Media Technology Inc.
 
 On
        September 24, 2004, GCI and the shareholders (collectively, “Shareholders”) of
        General Components, Inc., a Cayman Islands corporation, closed the transactions
        contemplated by the share exchange dated as of September 24, 2004. This share
        exchange transaction resulted in those shareholders obtaining a majority
        voting
        interest in GCI.
 
 On
        October 27, 2006, GCI and the beneficial owners (collectively, “Owners”) of
        Magical Insight Investments Limited, a British Virgin Islands corporation
        (“MIL”), consummated an exchange of shares (the “Share Exchange”) pursuant to a
        Share Exchange Agreement dated as of September 6, 2006 (the “Share Exchange
        Agreement”), which resulted in a change in control of GCI. In connection with
        the transaction, GCI issued an aggregate of 17,986,721 shares of its common
        stock and warrants to purchase an additional 28,013,279 shares of its common
        stock, after giving effect to the 1 for 10 reverse split of the common stock
        on
        February 13, 2007, in exchange for the sole outstanding share of MIL, which
        constituted 100% of the outstanding capital stock of GCI. Immediately after
        the
        closing of the Share Exchange, the new issued common stock and warrants
        constituted approximately 82.14% of the ownership of GCI.
 
 This
        Share Exchange transaction resulted in those shareholders obtaining a majority
        voting interest in GCI. Generally accepted accounting principles require
        that
        MIL retain the majority interest in a combined business be treated as the
        accounting acquirer. The exchange transaction has been accounted for as a
        reverse acquisition in accordance with Statement of Financial Accounting
        Standards (“SFAS”) No. 141 “Business Combinations”. The acquisition was
        accounted for as the recapitalization of MIL. Accordingly, the accompanying
        consolidated statements of income include the results of operations of GCI
        and
        MIL for 2007 and 2006.
 
 The
        consideration of the reverse acquisition was measured at the net fair value
        of
        GCI as the common stock of GCI did not appear to be more indicative of fair
        value. As a result, no goodwill was recognized from the share exchange.
  F-11
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **1.**
              **ORGANIZATION
                  AND PRINCIPAL ACTIVITIES
                  (CONTINUED)**
  Before
        acquiring MIL, the principal activity of China Mobile Media Technology Inc.
        and
        its subsidiaries (the “Company”) was to provide broadband technology for the
“last mile” market. The Company’s products were produced by original equipment
        manufacturers (“OEM”) and sold under the “General Components” and “Reachhome”
brands. The Company also developed plastic optical fiber (“POF”) cable
        technology and related networking equipment. The Company filed patents in
        the
        USA and Asia on its proprietary POF technology, related manufacturing process
        and production machinery. The POF global market did not develop as rapidly
        as
        the Company anticipated and the Company deferred the commercialization and
        launch of POF products and reduced research and development of POF.
 
 Prior
        to
        acquiring MIL, while searching for a new business direction, the Company
        developed a product line of Voice Over Internet Protocol (“VOIP”) to provide the
        voice communication services within the internet environment. However, since
        the
        Company did not have sufficient financial resources to fully develop its
        new
        VOIP business, on September 8, 2006, the Company, via its subsidiary, General
        Components Inc, (“GCI Cayman”), a Cayman Islands corporation, entered into an
        Asset Purchase Agreement (“APA”) for the sale of its VOIP business. The
        agreement provided for the sale of the Company’s VOIP business for consideration
        of $0. The transaction contemplated by the APA closed on November 6, 2006.
        Also
        see Note 18
 
 On
        December 22, 2006, the Company entered into an asset purchase agreement with
        General Components International Limited, a British Virgin Islands company.
        Pursuant to the agreement the Company agreed to sell all of its interest
        in the
        business operations of and its 100% equity interest (including the first
        installment received, the second and the third installments to be received
        along
        with all the other assets and liabilities) in General Components Inc, (“GCI
        Cayman”), a Cayman Islands corporation, and its subsidiaries, to a third party
        for $1. GCI Cayman was the 100% ultimate holding company of General Components,
        Inc., a New Jersey corporation, General Components Limited, a Hong Kong
        corporation, and General Components, Inc., a China corporation. Also see
        Note
        18.
  F-12
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **1.**
              **ORGANIZATION
                  AND PRINCIPAL ACTIVITIES
                  (CONTINUED)**
  Going
        forward, the Company intends to carry out the business of MIL and its primary
        operating subsidiary, Beihai Hi-Tech Wealth Technology Development Co., Ltd.
        (“HTW”). HTW is a provider of electronic and mobile communication products in
        the People’s Republic of China (the “PRC”).
 
 On
        October 27, 2006, MIL acquired 100% equity interest of Euro Asia Arbitrage
        Investment Limited (“Euro Asia”), a Hong Kong corporation, for HK$100,000,
        equivalent to US$12,838. Euro Asia is investment holding company, which owns
        100% of Beijing Hi-Tech Wealth Software Co., Limited. As a result, Euro Asia
        and
        its subsidiary were consolidated into the accompanying consolidated financial
        statements for 2006.
 
 On
        November 28, 2006, MIL increased its ownership in HTW through an
        additional investment of $3,600,000. On February 12, 2007 and March 19, 2007,
        MIL increased its ownership in HTW through an additional investment of
        $4,500,000 and $320,513, respectively.
 
 On
        March
        27, 2007, MIL acquired the remaining interest from the minority interest
        holders
        of HTW for 3,000,000 shares of the Company’s common stock. Thereafter, HTW
        became a 100% owned subsidiary of MIL. Also see Note 19.
 
 On
        February 13, 2007, the Company completed a 1 for 10 reverse split of its
        outstanding common stock. As a result, all the amounts in the accompanying
        consolidated financial statements for the years ended December 31, 2007 and
        2006
        have been restated to give effect to the 1 for 10 reverse split.
 
 On
        June
        13, 2007, HTW entered into an agreement to sell its 90% interest on Beihai
        Hi-Tech Wealth Electronic Products Co., Ltd (“HEP”), a 90% subsidiary of HTW, to
        BJ HID for $237,554. The transaction was approved by the PRC Government and
        consummated on July 3, 2007. Also see Note 18.
 
 On
        October 29, 2007, MIL entered into an agreement to sell its 100% interest
        on
        Euro Asia Arbitrage Investment Limited (“Euro Asia”) to a third party for
        $12,838. Subject to the disposal, the subsidiary of Euro Asia, Beijing Hi-Tech
        Wealth Software Co., Limited, was also disposed. As a result, Euro Asia and
        its
        subsidiary are reported as discontinued operations.
 
 
 ****
 F-13
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
  **2.**
              **GOING
                  CONCERN**
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. The Company has a net loss
        of
        $24,733,048 and a negative cash flow from operations of $13,607,191 for the
        year
        ended December 31, 2007, and has a working capital deficiency of $1,033,683
        and
        a retained deficit of $20,142,287 at December 31, 2007.
 
 On
        February 8, 2007, the Company raised $13,250,000 in a private placement in
        the
        form of a sale of shares of Series A, convertible preferred stock (See Note
        16).
        On January 11, 2008, MIL sold in a private placement of $20,661,157
        (Rmb150,000,000) principal amount of 9.57% per annum global notes due January
        10, 2014 (the “Global Notes”), with common stock purchase warrants, granted by
        the Company, to purchase 12,000,000 shares of the Company’s common stock at an
        exercise price of $2.00 per share (the “Exercise Price”), exercisable any time
        after January 1, 2008 through June 30, 2014.
 
 The
        Company will need to obtain additional financing in addition to the funds
        already raised through the sale of equity securities to fund our cash needs
        and
        continue our operations beyond March 2009. Additional financing, whether
        through
        public or private equity or debt financing, arrangements with stockholders
        or
        other sources to fund operations, may not be available, or if available,
        may be
        on terms unacceptable to us. Our ability to maintain sufficient liquidity
        is
        dependent on our ability to raise additional capital. If we issue additional
        equity securities to raise funds, the ownership percentage of our existing
        stockholders would be reduced. New investors may demand rights, preferences
        or
        privileges senior to those of existing holders of our common stock. Debt
        incurred by us would be senior to equity in the ability of debt holders to
        make
        claims on our assets. The terms of any debt issued could impose restrictions
        on
        our operations. If adequate funds are not available to satisfy either medium
        or
        long-term capital requirements, our operations and liquidity could be materially
        adversely affected and we could be forced to cut back our
        operations.
  F-14
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING
                  POLICIES**
  (a)
              Principles
                  of Consolidation
 
 The
        consolidated financial statements include the accounts of Hi-Tech Wealth
        Inc.
        and the following subsidiaries:
 
 (i)
                Magical
                    Insight Investments Limited (“MIL”) (100% subsidiary of the Company).
 
 (ii)
                Beihai
                    Hi-Tech Wealth Technology Development Co., Ltd (“HTW”) (100% subsidiary of
                    MIL).
 
 (iii)
                Beijing
                    Hi-Tech Wealth Communication Technology Co., Limited (“BJ HCT”) (100%
                    subsidiary of MIL).
 
 Inter-company
        accounts and transactions have been eliminated in
        consolidation.
  F-15
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (b)
              Concentrations
 
 The
        Company had various customers in 2007 and 2006 who accounted for the following
        percentage of total sales and total accounts receivable:
 
 **Sales**
              
              **Accounts
                  Receivable****Major
                  Customers**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**Company
                  A
              
              
              3.77
              %
              
              19.50
              %
              
              4.35
              %
              
              -Company
                  B
              
              
              -
              
              
              6.30
              %
              
              
              
              
              8.72
              %Company
                  C
              
              
              -
              
              
              5.0
              %
              
              
              
              
              9.43
              %Company
                  D
              
              
              -
              
              
              5.0
              %
              
              -
              
              
              -Company
                  E
              
              
              -
              
              
              2.0
              %
              
              -
              
              
              -Company
                  F
              
              
              -
              
              
              -
              
              
              -
              
              
              15
              %Company
                  G
              
              
              6.40
              %
              
              -
              
              
              3.40
              %
              
              -Company
                  H
              
              
              5.15
              %
              
              -
              
              
              16.01
              %
              
              -Company
                  I
              
              
              11.48
              %
              
              -
              
              
              16.39
              %
              
              -Company
                  J
              
              
              3.18
              %
              
              -
              
              
              8.46
              %
              
              -
 
 Company
        E
        (Beijing Mobil XP Technology Co., Ltd) is a related party. Beijing Mobil
        XP
        Technology Co., Ltd is a company controlled by the director of MIL. Also
        see
        Notes 4 and 6.
 
 The
        sole
        market of the Company is the PRC for the years ended December 31, 2007 and
        2006.
  F-16
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (b)
              Concentrations
                  (Continued)
 
 The
        Company had various suppliers in 2007 and 2006 who accounted for the following
        percentage of total purchases and total accounts payable:
 
 **Purchases**
              
              **Accounts
                  Payable****Major
                  Suppliers**
              
              **2007**
              
              **2006**
              
              **2007**
              
              **2006**Company
                  A
              
              
              18.43
              %
              
              61.6
              %
              
              -
              
              
              -Company
                  B
              
              
              38.27
              %
              
              14.5
              %
              
              -
              
              
              11.25
              %Company
                  C
              
              
              -
              
              
              8.1
              %
              
              -
              
              
              -Company
                  D
              
              
              6.65
              %
              
              3.6
              %
              
              10.93
              %
              
              -Company
                  E
              
              
              31.35
              %
              
              -
              
              
              78.66
              %
              
              -Company
                  F
              
              
              5.12
              %
              
              -
              
              
              -
              
              
              -
 
 Company
        A
        is a related party. Beijing Hi-Tech Wealth Electronic Products Company Limited
        is a company controlled by the director of MIL. Also see Notes 4 and
        6.
 
