UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K









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


For the
fiscal year ended December 31, 2008





OR





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 Number
333-64804











ASIA
GLOBAL HOLDINGS CORP.





(Exact
name of registrant as specified in its charter)





Nevada
              
              75-3026459(State
      or other jurisdiction of
                Incorporation
      or organization)
              
              (IRS
      Employer Identification No.)





Millenium City
1


32/F, Tower 1, Millenium City, 388 Kwun
Tong Road


Kwun Tong,
Kowloon


Hong Kong





(Address
of principal executive offices)





(213)
243-1505


(Issuer's
telephone number, including area code)







Securities
registered pursuant to Section 12(b) of the Act: None.





Securities
registered pursuant to Section 12(g) of the Act: Common Stock ($0.001 par
value)





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





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act. Yes  No
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 the past 90 days.    Yesx     No
 ̈





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-K or any amendment to this
Form 10-K.  ̈





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  ̈           Accelerated
filer  ̈         Non-accelerated
filer  ̈Smaller reporting companyx





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





As of
December 31, 2008, the aggregate market value of the registrant’s common
stock held by non-affiliates of the registrant was approximately $2,091,852
based on the closing sale price as reported on the Over-the-Counter Bulletin
Board. As of March 27, 2009, there were 134,112,000 shares of common stock
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE





None


Page 1 of
33





Asia
Global Holdings Corp.





FORM
10-K





For the
Year Ended December 31, 2008





TABLE
OF CONTENTS





PART
      IITEM
      1.
              
              Business
              4ITEM
      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
              17PART
      IIITEM
      5.
              
              Market
      for Registrant’s Common Equity, Related Stockholder Matters
      and
                Issuer
      Purchases of Equity Securities
              17ITEM
      6.
              
              Selected
      Financial Data
              18ITEM
      7.
              
              Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
              18ITEM
      7A.
              
              Quantitative
      and Qualitative Disclosures About Market Risk
              22ITEM
      8.
              
              Financial
      Statements and Supplementary Data
              23ITEM
      9.
              
              Changes
      In and Disagreements with Accountants on Accounting and Financial
      Disclosure
              24ITEM
      9A(T).
              
              Controls
      and Procedures
              24ITEM
      9B.
              
              Other
      Information
              24PART
      IIIITEM
      10.
              
              Directors
      and Executive Officers of the Registrant
              25ITEM
      11.
              
              Executive
      Compensation
              26ITEM
      12.
              
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              28ITEM
      13.
              
              Certain
      Relationships and Related Transactions
              30ITEM
      14.
              
              Principal
      Accountant Fees and Services
              30PART
      IVITEM
      15
              
              Exhibits,
      Financial Statement Schedules
              31SIGNATURES
              
              
              32


Page 2 of
33





INFORMATION
REGARDING FORWARD-LOOKING STATEMENTS





This
Annual Report on Form 10-K contains forward-looking statements. These statements
relate to future events or our future financial performance. These statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance,
or achievements expressed or implied by forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential" or "continue," the negative of such terms or other
comparable terminology. These statements are only predictions. Actual events or
results may differ materially.





Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of the forward-looking
statements. We undertake no duty to update any of the forward-looking statements
after the date of this report to conform such statements to actual results or to
changes in our expectations.





Readers
are also urged to carefully review and consider the various disclosures made by
us which attempt to advise interested parties of the factors which affect our
business, including without limitation the disclosures made in PART I. ITEM 1A:. Risk
Factors and PART II.
ITEM 6 "Management's Discussion and Analysis or Plan of Operation"
included herein.


Page 3 of
33


PART
I.





Item
1. Business





Overview





Asia
Global Holdings Corp. (formerly known as BonusAmerica Worldwide Corporation)
("AAGH" "we" and the "Company") is focused on building businesses in China and
other emerging regions and markets in Asia and worldwide. The Company has
subsidiaries participating in media and advertising, TV entertainment, marketing
services and Internet commerce. During 2007 we entered the television
entertainment market when we produced and broadcast the Who Wants To Be A
Millionaire? TV show in China. We are headquartered in Hong Kong, and
have offices in the US and mainland China.





Our
direct and indirect subsidiaries include Sino Trade-Intelligent Development
Corp., Limited (also referred to as “Sino Trade”), Idea Asia Limited (also
referred to as “Idea Asia”), China Media Power Limited (also referred to as
“CMP”), and Wah Mau Corporate Planning Development Co., Ltd. (also referred to
as “Wah Mau”). Sino Trade is a wholly-owned subsidiary of the Company. Idea Asia
and Wah Mau are wholly owned subsidiaries of Sino Trade. CMP is a 60%-owned
subsidiary of Idea Asia. Sino Trade, Idea Asia and CMP are all Hong Kong
corporations. Wah Mau was formed under the laws of the Peoples Republic of China
("PRC").





We sell
our products and services worldwide from 4 sales locations in 3 countries to a
customer base in Asia, North America, Europe, and Canada.





History





We were
incorporated in the state of Nevada on February 1, 2002 under the name Longbow
Mining, Inc. (“Longbow”) Prior to March 1, 2004, we were engaged in acquisition
and exploration of mineral properties and evacuation of minerals located in
British Columbia, Canada.





On March
1, 2004, we purchased BonusAmerica Corporation, a California corporation, or
BAC, a wholly-owned subsidiary of Stanford International Holding Corporation, a
California corporation, or Stanford. In connection with the transaction, we
issued 5 million shares of restricted common stock and Archer Pacific
Management, Inc., an affiliate of Ernest Cheung (one of our founders) and Fred
Tse (one of his affiliates) transferred 6.5 million shares of our restricted
common stock held by them to Stanford for all of the issued and outstanding
shares of BAC. As a result of this transaction, Stanford became the beneficial
owner of 57.9% of our then issued and outstanding shares of common stock and BAC
became our wholly-owned subsidiary. At the time of the transaction, Stanford was
owned by Michael Mak, our current president (“President”), chief executive
officer (“Chief Executive Officer”), interim chief financial officer (“interim
Chief Financial Officer”) and director, Carson Kwong, a former director, and
Steven Wong. A Form 13D was filed on June 28, 2004 denoting the beneficial
ownership of Stanford. Furthermore, on April 16, 2005, Mr. Mak purchased 100% of
the ownership of Stanford from Carson Kwong and Steven Wong. Michael Mak is also
the Chief Executive Officer of Stanford and has the power to direct Stanford's
votes. Our common stock is currently trading on the Over-the-Counter Bulletin
Board under the symbol "AAGH."





Effective
May 12, 2004, (i) Fred Tse resigned as our President and Chief Executive Officer
and the Board of Directors appointed Michael Mak to serve as our President,
Chief Executive Officer and director; and (ii) Carson Kwong was appointed to
serve on our Board of Directors in connection with the acquisition. Effective
October 13, 2004, Stephen Kenwood and Fred Tse resigned from their positions as
our directors. Effective October 26, 2004, John A. Leper was appointed to serve
on our Board of Directors and to serve as Secretary as replacement for Ernest
Cheung. Effective December 29, 2004, Carson Kwong resigned from his position as
a director and Kam Chuen Lau was appointed to fill the vacancy created by Mr.
Kwong's departure. Mr. Kam C. Lau resigned his position as a director of the
Company on November 15, 2005. Currently, our board of directors consists of
Michael Mak, who is also our President and Chief Executive Officer and John A.
Leper, who is also our Vice-President and Secretary. We are in the process of
searching for qualified personnel to serve as our Chief Financial Officer. Until
such time, Michael Mak is serving as our interim Chief Financial
Officer.





Effective
May 12, 2004, we changed our name from Longbow to BonusAmerica Worldwide
Corporation and on June 6, 2006, we changed our name to Asia Global Holdings
Corp. On July 6, 2006 the Company filed a request with the National Association
of Securities Dealers (NASD) to change its name and symbol. The change of name
and new symbol became effective on July 17, 2006. The Company's new trading
symbol is AAGH. As a result, the Company requested a new CUSIP from the CUSIP
Service Bureau. The new CUSIP is 04518D 10 8, which became effective on July 12,
2006.


Page 4 of
33





Effective
July 17, 2006, the Company relocated its headquarters from 834 S. Broadway, 5th
Floor, Los Angeles, California to 1601-1604 CRE Centre 889 Cheung Sha Wan Road,
Kowloon, Hong Kong.





During
March 2004, we formed, a wholly-owned subsidiary, Sino Trade, under the laws of
Hong Kong. The original purpose of Sino Trade was to provide additional support
to our business-to-business trade operations in China and the United States.
Today all of our media and advertising business is conducted through Sino Trade
and its subsidiaries.





On
November 10, 2006, we formed Idea Asia, which is a wholly-owned subsidiary of
Sino Trade, under the laws of Hong Kong.  The purpose of Idea Asia is
to acquire and operate entertainment related businesses.





On
November 27, 2006 we formed CMP, which is a sixty percent (60%) owned subsidiary
of Idea Asia, under the laws of Hong Kong.  The purpose of CMP is to
acquire the rights to a specific entertainment property, namely the globally
successful Who Wants To Be A
Millionaire? TV show, and produce and broadcast the show in the
PRC.





On
September 29, 2007 CMP, subsidiary of AAGH, broadcast the first ever airing of
the globally successful Who
Wants To Be A Millionaire? TV show produced specifically for mainland
China.





On October 29, 2008, the Company
accepted the resignation of Michael Mak as the Company’s Chief Executive
Officer, Chief Financial Officer and as a Director, prior to the acceptance of
Mr. Mak’s resignation, the Board of Directors appointed John Leper, Chairman of
the Board of Directors, Chief Executive Officer and Chief Financial Officer. The
Board also appointed Hin Lee Kwong as Secretary and as a Director of the
Board.  John Leper, 53, has been the Company’s Secretary, a member of
the Board of Directors and Vice President contributing in the areas of
marketing, business development, corporate planning and strategy since 2004.
From May 2001 to September 2003, Mr. Leper served as the Chief Marketing Officer
and Strategist for Stanford International Holding Corporation. Hin Lee Kwong,
50, has served as a Director of the Company’s wholly-owned subsidiary Sino
Trade-Intelligent Development Corp. Ltd. (“Sino Trade”). Since joining Sino
Trade, Mr. Kwong has been responsible for the overall strategy and
administrative affairs of the subsidiary.





On November 17, 2008, Mr. Mak notified
the Board of Directors that he was surrendering 150,000 shares of Series A Stock
back to the Company for cancellation. The Board of Directors approved the
surrendering of the 150,000 shares of the Series A Stock. After the return of
the 150,000 shares of the Series A Stock, Mr. Mak still controls 250,000 shares
of the Series A Stock. The Company contacted its transfer agent to cancel the
150,000 shares of the Series A Stock. Prior to these activities, on August 18,
2006 the Company entered into an Employment Agreement with Mr. Mak. As part of
his compensation, Mr. Mak received 500,000 shares of the Company’s Series A
Convertible Preferred Stock (“Series A Stock”).  Then on October 9,
2007, Mr. Mak converted 100,000 shares of his Series A Stock into 20,000,000 144
Restricted shares of the Company’s Common Stock. This left Mr. Mak, at that
time, with 400,000 shares of the Series A Stock.





In March
of 2009 Sino Trade entered into talks with a US based company regarding the
potential acquisition of its wholly-owned subsidiary Idea Asia.





Currently





2008





In 2008,
our revenues declined by 53.4% from $10,664,613 in 2007 to $4,968,145 in 2008
primarily resulting from decreased advertising sales due to global economic
downturn in the last quarter of 2008.





During
the first three quarters of the year the Company saw a very strong growth in
Media and Advertising sales from our Sino Trade subsidiary.  However
near the end of 2008 and beginning of 2009 Sino Trade began feeling the effects
of the global financial turndown. Sino Trade focuses exclusively on selling
business-to-business advertising to small manufactures in China. The financial
meltdown during the fourth quarter of 2008 harshly impacted Sino Trade’s core
client base of small and medium sized manufacturers located in China who engage
in manufacturing and exporting products to the United States. This segment of
manufacturers in China simultaneously experienced severe cut-backs on bank
facilities and a severe drop in export demand. The segment saw numerous factory
closings and cutbacks at the end of year 2008, particularly in Southern China –
the location of much of Sino Trade’s key client base. The adverse financial
effect on the core customer group was far worse than Sino Trade originally
anticipated. The full effect was not fully realized until the first quarter of
2009 when it became more apparent to Sino Trade management that many of its
customers may not recover from the recent global financial crisis soon if at
all. As a result, this adverse impact on the Sino Trade core customer base cast
doubt on a considerable portion of sales the Company recorded in the three-month
period ended September 30, 2008 as management cannot be certain of when or what
portion of Sino Trade’s account receivables can be fully
collected.


Page 5 of
33





Management
is engaged in discussions regarding the potential for investment and or
acquisition of Idea Asia and believes this to be the best option for leveraging
its investment in the subsidiary.





We have
not yet been able to raise the additional capital required to execute many
components of our overall business plan. As such, some of our plans will remain
inactive while we focus the resources we have available on only the
opportunities with the greatest potential for long-term success and benefit for
shareholders.





Our
Products and Services





TV
Entertainment





Idea Asia
intends to derive income from TV distribution, advertising during TV programs it
produces and distributes in China. China has a population of 1.3 billion with a
middle class of approximately 300 million and growing rapidly. Advertising
during popular TV shows is the best way for major international brands to reach
this audience which is quickly becoming the most important consumer market in
the world. Idea Asia generates revenue through the distribution of shows it
produces and distributes as well as the sale of advertising slots in those
shows.





Media
& Advertising





Advertising:
Our advertising business includes two categories 1) business-to-business media
and advertising services, and 2) business-to-consumer media &
advertising.





Business-to-Business:
In this category, we derive income from the sale of advertising products and
services to companies who desire to promote their products or services to other
businesses. Our offerings in this category include a) business directories and
trade publications that we publish and distribute - we charge companies to place
their advertisements in these publications; b) Internet direct marketing
services wherein we help businesses promote their business via email and other
forms of online advertising; and c) international trade portal and search engine
marketing and advertising services which allow companies to locate buyers and/or
suppliers - specifically we offer these services through an online portal we
developed called TradeDragon. We charge companies who use TradeDragon to promote
their business.





TradeDragonTM,
launched in 2004, is an online international Business-to-Business trade portal
that connects businesses that desire to trade internationally particularly
between China and the United States. Supplier members are charged a membership
fee to participate in TradeDragon. TradeDragon members connect with each other
through the TradeDragon.com website, which allows them to search for buyers and
suppliers that match their specific requirements. Suppliers can exhibit their
products and services online for buyers worldwide to view. Buyers can find
suppliers by posting their needs for suppliers worldwide to view and respond to
and by browsing/searching the database of supplier information online.
TradeDragon members benefit from a proprietary technology called DragonDynamicsTM
which drives custom-tailored online business traffic to each individual member
based on that member's specific requirements. DragonDynamicsTM was developed
internally based on a combination of proprietary industry knowledge, and
expertise in global direct marketing, ecommerce and China sourcing.





Industry
Publications. Manufactures and suppliers can reach buyers through publications
produced and distributed by Sino Trade such as (i) China Enterprises, which is a
periodic trade magazine created for and distributed to companies seeking
manufacturers and suppliers in China; (ii) Industry specific trade magazines;
(iii) China Exhibition Guide, which includes detailed information and dates of
trade shows in China and worldwide; and (iv) China Supplier Guide, a 1000-plus
page comprehensive yearly directory listing thousands of China manufacturers and
suppliers across 20 different categories.





Marketing
Services. Sino Trade provides manufacturers and suppliers located primarily in
China and Hong Kong with marketing services designed to reach international
buyers. Email marketing and traditional direct marketing services help introduce
the products and services of manufacturers located in “the world’s factory” -
China.





Business-to-Consumer:
In this category we seek to derive income from companies desiring to promote
their products or services to consumers. Our consumer Internet portals at this
time are currently inactive until management determines the Company is in a
position to successfully execute the operation of each. If and when we scale-up
our consumer Internet portals, we plan to derive income from advertisers
utilizing our portals to promote their business to the consumers who visit the
Internet portals/websites. We have developed but suspended the operations of
three portals —www.More2Save.com, www.RateandSave.com and
www.CouponsRewardsSavings.com. We will consider launching www.BonusChina.com, an
online entertainment, information and services portal, in China if and when
funding is available to do so.


Page 6 of
33





CouponsRewardSavings.com
(Inactive) was established in 2003 and was the original business in our media
and advertising distribution network. This website attracted visitors with
discounts, free gifts and other promotions. Revenues were generated by charging
advertisers each time a visitor opted to receive information (usually an online
coupon or special offer) from that advertiser. More2Save.com (Inactive) is an
online coupon portal that offers shoppers coupons, rewards and savings. Revenues
were generated by charging advertisers to post coupons on the website.
RateandSave.com (Inactive) is a consumer-shopping portal that helps consumers
find the best prices on products they are seeking. Revenues were generated from
advertisers via a cost-per-click bidding model. BonusChina.com (Planned/not
active) will be an online portal and will provide entertainment, information and
services to the consumer market in China.. We intend to generate revenue by
selling advertising space and services to consumers and advertisers. These four
Business-to-Consumer businesses will remain inactive until management determines
that adequate resources are available to implement and operate any of them
profitably.





Infrastructure





Our
wholly-owned subsidiary, Sino Trade provides the infrastructure to operate our
media and advertising business in Hong Kong and China. Through Sino Trade, we
coordinate two offices in mainland China and one office in Hong Kong. Our
offices in mainland China are located in Guangdong and Shanghai. Our office in
Hong Kong serves as our China communications hub. Wah Mau, a wholly-owned
subsidiary of Sino Trade, provides support for our operations specifically in
mainland China and helps generate sales of our media and advertising products
and services. Through Sino Trade and Wah Mau we have established a network of
advertising agency partners in China who sell our business-to-business media and
advertising products and services.





To
address the TV media opportunity in China, our Sino Trade subsidiary created the
wholly-owned subsidiary Idea Asia to hold entertainment related businesses. Idea
Asia created CMP of which Idea Asia owns 60%. On December 18, 2006, CMP entered
into an agreement to acquire the rights from UK based Celador International
Limited (now part of 2waytraffic) to broadcast in China the global quiz show
phenomenon Who Wants To Be A
Millionaire?. The remaining 40% of CMP is owned by Kolmanski
International Limited and Region Giants Limited. CMP entered into an agreement
with China advertising media sales agency Zixunmedia in November of 2006.
Pursuant to PRC regulations, only a licensed advertising agency can sell
advertising and collect payments for advertising sales in China. CMP
discontinued production and distribution of Who Wants To Be A
Millionaire?inMarch
2008.





Sales
and Marketing Plan





Our
business-to-business media & advertising products and services have been
sold through a combination of minimal in-house sales personnel and a network of
outside advertising agencies located throughout China and Hong Kong. Given the
recent downturn Sino Trade was forced to discontinue its in-house sales
personnel. Our sales efforts were supplemented with 16 tradeshow exhibits in
2008.





Our
Competitors





Our Sino
Trade business including TradeDragon.com and our international trade
publications competes with Alibaba.com (a global trade portal and provider of
online marketing services for importers and exporters) and GlobalSources.com (a
business-to-business media company that facilitates global trade, focusing on
the China market-NASDAQ: GSOL). We compete with a variety of companies, some of
which are bigger and better capitalized, whose products or services are similar
to ours. As such, we may be at a competitive disadvantage to companies that have
greater financial resources, more advanced technology, greater experience or
offer lower cost products or services than ours.





Employees





As of
December 31, 2008, we employed approximately 12 full-time employees. The Company
does not have any collective bargaining agreements with its employees and we
consider our employee relations to be good.





Privacy
Protection





Regarding
our Internet related businesses we believe that protecting an individual’s
privacy is of paramount importance. We will always do our best to adhere to best
practices regarding matters concerning privacy and security.





Page 7 of
33




Website
Access to our SEC Reports


Our
Internet website address is www.asiaglobalholdings.com. Through our Internet
website, we will make available, free of charge, the following reports as soon
as reasonably practicable after electronically filing them with, or furnishing
them to, the SEC: our Annual Reports on Form 10-K; our Quarterly Reports on Form
10-Q; our Current Reports on Form 8-K; and amendments to those reports filed or
furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Our Proxy Statements for our Annual Stockholder
Meetings are also available through our Internet website. Our Internet website
and the information contained therein or connected thereto are not intended to
be incorporated into this Annual Report on Form 10-K.





The
public may also read and copy any materials filed with the SEC at the SEC's
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or through
the SEC website at www.sec.gov. The Public Reference Room may be contact at
(800) SEC-0330. You may also access our other reports via that link to the SEC
website.





Item
1A. Risk Factors





Risks
Related to the Company





You
should not place undue reliance on our financial guidance, nor should you rely
on our quarterly or annual operating results as an indication of our future
performance because our results of operations are subject to significant
fluctuations.





We were
unable to achieve profitability in accordance with generally accepted accounting
principles in the United States, or GAAP, for the year ended December 31, 2008
and we may be unable to achieve profitability in the future. We incurred net
losses of $3,217,339 for the twelve months ended December 31,
2008.  Even if we do achieve profitability, we may not be able to
sustain or increase profitability on a quarterly or an annual basis in the
future.





We may
experience significant fluctuations in our quarterly or annual operating results
due to a variety of factors, many of which are outside of our control.
Significant fluctuations in our operating results could be caused by any of the
factors identified in this section, including but not limited to our ability to
retain existing users, attract new users at a steady rate and maintain user
satisfaction; the announcement or introduction of new or enhanced services,
content and products by us or our competitors; significant news events that
increase traffic to our websites; technical difficulties, system downtime or
Internet failures; demand for advertising space from advertisers; seasonality of
the advertising market; the amount and timing of operating costs and capital
expenditures relating to expansion of our business, operations and
infrastructure; governmental regulation; seasonal trends in Internet use; a
shortfall in our revenues relative to our forecasts and a decline in our
operating results due to our inability to adjust our spending quickly; and
general economic conditions and economic conditions specific to the Internet,
electronic commerce and the Greater China market. As a result of these and other
factors, you should not place undue reliance on our financial guidance, nor
should you rely on quarter-to-quarter comparisons of our operating results as
indicators of likely future performance. Our quarterly revenue and earnings per
share guidance is our best estimate at the time we provide guidance. Our
operating results may be below our expectations or the expectations of public
market analysts and investors in one or more future quarters. If that occurs,
the price of our ordinary shares could decline and you could lose part or all of
your investment.





We
may not be able to successfully upgrade and integrate our existing products and
technology.





Our
ability to compete depends, in part, on our success at upgrading and integrating
our existing products and technology. From time to time we upgrade and issue new
releases of our existing technology to integrate new functionalities and respond
to industry developments. We may experience bugs, delays, difficulties or
increased costs that could hinder or prevent the successful design, integration,
development, introduction or marketing of new releases of our technology. In
addition, we must ensure that performance levels of our technology remain steady
when we release new versions to our customers. Any material delays in
introducing a new release or performance problems could cause us to lose
customers and cause our revenue to decline.