 (c)
              Economic
                  and Political Risks
 
 The
        Company’s operations are conducted in the PRC. Accordingly, the Company’s
        business, financial condition and results of operations may be influenced
        by the
        political, economic and legal environments in the PRC, and by the general
        state
        of the PRC economy.
 
 The
        Company’s operations in the PRC are subject to special considerations and
        significant risks not typically associated with companies in North America
        and
        Western Europe. These include risks associated with, among others, the
        political, economic and legal environment and foreign currency exchange.
        The
        Company’s results may be adversely affected by changes in the political and
        social conditions in the PRC, and by changes in governmental policies with
        respect to laws and regulations, anti-inflationary measures, currency
        conversion, remittances abroad, and rates and methods of taxation, among
        other
        things.
 
 F-17
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (d)
              Use
                  of Estimates
 
 The
        preparation of the consolidated financial statements in conformity with
        generally accepted accounting principles in the United States of America
        requires management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and disclosure of contingent assets and
        liabilities at the date of the consolidated financial statements and the
        reported amounts of revenues and expenses during the reporting periods.
 
 Management
        makes these estimates using the best information available at the time the
        estimates are made. Actual results could differ materially from those
        estimates.
 
 (e)
              Fair
                  Value of Financial Instruments
 
 The
        Company’s financial instruments include cash and cash equivalents, accounts
        receivable, notes receivable, due to/from related parties, other receivables
        and
        prepaid expenses, due from/to employees, prepayments for goods, accounts
        payable, notes payables, short-term bank loans, other payables and accrued
        liabilities, taxes payable and customer deposits. Management has estimated
        that
        the carrying amount approximates fair value due to their short-term
        nature.
 
 The
        fair
        value of the Company’s long-term debt is estimated based on the current rates
        offered to the Company for debt of similar terms and maturities. Under this
        method, the Company’s fair value of long-term debt is not significantly
        different from the carrying value at December 31, 2007 and 2006.
 
 (f)
              Cash
                  and Cash Equivalents
 
 For
        financial reporting purpose, the Company considers all highly liquid investments
        purchased with original maturity of three months or less to be cash equivalents.
        The Company does not maintain any bank accounts in the United States of
        America.
 
  F-18
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (g)
              Inventories
 
 Inventories
        are stated at the lower of cost or net realizable value (market). Cost of
        raw
        materials is determined on the basis of weighted average. Finished goods
        are
        determined on the weighted average basis and comprise direct materials, direct
        labor and an appropriate proportion of overhead.
 
 Net
        realizable value is based on estimated selling prices less any further costs
        expected to be incurred for completion and disposal.
 
 At
        December 31, 2007, the Company has a provision for slow moving inventories
        of
        $1,084,001. Also see Note 5.
 
 (h)
              Trade
                  Receivables
 
 Trade
        receivables are recognized and carried at original invoice amount less allowance
        for any uncollectible amounts. An estimate for doubtful accounts is made
        when
        collection of the full amount is no longer probable. At December 31, 2007,
        the
        Company has an allowance for doubtful accounts of $5,661,556.
 
 (i)
              Prepayments
                  for goods
 
 Prepayments
        for goods represent cash paid in advance to suppliers for raw material
        purchases.
  F-19
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (j)
              Long-Term
                  Investment
 
 The
        Company invested in Hi-Tech Wealth Holding Co. Ltd. (“HTWH”), a Hong Kong
        company, which is an investment holding company. The cost of the investment
        is
        $4,000, and the interest owned in HTWH is 4%.
 
 As
        of
        December 31, 2007 and 2006, the Company does not have more than 20% interest
        in
        this investment and does not exercise significant influence over it. The
        Company
        accounts for the investment under the cost method. Investment income is
        recognized by the Company when the investee declares a dividend and the Company
        believes it is collectible.
 
 (k)
              Plant
                  and Equipment
 
 Plant
        and
        equipment are carried at cost less accumulated depreciation and amortization.
        Depreciation is provided over their estimated useful lives, using the
        straight-line method. Leasehold improvements are amortized over the life
        of the
        asset or the term of the lease, whichever is shorter. Estimated useful lives
        are
        as follows:
 Buildings
                20
                    to 40 yearsMachinery
                5
                    to 10 yearsMotor
                    vehicles
                5
                    to 10 yearsOffice
                    equipment
                5
                    yearsLeasehold
                    improvements
                5
                    to 25 years
  The
        cost
        and related accumulated depreciation of assets sold or otherwise retired
        are
        eliminated from the accounts and any gain or loss is included in the statement
        of (loss) income. The cost of maintenance and repairs is charged to income
        as
        incurred, whereas significant renewals and betterments are capitalized.
  (l)
              Land
                  Use Right
 
 According
        to the laws of China, the government owns all the land in China. Companies
        or
        individuals are authorized to possess and use the land only through land
        use
        right granted by the Chinese government. The land use right granted to the
        Company is being amortized using the straight-line method over the lease
        term of
        fifty years.
  F-20
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (m)
              Impairment
                  of Long-Term Assets
 
 Long-term
        assets of the Company are reviewed annually as to whether their carrying
        value
        has become impaired, pursuant to the guidelines established in SFAS No. 144,
        “Accounting for the Impairment or Disposal of Long-Lived Assets”. The Company
        also periodically evaluates the amortization periods of its depreciable assets
        to determine whether subsequent events and circumstances warrant revised
        estimates of the useful lives. There were no impairments in 2007 and
        2006.
 
 (n)
              Revenue
                  Recognition
 
 Revenue
        related to smart phone and electronic products represents the invoiced value
        of
        goods sold recognized upon the delivery of goods to customers. According
        to the
        contracts, goods delivered by the Company could be returned within 7 days,
        if
        there is any defect. The Company estimates a reserve for returns based on
        the
        amount of goods actually returned after the reporting period. No reserve
        was
        netted against revenue for the years ended December 31, 2007 and 2006,
        respectively.
  Revenue
        is recognized when all of the following criteria are met:
 
 -
              Persuasive
                  evidence of an arrangement exists,
 -
              Delivery
                  has occurred or services have been rendered, when no subsequent
                  return is
                  noted,
 -
              The
                  seller’s price to the buyer is fixed or determinable,
                  and
 -
              Collectibility
                  is reasonably assured.
 
 (o)
              Government
                  Grants
 
 Grants
        received from the PRC Government for assisting the Company’s technical research
        and development are recognized as other income when the proceeds are earned
        and
        received or collectible.
 
 For
        the
        years ended December 31, 2007 and 2006, $359,331 and $517,917 were received
        as
        grants from the PRC Government and were recognized as other income.
  F-21
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (p)
              Research
                  and Development Costs
 
 Expenditures
        relating to the development of new products and processes, including significant
        improvements to existing products are expensed as incurred.  Research and
        development expenses were $862,784 and $50,885 for the years ended December
        31,
        2007 and 2006, respectively.
 
 (q)
              Retirement
                  Benefits
 
 Retirement
        benefits in the form of contributions under defined
        contribution retirement plans to the relevant authorities are charged to
        operations as incurred. Retirement benefits amounting to $19,428 and $18,694
        were charged to operations for the years ended December 31, 2007 and 2006,
        respectively.
 
 (r)
              Foreign
                  Currency Translation
 
 The
        accompanying consolidated financial statements are presented in United States
        dollars. The functional currency of the Company is the Renminbi (RMB). The
        consolidated financial statements are translated into United States dollars
        from
        RMB at year-end exchange rates as to assets and liabilities and average exchange
        rates as to revenues and expenses. Capital accounts are translated at their
        historical exchange rates when the capital transactions occurred.
 
 December
                  31,2007
              
              December
                  31,2006Year
                  end RMB: US$ exchange rate
              
              
              7.3141
              
              
              7.8087Average
                  yearly RMB: US$ exchange rate
              
              
              7.5658
              
              
              7.9395
 
 (s)
              Income
                  Taxes
 
 The
        Company accounts for income tax using the asset and liability approach. Deferred
        taxes are provided for the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. A valuation allowance is provided
        for
        deferred tax assets if it is more likely than not these items will either
        expire
        before the Company is able to realize their benefits, or that future utilization
        is uncertain.
  F-22
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (t)
              Reserve
                  Fund
 
 In
        2007
        and 2006, the subsidiaries of the Company in China transferred 15% of their
        PRC
        profit after taxation to the surplus reserve fund. Subject to certain
        restrictions set out in the PRC Companies Law, the surplus reserve fund may
        be
        distributed to shareholders in the form of share bonus issues and/or cash
        dividends. The Company’s retained earnings in the amount of $1,978,395 and
        $1,202,599 are restricted as of December 31, 2007 and 2006, respectively
        for the
        surplus reserve fund.
 
 (u)
              Comprehensive
                  Income
 
 Comprehensive
        income is defined to include all changes in equity except those resulting
        from
        investments by owners and distributions to owners. Among other disclosures,
        all
        items that are required to be recognized under current accounting standards
        as
        components of comprehensive income should be reported in a financial statement
        that is presented with the same prominence as other financial statements.
        The
        Company’s only current component of comprehensive income is the foreign currency
        translation adjustment.
  F-23
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (v)
              Earnings
                  (Loss) Per Share
 
 Basic
        earnings (loss) per share are computed by dividing income available to common
        shareholders by the weighted-average number of common shares outstanding
        during
        the period. Diluted earnings (loss) per share is computed similar to basic
        earnings per share except that the denominator is increased to include the
        number of additional common shares that would have been outstanding if the
        potential common shares had been issued and if the additional common shares
        were
        dilutive. All potentially dilutive securities of 12,171,144 are not included
        in
        loss per share in 2007, as their effect would be anti-dilutive. All potentially
        dilutive securities are included in earnings per share in 2006.
 
 Basic
        and
        diluted (loss) earning per share are calculated as follows:
 
 **Year
                  ended December 31****2007**
              
              **2006****Basic:**(Loss)
                  income applicable to common shareholders
              
              $
              (24,733,048
              )
              $
              4,549,642Weighted
                  average shares outstanding during the year
              
              
              53,826,115
              
              
              19,797,505Net
                  (loss) income per share
              
              $
              (0.46
              )
              $
              0.23**Diluted:**(Loss)
                  income applicable to common shareholders
              
              $
              (24,733,048
              )
              $
              4,549,642Interest
                  expense attributable to convertible notes
              
              
              -
              
              
              135,738Diluted
                  (loss) income applicable to common shareholders
              
              
              (24,733,048
              )
              
              4,685,380Weighted
                  average shares outstanding during the year
              
              
              53,826,115
              
              
              19,797,505Effect
                  of dilutive securities:Warrants
              
              
              -
              
              
              5,113,246Convertible
                  notes
              
              
              -
              
              
              495,611Weighted
                  average diluted shares outstanding during the year
              
              
              53,826,115
              
              
              25,406,362Diluted
                  net (loss) income per share
              
              $
              (0.46
              )
              $
              0.18
  F-24
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (w)
              Recent
                  Accounting Pronouncements
 
 In
        September 2006, the Financial Accounting Standards Board (“FASB”) issued
        Statements of Financial Accounting Standards (“SFAS”) No. 157, "Fair Value
        Measurements," which provides enhanced guidance for using fair value to measure
        assets and liabilities. SFAS No. 157 provides a common definition of fair
        value
        and establishes a framework to make the measurement of fair value in generally
        accepted accounting principles more consistent and comparable. SFAS No. 157
        also
        requires expanded disclosures to provide information about the extent to
        which
        fair value is used to measure assets and liabilities, the methods and
        assumptions used to measure fair value, and the effect of fair value measures
        on
        earnings. SFAS No. 157 is effective for financial statements issued in fiscal
        years beginning after November 15, 2007 and to interim periods within those
        fiscal years. The Company is currently in the process of evaluating the effect,
        if any, the adoption of SFAS No. 157 will have on its consolidated results
        of
        operations, financial position, or cash flows.
 