Our
international operations face legal and cultural challenges and subject us to
additional risks. We have operations in a number of international markets,
including Asia, United States, Europe and Canada, and we currently derive
approximate all of our revenue from non-U.S. markets. To date, we have limited
experience in marketing, selling and distributing our solutions internationally.
Our international operations are subject to other risks, including:





o changes
in regulatory requirements;





o reduced
protection for intellectual property rights in some countries;





o
potentially adverse tax consequences and restrictions on cash flow resulting
from, among other things:





o local
statutory liquidity requirements for businesses operating in certain foreign
countries;





o the
need to maintain cash balances to meet short-term capital
requirements;


Page 8 of
33





o
operations in foreign countries with higher tax rates than the United
States;





o the
inability to utilize certain foreign tax credits; and





o the
inability to utilize some or all of our losses generated in one or more foreign
countries;





o general
import/export restrictions relating to encryption technology and/or privacy
matters;





o
difficulties and costs of staffing and managing foreign operations;





o local
law requirements governing employment contracts, which may impose, among other
things, minimum notice periods and minimum severance payments for involuntary
terminations;





o
political and economic instability;





o
fluctuations in currency exchange rates; and





o
seasonal reductions in business activity during the summer months in Europe and
certain other parts of the world.





Any or
all of these risks could affect our business outside of the United States and
negatively impact our results of operations.





Our
future revenues and results of operations may be difficult to forecast and
results in prior periods may no be indicative of future results.





At times
in the past and in certain segments, our revenues have fluctuated on a quarterly
and annual basis as well as grown significantly and has decreased significantly.
Accurate predictions of future revenues are difficult because of the rapid
changes in the markets in which we operate.





Our
results of operations have fluctuated and may continue to fluctuate
significantly in the future as a result of a variety of factors, many of which
are beyond our control. These factors include:





o the
addition of new clients or the loss of existing clients;





o changes
in fees paid by advertisers or other clients;





o changes
in the amount of royalties payable by us to owners of websites or the imposition
of new charges or fees by website owners;





o the
demand by advertisers and web-publishers for our advertising
solutions;





o the
introduction of new Internet marketing services by us or our
competitors;





o
variations in the levels of capital or operating expenditures and other costs
relating to the maintenance or expansion of our operations, including personnel
costs;





o
seasonality;





o changes
in results of operations brought about by newly acquired businesses or new joint
ventures, which may be exceedingly difficult to predict due to management's lack
of history with such businesses or joint ventures;





o changes
in governmental regulation of the Internet; and





o general
economic conditions.





Our
future revenues and results of operations may be difficult to forecast due to
the above factors and the time we may need to adequately respond to any changes
in them. Our profit margins may suffer if we are unable to pass some of the
costs on to our customers. In addition, our expense levels are based in large
part on our investment plans and estimates of future revenues. Any increased
expenses may precede or may not be followed by increased revenues, as we may be
unable to, or may elect not to, adjust spending in a timely manner to compensate
for any unexpected revenue shortfall. As a result, we believe that
period-to-period and year-to-year comparisons of our results of operations may
not be meaningful.


Page 9 of
33





Changes
in general economic conditions could have a material impact on our
business.





Our
results of operations could be impacted by changes in overall economic
conditions that impact consumer spending within China and the United States.
Future economic conditions affecting disposable income such as employment
levels, consumer confidence, business conditions, stock market volatility,
weather conditions, acts of terrorism, threats of war, and interest and tax
rates could reduce consumer spending or cause consumers to shift their spending
away from our products. If the economic conditions and performance of the retail
and media environment worsen, we may experience material adverse impacts on our
business, operating results and financial condition.





Acquisitions
may harm our financial results.





Acquisitions
have been part of our growth and may continue to be part of our growth in the
future. Our acquisitions may be of entire companies, certain assets of
companies, controlling interests in companies or of minority interests in
companies where we intend to invest as part of a strategic alliance. If we are
not successful in integrating companies that we acquire or are not able to
generate adequate sales from the acquired entities, our business could be
materially and adversely affected.





Disputes
concerning media content and intellectual property may adversely affect
us.





Most of
our media content is subject to arrangements with third parties pursuant to
which we have licensed certain rights to use and distribute media content owned
by third parties or have licensed to third parties certain rights to use and
distribute media content that we own. In addition, we have a number of
agreements with third parties concerning the use of our media content and
intellectual property, including agreements regarding royalties, distribution,
duplication, etc. Allegations that we do not have rights to use media content
and other disputes arising from such arrangements can be costly and may have a
material adverse impact on our results.





Third
parties that are engaged by the Company may have legal action brought against
them which could adversely affect us or may result in legal action against the
Company.





We work
with several third parties in our TV Entertainment and Media & Advertising
segments.  Such agreements could result in legal action being brought
against a third party which we have no control over and could result in the
Company being brought into such legal action.  Such litigation may
impose a heavy financial burden on the Company.





Television
production budgets may increase, and television production spending may exceed
such budgets.





Our
future television budgets may continue to increase due to factors including, but
not limited to, (1) escalation in compensation rates of people required to
work on our current projects, (2) number of personnel required to work on
our current projects, (3) equipment needs, (4) the enhancement of
existing, or the development of new, proprietary technology and (5) the
expansion of our facilities to accommodate the growth of the television and
media segment. Under the Format Option Agreement for Singing Bee, we will finance
the budget for production and sale of the show. Due to production exigencies,
which are often difficult to predict, it is not uncommon for television
production spending to exceed television production budgets, and our current
projects may not be completed within the budgeted amounts. In addition, when
production of each film is completed, we may incur significant carrying costs
associated with transitioning personnel on creative and development teams from
one project to another. These carrying costs increase overall production budgets
and could have a material adverse effect on our results of operations and
financial condition.





We
have an obligation to finance production costs.





We
financed the production of Who
Wants to Be A Millionaire?, and we may partially or fully finance other
productions or products to be developed. If our television and related products
do not generate proceeds sufficient to more than offset our share of the
production costs, our business, operating results and financial condition will
be materially adversely affected.





In
order for our television and related products to be successful, we must develop
appealing creative content.





The
success of each television production developed and produced by us depends in
large part upon our ability to develop and produce engaging content and formats
that will appeal to a broad audience. Traditionally, this process has been
extremely difficult. While we have enjoyed success with our television
productions, there can be no assurance that similar levels of success will be
achieved by our subsequent productionsand our other future
projects.


Page 10
of 33





Work
stoppages could adversely impact our operations.





Although
none of our employees are represented by a labor union, it is common for
television directors, producers, production staff and actors at television
production companies to belong to a union. There can be no assurance that our
employees will not join or form a labor union or that we, for certain purposes,
will not be required to become a union signatory. We may be directly or
indirectly dependent upon certain union members, and work stoppages or strikes
organized by such unions could have a material adverse impact on our business,
financial condition or results of operations. If a work stoppage occurs, it
could delay the completion of our television productions and have a material
adverse effect on our business operating results or financial
condition.





If
we lost any key personnel, our business will be adversely affected.





Our
success depends, to a significant extent, upon our senior management and key
sales and technical personnel, particularly our Chief Executive Officer, who is
also our interim Chief Financial Officer. The competition for experienced and
talented executives, senior managers and technical and sales personnel has
become intense in our industry. The loss of the services of one or more of these
persons, other similarly positioned members of management or other key personnel
could materially and adversely affect our ability to develop our
business.





In
order to continue to operate efficiently and to grow our business, we will need
to attract and retain qualified personnel and manage our costs, which we may be
unable to do.





Our
success depends on our ability to attract and retain qualified technical, sales
and marketing, customer support, financial and accounting, and managerial
personnel. We may expand our total workforce and will need to continue to
attract qualified personnel in order to grow our business successfully.
Additionally, as our business has escalated, we have increased our reliance on
contractors and outside firms for development. We may not be able to attract,
integrate and retain the numbers and types of candidates that we desire, and we
may not be able to retain our contractors and outside firms and may not be able
to replace them. Even if we are successful in attracting new staff, we may not
be able to increase revenue quickly enough to offset the costs of the additional
personnel. Any of these contingencies could cause our business to
suffer.


We have
experienced in the past, and may continue to experience in the future,
particular difficulty in hiring and retaining qualified staff. Competition for
staff is very high, and training is difficult because the required skill set is
complex and there is no industry standard. If we are unable to attract, train
and retain qualified search staff, we may not remain competitive and could lose
business and our customers, which could have an adverse effect on
revenue.





Our
operations are vulnerable to natural disasters and other events, including
terrorist attacks, because we have limited backup systems.





We have
limited backup systems and have experienced system failures and electrical
outages from time to time in the past, which have disrupted our operations. We
have a limited disaster recovery plan in the event of damage from fire, floods,
typhoons, earthquakes, power loss, telecommunications failures, break-ins and
similar events. Our operations are dependent on our ability to protect our
computer systems against these unexpected adverse events. If any of the
foregoing occurs, we may experience a complete system shutdown. Any business
interruption insurance that we carry is unlikely to be sufficient to compensate
us for loss of business in the event of a significant catastrophe.





In
addition, interruptions in our services could result from the failure of our
telecommunications providers to provide the necessary data communications
capacity in the time frame we require. Our TradeDragon technology resides on
computer systems located in our data centers housed by us in Hong Kong. These
systems' continuing and uninterrupted performance is critical to our success, as
a substantial portion of the revenue depend on the continuing availability of
these systems. Despite precautions that we have taken, unanticipated problems
affecting our systems have from time to time in the past caused, and in the
future could cause, interruptions in the delivery of our solutions. Our
business, results of operations and financial condition could be materially and
adversely affected by any damage or failure that interrupts or delays our
operations. To improve the performance and to prevent disruption of our
services, we may have to make substantial investments to deploy additional
servers or one or more copies of our Web sites to mirror our online resources.
Although we believe we carry property insurance with adequate coverage limits,
our coverage may not be adequate to compensate us for all losses, particularly
with respect to loss of business and reputation that may occur.





In
addition, terrorist acts or acts of war may cause damage to our employees,
facilities, clients, our clients' customers and vendors, which could
significantly impact our revenues, costs and expenses and financial position.
The potential for future terrorist attacks, the national and international
responses to terrorist attacks or perceived threats to national security, and
other acts of war or hostility have created many economic and political
uncertainties that could adversely affect our business and results of operations
in ways that cannot be presently predicted. We are predominantly uninsured for
losses and interruptions caused by terrorist acts and acts of
war.


Page 11
of 33





Our
network operations may be vulnerable to hacking, viruses and other disruptions,
which may make our products and services less attractive and
reliable.





Internet
usage could decline if any well-publicized compromise of security occurs.
"Hacking" involves efforts to gain unauthorized access to information or systems
or to cause intentional malfunctions or loss or corruption of data, software,
hardware or other computer equipment. Hackers have made many attempts to breach
the security of our network operations, with minimal disruption to date. If
hackers are successful in the future, they could misappropriate proprietary
information, which could lead to litigation against us, or cause substantial
disruptions in our service. We may be required to expend capital and other
resources to protect our Web site against hackers. Any measures we may take may
not be effective. In addition, the inadvertent transmission of computer viruses
could expose us to a material risk of loss or litigation and possible liability,
as well as materially damage our reputation and decrease our user
traffic.





We
depend on proprietary rights and we face the risk of infringement.





Our
success and ability to compete are substantially dependent on our internally
developed technologies and trademarks, which we protect through a combination of
copyright, trade secret and trademark law. Patent applications and trademark
applications we submit may not be approved. Even if they are approved, such
patents or trademarks may be successfully challenged by others or invalidated.
If our trademark registrations are not approved because third parties own such
trademarks, our use of such trademarks will be restricted unless we enter into
arrangements with such third parties that may be unavailable on commercially
reasonable terms.





We
generally enter into confidentiality or license agreements with our employees,
consultants and corporate partners, and generally control access to and
distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. The steps we have taken may not prevent
misappropriation of our solutions or technologies, particularly in many foreign
countries in which we operate, where laws or law enforcement practices may not
protect our proprietary rights as fully as in the United States.





We have,
from time to time, been, and may in the future be, subject to claims of alleged
infringement of the trademarks and other intellectual property rights of third
parties by us or by customers who employ our advertising solutions. We may be
required, or may elect, to indemnify these parties against such claims. Such
claims and any resultant litigation could subject us to significant liability
for damages and could result in the invalidation of our proprietary rights. In
addition, even if we prevail, such litigation could be time-consuming and
expensive to defend, and could result in the diversion of our time and
attention, any of which could materially and adversely affect our business,
results of operations and financial condition. Any claims or litigation from
third parties may also result in limitations on our ability to use the
trademarks and other intellectual property subject to such claims or litigation
unless we enter into arrangements with the third parties responsible for such
claims or litigation, which may be unavailable on commercially reasonable terms,
if at all.





Future
currency fluctuations and restrictions on currency exchange may adversely affect
our business, including limiting our ability to convert Chinese renminbi into
foreign currencies and, if Chinese renminbi were to decline in value, reducing
our revenues in U.S. dollar terms.





Our
reporting currency is the U.S. dollar and our operations in China and Hong Kong
use their respective local currencies as their functional currencies. The
majority of our revenues derived and expenses incurred are in currencies other
than the U.S. dollar. We are subject to the effects of exchange rate
fluctuations with respect to any of these currencies. We can offer no assurance
that these will be stable against the U.S. dollar or any other foreign
currency.





The
income statements of our international operations are translated into U.S.
dollars at the average exchange rates in each applicable period. To the extent
the U.S. dollar strengthens against foreign currencies, the translation of these
foreign currencies denominated transactions results in reduced revenues,
operating expenses and net income for our international operations. Similarly,
to the extent the U.S. dollar weakens against foreign currencies, the
translation of these foreign currency denominated transactions results in
increased revenues, operating expenses and net income for our international
operations. We are also exposed to foreign exchange rate fluctuations as we
convert the financial statements of our foreign subsidiaries into U.S. dollars
in consolidation. If there is a change in foreign currency exchange rates, the
conversion of the foreign subsidiaries' financial statements into U.S. dollars
will lead to a translation gain or loss which is recorded as a component of
other comprehensive income. In addition, we have certain assets and liabilities
that are denominated in currencies other than the relevant entity's functional
currency. Changes in the functional currency value of these assets and
liabilities create fluctuations that will lead to a transaction gain or loss. We
have not entered into agreements or purchased instruments to hedge our exchange
rate risks, although we may do so in the future. The availability and
effectiveness of any hedging transactions may be limited and we may not be able
to successfully hedge our exchange rate risks.


Page 12
of 33





Changes
to existing accounting pronouncements, including SFAS 123R, or taxation rules or
practices may adversely affect our reported results of operations or how we
conduct our business.





A change
in accounting pronouncements or taxation rules or practices can have a
significant effect on our reported results and may even affect our reporting of
transactions completed before the change is effective. Pursuant to SEC rules, we
are required to implement the Statement of Financial Accounting Standards No.
123 (revised 2004), "Share-Based Payment" ("SFAS 123R") starting in the first
quarter of 2006. SFAS 123R requires us to measure compensation costs for all
share-based compensation (including stock options and our employee stock
purchase plan, as currently constructed) at fair value and take compensation
charges equal to that value. The method that we use to determine the fair value
of stock options is based upon, among other things, the volatility of our
ordinary shares. The price of our ordinary shares has historically been
volatile. Therefore, the requirement to measure compensation costs for all
share-based compensation under SFAS 123R could negatively affect our
profitability and the trading price of our ordinary shares. SFAS 123R and the
impact of expensing on our reported results could also limit our ability to
continue to use stock options as an incentive and retention tool, which could,
in turn, hurt our ability to recruit employees and retain existing employees.
Other new accounting pronouncements or taxation rules and varying
interpretations of accounting pronouncements or taxation practice have occurred
and may occur in the future. This change to existing rules, future changes, if
any, or the questioning of current practices may adversely affect our reported
financial results or the way we conduct our business.





While
we believe that we currently have adequate internal control procedures in place,
we are still exposed to potential risks from recent legislation requiring
companies to evaluate controls under Section 404 of the Sarbanes-Oxley Act of
2002.





While we
believe that we currently have adequate internal control procedures in place, we
are still exposed to potential risks from recent legislation requiring companies
to evaluate controls under Section 404 of the Sarbanes-Oxley Act of 2002. Under
the supervision and with the participation of our management, we have evaluated
our internal controls systems in order to allow management to report on our
internal controls, as required by Section 404 of the Sarbanes-Oxley Act. We have
performed the system and process evaluation and testing required in an effort to
comply with the management certification requirements of Section 404. As a
result, we have incurred additional expenses and a diversion of management's
time. If we are not able to continue to meet the requirements of Section 404 in
a timely manner or with adequate compliance, we might be subject to sanctions or
investigation by regulatory authorities, such as the SEC or the Nasdaq National
Market. Any such action could adversely affect our financial results and the
market price of our ordinary shares.





Our
stock price has been historically volatile and may continue to be volatile,
which may make it more difficult for you to resell shares when you want at
prices you find attractive.





The
trading price of our ordinary shares has been and may continue to be subject to
considerable daily fluctuations. During the twelve months ended December 31,
2008, the closing sale prices of our ordinary shares on the Over-the-Counter
Bulletin Board ranged from $0.018 to $0.143 per share and the closing sale price
on April 14, 2009 was $0.014 per share. Our stock price may fluctuate in
response to a number of events and factors, such as quarterly variations in
operating results, announcements of technological innovations or new products
and media properties by us or our competitors, changes in financial estimates
and recommendations by securities analysts, the operating and stock price
performance of other companies that investors may deem comparable, new
governmental restrictions or regulations and news reports relating to trends in
our markets. In addition, the stock market in general, and the market prices for
China-related and Internet-related companies in particular, have experienced
extreme volatility that often has been unrelated to the operating performance of
such companies. These broad market and industry fluctuations may adversely
affect the price of our ordinary shares, regardless of our operating
performance.





We
may be classified as a passive foreign investment company, which could result in
adverse U.S. tax consequences to U.S. investors.





Based
upon the nature of our income and assets, we may be classified as a passive
foreign investment company, or PFIC, by the United States Internal Revenue
Service for U.S. federal income tax purposes. This characterization could result
in adverse U.S. tax consequences to you. For example, if we are a PFIC, our U.S.
investors will become subject to increased tax liabilities under U.S. tax laws
and regulations and will become subject to more burdensome reporting
requirements. The determination of whether or not we are a PFIC is made on an
annual basis, and those determinations depend on the composition of our income
and assets, including goodwill, from time to time. Although in the past we have
operated our business and in the future we intend to operate our business so as
to minimize the risk of PFIC treatment, you should be aware that certain factors
that could affect our classification as PFIC are out of our control. For
example, the calculation of assets for purposes of the PFIC rules depends in
large part upon the amount of our goodwill, which in turn is based, in part, on
the then market value of our shares, which is subject to change. Similarly, the
composition of our income and assets is affected by the extent to which we spend
the cash we have raised on acquisitions and capital expenditures. In addition,
the relevant authorities in this area are not clear and so we operate with less
than clear guidance in our effort to minimize the risk of PFIC treatment.
Therefore, we cannot be sure whether we are not and will not be a PFIC for the
current or any future taxable year. In the event we are determined to be a PFIC,
our stock may become less attractive to U.S. investors, thus negatively
impacting the price of our stock.


Page 13
of 33





We
have a single shareholder who can substantially influence the outcome of all
matters voted upon by our shareholders and whose interests may not be aligned
with yours.





Our
former Chief Executive Officer, Michael Mak, beneficially holds the majority
shareholder vote. As a result, Mr. Mak is able to substantially influence all
matters requiring the approval of our shareholders, including the election of
directors and the approval of significant corporate transactions such as
acquisitions. This concentration of ownership could delay, defer or prevent a
change in control or otherwise impede a merger or other business combination
that the Board of Directors or other shareholders may view
favorably.





We
must rely on the Chinese government to develop China's Internet infrastructure
and, if it does not develop this infrastructure, our ability to grow our
business could be hindered.





The
Chinese government's interconnecting, national networks connect to the Internet
through government-owned international gateways, which are the only channels
through which a domestic Chinese user can connect to the international Internet
network. We rely on this backbone and China Telecom and China Netcom to provide
data communications capacity primarily through local telecommunications lines.
Although the Chinese government has announced plans to aggressively develop the
national information infrastructure, we cannot assure you that this
infrastructure will be developed. In addition, we have no guarantee that we will
have access to alternative networks and services in the event of any disruption
or failure. If the necessary infrastructure standards or protocols or
complementary products, services or facilities are not developed by the Chinese
government, the growth of our business could be hindered.





We
may be adversely affected by complexity, uncertainties and changes in PRC
regulation of Internet business and companies, including limitations on our
ability to own key assets such as our website.





The
Chinese government heavily regulates its Internet sector including the legality
of foreign investment in the Chinese Internet sector, the existence and
enforcement of content restrictions on the Internet and the licensing and permit
requirements for companies in the Internet industry. Because these laws,
regulations and legal requirements with regard to the Internet are relatively
new and evolving, their interpretation and enforcement involve significant
uncertainty. In addition, the Chinese legal system is a civil law system in
which decided legal cases may be cited for reference but have little
precedential value. As a result, in many cases it is difficult to determine what
actions or omissions may result in liability. Issues, risks and uncertainties
relating to China's government regulation of the Chinese Internet sector include
the following:





o
              We
      only have contractual control over our website in China; we do not own it
      due to the restriction of foreign investment in businesses providing
      value-added telecommunication services, including computer information
      services, online promotional advertising or electronic mail box
      services.





o
              In
      addition, uncertainties relating to the regulation of the Internet
      business in China, including evolving licensing practices, give rise to
      the risk that permits, licenses or operations at some of our companies may
      be subject to challenge, which may be disruptive to our business, or
      subject us to sanctions, requirements to increase capital or other
      conditions or enforcement, or compromise enforceability of related
      contractual arrangements, or have other harmful effects on
    us.





o
              On
      December 11, 2001, the day China formally joined the World Trade
      Organization, the PRC State Council promulgated the FITE Regulations,
      which became effective on January 1, 2002. The FITE Regulations stipulate
      that the foreign party to a foreign-invested telecommunications enterprise
      can hold an equity share in such foreign-invested telecommunications
      enterprise that provides basic telecom services or value-added telecom
      services, ultimately not to exceed 49% or 50%, respectively. The
      Administrative Measures for Telecommunications Business Operating License
      were promulgated by the Chinese Ministry of Information Industry (MII) on
      December 26, 2001 and came into effect on January 14, 2002 to supplement
      the FITE Regulations. However, there are still uncertainties regarding the
      interpretation and application of the FITE
  Regulations.





o
              The
      numerous and often vague restrictions on acceptable content in China
      subject us to potential civil and criminal liability, temporary blockage
      of our website or complete cessation of our website. For example, the
      State Secrecy Bureau, which is directly responsible for the protection of
      state secrets of all Chinese government and Chinese Communist Party
      organizations, is authorized to block any website it deems to be leaking
      state secrets or failing to meet the relevant regulations relating to the
      protection of state secrets in the distribution of online
      information.