 In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities −− Including an amendment of SFAS No. 115. SFAS
        No. 159, which becomes effective for the Company on January 1, 2008. This
        standard permits companies to choose to measure many financial instruments
        and
        certain other items at fair value and report unrealized gains and losses
        in
        earnings. Such accounting is optional and is generally to be applied instrument
        by instrument. The Company does not anticipate that election, if any, of
        this
        fair value option will have a material effect on the consolidated results
        or
        operations or financial position.
 
 F-25
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
  **3.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
                  (CONTINUED)**
 
 (w)
              Recent
                  Accounting Pronouncements(Continued)
 
 In
        December 2007, the FASB issued SFAS No.141(R), Business Combinations, and
        SFAS
        No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS
        No.
        141(R) requires an acquirer to measure the identifiable assets acquired,
        the
        liabilities assumed, and any noncontrolling interest in the acquiree at their
        fair values on the acquisition date, with goodwill being the excess value
        over
        the net identifiable assets acquired. SFAS No. 160 clarifies that a
        noncontrolling interest in a subsidiary should be reported as equity in the
        consolidated financial statements. The calculation of earnings per share
        will
        continue to be based on income amounts attributable to the parent. SFAS No.
        141(R) and SFAS No. 160 are effective for financial statements issued for
        fiscal
        years beginning after December 15, 2008. Early adoption is prohibited. We
        have
        not yet determined the effect on our consolidated financial statements, if
        any,
        upon adoption of SFAS No. 141(R) or SFAS No. 160. We are aware that our
        accounting for minority interest will change and we are considering those
        effects now but believe the effects will only be a reclassification of minority
        interest from mezzanine equity to our stockholder’s equity section in the
        balance sheets. In any case we do not believe the implementation of SFAS
        160
        will be material to our financial position. SFAS 141(R) will significantly
        affect the accounting for future business combinations and we will determine
        the
        accounting as new combinations are determined.
  F-26
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **4.**
              **NOTES
                  RECEIVABLE**
 
 Notes
        receivable consist of the following:
 
 **December
                  31,****2007**
              
              **December
                  31,****2006**Bank
                  acceptance note
              
              $
              -
              
              $
              128,062Notes
                  receivable from unrelated companies:Beihai
                  University Garden Management Co. Ltd.,due
                  December 31, 2008
              
              
              346,454
              
              
              324,510Jiangxi
                  Jin Sunpower Technology Co. Ltd., due December 31, 2008
              
              
              13,672
              
              
              -$
              360,126
              
              $
              324,510Notes
                  receivable from related companies:Hong
                  Kong Hi-Tech Wealth Electronic Products Co. Ltd.,due
                  June 25, 2008
              
              
              2,459,648
              
              
              -Union
                  Perfect Limited., due December 31, 2008
              
              
              2,826,098
              
              
              -$
              5,285,746
              
              $
              -Less:
                  Notes receivable discount
              
              
              (237,066
              )
              
              -Total
                  notes receivable, net
              
              $
              5,408,806
              
              $
              452,572
  The
        bank
        acceptance note was settled in January 2007.
 
 The
        note
        which was provided to Beihai University Garden Management Co., Ltd in 2006
        was
        settled in November 2007.
 
 In
        2007,
        interest-free notes were provided to Beihai University Garden Management
        Co.,
        Ltd. for their assistance in improving the Company’s relationship with local
        government. The Company recorded general and administrative expenses and
        a
        discount on the notes receivable of $22,665 based on the present value of
        the
        notes receivable using a 7% rate. In 2007, $1,889 of interest income was
        recognized in the accompanying consolidated statements of income from the
        amortization of the discount.
 
 In
        2007,
        interest-free notes were provided to related companies for their assistance
        in
        developing distribution channels and new markets for the Company. The Company
        recorded selling expenses and a discount on the notes receivable of $319,384
        based on the present value of the notes receivable using a 7% rate. In 2007,
        $103,095 of interest income was recognized in the accompanying consolidated
        statements of income from the amortization of the discount. Also see Note
        6.
  Union
        Perfect Limited has a common director with MIL.
  F-27
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
  **5.**
              **INVENTORIES**
 
 Inventories
        consist of the following:
 
 **December
                  31,****2007**
              
              **December
                  31,****2006**Raw
                  materials
              
              $
              3,562,003
              
              $
              11,487,668Finished
                  goods
              
              
              4,907,439
              
              
              1,967,7938,469,442
              
              
              13,455,461Less:
                  Provision for slow-moving inventories
              
              
              (1,084,001
              )
              
              -Inventories,
                  net
              
              $
              7,385,441
              
              $
              13,455,461
  **6.**
              **DUE
                  TO/FROM RELATED PARTIES**
 
 Due
        to/from related parties consist of the following:
 
 (I)
                  Due From Related Parties
              
              
              
              **December
                  31,****2007**
              
              **December
                  31,****2006**Beijing
                  Hi-Tech Wealth Electronic Product Co. Ltd.
              
              
              (a
              )
              $
              139,204
              
              $
              368,897Beihai
                  Hi-Tech Wealth Information Industry Co. Ltd.
              
              
              (b
              )
              
              4,415
              
              
              15,367Beijing
                  Hi-Tech Wealth Technology Development Co. Ltd.
              
              
              (c
              )
              
              3,290
              
              
              -Hong
                  Kong Hi-Tech Wealth Electronic Products Co. Ltd.
              
              
              (d
              )
              
              -
              
              
              954,587Nanjing
                  Hengzhi Communication Equipment Co. Ltd.
              
              
              (e
              )
              
              -
              
              
              1,450,077Total
                  due from related parties
              
              
              
              
              $
              146,909
              
              $
              2,788,928
  (II)
                  Due To Related Parties
              
              
              
              **December
                  31,****2007**
              
              **December
                  31,****2006**Beihai
                  Hi-Tech Wealth Electronic Product Selling Co. Ltd.
              
              
              (f
              )
              $
              -
              
              $
              491,019Beijing
                  Mobil XP Technology Co., Ltd.
              
              
              (g
              )
              
              522,086
              
              
              224,367Hi-Tech
                  Wealth Holding Co. Ltd.
              
              
              (h
              )
              
              -
              
              
              20,118Beijing
                  Hi-Tech Wealth Investment and Development Co. Ltd.
              
              
              (i
              )
              
              3,333
              
              
              -Beihai
                  Hi-Tech Wealth Electronic Product.,Ltd
              
              
              (j
              )
              
              35,856
              
              
              221,906Total
                  due to related parties
              
              
              
              
              $
              561,275
              
              $
              957,410
 
 (III)
                  Due From Employees
              
              
              
              **December
                  31,****2007**
              
              **December
                  31,****2006**Current
              
              
              
              
              $
              105,936
              
              $
              76,330Total
                  due from employees
              
              
              (k
              )
              $
              105,936
              
              $
              76,330
  F-28
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **6.**
              **DUE
                  TO/FROM RELATED PARTIES
                  (CONTINUED)**
 
 (IV)
                  Due To Employees
              
              
              
              **December
                  31,****2007**
              
              **December
                  31,****2006**Current
              
              
              
              
              $
              115,719
              
              $
              -Total
                  due to employees
              
              
              (k
              )
              $
              115,719
              
              $
              -
 
 
 (a)
                Beijing
                    Hi-Tech Wealth Electronic Product Co. Ltd (“BJ HEP”) is a company
                    controlled by a director of the Company. In 2007 and 2006, the
                    Company
                    purchased raw materials and goods from BJ HEP in the amount of
                    $6,122,935
                    and $30,256,399, respectively. In 2007, HTW sold goods to BJ
                    HEP in the
                    amount of $504,689.
 
 In
        2006,
        BJ HEP paid subcontracting fees on behalf of HTW in the amount of $434,274.
 
 The
        remaining balance is interest free, unsecured and had no fixed repayment
        term.
        Also see Note 4.
 
 (b)
                Beihai
                    Hi-Tech Wealth Information Industry Co. Ltd. has a common director
                    with
                    MIL. The balance as of December 31, 2007 and 2006 represented
                    advances,
                    which are interest free, unsecured and have no fixed repayment
                    term.
 
 (c)
                Beijing
                    Hi-Tech Wealth Technology Development Co., Ltd. has a common
                    director with
                    MIL. The balance as of December 31, 2007 represents advances,
                    which are
                    interest free, unsecured and have no fixed repayment term.
  (d)
                Hong
                    Kong Hi-Tech Wealth Electronic Products Co., Ltd. (“HK HEP”) has a common
                    director with MIL.The balance as of December 31, 2006 represented an advance to
                    HK HEP,
                    which was collected in 2007. The balance was interest free, unsecured
                    and
                    had no fixed repayment term. Also see Note
                    4.
 
 (e)
                Nanjing
                    Hengzhi Communication Equipment Co. Ltd. (“NHC”) is controlled by a
                    relative of a director of HTW. In 2007 and 2006, HTW sold goods
                    to NHC in
                    the amount of $1,061,479 and $3,353,655, respectively. The interest
                    free
                    receivable balance as of December 31, 2006 was collected in 2007.
  F-29
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **6.**
              **DUE
                  TO/FROM RELATED PARTIES
                  (CONTINUED)**
 
 (f)
                Beihai
                    Hi-Tech Wealth Electronic Product Selling Co. Ltd. (“BH HEP”) is a company
                    controlled by a director of MIL The balance as of December 31,
                    2006
                    represented an advance for purchases. The advance was interest
                    free and
                    was settled in 2007.
 
 (g)
                Beijing
                    Mobil XP Technology Co., Ltd (“BMT”) is a company controlled by the
                    director of MIL. In 2007, HTW purchased materials and goods from
                    BMT in
                    the amount of $349,695. In 2006, HTW sold goods to BMT in the
                    amount of
                    $1,226,663. The remaining balance is interest free, unsecured
                    and has no
                    fixed repayment term. The balances at December 31, 2007 and 2006
                    represent
                    advances for purchases. Also see Note
                    4.
 
 (h)
                Hi-Tech
                    Wealth Holding Co. Ltd. (“HTWH”) is an investment of MIL. The balance was
                    interest free, unsecured and had no fixed repayment term. Also
                    see Note 3.
                    The balance as of December 31, 2006 represented advances, which
                    were
                    interest free, and settled in
                    2007.
 