Page 14
of 33





o
              Because
      the definition and interpretation of prohibited content are in many cases
      vague and subjective, it is not always possible to determine or predict
      what and how content might be prohibited under existing restrictions or
      restrictions that might be imposed in the future. For example, in January
      2005, the Chinese State Administration of Radio, Film & Television
      ("SARFT"), which regulates radio and television stations in China, issued
      a notice prohibiting commercials for value-added services related to
      "fortune-telling" from airing on radio and television stations, effective
      in February 2005. This notice could also lead to further actions by other
      Chinese government authorities to prohibit the sale of such
      fortune-telling related value-added services, which could have a material
      adverse effect on our financial position, results of operations, or cash
      flows. SARFT or other Chinese government authorities may prohibit the
      marketing of other advertising services via a channel we depend on to
      generate revenues, which could also have a material adverse effect on our
      financial position, results of operations or cash
  flows.





o
              Certain
      Chinese governmental authorities have stated publicly that they are in the
      process of preparing new laws and regulations that will govern Internet
      activities. The areas of regulation currently include online advertising,
      online news reporting, online publishing, and the provision of
      industry-specific (e.g., drug-related) information over the Internet.
      Other aspects of our online operations may be subject to regulation in the
      future. Our operations may not be consistent with these new regulations
      when they are put into effect and, as a result, we could be subject to
      severe penalties as discussed
above.





o
              The
      governing body of China's mobile industry, from time to time issues
      policies that regulate the business practices relating to advertising. We
      cannot predict the timing or substance of such regulations. Such
      regulations may have a negative impact on our
  business.





The
interpretation and application of existing Chinese laws, regulations and
policies, the stated positions of the MII and possible new laws, regulations or
policies have created substantial uncertainties regarding the legality of
existing and future foreign investments in, and the businesses and activities
of, Internet businesses in China, including our business.





We
may be exposed to infringement claims by third parties, which, if successful,
could cause us to pay significant damage awards.





Third
parties may initiate litigation against us alleging infringement of their
proprietary rights. In the event of a successful claim of infringement and our
failure or inability to develop non-infringing technology or license the
infringed or similar technology on a timely basis, our business could be harmed.
In addition, even if we are able to license the infringed or similar technology,
license fees could be substantial and may adversely affect our results of
operations.





Our
failure to compete successfully may hinder our growth.





The
markets for Internet advertising and related products and services are intensely
competitive and such competition is expected to increase. Our failure to compete
successfully may hinder our growth. We believe that our ability to compete
depends upon many factors both within and beyond our control,
including:





o
              the
      development of new online advertising media and
  methods;





o
              the
      timing and market acceptance of new products and enhancements of existing
      services developed by us and our
competitors;





o
              the
      ability to attract and retain qualified
  personnel;





o
              changing
      demands regarding customer service and
support;





o
              shifts
      in sales and marketing efforts by us and our competitors;
    and





o
              the
      ease of use, performance, price and reliability of our services and
      products.





Some of
our competitors have longer operating histories, greater name recognition,
larger customer bases and significantly greater financial, technical and
marketing resources than ours. In addition, current and potential competitors
have established or may establish cooperative relationships among themselves or
with third parties to increase the ability of their products or services to
address the needs of our prospective clients. In addition, most online
advertising companies are seeking to broaden their business models, so that
companies that do not currently compete directly with us may decide to compete
more directly with us in the future. We may be unable to compete successfully
against current or future competitors.


Page 15
of 33





Changes
in laws and standards relating to data collection and use practices and the
privacy of internet users, or related litigation, could harm our
business.





The U.S.
federal and various state governments have recently proposed limitations on the
collection and use of information regarding Internet users. In 2004 and 2005,
the U.S. Congress proposed several new pieces of legislation that would limit
the use of technologies deemed to be "spyware", which some bills have defined to
include cookies, Web beacons and javascript, which are required by our products
and services. The effectiveness of our advertising products and services could
be significantly limited by federal and state regulations limiting the
collection or use of information regarding Internet users. Since many of the
proposed federal and state laws or regulations are being developed, we cannot
yet determine the impact these regulations may have on our business. In
addition, growing public concern about privacy and the collection, distribution
and use of personal information has led to self-regulation of these practices by
the Internet advertising and direct marketing industry, and to increased federal
and state regulation. Lastly, a number of civil actions have been brought by
federal and state authorities against companies alleged to have distributed
"spyware" without the proper consent of users. The Network Advertising
Initiative has developed self-regulatory principles for online preference
marketing. We are also subject to various federal and state regulations
concerning the collection, distribution and use of personal information. These
laws include the Children's Online Privacy Protection Act and state laws that
limit or preclude the use of voter registration and drivers license information,
as well as other laws that govern the collection and use of consumer credit
information. While we monitor legislative initiatives, in the event that more
onerous federal or state laws or regulations are enacted or applied to us or to
our clients, our business, financial condition and results of operations could
be materially and adversely affected.





Privacy
concerns may prevent us from collecting user data.





Growing
concerns about the use of cookies and data collection may limit our ability to
develop user profiles. Web sites typically place small files of information,
commonly known as "cookies," on a user's hard drive, generally without the
user's knowledge or consent. Cookie information is passed to the Web site
through the Internet user's browser software. Our software technology enables
the use of cookies and other non-personally-identifying information to deliver
targeted advertising and to limit the frequency with which an advertisement is
shown to a user. Most currently available Internet browsers allow users to
modify their browser settings to prevent cookies from being stored on their hard
drive, and Microsoft Corporation changed the design and instrumentation of its
Web browser to give users the option to accept or reject third-party cookies. A
small minority of users are currently choosing to prevent certain cookies. Users
can also delete cookies from their hard drive or modify them at any time. Some
Internet commentators and privacy advocates have suggested limiting or
eliminating the use of cookies. Any reduction or limitation in the use of
cookies or increase in the number of users blocking cookies could limit the
effectiveness of our sales and marketing efforts and impair our profiling and
targeting capabilities. Such changes also could adversely affect our ability to
determine the reach of advertising campaigns sold and delivered by us and the
frequency with which users of sites see the same advertisement.





If the
use or effectiveness of cookies is limited, we would likely have to switch to
other technology that would allow us to gather demographic and behavioral
information. While such technology currently exists, it is substantially less
effective than cookies. Replacement of cookies could require significant
engineering time and resources, might not be completed in time to avoid negative
consequences to our business, financial condition or results of operations, and
might not be commercially feasible.





We
face risks associated with technological changes.





The
Internet and Internet advertising markets are characterized by rapidly changing
technologies, evolving industry standards, frequent new product and service
introductions and changing customer demands. Our future success will depend on
our ability to adapt to rapidly changing technologies and to enhance existing
solutions and develop and introduce a variety of new solutions to address our
customers' changing demands. We may experience difficulties that could delay or
prevent the successful design, development, introduction or marketing of our
services. In addition, our new services or enhancements must meet the
requirements of our current and prospective customers and must achieve
significant market acceptance. Material delays in introducing new services and
enhancements may cause customers to forego purchases of our services and
purchase those of our competitors.





In
addition, the development of commercial software and technology that blocks,
eliminates or otherwise screens out Internet advertising may reduce the value of
advertising inventory services and the benefits of our services to our
customers. We cannot guarantee that a new commercial software or technology, for
end-users or enterprises, will not be capable of eliminating a portion or all of
the advertisement formats, including email, banners, pop-ups, pop-unders and
other formats, that we utilize through the Internet or that we currently deliver
through our services. To the extent that our customers refuse to pay for
advertisements that are blocked, or if the use of blocking software exceeds our
expectations, our business, results of operations and financial condition may be
materially and adversely affected.


Page 16
of 33





Item
1B. Unresolved Staff Comments





Not
applicable.





Item
2. Properties





In 2008,
beginning in June, our principal executive offices were located at Unit 601B,
6th
Floor, Tower 1, 833 Cheung Sha Wan Road, Kowloon, Hong Kong..





In 2008,
our total office rental expenses for our offices in Hong Kong and China were
$94,152





We
currently occupy office space in Hong Kong at the following
location:





Millenium City 1, 32/F, Tower 1,
Millenium City, 388 Kwun
Tong Road, Kwun Tong, Kowloon, HongKong





In
addition, we currently occupy office space in China at the following
location:





Rm 301, Block 4, Xi Ling Garden, Luo Sha
Road, ShenZhen, China





Item
3. Legal Proceedings





We are
not involved in any material pending legal proceedings at this time, and
management is not aware of any contemplated proceeding by any governmental
authority.





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





During
the fiscal year ended December 31, 2008, there were no matters submitted to the
security holders for a vote.





PART
II.





ITEM
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.





Since
July 17, 2006, our common stock has been traded on the Over-the-Counter Bulletin
Board under the symbol “AAGH.OB”.  Prior to July 17, 2006, our common
stock was traded on the Over-the-Counter Bulletin Board under the symbol
"BAWC.OB".] As of
January 7, 2008, there were: (i) 995 shareholders of record, without giving
effect to determining the number of shareholders who hold shares in "street
name" or other nominee status; (ii) no outstanding options to purchase shares of
our common stock; (iii) outstanding 133,362,000 shares of our common stock, of
which 98,862,000 shares are either freely tradable or eligible for sale under
Rule 144 or Rule 144K, and (v) no shares subject to registration
rights.





The
following table sets forth, for the fiscal quarters indicated, the high and low
closing prices as reported by the Over-the-Counter Bulletin Board. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.





Sales
Price


High
                  
                  
                  LowFiscal
      2008First
      Quarter
                  
                  $
                  0.143
                  
                  
                  $
                  0.036Second
      Quarter
                  
                  $
                  0.097
                  
                  
                  $
                  0.055Third
      Quarter
                  
                  $
                  0.064
                  
                  
                  $
                  0.031Fourth
      Quarter
                  
                  $
                  0.05
                  
                  
                  $
                  0.018Fiscal
      2007First
      Quarter
                  
                  $
                  0.0145
                  
                  
                  $
                  0.04Second
      Quarter
                  
                  $
                  0.079
                  
                  
                  $
                  0.04Third
      Quarter
                  
                  $
                  0.335
                  
                  
                  $
                  0.052Fourth
      Quarter
                  
                  $
                  0.315
                  
                  
                  $
                  0.07




Page 17
of 33




Dividend
Policy





Common
Stock.





We have
never paid cash dividends and have no plans to do so in the foreseeable future.
Our future dividend policy will be determined by our Board of Directors and will
depend upon a number of factors, including our financial condition and
performance, our cash needs and expansion plans, income tax consequences, and
the restrictions that applicable laws and our credit arrangements then
impose.





Preferred
Stock.





The
Series A Preferred Convertible Stock does not pay dividends.





Recent
Sales of Unregistered Securities




During
the year ended December 31, 2008, we did not issue any securities that were not
registered under the Securities Act of 1933, as amended (the “Securities
Act”).





Item
6. Selected Financial Data.





The
following tables summarize the consolidated financial data of Asia Global
Holdings Corp. for the periods presented. You should read the following
financial information together with the information under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and
our consolidated financial statements and the related notes to these
consolidated financial statements appearing elsewhere in this Form
10-K.





Year
      Ended Dec 312006
                                        
                                        
                                        2007
                                        
                                        
                                        2008Revenue
                                        
                                        $
                                        5,179,174
                                        
                                        
                                        $
                                        10,783,574
                                        
                                        
                                        $
                                        4,968,145Cost
      of sales
                                        
                                        $
                                        -1,901,613
                                        
                                        
                                        $
                                        -4,450,861
                                        
                                        
                                        $
                                        -4,107,219Gross
      profit
                                        
                                        $
                                        3,277,561
                                        
                                        
                                        $
                                        6,332,713
                                        
                                        
                                        $
                                        860,926Depreciation
      and amortization
                                        
                                        $
                                        -280,724
                                        
                                        
                                        $
                                        -195,960
                                        
                                        
                                        $
                                        -210,359Selling
      and distribution expenses
                                        
                                        $
                                        -459,262
                                        
                                        
                                        $
                                        -1,423,005
                                        
                                        
                                        $
                                        -2,177,927General
      and administrative expenses
                                        
                                        $
                                        -11,989,553
                                        
                                        
                                        $
                                        -7,427,293
                                        
                                        
                                        $
                                        -2,002,332Other
      income
                                        
                                        $
                                        72,387
                                        
                                        
                                        $
                                        18,017
                                        
                                        
                                        $
                                        19,976Interest
      expense
                                        
                                        $
                                        -45,474
                                        
                                        
                                        $
                                        -77,260
                                        
                                        
                                        $
                                        -87,677Loss
      before income taxes and minority interest
                                        
                                        $
                                        -9,425,065
                                        
                                        
                                        $
                                        -1,936,016
                                        
                                        
                                        $
                                        -3,597,393Income
      tax expense
                                        
                                        $
                                        -446,561
                                        
                                        
                                        $
                                        -810,609
                                        
                                        
                                        $
                                        638,440Loss
      from discontinued operations
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -3,161,920
                                        
                                        
                                        $
                                        -258,386Net
      loss attributable to the Shareholders of the Company
                                        
                                        $
                                        -9,871,113
                                        
                                        
                                        $
                                        -5,908,545
                                        
                                        
                                        $
                                        -3,217,339Loss
      per Share — basic (US$)
                                        
                                        $
                                        -0.34
                                        
                                        
                                        $
                                        -0.06
                                        
                                        
                                        $
                                        -0.02Loss
      per Share — diluted (US$)
                                        
                                        $
                                        -0.34
                                        
                                        
                                        $
                                        -0.06
                                        
                                        
                                        $
                                        -0.02





Year
      Ended Dec 31,2006
                        
                        
                        2007
                        
                        
                        2008Balance
      Sheet DataCash
      and cash equivalents
                        
                        $
                        22,514
                        
                        
                        $
                        846,907
                        
                        
                        $
                        261,053Total
      current assets
                        
                        $
                        4,399,435
                        
                        
                        $
                        4,976,551
                        
                        
                        $
                        559,353Total
      assets
                        
                        $
                        4,763,015
                        
                        
                        $
                        5,348,259
                        
                        
                        $
                        566,955Short-term
      borrowings
                        
                        $
                        707,509
                        
                        
                        $
                        1,578,078
                        
                        
                        $
                        692,503Total
      current liabilities
                        
                        $
                        2,098,699
                        
                        
                        $
                        2,958,293
                        
                        
                        $
                        1,515,192Total
      stockholders’ equity (deficit)
                        
                        $
                        2,510,305
                        
                        
                        $
                        2,159,203
                        
                        
                        $
                        -948,237





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





The
information in this discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, including statements regarding our
capital needs, business strategy and expectations. Any statements contained
herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "expect", "plan",
"intend", "anticipate", "believe", "estimate", "predict", "potential" or
"continue", the negative of such terms or other comparable terminology. Actual
events or results may differ materially. We disclaim any obligation to publicly
update these statements, or disclose any difference between its actual results
and those reflected in these statements. The information constitutes
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.


Page 18
of 33





Overview
and Future Plan of Operations





In 2008
the Company generated all its revenue from the media and advertising business.
In March 2008 the Company discontinued production of the Who Wants To Be A
Millionaire? TV show and has largely scaled down its TV entertainment
business.  In 2008 revenue declined by 53.4% from $10,664,613 in 2007
to $4,968,145 in 2008 primarily resulting from decreased advertising sales due
to the global economic downturn starting from the fourth quarter of 2008. The
Company experienced a loss of $3,217,339.





Going
Forward





With
regard to our Media & Advertising business going forward, we plan to
continue to work with our existing customer base to see them through the
prevailing economic conditions and we intend to seek new customers to help
offset the soft positions we are experiencing as a result of our existing
customers’ currently soft market.  Regarding our TV entertainment
business in March of 2009 we entered into discussions related to investment in
or the acquisition of Idea Asia.





Results
of Operations for the Twelve Months Ended December 31, 2008 and December 31,
2007





During
the twelve months ended December 31, 2008, we experienced a net loss of
$3,217,339 attributable primarily to a significant decrease in revenue. During
this period we generated all of our revenues from our media & advertising
business.





Revenue





In 2008,
our revenues declined by 53.4% from $10,664,613 in 2007 to $4,968,145 in 2008
primarily resulting from decreased advertising sales due to global economic
downturn starting from the fourth quarter of 2008.





Cost
of Sales





Cost of
sales were $4,107,219 representing 82.7% of our total revenue of $4,968,145 for
the twelve month period ended December 31, 2008 as compared to $3,495,128, also
32.8% of total revenue of $10,664,613 for the twelve month period ended December
31, 2007. The increase in cost of sales as a percentage of total revenue is
attributed to a significant decrease in revenue returned against comparable
selling efforts.





Selling,
General and Administrative Expenses





Selling,
general and administrative expenses decreased $4,655,640 to $4,390,618 for the
twelve month period ended December 31, 2008 as compared to $9,046,258 for the
twelve month period ended December 31, 2007. The decrease in expenses during the
twelve month period ended December 31, 2008 was primarily attributable to a
reduction in consulting in professional fees of $5,312,222.





Depreciation,
Amortization of Intangible Assets, and Impairment Loss of Property, Plant and
Equipment





In 2008
we experienced non-cash expenditures of $210,359 from depreciation of fixed
assets and amortization as compared to $195,960 in 2007, an increase of 7%. Also
we made an impairment loss on long live assets including equipments, customer
list and database of $761,062 after the impairment test under SFAS No.
142.





Other
Income (Expense)





Total
other income (expense) for both periods presented was immaterial and consisted
of the following:





2008
                
                
                2007Other
      income
                
                
                12,821
                
                
                
                149Interest
      income
                
                $
                7,155
                
                
                $
                17,868Interest
      expense
                
                $
                (87,677
                )
                
                $
                (77,260
                )Total
      other expense
                
                $
                (67,701
                )
                
                $
                (59,243
                )


Page 19
of 33





Net
Income/Loss





Net loss
for 2008 was $3,217,339 compared to net loss of $5,908,545 in 2007. Loss is
primarily attributed to significant decrease in revenue in 2008.





Trends,
Events, and Uncertainties





Demand
for our services and products will be dependent on, among other things, market
acceptance of our concept and general economic conditions, which are cyclical in
nature. Our business operations may be adversely affected by our competitors and
prolonged recessionary periods. We are in the process of seeking additional
financing to accelerate our business plan. There is no assurance additional
financing will be available, or if available, that it will be available on
reasonable terms. Even if we do obtain such financing, there is no assurance
that we will be able to generate profitable operations.





Liquidity
and Capital Resources for the Twelve Month Period Ended December 31, 2008 and
2007





Cash
flows from operating activities





We
experienced positive cash flows provided by operations in the amount of $260,911
for the twelve month period ended December 31, 2008, primarily due to net loss
from continuing operations of $2,958,953 offset by non-cash items of impairment
charges of $766,217, decrease in accounts receivable of $2,875,582 and decrease
in income tax payable of $424,016.





For the
twelve month period ended December 31, 2007 we experienced positive cash flows
provided by operations in the amount of $3,071,989, primarily due to net loss
from operations of $2,746,625 offset by non-cash charges such as depreciation
and amortization of $195,960, common stock issued for services of $5,293,825,
stock-based compensation to an executive of $260,877 and changes in operating
assets such as an increase in accounts receivable of $484,079 coupled with
decrease in our accounts payable and accrued expenses of $359,686.





Net cash
used in discontinued operations was $187,574 for the twelve month period ended
December 31, 2008, while net cash used in discontinued operations was $1,446,039
for the twelve month period ended December 31, 2007.





Cash
flows from investing activities





Net cash
flows used in investing activities for 2008 was $314,200 primarily representing
the expenditure on intangible assets of $585,076.





For 2007
net cash flows used in investing activities was $1,030,407 primarily
representing the purchase of property, plant and equipment in the amount of
$889,542.





Cash
flows from financing activities





Net cash
flows used in financing activities for 2008 was $589,350 representing the
repayments of secured bank loan of $847,953 partially offset by repayment from
related parties of $394,897.





For 2007
net cash flows provided by financing activities was $1,437,008 representing
repayment from related parties of $562,074 and net funds advanced under banking
agreements of $737,456.





Liquidity





Our
growth plans may require additional funding from outside sources. We intend to
pursue discussions with existing shareholders, third party financing sources and
potential lenders to ensure access to funds as required. Our future liquidity
will depend on our revenue growth and our ability to sell our products and
services at positive gross margins and control our operating expenses. Over the
coming twelve months, we expect to spend approximately $500,000 for operating
expenses. These capital needs must be met from external sources of
financing.





The
accompanying consolidated financial statements contemplate continuation of the
Company as a going concern. Due to the Company’s current year net loss of
approximately $3,217,339 substantial doubt to continue as a going concern is
raised and realization of a major portion of the assets in the accompanying
consolidated balance sheet is dependent upon the continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements and the success of its future
operations.


Page 20
of 33





Management
believes the Company has the ability to continue as a going concern only if it
can meet its financing requirements through external sources of financing.
Management plans to continue reviewing all aspects of its business and make
adjustments as needed to those considered unprofitable. The Company must meet
its financing requirements through external sources of financing or the Company
cannot continue to operate as a going concern. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and classification of
liabilities or any other adjustment that might be necessary should the Company
be unable to continue as a going concern.





On a
long-term basis, our liquidity will be dependent on establishing profitable
operations, receipt of revenues, additional infusions of capital and additional
financing. If necessary, we may raise capital through an equity or debt
offering. The funds raised from this offering will be used to develop and
execute our business plan. However, there can be no assurance that we will be
able to obtain additional equity or debt financing in the future, if at all. If
we are unable to raise additional capital, our growth potential will be
adversely affected.





Critical
Accounting Policies





The
financial statements are prepared in accordance with accounting principles
generally accepted in the U.S., which requires us to make estimates and
assumptions in certain circumstances that affect amounts reported in the
accompanying financial statements and related footnotes. In preparing these
financial statements, management has made its best estimates and judgments of
certain amounts included in the financial statements, giving due consideration
to materiality. We do not believe there is a great likelihood that materially
different amounts would be reported related to the accounting policies described
below. However, application of these accounting policies involves the exercise
of judgment and use of assumptions as to future uncertainties and, as a result,
actual results could differ from these estimates.





Revenue
recognition





In
accordance with the SEC’s Staff Accounting Bulletin No. 104, “Revenue
Recognition”, the Company recognizes revenue when persuasive evidence of an
arrangement exists, transfer of title has occurred or services have been
rendered, the selling price is fixed or determinable and collectibility is
reasonably assured.