 (i)
                Beijing
                    Hi-Tech Wealth Investment and Development Co. Ltd. was a former
                    minority
                    shareholder of HTW. The balance is interest free, unsecured and
                    has no
                    fixed repayment term. The balance at December 31, 2007 represents
                    an
                    advance for purchases. Also see Notes 1 and
                    15.
 
 (j)
                Beihai
                    Hi-Tech Wealth Electronic Product Co. Ltd. (“BH HEP”) is a company
                    controlled by a director of MIL. In 2007, the Company purchased
                    raw
                    materials and goods from BH HEP in the amount of $14,807. The
                    balance at
                    December 31, 2007 and 2006 represent advances for purchases.
                    The remaining
                    balance is interest free, unsecured and has no fixed repayment
                    term.
 
 (k)
                Due
                    from/to employees are interest-free, unsecured and have no fixed
                    repayment
                    terms. The amounts due from/to employees primarily represent
                    advances
                    to/amount due to sales personnel for business related
                    expenses.
  F-30
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **7.**
              **PLANT
                  AND EQUIPMENT**
 
 Plant
        and
        equipment consist of the following:
 
 **December
                  31,****2007**
              
              **December
                  31,****2006**At
                  cost:Buildings
              
              $
              14,302,151
              
              $
              13,262,655Machinery
              
              
              3,331,587
              
              
              2,711,482Motor
                  vehicles
              
              
              184,829
              
              
              144,635Office
                  equipment
              
              
              367,941
              
              
              223,294Other
                  equipment
              
              
              651,415
              
              
              472,02418,837,923
              
              
              16,814,090Less:
                  Accumulated depreciationBuildings
              
              
              1,182,825
              
              
              743,418Machinery
              
              
              1,181,670
              
              
              639,740Motor
                  vehicles
              
              
              96,121
              
              
              58,400Office
                  equipment
              
              
              142,139
              
              
              77,191Other
                  equipment
              
              
              149,951
              
              
              34,2122,752,706
              
              
              1,552,961Plant
                  and equipment, net
              
              $
              16,085,217
              
              $
              15,261,129
 
 The
        net
        book value of buildings pledged for certain bank loans at December 31, 2007
        and
        2006 is $13,808,003 and $10,796,659, respectively. Also see Notes 10 and
        11.
 
 Depreciation
        expense for 2007 and 2006 was $1,199,746 and $746,014, respectively. During
        the year ended December 31, 2006, $2,218,612 of the construction in progress
        was
        transferred to buildings.
 
 
 F-31
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **8.**
              **LAND
                  USE RIGHT**
 
 Land
        use
        right consists of the following:
 
 **December
                  31,****2007**
              
              **December
                  31,****2006**Cost
              
              $
              2,521,217
              
              $
              2,521,217Less:
                  Accumulated amortization
              
              
              235,313
              
              
              184,889Land
                  use right, net
              
              $
              2,285,904
              
              $
              2,336,328
 
 Amortization
        expense for the years ended December 31, 2007 and 2006 is $50,425 and $50,424,
        respectively.
 
 Amortization
        expense for the next five years and thereafter is as follows:
 
 2007
              
              $
              50,4252008
              
              
              50,4252009
              
              
              50,4252010
              
              
              50,4252011
              
              
              50,425Thereafter
              
              
              2,033,779Total
              
              $
              2,285,904
 
 The
        net
        book value of the land use right is pledged for certain bank loans at December
        31, 2007 and 2006 is $2,285,904 and $2,336,328, respectively. Also see Notes
        10
        and 11.
  **9.**
              **GOODWILL**
 
 On March
        27, 2007, MIL acquired from Beijing Hi-Tech Wealth Investment and Development
        Company Limited (“BJ HID”), the minority owners of HTW, their remaining interest
        in HTW. The acquisition cost was 3,000,000 shares of the Company's common
        stock
        valued at the closing share price of $2.01 on March 27, 2007, when the
        transaction was approved by the PRC Government and consummated. The total
        stock
        value was $6,030,000. Also see Notes 6, 16 and 19.
 
 The
        accompanying consolidated financial statements include the allocation of
        the acquisition
        cost to the net assets acquired based on their respective fair values.
        The fair value of net assets acquired was $1,789,158, and total consideration
        paid was $6,030,000. The excess of acquisition cost over the consideration
        paid was recognized as goodwill of $4,240,842.
  F-32
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **10.**
              **SHORT-TERM
                  DEBT**
  Short-term
        debt consists of the following:
 
 **Bank
                  Loans**
              
              **December
                  31,****2007**
              
              **December
                  31,****2006**Industrial
                  and Commercial Bank of China, Nanzhu Branch, outstanding principal
                  of
                  Rmb9,000,000, due December 21, 2007, monthly interest only payments
                  at
                  7.956% per annum, secured by a building and a land use right of
                  the
                  Company. Also see Notes 6 and 7.
              
              $
              -
              
              $
              1,152,561Industrial
                  and Commercial Bank of China, Nanzhu Branch, outstanding principal
                  of
                  Rmb8,000,000, due December 26, 2008, monthly interest only payments
                  at
                  9.712% per annum, secured by the building and land use right of
                  the
                  Company. Also see Notes 6 and 7.
              
              
              1,093,778
              
              
              -Agricultural
                  Bank of China, Beihai Branch, outstanding principal of Rmb15,000,000,
                  due
                  September 11, 2008, monthly interest only payments at 8.424% per
                  annum,
                  secured by a land use right of the Company. Also see Note
                  7.
              
              
              2,050,833
              
              
              -Total
                  short-term bank loans
              
              $
              3,144,611
              
              $
              1,152,561**Notes
                  Payable to Unrelated Companies:**Beijing
                  HuayuJicheng Trading Co., Ltd. , due October 31, 2008
              
              $
              1,809,465
              
              $
              -Beijing
                  HuayuJicheng Trading Co., Ltd. , due August 31, 2008
              
              
              202,349
              
              
              -Beijing
                  Bowei Technology Co., Ltd. , due December 31, 2008
              
              
              68,361
              
              
              -Beijing
                  Yuanmingyitong Technology Co., Ltd. , due July 20, 2008
              
              
              77,375
              
              
              -Beijing
                  HuayuJicheng Trading Co., Ltd. , due November 11, 2007
              
              
              -
              
              
              204,900Beijing
                  Yanxin Times Science & Technology Co. , due November 11,
                  2007
              
              
              -
              
              
              38,419Shanghai
                  Yulin Trading Co. , due November 11, 2007
              
              
              -
              
              
              1,024,498Subtotal
              
              
              2,157,550
              
              
              1,267,817**Notes
                  Payable to Related Companies:**Hi-Tech
                  Wealth Holding Co. Ltd., due October 1, 2008
              
              
              21,478
              
              
              -Beijing
                  Hi-Tech Wealth Mobile Communication Technology Co., Ltd.,due
                  November 4, 2008
              
              
              12,305
              
              
              -Subtotal
              
              
              33,783
              
              
              -Total
                  notes payable
              
              
              2,191,333
              
              
              1,267,817Total
                  short-term debt
              
              $
              5,335,944
              
              $
              2,420,378
  Interest
        expense for 2007 and 2006 was $549,881 and $432,717, respectively.
 
 Notes
        payable to unrelated and related companies are interest-free and unsecured.
 
 Beijing
        Hi-Tech Wealth Mobile Communication Technology Co., Ltd . has
        a
        common director with MIL. Also see Note 6.
  F-33
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **11.**
              **LONG-TERM
                  BANK LOANS**
  The
        long-term bank loans consist of the following:
  **December
                  31,****2007**
              
              **December
                  31,****2006**Industrial
                  and Commercial Bank of China, Nanzhu Branch, outstanding principal
                  of
                  Rmb27,500,000, at an interest rate of 6.1425% (2005: 5.8590%) per
                  annum,
                  secured by building, a land use right and construction in progress
                  of HTW.
                  The loan was due on July 31, 2007, and was paid in December 2007.
                  Also see
                  Notes 7 and 8.
              
              $
              -
              
              $
              3,521,713Industrial
                  and Commercial Bank of China, Nanzhu Branch, outstanding principal
                  of
                  Rmb20,000,000, at an interest rate of 6.1425% (2005: 5.8590%) per
                  annum,
                  secured by the land use right of HTW. The loan was due on July
                  31, 2007,
                  and was paid in December 2007. Also see Note 8.
              
              
              -
              
              
              2,561,246Agricultural
                  Bank of China, Beihai Branch, due November 18, 2006, outstanding
                  principal
                  of Rmb15,800,000, monthly interest only payment at 11.340% after
                  due date
                  and 5.7645% before due date per annum, respectively, secured by
                  a
                  guarantee of an unrelated company. It was paid in August 2007.
              
              
              -
              
              
              2,023,384Industrial
                  and Commercial Bank of China, Nanzhu Branch, outstanding principal
                  of
                  Rmb42,700,000, at an interest rate of 9.711% per annum, secured
                  by the
                  building and a land use right of HTW. The loan is due on December
                  31,
                  2010. Also see Notes 7 and 8.
              
              
              5,838,039
              
              
              -Total
                  long-term bank loans
              
              $
              5,838,039
              
              $
              8,106,343Less:
                  Current portion
              
              
              (1,093,778
              )
              
              (8,106,343
              )Long-term
                  portion
              
              $
              4,744,261
              
              $
              -
 
 Interest
        expense for 2007 and 2006 was $266,009 and $390,402, respectively.
 
 The
        long-term bank loan is due as follows:
  Year
                  Ending December 31,
              
              Amount2008
              
              $
              1,093,7782009
              
              
              1,367,2222010
              
              
              3,377,039$
              5,838,039
  F-34
 **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **12.**
              **CONVERTIBLE
                  NOTES**
  Convertible
        notes are as follows:
  **December
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Origination
                  on September 5, 2006, outstanding principal of $165,000, due on
                  September
                  5, 2007 at an interest rate of 8% per annum. Both principal and
                  interest
                  had been secured by cash proceeds of $250,000 received by General
                  Components, Inc., a Cayman Islands company, from the disposition
                  of the
                  VOIP operations under an assets purchase agreement which was consummated
                  on November 6, 2006. On September 5, 2007, all notes and accrued
                  interest
                  were converted to common stock.
              
              $
              -
              
              $
              165,000Origination
                  on November 1, 2006, outstanding principal of $2,000,000, net of
                  discount
                  of $33,831, due on May 1, 2007 at an interest rate of 24% per annum
                  and
                  accrued interest of $78,904 at December 31, 2006 payable on maturity.
                  On
                  February 8, 2007, all notes and accrued interest were converted
                  to Series
                  B preferred stock.
              
              
              -
              
              
              1,966,169Origination
                  on December 11, 2006, outstanding principal of $4,000,000, net
                  of discount
                  of $2,245,482, due on June 11, 2007 at an interest rate of 24%
                  per annum
                  and accrued interest of $52,603 at December 31, 2006 payable on
                  maturity.
                  On February 8, 2007, all notes and accrued interest were converted
                  to
                  Series B preferred stock.
              
              
              -
              
              
              1,754,518Total
              
              $
              -
              
              $
              3,885,687
 
 **September
        5, 2006 Notes**
 
 The
        notes
        were convertible at the option of the holder at any time on or before maturity
        on September 5, 2007 into shares of the Company common stock at a conversion
        price of $0.50 per share. Interest on the notes was payable on the maturity
        date
        or the earlier conversion of such principal amount of the notes. For 2007
        and
        2006, $8,969 and $4,231 were recognized as interest expense, respectively.
 
 On
        September 5, 2007, all notes and accrued interest were converted into 356,400
        shares of common stock.
  F-35
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **12.**
              **CONVERTIBLE
                  NOTES (CONTINUED)**
  **November
        1, 2006 Notes**
 
 The
        Company sold in a private placement $2,000,000 principal amount of 24% unsecured
        notes due May 1, 2007, with common stock purchase warrants to purchase 300,000
        shares of the Company’s common stock at an exercise price of $1.00 per share,
        exercisable any time after November 1, 2006 through November 1, 2009. There
        was
        no beneficial conversion feature at the time of the sale of the
        notes.
 
 The
        fair
        value of the warrants of $50,470 at the time of issuance was determined using
        the Black-Scholes option-pricing model with the following
        assumptions:
 
 Risk
                  free interest rate
              
              
              4.60
              %Expected
                  life
              
              
              3
                  yearsExpected
                  volatility
              
              
              35.59
              %Expected
                  dividend yield
              
              
              0
              %
 
 The
        fair
        value of the warrants was recorded as additional paid-in capital and a discount
        to the notes and was being amortized over the term of the notes.  At
        December 31, 2006, the unamortized discount on the notes was $33,831.
        Amortization of the discount to the notes as interest expense for 2006 was
        $16,639. Accrued interest at December 31, 2006 was $78,904. Interest on the
        notes was payable on the maturity date or the earlier conversion of such
        principal amount of the notes.
 
 Interest
        expense for 2007 was $49,096. Amortization of discount to interest expense
        for
        2007 amounted to $33,831.
  F-36
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **12.**
                **CONVERTIBLE
                    NOTES (CONTINUED)**
  **December
        11, 2006 Notes**
 
 The
        Company sold in a private placement $4,000,000 principal amount of 24% unsecured
        notes due June 11, 2007, with common stock purchase warrants to purchase
        400,000
        shares of the Company’s common stock at an exercise price of $1.00 per share,
        exercisable any time after December 11, 2006 through December 11, 2009.
 
 The
        fair
        value of the warrants of $261,351 at the issuance date was determined using
        the
        Black-Scholes option-pricing model with the following assumptions:
 
 Risk
                  free interest rate
              
              
              4.60
              %Expected
                  life of options
              
              
              3
                  yearsExpected
                  volatility
              
              
              35.59
              %Expected
                  dividend yield
              
              
              0
              %
 
 The
        convertible notes also contained a beneficial conversion feature, and the
        intrinsic value at the date of issuance of the notes amounted to $2,261,351.
        The
        fair value of the warrants and the intrinsic value of the beneficial conversion
        feature of $2,522,702 was recorded as a discount to the notes and an increase
        to
        additional paid-in capital. The discount was being amortized over the term
        of
        the notes.  At December 31, 2006, the unamortized discount on the notes was
        $2,245,482, and the a mortization
        of discount to the notes for 2006 was $277,220. Interest
        on the notes was payable on the maturity date or the earlier conversion of
        such
        principal amount of the notes. Accrued
        interest at December 31, 2006 was $52,603 .
 
 Interest
        expense for 2007 was $99,397. Amortization of discount to interest expense
        for
        2007 amounted to $2,245,481.
 
 Before
        the maturity of the notes, the notes were convertible into Series B Preferred
        Stock having an annual preferred dividend of 6% and conversion rights entitling
        the holders to convert such shares into common stock of the Company at a
        conversion price of $1.00 per share.
 
 On
        February 8, 2007, $6,000,000 unsecured convertible notes with accrued interest
        expense of $280,000, which were issued on November 1, 2006 and December 11,
        2006, were converted into 125.6 shares of Series B Preferred Stock. Also
        see
        Note 16.
  F-37
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **13.**
              **SECURED
                  NOTES**
  Secured
        notes are as follows:
  **December
                  31,****2007**Origination
                  on June 15, 2007, outstanding principal of $5,000,000, net of discount
                  of
                  $1,093,454, due on June 14, 2008 at an interest rate of 10% per
                  annum and
                  accrued interest of $273,973 at December 31, 2007 payable in October
                  2007
                  or maturity. Both principal and interest have been secured by four
                  patents
                  for intellectual properties.
              
              $
              4,505,699Origination
                  on August 2, 2007, outstanding principal of $5,000,000, net of
                  discount of
                  $1,093,454, due on June 14, 2008 at an interest rate of 10% per
                  annum and
                  accrued interest of $208,219 at December 31, 2007 payable in October
                  2007
                  or maturity. Both principal and interest have been secured by four
                  patents
                  for intellectual properties.
              
              
              4,361,902Total
                  secured notes
              
              $
              8,867,601
 
 On
        June
        15, 2007 and August 2, 2007, the Company sold in a private placement of
        $10,000,000 principal amount of 10% secured notes due June 14, 2008 (the
        “Secured Notes”), with common stock purchase warrants to purchase 1,500,000
        shares of the Company’s common stock at an exercise price of $2.50 per share
        (the “Warrants”), exercisable any time after June 15, 2007 and August 2, 2007,
        respectively, through June 14, 2012.
 
 The
        Secured Notes are secured by intellectual properties of solar powered mobile
        (the “Secured Properties”), which are the patents for solar powered mobile. The
        Secured Properties are owned by BJ HID and they agreed to sell the patents
        to
        MIL under the binding term sheet entered on February 8, 2007. Also see Note
        15.
 
 Holders
        of the Notes are entitled to the protection of the covenants: At
        any
        time the secure notes are outstanding, if the Company's shareholders' Equity
        is
        less than twenty-five million dollars, the Company should make all sums
        of principle and interest upon demand.
 
 The
        fair
        value of the Warrants of $2,186,908 at the issuance date was determined using
        the Black-Scholes option-pricing model with the following
        assumptions:
 
 Risk
                  free interest rate
              
              
              4.88%Expected
                  life of options
              
              
              5
                  yearsExpected
                  volatility
              
              
              37.28%Expected
                  dividend yield
              
              
              0%
  The
        fair
        value of the Warrants was recorded as a discount to the secured notes and
        an
        increase to additional paid-in capital. The discount is being amortized over
        the
        term of the notes.  Also see Note 17.
  F-38
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **13.**
                      **SECURED
                          NOTES
                          (CONTINUED)**
 
 The
        placement costs of $983,767 relating to the issuance of secured notes were
        recorded as debt issue costs and are being amortized over the term of the
        notes.
 
 For
        2007,
        $1,054,509 and $515,558 of amortization of discount and debt issue costs,
        respectively, were recognized as other expense.
 
 On
        January 11, 2008, the principal of $10,000,000 of secured notes and all accrued
        interests were fully repaid and settled. At that same time, all pledged
        properties have been released accordingly. Also see Note 15 and 21.
  **14.**
                **I****NCOME
                    TAXES**
 
 (a)
                CorporationIncome
                    Tax (“CIT”)
 
 In
        2006, HTW applied to the local tax authority for a favorable corporate
        income tax rate of 15% for companies registered in the western zone of PRC,
        which was approved in December 2006.  As a result, the corporate income tax
        rate applicable to HTW was changed from 24% to 15%. The Company adjusted
        its
        deferred taxes, accordingly.
 
 According
        to the relevant taxation laws in the PRC, HTW is entitled to a 50% tax reduction
        from 2005 to 2007 with 7.5% CIT rate for year 2007. BJ HCT is a subsidiary
        of
        MIL, and its applicable CIT rate is 27% in 2007.
 
 Effective
        January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting
        for
        Uncertainty in Income Taxes ("FIN 48"). -- AN INTERPRETATION OF FASB STATEMENT
        NO. 109, ACCOUNTING FOR INCOME TAXES. The Interpretation addresses the
        determination of whether tax benefits claimed or expected to be claimed on
        a tax
        return should be recorded in the financial statements. Under FIN 48, we may
        recognize the tax benefit from an uncertain tax position only if it is more
        likely than not that the tax position will be sustained on examination by
        the
        taxing authorities, based on the technical merits of the position. The tax
        benefits recognized in the financial statements from such a position should
        be
        measured based on the largest benefit that has a greater than fifty percent
        likelihood of being realized upon ultimate settlement. FIN 48 also provides
        guidance on derecognition, classification, interest and penalties on income
        taxes, accounting in interim periods and requires increased disclosures.
        As of
        December 31, 2007, the Company does not have a liability for unrecognized
        tax
        benefits.
 
 F-39
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **14.**
                  **INCOME
                      TAXES
                      (CONTINUED)**
 
 The
        Company filed certain tax returns in China. As of December 31, 2007 the Company
        was not aware of any pending income tax examinations by China tax authorities.
        The Company's policy is to record interest and penalties on uncertain tax
        provisions as income tax expense. As of December 31, 2007, the Company has
        no
        accrued interest or penalty related to uncertain tax positions.
 
 Under
        the
        new CIT law, the corporate income tax rate applicable to the Company starting
        from January 1, 2008 is 25%, replacing the current applicable tax rate of
        33%.
        The company believes some of the tax concession granted to eligible companies
        prior to the new CIT law will be grandfathered. The new CIT Law has an impact
        on
        the deferred tax assets and liabilities of the Company. The Company expects
        they
        will get the approval of 15% favorable rate from 2008 to 2010, because HTW
        is
        located in western zero. Effects arising from the enforcement of the new
        CIT Law
        are reflected into the accounts by best estimation method.
 
 Income
        tax expense for the years ended December 31, 2007 and 2006 are summarized
        as
        follows:
 
 **2007**
              
              **2006**Current:CIT
              
              $
              (139,296
              )
              $
              (451,998
              )Deferred:CIT
              
              
              (713,132
              )
              
              113,121Income
                  tax expense
              
              $
              (852,428
              )
              $
              (338,877
              )
 
 
 F-40
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **14.**
              **INCOME
                  TAXES (CONTINUED)**
 
 (a)
              Corporation
                  Income Tax (“CIT”)(Continued)
 
 The
        Company’s income tax expense differs from the “expected” tax (expense) benefit
        for the years ended December 31, 2007 and 2006 (computed by applying the
        CIT
        rate of 33 percent and 15 percent to income before income taxes, respectively)
        as follows:
  **2007**
              
              **2006**Computed
                  “expected” benefit (expense)
              
              $
              1,759,387
              
              $
              (784,151
              )Permanent
                  differences
              
              
              390,426
              
              
              (17
              )Tax
                  rate adjustment
              
              
              20,070
              
              
              (162,358
              )Effect
                  of favorable tax rates
              
              
              72,287
              
              
              607,649Valuation
                  allowance
              
              
              (3,094,598
              )
              
              -Income
                  tax expense
              
              $
              (852,428
              )
              $
              (338,877
              )
 
 The
        tax
        effects of temporary differences that give rise to the Company’s net deferred
        tax assets and liabilities as of December 31, 2007 and 2006 are as follows:
 
 **2007**
              
              **2006**Deferred
                  tax assets:Current
                  portion:Advertising
                  expenses
              
              
              -
              
              
              681,073Sales
                  and returns
              
              
              6,267
              
              
              20,182Bad
                  debt provision
              
              
              849,226Selling
                  expenses
              
              
              51,841
              
              
              -Financial
                  expenses
              
              
              9,489
              
              
              -Stock
                  provision
              
              
              162,600
              
              
              -Processing
                  expenses
              
              
              24,722
              
              
              173,431Administrative
                  expenses
              
              
              102,432
              
              
              54,462Research
                  and development costs
              
              
              13,413
              
              
              7,761Loss
                  carry forward
              
              
              79,348
              
              
              -Loss
                  from disposition of discontinued operations
              
              
              10,254
              
              
              -Other
              
              
              -
              
              
              773Less:
                  Valuation allowance
              
              
              (872,076
              )
              