Accounts
receivable and provision for bad debts





Accounts
receivable, net of provision for bad debts, are presented at net realizable
value. The Company periodically records a provision for bad debts based on
management’s judgment resulting from an evaluation of the collectibility of
accounts receivable by assessing, among other factors, our customer’s
willingness or ability to pay, repayment history, general economic conditions,
and the ongoing relationship with our customers. The total amount of this
provision is determined by first identifying the receivables of customers that
are considered to be a higher credit risk based on their current overdue
accounts, difficulties in collecting from these customers in the past, and their
overall financial condition. For each of these customers, the Company estimates
the extent to which the customer will be able to meet its financial obligations
and records a provision that reduces our trade receivable for that customer to
the amount that is reasonably believed will be collected. Additional provisions
may be required in the future if the financial condition of our customers or
general economic conditions deteriorate, thereby reducing net
earnings.





Impairment
of long-lived assets





We review
property, plant and equipment and puchased intangible assets for impairment
whenever events or changes in circumstances indicate the carrying value of an
asset may not be recoverable. Our asset impairment review assesses the fair
value of the assets based on the future cash flows the assets are expected to
generate. An impairment loss is recognized when estimated undiscounted future
cash flows expected to result from the use of the asset plus net proceeds
expected from disposition of the asset (if any) are less than the carrying value
of the asset. When an impairment is identified, the carrying amount of the asset
is reduced to its estimated fair value. Deterioration of our business in a
geographic region or within a business segment in the future could also lead to
impairment adjustments as such issues are identified. The accounting effect of
an impairment loss would be a charge to earnings, thereby reducing our net
earnings.





Page 21
of 33




Accounting
for stock-based compensation


The
Company adopted SFAS No. 123  (revised  2004),
"Share-Based  Payment" ("SFAS  123(R)"), on January 1, 2006,
which requires the measurement and recognition of
compensation  expense for all share-based awards made to employees and
directors, including employee stock options and shares issued through its
employee stock purchase plan, based on estimated fair values. Prior to the
adoption of SFAS 123(R), the Company accounted for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
("APB") Opinion No.25, "Accounting for Stock Issued to Employees." Under the
intrinsic value method that was used to account for stock-based awards prior to
January 1, 2006, which had been allowed under the original provisions of SFAS
123, compensation expense was recorded on the date of grant if the current
market price of the underlying stock exceeded the exercise price. Any
compensation expense was recorded on a straight-line basis over the vesting
period of the grant. The adoption of this standard had a significant impact to
the Company's accompanying consolidated financial statements since the Company
entered into an employment agreement included stock-based compensation awards
with its President, Michael Mak, who is also the Company’s Chief Executive
Officer and interim Chief Financial Officer, on August 18, 2006. Except for the
above, the adoption of this standard had no impact to the Company’s financial
position, results of operations or cash flows as the Company's previous
stock-based compensation awards expired prior to January 1, 2006, and there have
been no grants during the current year. The accounting effect of recording
compensation expense is a charge to earnings, thereby reducing our net
earnings.





Taxes
on earnings





We record
a valuation allowance to reduce our deferred tax assets to the amount that is
more likely than not to be realized. We have considered future market growth,
forecasted earnings, future taxable income and the mix of earnings in the
jurisdictions in which we operate in determining the need for a valuation
allowance. In the event we determine that we would not be able to realize all or
part of our net deferred tax assets in the future, an adjustment to the deferred
tax assets would be charged to earnings in the period such determination is
made. Likewise, if we later determine that it is more likely than not that the
net deferred tax assets would be realized, the previously provided valuation
allowance would be reversed.





Item
7A. Quantitative and Qualitative Disclosures About Market Risk.





Interest
Rate Risk





We are
exposed to interest rate risk primarily with respect to our short-term bank
loans. Although the interest rates are fixed for the terms of the loans, the
terms are typically twelve months and interest rates are subject to change upon
renewal. There were no material changes in interest rates for short-term bank
loans during the fiscal year ended December 31, 2008.  A hypothetical
1.0% increase in the annual interest rates for all of our credit facilities at
approximately $423,000 would decrease net income before provision for income
taxes by approximately $4,000 for the fiscal year ended December 31,
2008.  Management monitors the banks’ interest rates in conjunction
with our cash requirements to determine the appropriate level of debt balances
relative to other sources of funds. We have not entered into any hedging
transactions in an effort to reduce our exposure to interest rate
risk.





Foreign
Exchange Risk





While our
reporting currency is the U.S. Dollar, all of our consolidated revenues and
consolidated costs and expenses are denominated in Renminbi. All of our assets
are denominated in RMB except for cash. As a result, we are exposed to foreign
exchange risk as our revenues and results of operations may be affected by
fluctuations in the exchange rate between U.S. Dollars and RMB. If the RMB
depreciates against the U.S. Dollar, the value of our RMB revenues, earnings and
assets as expressed in our U.S. Dollar financial statements will decline. We
have not entered into any hedging transactions in an effort to reduce our
exposure to foreign exchange risk.





Inflation





Inflationary
factors such as increases in the cost of our product and overhead costs may
adversely affect our operating results. Although we do not believe that
inflation has had a material impact on our financial position or results of
operations to date, a high rate of inflation in the future may have an adverse
effect on our ability to maintain current levels of gross margin and selling,
general and administrative expenses as a percentage of net revenues if the
selling prices of our products do not increase with these increased
costs.





Page 22
of 33


Item
8. Financial Statements and Supplementary Data.





ASIA
GLOBAL HOLDINGS CORP.





Consolidated
Financial Statements


For
The Years Ended December 31, 2008 and 2007





(With
Reports of Independent Registered Public Accounting Firm
Thereon)


Page 23
of 33





ASIA
GLOBAL HOLDINGS CORP.





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





PageReport
      of Independent Registered Public Accounting Firm
                  
                  F-2Consolidated
      Balance Sheets
                  
                  F-3Consolidated
      Statements of Operations And Comprehensive Loss
                  
                  F-4Consolidated
      Statements of Cash Flows
                  
                  F-5Consolidated
      Statements of Stockholders’ (Deficit) Equity
                  
                  F-6Notes
      to Consolidated Financial Statements
                  
                  F-7 to F-29


F-1











REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The Board
of Directors and Stockholders of


Asia
Global Holdings Corp.








We have
audited the accompanying consolidated balance sheets of Asia Global Holdings
Corp. and its subsidiaries (“the Company”) as of December 31, 2008 and 2007, and
the related consolidated statements of operations and comprehensive loss, cash
flows and stockholders’ (deficit) equity for the years ended December 31, 2008
and 2007. The financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.





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





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 2008 and 2007, and the results of operations and cash flows for the years
then ended and 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. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred substantial losses
over the past years, all of which raise substantial doubt about its ability to
continue as a going concern. Management’s plans in regard to these matters are
also described in Note 2. These consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.





/s/ ZYCPA Company
  Limited





ZYCPA
Company Limited


(Formerly
Zhong Yi (Hong Kong) C.P.A. Company Limited)


Certified
Public Accountants





Hong
Kong, China


April 15,
2009







F-2


ASIA
GLOBAL HOLDINGS CORP.


CONSOLIDATED
BALANCE SHEETS


AS
OF DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”), except for number of
shares)





As of December 31,2008
                      
                      
                      2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                      
                      $
                      258
                      
                      
                      $
                      846,907Restricted
      cash
                      
                      
                      260,795
                      
                      
                      
                      558,104Accounts
      receivable, net
                      
                      
                      -
                      
                      
                      
                      2,953,719Amounts
      due from related parties
                      
                      
                      39,677
                      
                      
                      
                      530,706Income
      tax recoverable
                      
                      
                      183,151
                      
                      
                      
                      -Prepayments
      and other current assets
                      
                      
                      75,472
                      
                      
                      
                      87,115Total
      current assets
                      
                      
                      559,353
                      
                      
                      
                      4,976,551Non-current
      assets:Property,
      plant and equipment, net
                      
                      
                      5,564
                      
                      
                      
                      161,034Intangible
      assets, net
                      
                      
                      2,038
                      
                      
                      
                      210,674TOTAL
      ASSETS
                      
                      $
                      566,955
                      
                      
                      $
                      5,348,259LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Bank
      overdraft, secured
                      
                      $
                      136,263
                      
                      
                      $
                      163,056Secured
      bank loan - current portion
                      
                      
                      58,442
                      
                      
                      
                      784,600Obligation
      under capital lease - current portion
                      
                      
                      117,670
                      
                      
                      
                      146,416Letters
      of credit
                      
                      
                      380,128
                      
                      
                      
                      484,006Accounts
      payable and accrued liabilities
                      
                      
                      802,485
                      
                      
                      
                      838,239Income
      tax payable
                      
                      
                      11,752
                      
                      
                      
                      435,768Amount
      due to a related party
                      
                      
                      8,452
                      
                      
                      
                      106,208Total
      current liabilities
                      
                      
                      1,515,192
                      
                      
                      
                      2,958,293Long-term
      liabilities:Secured
      bank loan
                      
                      
                      -
                      
                      
                      
                      6,410Obligation
      under capital lease
                      
                      
                      -
                      
                      
                      
                      92,262Deferred
      tax liabilities
                      
                      
                      -
                      
                      
                      
                      132,091Total
      long-term liabilities
                      
                      
                      -
                      
                      
                      
                      230,763Total
      liabilities
                      
                      
                      1,515,192
                      
                      
                      
                      3,189,056Commitments
      and contingenciesStockholders’
      (deficit) equity:Series
      A, convertible preferred stock, $0.001 par value; 500,000 shares
      authorized; 250,000 shares and 400,000 shares issued and outstanding
      shares as of December 31, 2008 and 2007
                      
                      
                      250
                      
                      
                      
                      400Common
      stock, $0.001 par value; 300,000,000 shares authorized; 133,362,000 and
      129,862,000 shares issued and outstanding as of December 31, 2008 and
      2007
                      
                      
                      133,362
                      
                      
                      
                      129,862To
      be issued: 0 shares and 2,000,000 shares as of December 31, 2008 and
      2007
                      
                      
                      -
                      
                      
                      
                      414,000Additional
      paid-in capital
                      
                      
                      17,941,172
                      
                      
                      
                      17,406,772Accumulated
      other comprehensive (loss) income
                      
                      
                      (7,593
                      )
                      
                      
                      6,258Accumulated
      deficit
                      
                      
                      (19,015,428
                      )
                      
                      
                      (15,798,089
                      )Total
      stockholders’ (deficit) equity
                      
                      
                      (948,237
                      )
                      
                      
                      2,159,203TOTAL
      LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
                      
                      $
                      566,955
                      
                      
                      $
                      5,348,259




See
accompanying notes to consolidated financial statements.


F-3


ASIA
GLOBAL HOLDINGS CORP.