              -Subtotal
              
              
              437,516
              
              
              937,682Non-current
                  portion:Depreciation
              
              $
              76,298
              
              $
              46,610Loss
                  carry forward
              
              
              2,146,224
              
              
              -Less:
                  Valuation allowance
              
              
              (2,222,522
              )
              
              -Subtotal
              
              
              -
              
              
              46,610Total
                  deferred tax assets
              
              
              437,516
              
              
              984,292
  F-41
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS** **OF
          DECEMBER 31, 2007 AND 2006**
 **14.**
                    **INCOME
                        TAXES
                        (CONTINUED)**
  (a)
              Corporation
                  Income Tax (“CIT”) (Continued)
  **2007**
                
                **2006**Deferred
                    tax liabilities:Current
                    portion:Sales
                
                $
                (543,230
                )
                **$**
                (406,817
                )Accrued
                    expenses
                
                
                (11,531
                )
                
                -Subtotal
                
                
                (554,761
                )
                
                (406,817
                )Non-current
                    portion:Translation
                    reserves
                
                
                (136,149
                )
                
                (136,149
                )Total
                    deferred tax liabilities
                
                
                (690,910
                )
                
                (542,996
                )Net
                    deferred tax assets (liabilities)
                
                $
                (253,394
                )
                $
                441,326
 
 (b)
              Tax
                  Holiday Effect
 
 For
        2007
        and 2006 the PRC corporate income tax was 33%. Certain subsidiaries of the
        Company were entitled to tax exemptions or lower tax rates (tax holiday)
        for
        2007 and 2006.
 
 (Loss)
        income before income tax expense of $(22,131,331) and $3,348,962 for 2007
        and
        2006, respectively, was attributed to subsidiaries with operations in China.
        Income tax expense related to China income for 2007 and 2006 is $852,428
        and
        $338,877, respectively.
 
 The
        combined effects of the income tax expense exemptions available to the Company
        for the years ended December 31, 2007 and 2006 are as follows:
  **2007**
              
              **2006**Tax
                  holiday effect
              
              
              72,286
              
              
              607,649Basic
                  net income (loss) per share effect
              
              
              0.00
              
              
              0.03
  
 F-42
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 
 **14.**
              **INCOME
                  TAXES (CONTINUED)**
 
 (c)
              Value
                  Added Tax (“VAT”)
 
 Enterprises
        or individuals who sell commodities, engage in repair and maintenance or
        import
        or export goods in the PRC are subject to a value added tax in accordance
        with
        Chinese Laws.  The value added tax standard rate is 17% of the gross sales
        price. A credit is available whereby VAT paid on the purchases of semi-finished
        products or raw materials used in the production of the Company’s finished
        products can be used to offset the VAT due on the sales of the finished
        products.
 
 The
        VAT
        payable of $113,794 and $407,336 at December 31, 2007 and 2006, respectively,
        is
        included in other payables and accrued expenses in the accompanying consolidated
        balance sheets.
 
 For
        the
        years ended December 31, 2007 and 2006, $229,150 and $0 was received as a
        VAT
        refund from the PRC Government, respectively, which was recognized as other
        income.
  F-43
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **15.**
              **COMMITMENTS**
 
 (a)
              Operating
                  Lease Commitments
 
 The
        Company occupies plant and office space leased from third parties. Accordingly,
        for the years ended December 31, 2007 and 2006 the Company recognized rental
        expense for these spaces of $323,453 and $0, respectively.
 
 As
        of
        December 31, 2007, the Company has outstanding commitments with respect to
        non-cancelable operating leases for real estate, which fall due as
        follows:
 
 Year
                  Ending December 31
              
              Amount2008
              
              $
              178,6652009
              
              
              34,426$
              213,091
 
 (b)
              Capital
                  Commitment
 
 On
        February 8, 2007, the Company entered into a binding term sheet whereby BJ
        HID
        agreed to sell, and the Company agreed to purchase, the technology, patents
        and
        all intellectual property rights related to solar powered mobile phones owned
        by
        BJ HID for $10,000,000, which is payable in 10 equal installments of $1,000,000.
        Each such installment will be due and payable following the sale by the Company
        of 100,000 solar power phones.
 
 In
        2007,
        the Company sold 12,028 solar powered mobile phones. A total license fee
        of
        $120,280 was recorded in cost of goods sold according to the quantity of
        the
        solar powered phones sold. For each solar mobile phone sold, a license fee
        of
        $10 will be due to BJ HID.
  F-44
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **16.**
              **OTHER
                  SHAREHOLDERS’ EQUITY
                  TRANSACTIONS**
 
 (a)
              Pledge
                  of Common Stock
 
 On
        October 13, 2006, the Company (the “Pledgor”) entered into a Share Release and
        Pledge Agreement (“Share Release Agreement”) with Warburg Pincus Asia LLC
        (“Security Trustee”) for pledging 14,162,991 shares of common stock and
        22,037,009 warrants (“Pledged Collateral”), amounting to 50.6% of the equity
        interest of the Company at December 31, 2006. The pledge guarantees a
        non-compete agreement with Sincere Kingdom Limited, a technology research
        and
        development company. If the Pledge fail to adhere to the non-compete agreement,
        as the vendor of the Smartphone software solution, and/or employ the key
        employee of Sincere Kingdom Limited, the Security Trustee may take any or
        all of
        the following actions at the Pledge’s expense and without prior notice to the
        Pledge except as required under applicable law: a) give notice of such failure
        to any person, collect dividends and other amounts constituting or payable
        in
        respect of Pledged Collateral, and enforce all rights of each Pledgor in
        the
        Pledged Collateral, b) take possession of any or all of Pledged Collateral,
        c)
        foreclose its lien upon any or of the Pledgor Collateral, d) sell, lease
        or
        otherwise dispose of any or all of the Pledged Collateral at public of private
        sale, e) pledge or otherwise encumber any or all the Pledged Collateral,
        and f)
        exercise any or all other right or remedies available to the Security Trustee
        under applicable law. Under the Share Release Agreement, the pledge would
        be
        released upon the earlier occurrence of a) after February 28, 2007, each
        of the
        Pledgor receive an offer of share transfer or sale of the Company’s common
        stocks and warrants, or after February 28, 2007, the Company completes a
        firm-commitment underwritten public offering of the Company’s stock on any
        national exchange market with international reputation and standing, duly
        approved by the Board of the Company, b) the date on which the WP Parties,
        which
        consist of Warburg Pincus Private Equity VIII, L.P., Warburg Pincus Netherlands
        Private Equity VIII I, C.V., Warburg Pincus Germany Private Equity VIII K.G.,
        Warburg Pincus International Partners, L.P., Warburg Pincus Netherlands
        International Partners I, C.V., and Warburg Pincus Germany International
        Partners, KG, no longer hold any equity securities in Sincere Kingdom Limited,
        and c) February 28, 2008. Based on the above terms the shares pledged have
        been
        released.
 
 F-45
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **16.**
              **OTHER
                  SHAREHOLDERS’ EQUITY TRANSACTIONS
                  (CONTINUED)**
 
 (b)
              Unregistered
                  Sales of Equity Securities
 
 On
        February 8, 2007, the Company completed a $13,250,000 financing through the
        issuance of 265 shares of its Series B preferred stock, with a stated value
        of
        $50,000 per share, and an
        annual preferred dividend of 6%, to
        both
        new investors of 145 shares and holders of the $6,000,000 unsecured convertible
        notes (the “Notes Holders”) of 120 shares. In additions, the accrued interest of
        $280,000 to the Notes Holders was also converted into 5.6 shares of Series
        B
        preferred stock and issued to the Notes Holders. Then, 125.6 shares of Series
        B
        preferred stock was issued to the Notes Holders. The Company paid to the
        placement agent of this financing a placement fee of $927,500 in the form
        of
        18.55 shares of Series B preferred stock for services rendered in the private
        placement. In April 2008, the Company is negotiating liquidated damages to
        the
        Series B preferred stockholders of $1,445,750 in the form of common stock
        for
        the default for not registering the Series B preferred stock on or before
        July
        2, 2007. The exact number of shares is still under discussion and negotiation
        with the Series B preferred stockholders. Also see Notes 12 and 21.
 
 (c)
              Exercises
                  of Warrants
  On
        March
        2, 2007, the former owners of MIL exercised all their warrants issued under
        the
        share exchange transaction with the Company on October 27, 2006. The Company
        recognized the value of shares issued as additional paid in capital in
        connection with the exercise of 28,013,280 warrants. Also see Note
        17.
 
 F-46
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **16.**
              **OTHER
                  SHAREHOLDERS’ EQUITY TRANSACTIONS
                  (CONTINUED)**
  (d)
              Series
                  B Preferred Stock Rights
 
 On
        February 8, 2007, the Company completed a $13,250,000 financing through the
        issuance of 265 shares of its Series B preferred stock to both new investors
        and
        holders of $6,000,000 in aggregate principal amount of its outstanding
        convertible notes, plus 5.6 shares of Series B preferred stock issued in
        respect
        of accrued interest on such convertible notes.
  Each
        share of Series B preferred stock has a stated value of $50,000 and holders
        of
        the Series B preferred stock are entitled to cumulative dividends at an annual
        rate of 6%, which may be paid in cash or, under certain circumstances, shares
        of
        common stock of the Company. Each share of Series B preferred stock is
        convertible at the option of the holder into 50,000 shares of common stock,
        subject to adjustment pursuant to customary anti-dilution provisions and
        a
        blocker provision that limits such convertibility in the event the holder
        would
        become the holder of more than 4.99% of the outstanding common stock of General
        Components. The Series B preferred stock is mandatorily convertible into
        common
        stock at any time after the effectiveness of the registration statement referred
        to below in the event either (i) the common stock of the Company trades at
        $2 or
        more for 20 out of 30 consecutive trading days with average daily trading
        volume
        for each trading day in excess of 30,000 shares or (ii) The Company consummates
        and public offering of its common stock raising at least $10 million in
        proceeds. The holders of the Series B preferred stock may require the redemption
        of such shares for cash upon the occurrence of certain change in control
        events.  In the event of any dissolution, liquidation or winding up of the
        Corporation, whether voluntary or involuntary, the holders of Series B Preferred
        Stock shall be entitled to receive out of the assets of the Corporation,
        for
        each one (1) share of Series B Preferred Stock, before any payment or
        distribution shall be made in respect of any Junior Securities, cash in an
        amount equal to $50,000 (the “ Stated
        Value ”),
        plus
        an amount equal to all accrued but unpaid dividends thereon to the date of
        such
        payment.  The holders of Series B Preferred Stock shall not be entitled to
        vote on any matters on which the holders of Common Stock shall be entitled
        to
        vote.
 
 F-47
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 
 **17.**
              **WARRANTS**
 
 The
        warrants consist of the following:
 
 **Activity**
              
              **Weighted
                  Average Exercise Price**Outstanding
                  as of January 1, 2006Granted
              
              
              28,713,280
              
              $
              0.024Exercised
              
              
              -
              
              
              -Cancelled
              
              
              -
              
              
              -Outstanding
                  as of December 31, 2006
              
              
              28,713,280
              
              
              0.024Granted
              
              
              4,406,250
              
              
              1.588Exercised
              
              
              (28,013,280
              )
              
              (0.000
              )Cancelled
              
              
              -
              
              
              -Outstanding
                  as of December 31, 2007
              
              
              5,106,250
              
              $
              1.612
 
 (a)
              Warrants
                  Granted to Financial Advisors
  According
        to the executed financial advisory agreements signed February 5, 2007, the
        Company issued 1,250,000 warrants to purchase common stock within 3 years
        from
        the date of issuance to financial advisors as compensation for their financial
        advisory services from February 8, 2007 to February 7, 2010. The warrants
        are
        forfeitable and were valued at $1,597,164 using the Black-Scholes option-pricing
        model with the following assumptions:
  Risk
                  free interest rate
              
              
              4.70
              %Expected
                  life
              
              
              3
                  yearsExpected
                  volatility
              
              
              35.59
              %Expected
                  dividend yield
              
              
              0
              %
 
 In
        2007,
        $488,022 of financial advisory fees was recognized as general and administrative
        expenses and additional paid-in capital.
 
 F-48
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **17.**
              **WARRANTS
                  (CONTINUED)**
 
 (b)
              Warrants
                  Granted to Placement Agent
 
 On
        February 8, 2007, the Company granted warrants for 1,656,250 shares of common
        stock to the placement agent for the sales of the Series B preferred stock.
 The
        warrants are non-forfeitable and were valued at $2,116,243 using the
        Black-Scholes option-pricing model with the following assumptions:
 
 Risk
                  free interest rate
              
              
              4.70
              %Expected
                  life
              
              
              3
                  yearsExpected
                  volatility
              
              
              35.59
              %Expected
                  dividend yield
              
              
              0
              %
 
 The
        fair
        value was recorded as an increase and decrease to additional paid-in capital.
        Also see Note 16.
 
 (c)
              Warrants
                  Granted to Secured Notes Holders
 
 On
        June
        15, 2007, the Company granted warrants for 1,500,000 shares of common stock
        to
        the secured notes holders in connection with the issuance of secured notes.
        The
        warrants are non-forfeitable and were valued at $2,186,908 using the
        Black-Scholes option-pricing model. Also see Note 13.
 
 (d)
              Exercises
                  of Warrants
  On
        March
        2, 2007, the former owners of MIL exercised all their warrants issued under
        the
        share exchange transaction with the Company on October 27, 2006. Also see
        Note
        16.
  F-49
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS**
 
 (a)
              Sale
                  of Business
 
 On
        November 6, 2006, the Company sold the business operations of Voice of Internet
        Protocol for a cash consideration of $500,000 and 81,000 shares of common
        stock
        of a Delaware corporation, which was valued at $81,000. The following represents
        the assets sold and liabilities assumed at the date of disposal:
 
 **November
                  6,****2006**Plant
                  and equipment, net
              
              $
              14,755Total
                  assets sold
              
              
              14,755Accounts
                  payable
              
              
              (127,307
              )Total
                  liabilities assumed
              
              
              (127,307
              )Total
                  net liabilities
              
              
              (112,552
              )Share
                  percentage
              
              
              100
              %Net
                  liabilities disposed
              
              $
              (112,552
              )
 
 In
        association with the agreement, the business operations of VOIP were no longer
        operations of the Company. In accordance with SFAS 144, “Accounting for the
        Impairment or Disposal of Long−Lived Assets,” the result of disposition of VOIP
        is presented separately as “Discontinued operations”. The gain from disposition
        was $693,552 in 2006 and is reflected in the Company’s consolidated statement of
        income for the year ended December 31, 2006.
 
 The
        following is the unaudited pro forma net income and basic and diluted net
        income
        per share of the Company for the years ended December 31, 2006 assuming the
        disposal of business was completed on January 1, 2006.
 **2006**Net
                    income
                
                $
                4,617,176Net
                    income per share-
                    Basic
                
                $
                0.23-
                    Diluted
                
                $
                0.18
  F-50
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS (CONTINUED)**
 
 (b)
              Sale
                  of Subsidiary in Cayman Islands
 
 On
        December 22, 2006, the Company entered into an assets purchase agreement
        with
        General Components International Limited, a British Virgin Islands company.
        Pursuant to the agreement the Company agreed to sell all of its interest
        in the
        business operations of and its 100% equity interest in GCI Cayman, a Cayman
        Islands corporation, and its subsidiaries, for $1. GCI Cayman is the 100%
        ultimate holding company of General Components, Inc., a New Jersey corporation,
        General Components Limited, a Hong Kong corporation, and General Components,
        Inc., a China corporation.
 
 The
        following represents the assets and liabilities sold of at the date of
        disposal
 **December
                    22, 2006**Plant
                    and equipment, net
                
                $
                83,130Investment
                
                
                81,000Cash
                    and cash equivalents
                
                
                883,006Accounts
                    receivable
                
                
                405,676Inventories
                
                
                686,126Prepaid
                    expenses and other current assets
                
                
                44,335Accumulated
                    losses and other reserves
                
                
                277,553Total
                    assets sold
                
                
                2,460,826Accounts
                    payable
                
                
                (710,484
                )Advances
                    from customers
                
                
                (27,743
                )Other
                    payables
                
                
                (1,238,551
                )Amount
                    due to holding company
                
                
                (165,000
                )Total
                    liabilities sold
                
                
                (2,141,778
                )Total
                    net assets sold
                
                $
                319,048
 
 In
        association with the agreements, GCI Cayman was no longer the subsidiary
        of the
        Company. In accordance with SFAS 144, “Accounting for the Impairment or Disposal
        of Long−Lived Assets,” the result of operation of GCI Cayman is presented
        separately as “Discontinued operations”. The loss from discontinued operations
        of $67,534 for the year ended December 31, 2006, and the loss from disposition
        of discontinued operations of $319,047 in 2006 are reflected in the Company’s
        consolidated statement of income for the year ended December 31,
        2006.
  F-51
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS** **OF
          DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS (CONTINUED)**
 
 (b)
              Sale
                  of Subsidiary in Cayman Islands
                  (Continued)
 
 The
        following is the unaudited pro forma net income and basic and diluted net
        income
        per share of the Company for the years ended December 31, 2006 assuming the
        disposal was completed on January 1, 2006.
 
 **2006**Net
                  income
              
              $
              4,230,595Net
                  income per share-
                  Basic
              
              $
              0.21-
                  Diluted
              
              $
              0.17
 
 (c)
              Sale
                  of Subsidiary in Beijing
  On
        December 28, 2006, HTW entered into an agreement to sell its 50% interests
        on
        Beijing Mobile Communication Technology Co., Ltd (“BMCT”), a 50% subsidiary of
        HTW, to another owner of BMCT at the consideration of $65,106. The transaction
        was approved by PRC Government and consummated on March 28, 2007.
 
 The
        following represents the assets and liabilities sold at the date of the
        disposal:
 
 **March
                  28, 2007**Assets
              
              $
              2,871Total
                  assets sold
              
              
              2,871Liabilities
              
              
              (325
              )Total
                  liabilities sold
              
              
              (325
              )Total
                  net assets
              
              
              2,546Share
                  percentage
              
              
              50
              %Net
                  assets disposed
              
              $
              1,273Consideration
              
              
              -Gain
                  on disposal
              
              $
              1,273
  F-52
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS (CONTINUED)**
 
 (c)
              Sale
                  of Subsidiary in Beijing
                  (Continued)
  In
        connection with the agreements, the business operations of BMCT were no longer
        operations and subsidiaries of the Company. In accordance with SFAS 144,
        “Accounting for the Impairment or Disposal of Long−Lived Assets,” the result of
        operation of BMCT was presented separately as “discontinued operations”. The
        loss from discontinued operations of $0 for the year ended December 31, 2007
        is
        reflected in the Company’s consolidated statement of income for the year ended
        December 31, 2007.
 
 The
        assets and liabilities of the discontinued operations are presented separately
        under the captions “Assets of discontinued operation” and “liabilities of
        discontinued operation”, in the accompanying balance sheet at December 31,
        2006.
 
 The
        following is the unaudited pro forma net (loss) income and basic and diluted
        net
        (loss) income per share of the Company for the years ended December 31, 2007
        and
        2006 assuming the sale of company was completed on January 1, 2007 and
        2006.
 
 **2007**
              
              **2006**Net
                  (loss) income
              
              $
              (24,733,048
              )
              $
              4,549,642Net
                  (loss) income per share-
                  Basic
              
              $
              (0.46
              )
              $
              0.23-
                  Diluted
              
              $
              (0.46
              )
              $
              0.18
  F-53
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS (CONTINUED)**
 
 (d)
              Sale
                  of Subsidiary in Beihai
  On
        June
        13, 2007, HTW entered into an agreement to sell its 90% interests on Beihai
        Hi-Tech Wealth Electronic Products Co., Ltd (“HEP”), a 90% subsidiary of HTW, to
        Beijing Hi-Tech Wealth Investment and Development Company Limited (“BJ HID”) for
        $237,554. The transaction was approved by PRC Government and consummated
        on July
        3, 2007.
 
 The
        following represents the assets and liabilities sold at the date of the
        disposal:
 
 **July
                  3, 2007**Plant
                  and equipment, net
              
              $
              6,575Cash
                  and cash equivalents
              
              
              31,219Amounts
                  due from related companies
              
              
              236,596Total
                  assets sold
              
              
              274,390Other
                  payables
              
              
              (43
              )Amount
                  due to related companies
              
              
              (74,436
              )Total
                  liabilities sold
              
              
              (74,479
              )Total
                  net assets
              
              
              199,911Share
                  percentage
              
              
              90
              %Net
                  assets disposed
              
              
              179,920Consideration
              
              
              237,554Gain
                  on disposal
              
              $
              57,634
 
 In
        connection with the agreements, the business operations of HEP were no longer
        operations and subsidiaries of the Company. In accordance with SFAS 144,
        “Accounting for the Impairment or Disposal of Long−Lived Assets,” the result of
        operation of HEP was presented separately as “discontinued operations”. The loss
        from discontinued operations of $1,546 for the year ended December 31, 2007
        is
        reflected in the Company’s consolidated statement of income for the year ended
        December 31, 2007.
 
 The
        assets and liabilities of the discontinued operations are presented separately
        under the captions “Assets of discontinued operation” and “liabilities of
        discontinued operation”, in the accompanying balance sheet at December 31,
        2006.
  F-54
 **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS (CONTINUED)**
 
 (d)
              Sale
                  of Subsidiary in Beihai (Continued)
  The
        following is the unaudited pro forma net (loss) income and basic and diluted
        net
        (loss) income per share of the Company for the years ended December 31, 2007
        and
        2006 assuming the sale of company was completed on January 1, 2007 and
        2006.
 
 **2007**
              
              **2006**Net
                  (loss) income
              
              $
              (24,731,502
              )
              $
              4,558,575Net
                  (loss) income per share-
                  Basic
              
              $
              (0.46
              )
              $
              0.23-
                  Diluted
              
              $
              (0.46
              )
              $
              0.18
 
 (e)
              Sale
                  of Subsidiary in Hong Kong
  On
        October 29, 2007, MIL disposed 100% of the equity interest of Euro Asia,
        a Hong
        Kong corporation, for HK$100,000, equivalent to $12,838. Prior to the disposal,
        Euro Asia was a 100% holding company of BJ HTS. The following represents
        the
        assets and liabilities sold at the date of the disposal:
 
 **October
                  29, 2007**Plant
                  and equipment, net
              
              $
              49,708Cash
                  and cash equivalents
              
              
              14,615Notes
                  receivable
              
              
              6,540,115Other
                  assets
              
              
              421,155Total
                  assets sold
              
              
              7,025,593Notes
                  payable
              
              
              (1,154,857
              )Customers
                  deposits
              
              
              (1,419,005
              )Other
                  payables
              
              
              (1,003,756
              )Payroll
                  payables
              
              
              (364,336
              )Total
                  liabilities sold
              
              
              (3,941,954
              )Total
                  net assets
              
              
              3,083,639Share
                  percentage
              
              
              100
              %Net
                  assets disposed
              
              
              3,083,639Consideration
              
              
              12,838Loss
                  on disposal
              
              $
              (3,070,801
              )
  F-55
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **18.**
              **DISCONTINUED
                  OPERATIONS (CONTINUED)**
 
 (e)
              Sale
                  of Subsidiary in Hong Kong
                  (Continued)
  In
        connection with the agreements, the business operations of Euro Asia and
        its
        subsidiaries were no longer operations and subsidiaries of the Company. In
        accordance with SFAS 144, “Accounting for the Impairment or Disposal of
        Long−Lived Assets,” the result of operation of Euro Asia and its subsidiaries
        was presented separately as “discontinued operations”. The loss from
        discontinued operations of $1,365,956 for the year ended December 31, 2007
        is
        reflected in the Company’s consolidated statement of income for the year ended
        December 31, 2007.
 
 The
        assets and liabilities of the discontinued operations are presented separately
        under the captions “Assets of discontinued operation” and “liabilities of
        discontinued operation”, in the accompanying balance sheet at December 31,
        2007.
 
 The
        following is the unaudited pro forma net (loss) income and basic and diluted
        net
        (loss) income per share of the Company for the years ended December 31, 2007
        and
        2006 assuming the sale of company was completed on January 1, 2007 and
        2006.
 
 **2007**
              
              **2006**Net
                  (loss) income
              
              $
              (26,099,004
              )
              $
              2,844,797Net
                  (loss) income per share-
                  Basic
              
              $
              (0.48
              )
              $
              0.14-
                  Diluted
              
              $
              (0.48
              )
              $
              0.11
  F-56
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **19.**
              **BUSINESS
                  COMBINATIONS**
 
 (a)
              Acquisition
                  of Company
 
 On
        October 27, 2006, MIL acquired 100% of the equity interest of Euro Asia
        Arbitrage Investment Limited (“Euro Asia”), a Hong Kong corporation, for
        HK$100,000, equivalent to $12,838. Prior to the acquisition, Euro Asia was
        a
        100% holding company of Beijing Hi-Tech Wealth Software Co., Limited, which
        has
        a common director with MIL. The following represents the assets purchased
        and
        liabilities assumed at the date of acquisition:
 
 **October
                  27, 2006**Plant
                  and equipment, net
              
              $
              11,091Cash
                  and cash equivalents
              
              
              59,693Other
                  receivable and prepayments
              
              
              3,046Amount
                  due from related parties
              
              
              2,326,342Other
                  assets
              
              
              443,357Total
                  assets purchased
              
              
              2,843,529Other
                  payables and accrued expenses
              
              
              (2,535,908
              )Deferred
                  taxes
              
              
              (198,713
              )Other
                  liabilities
              
              
              (96,070
              )Total
                  liabilities assumed
              
              
              (2,830,691
              )Total
                  net assets
              
              
              12,838Share
                  percentage
              
              
              100
              %Net
                  assets acquired
              
              
              12,838Total
                  consideration paid
              
              $
              12,838
  The
        following is the unaudited pro forma net income (loss) and basic and diluted
        net
        income (loss) per share of the Company for the years ended December 31, 2006
        assuming the acquisition of company was completed on January 1,
        2006.
 
 **2006**Net
                  income
              
              $
              7,529,404Net
                  income per share-
                  Basic
              
              $
              0.38-
                  Diluted
              
              $
              0.30
  F-57
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **20.**
              **SEGMENT
                  INFORMATION**
 
 The
        Company operates two and one business segments for the years ended December
        31,
        2007 and 2006 respectively. The two segments in 2007 and 2006 are the
        development, production and distribution of mobile phone products and mobile
        application software within China. The Company's segment information for
        2007
        and 2006 are as follows:
 
 **Year
                  Ended December 31, 2007**
              
              **Smart
                  Phone**
              
              **Software**
              
              **Corporate**
              
              **Consolidated**Revenues
              
              $
              43,506,827
              
              $
              -
              
              $
              -
              
              $
              43,506,827Advertising
              
              
              6,184,486
              
              
              -
              
              
              -
              
              
              6,184,486Other
                  operating
                expenses
              
              
              14,068,667
              
              
              -
              
              
              2,556,556
              
              
              16,625,223Operating
                  loss
              
              
              16,009,698
              
              
              -
              
              
              -
              
              
              16,009,698**December
                  31, 2007**Identifiable
                  assets
              
              $
              46,936,438
              
              $
              2,690,378
              
              $
              1,814,536
              
              $
              51,441,352
 
 **Year
                  Ended December 31, 2006**
              
              **Smart
                  Phone**
              
              **Software**
              
              **Corporate**
              
              **Consolidated**Revenues
              
              $
              60,097,086
              
              
              -
              
              $
              -
              
              $
              60,097,086Advertising
              
              
              13,677,979
              
              
              -
              
              
              -
              
              
              13,677,979Other
                  operating
                expenses
              
              
              2,197,890
              
              
              -
              
              
              1,020,825
              
              
              3,218,715Operating
                  income
              
              
              3,348,963
              
              
              -
              
              
              -
              
              
              3,348,963**December
                  31, 2006**Identifiable
                  assets
              
              $
              40,232,778
              
              $
              8,090,790
              
              $
              -
              
              $
              48,323,568
  F-58
  **CHINA
        MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
        KNOWN AS HI-TECH WEALTH INC.)**
 **AND
        SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**
 **21.**
              **SUBSEQUENT
                  EVENTS**
 
 (a)
              Issuance
                  of Global Notes and Warrants
 On
          January 11, 2008, the Company sold in a private placement of $20,661,157
          (Rmb150,000,000) principal amount of 9.5% per annum global notes due January
          10,
          2014 (the “Global Notes”) subject to increase by an additional 5% per annum in
          the event that the Company’s common stock is not listed on a recognized stock
          exchange by January 12, 2009, with common stock purchase warrants to purchase
          12,000,000 shares of the Company’s common stock at an exercise price of $2.00
          per share (the “Exercise Price”), exercisable any time after January 1, 2008
          through June 30, 2014.
 
 The
          Exercise Price shall be subject to a contingent downward price adjustment
          on the
          six month anniversary of the date hereof and upon the expiration of each
          subsequent six month period (each, a “Reset Date”), such that if the volume
          weighted average closing price per share of common stock for the 20-trading
          day
          period immediately prior to the applicable Reset Date is less than the
          then
          applicable Exercise Price (such lower volume weighted average closing price,
          the
“Reset Exercise Price”), the Exercise Price shall automatically be changed to
          the Reset Exercise Price; provided, however, that notwithstanding the foregoing,
          in no event shall the Reset Exercise Price be less than $1.00 per share
          (as
          adjusted proportionally for stock dividends, stock splits, combinations,
          recapitalizations and the like).
 
 This
          fair
          value of the warrants will be recorded as a discount to the face amount
          of the
          Global Notes and will be amortized over the life of the Notes.  The
          arrangement fee and service fee will be recorded as debt issue cost and
          will be
          amortized over the life of the Notes.
 
 The
          fair
          value of the Warrants of $401,741 at the issuance date was determined using
          the
          Black-Scholes option-pricing model with the following assumptions:
 
 Risk
                    free interest rate
                
                
                3.375
                %Expected
                    life
                
                
                6.5
                    yearsExpected
                    volatility
                
                
                35.57
                %Expected
                    dividend yield
                
                
                0
                %
 F-59
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **21.**
              **SUBSEQUENT
                  EVENTS (CONTINUED)**
 
 (a)
              Issuance
                  of Global Notes and Warrants
                  (Continued)
  Holders
        of the Notes are entitled to the protection of certain customary covenants,
        including limitations on the Companies ability to incur additional debt or
        liens
        on any Company property, limitations on asset sales, payments of
        dividends, and certain types of restricted payments, a limitation on the
        Company’s ability to pledge capital stock of any subsidiaries and a limitation
        on senior management’s ability to transfer shares.  The Company must
        maintain a fixed charge coverage ratio, for the four fiscal quarters, of
        at
        least 3.5 to 1.00, a leverage ratio for the four fiscal quarters, not exceeding
        4.0 to 1.00. The Notes are mandatorily redeemable in tranches beginning on
        the
        third anniversary of the issuance. In addition, the Company is obligated
        to
        repurchase the securities in the event of a change of control, sales of
        significant assets or a delisting of the Company’s common stock at purchase
        prices of 105%, 100% and 105%, respectively, of the principal amount.
  Additionally, the Company has agreed to file a resale registration
        statement for the shares of common stock issuable upon exercise of the Warrants.
        The principal shareholders of the Company have also entered into arrangements
        with Abax Lotus Ltd. that grant broad management veto rights in favor of
        Abax
        Lotus Ltd.  Abax Lotus Ltd. received an arrangement fee of $2,000,000 and a
        service fee of $150,000 in connection with the financing.
 (b)
              Repayment
                  of Secured Notes
  On
        January 11, 2008, the Company fully settled all outstanding principal and
        interest of the Secured Notes. Consequently, all Secured Properties under
        the
        Secured Notes have been released.
 
 F-60
 **CHINA
          MOBILE MEDIA TECHNOLOGY INC.**
 **(FORMERLY
          KNOWN AS HI-TECH WEALTH INC.)**
 **AND
          SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**
 **21.**
              **SUBSEQUENT
                  EVENTS (CONTINUED)**
 
 (c)
              Formation
                  of New Company
  On
        January 31, 2008, MIL formed a wholly owned foreign enterprise, Beijing Hi-Tech
        Super Net Technology Development Co., Ltd. in China with registered capital
        of
        $5,000,000 to carry out TV-shopping services operations.
 
 (d)
              Issuance
                  of 6% Series B preferred stock
                  dividends
  On
        March
        14, 2008, the Company agreed to issue the 6% preferred stock Series B preferred
        stockholders dividends totaling $764,373 in the form of 1,415,507 shares
        of
        common stock for the year ended December 31, 2007.
  (e)
              Intellectual
                  Patent Registration
  On
        March
        26, 2008, the Company’s subsidiary Beijing Hi-Tech Wealth Communication
        Technology Development Ltd submitted registration application to the Chinese
        Government Intellectual Patent Agency as the new owner of five approved
        solar power technology patents to replace Beijing Hi-Tech Wealth Investment
        Limited. Two patent registration have been accomplished and the other three
        patent registration should be accomplished in short term future.
  F-61