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”), except for number of
shares)





Years ended December 31,2008
                  
                  
                  2007Revenues,
      net
                  
                  $
                  4,968,145
                  
                  
                  $
                  10,664,613Cost
      of revenue
                  
                  
                  (4,107,219
                  )
                  
                  
                  (3,495,128
                  )Gross
      profit
                  
                  
                  860,926
                  
                  
                  
                  7,169,485Operating
      expenses:Sales
      and marketing
                  
                  
                  2,177,927
                  
                  
                  
                  1,423,005Consulting
      and professional fee
                  
                  
                  157,991
                  
                  
                  
                  5,470,213Depreciation
      and amortization
                  
                  
                  210,359
                  
                  
                  
                  195,960Impairment
      loss on long-lived assets
                  
                  
                  761,062
                  
                  
                  
                  690,611Stock
      based compensation to executives
                  
                  
                  123,750
                  
                  
                  
                  260,877General
      and administrative
                  
                  
                  959,529
                  
                  
                  
                  1,005,592Total
      operating expenses
                  
                  
                  4,390,618
                  
                  
                  
                  9,046,258LOSS
      FROM OPERATIONS
                  
                  
                  (3,529,692
                  )
                  
                  
                  (1,876,773
                  )Other
      income (expense):Other
      income
                  
                  
                  12,821
                  
                  
                  
                  149Interest
      income
                  
                  
                  7,155
                  
                  
                  
                  17,868Interest
      expense
                  
                  
                  (87,677
                  )
                  
                  
                  (77,260
                  )Total
      other expense
                  
                  
                  (67,701
                  )
                  
                  
                  (59,243
                  )LOSS
      BEFORE INCOME TAXES
                  
                  
                  (3,597,393
                  )
                  
                  
                  (1,936,016
                  )Income
      tax benefit (expense)
                  
                  
                  638,440
                  
                  
                  
                  (810,609
                  )LOSS
      FROM CONTINUING OPERATIONS
                  
                  
                  (2,958,953
                  )
                  
                  
                  (2,746,625
                  )Loss
      from discontinued operations
                  
                  
                  (258,386
                  )
                  
                  
                  (3,161,920
                  )NET
      LOSS
                  
                  $
                  (3,217,339
                  )
                  
                  $
                  (5,908,545
                  )Other
      comprehensive (loss) income:-
      Foreign currency translation (loss) gain
                  
                  
                  (13,851
                  )
                  
                  
                  2,741COMPREHENSIVE
      LOSS
                  
                  $
                  (3,231,190
                  )
                  
                  $
                  (5,905,804
                  )Per
      share information:Net
      loss per share from continuing operation – Basic and
    diluted
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.03
                  )Net
      loss per share from discontinued operation – Basic and
    diluted
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.03
                  )Weighted
      average number of shares outstanding – Basic and diluted
                  
                  
                  132,000,356
                  
                  
                  
                  93,978,667





See
accompanying notes to consolidated financial statements.




F-4




ASIA
GLOBAL HOLDINGS CORP.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





Years ended December 31,2008
                            
                            
                            2007Cash
      flows from operating activities:Loss
      from continuing operations
                            
                            $
                            (2,958,953
                            )
                            
                            $
                            (2,746,625
                            )Adjustments
      to reconcile income (loss) from continuing operations to net cash (used
      in) provided by operating activities:Depreciation
      and amortization
                            
                            
                            210,359
                            
                            
                            
                            195,960Stock-based
      compensation to an executive, non-cash
                            
                            
                            123,750
                            
                            
                            
                            260,877Common
      stock issued for services, non-cash
                            
                            
                            -
                            
                            
                            
                            5,293,825Impairment
      loss on long-lived assets
                            
                            
                            766,217
                            
                            
                            
                            690,611Change
      in operating assets and liabilities:Accounts
      receivable, trade
                            
                            
                            2,875,582
                            
                            
                            
                            (484,079
                            )Prepayments
      and other current assets
                            
                            
                            (28,810
                            )
                            
                            
                            (35,941
                            )Accounts
      payables and accrued liabilities
                            
                            
                            12,024
                            
                            
                            
                            (359,686
                            )Amount
      due to a related party
                            
                            
                            -
                            
                            
                            
                            89,035Deferred
      tax liabilities
                            
                            
                            (132,091
                            )
                            
                            
                            72,387Income
      tax credit
                            
                            
                            (183,151
                            )
                            
                            
                            -Income
      tax payable
                            
                            
                            (424,016
                            )
                            
                            
                            95,625Net
      cash provided by operating activities
                            
                            
                            260,911
                            
                            
                            
                            3,071,989Net
      cash used in discontinued operations
                            
                            
                            (187,574
                            )
                            
                            
                            (1,446,039
                            )Cash
      flows from investing activities:Change
      in restricted cash
                            
                            
                            297,309
                            
                            
                            
                            (140,865
                            )Expenditure
      on intangible assets
                            
                            
                            (585,076
                            )
                            
                            
                            -Purchase
      of property, plant and equipment
                            
                            
                            (26,433
                            )
                            
                            
                            (889,542
                            )Net
      cash used in investing activities
                            
                            
                            (314,200
                            )
                            
                            
                            (1,030,407
                            )Net
      cash used in discontinued operations
                            
                            
                            -
                            
                            
                            
                            (1,173,359
                            )Cash
      flows from financing activities:Advances
      from related parties
                            
                            
                            394,897
                            
                            
                            
                            562,074Change
      in bank overdraft
                            
                            
                            (26,793
                            )
                            
                            
                            137,478(Payments
      on) proceeds from the letters of credit
                            
                            
                            (103,878
                            )
                            
                            
                            221,378Proceeds
      from secured bank loan
                            
                            
                            115,385
                            
                            
                            
                            879,191Payments
      on secured bank loan
                            
                            
                            (847,953
                            )
                            
                            
                            (601,791
                            )Proceeds
      from capital lease
                            
                            
                            -
                            
                            
                            
                            302,564Payments
      on capital lease
                            
                            
                            (121,008
                            )
                            
                            
                            (63,886
                            )Net
      cash (used in) provided by financing activities
                            
                            
                            (589,350
                            )
                            
                            
                            1,437,008Net
      cash used in discontinued operations
                            
                            
                            (1,624
                            )
                            
                            
                            (37,540
                            )Effect
      of exchange rate change on cash and cash equivalents
                            
                            
                            (14,812
                            )
                            
                            
                            2,741NET
      CHANGE IN CASH AND CASH EQUIVALENTS
                            
                            
                            (846,649
                            )
                            
                            
                            824,393CASH
      AND CASH EQUIVALENTS, BEGINNING OF YEAR
                            
                            
                            846,907
                            
                            
                            
                            22,514CASH
      AND CASH EQUIVALENTS, END OF YEAR
                            
                            $
                            258
                            
                            
                            $
                            846,907SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Cash
      paid for income taxes
                            
                            $
                            100,818
                            
                            
                            $
                            641,797Cash
      paid for interest expenses
                            
                            $
                            87,677
                            
                            
                            $
                            77,306SUPPLEMENTAL
      DISCLOSURE OF NON-CASH TRANSACTIONS:Amounts
      due from minority shareholders in relation to unsettled investment cost of
      a subsidiary
                            
                            $
                            -
                            
                            
                            $
                            820,513





See
accompanying notes to consolidated financial statements.


F-5


ASIA
GLOBAL HOLDINGS CORP.


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”), except for number of
shares)





Series
      A, ConvertibleSeries
      A, Convertible
                                        
                                        
                                        Preferred
      Stock
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        Common
      stock to be
                                        
                                        
                                        
                                        
                                        
                                        AccumulatedPreferred
      Stock
                                        
                                        
                                        to
      be issued
                                        
                                        
                                        Common
      stock
                                        
                                        
                                        issued
                                        
                                        
                                        Additional
                                        
                                        
                                        other
                                        
                                        
                                        
                                        
                                        
                                        TotalNo.
      of
                                        
                                        
                                        
                                        
                                        
                                        No.
      of
                                        
                                        
                                        
                                        
                                        
                                        No.
      of
                                        
                                        
                                        
                                        
                                        
                                        No.
      of
                                        
                                        
                                        
                                        
                                        
                                        paid-in
                                        
                                        
                                        comprehensive
                                        
                                        
                                        Accumulated
                                        
                                        
                                        stockholders’shares
                                        
                                        
                                        Amount
                                        
                                        
                                        shares
                                        
                                        
                                        Amount
                                        
                                        
                                        shares
                                        
                                        
                                        Amount
                                        
                                        
                                        shares
                                        
                                        
                                        Amount
                                        
                                        
                                        capital
                                        
                                        
                                        income
                                        
                                        
                                        deficit
                                        
                                        
                                        equity
      (deficit)Balance
      as of January 1, 2007
                                        
                                        
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        
                                        500,000
                                        
                                        
                                        $
                                        4,760,002
                                        
                                        
                                        
                                        54,862,000
                                        
                                        
                                        $
                                        54,862
                                        
                                        
                                        
                                        739,726
                                        
                                        
                                        $
                                        153,123
                                        
                                        
                                        $
                                        7,428,345
                                        
                                        
                                        $
                                        3,517
                                        
                                        
                                        $
                                        (9,889,544
                                        )
                                        
                                        $
                                        2,510,305Issuance
      of preferred stock
                                        
                                        
                                        500,000
                                        
                                        
                                        
                                        500
                                        
                                        
                                        
                                        (500,000
                                        )
                                        
                                        
                                        (4,760,002
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        4,759,502
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Issue
      of common stock for services rendered, non-cash
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        55,000,000
                                        
                                        
                                        
                                        55,000
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        5,238,825
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        5,293,825Bonus
      shares to be issued to an executive, non-cash
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,260,274
                                        
                                        
                                        
                                        260,877
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        260,877Conversion
      of preferred stock into common stock 200:1
                                        
                                        
                                        (100,000
                                        )
                                        
                                        
                                        (100
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        20,000,000
                                        
                                        
                                        
                                        20,000
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (19,900
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Net
      loss for the year
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (5,908,545
                                        )
                                        
                                        
                                        (5,908,545
                                        )Foreign
      currency translation adjustment
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2,741
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2,741Balance
      as of December 31, 2007
                                        
                                        
                                        400,000
                                        
                                        
                                        $
                                        400
                                        
                                        
                                        
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        
                                        129,862,000
                                        
                                        
                                        $
                                        129,862
                                        
                                        
                                        
                                        2,000,000
                                        
                                        
                                        $
                                        414,000
                                        
                                        
                                        $
                                        17,406,772
                                        
                                        
                                        $
                                        6,258
                                        
                                        
                                        $
                                        (15,798,089
                                        )
                                        
                                        $
                                        2,159,203Stocks
      issued for services rendered, non-cash
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,500,000
                                        
                                        
                                        
                                        1,500
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        122,250
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        123,750Bonus
      shares to be issued to an executive, non-cash
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2,000,000
                                        
                                        
                                        
                                        2,000
                                        
                                        
                                        
                                        (2,000,000
                                        )
                                        
                                        
                                        (414,000
                                        )
                                        
                                        
                                        412,000
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Cancellation
      of 150,000 shares of preferred stock
                                        
                                        
                                        (150,000
                                        )
                                        
                                        
                                        (150
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        150
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Net
      loss for the year
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (3,217,339
                                        )
                                        
                                        
                                        (3,217,339
                                        )Foreign
      currency translation adjustment
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (13,851
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (13,851
                                        )Balance
      as of December 31, 2008
                                        
                                        
                                        250,000
                                        
                                        
                                        $
                                        250
                                        
                                        
                                        
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        
                                        133,362,000
                                        
                                        
                                        $
                                        133,362
                                        
                                        
                                        
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        17,941,172
                                        
                                        
                                        $
                                        (7,593
                                        )
                                        
                                        $
                                        (19,015,428
                                        )
                                        
                                        $
                                        (948,237
                                        )




See
accompanying notes to consolidated financial statements.


F-6


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))








1.         ORGANIZATION
AND BUSINESS BACKGROUND





Asia Global Holdings Corp. (the
“Company”or “AAGH”) was incorporated in the State of
Nevada on February 1, 2002 as Longbow Mining Inc.On May 12, 2004,the Companychanged its name to“BonusAmerica Worldwide
Corporation”. On June 6, 2006, the Companyfurtherchanged itscurrent companyname to“Asia Global Holdings Corp.”





The Company is focused on building
businesses in China and other emerging regions and markets in Asia and
worldwide. The Company has subsidiaries participating in media and advertising, TV
entertainment, marketing services and Internet commerce. During 2007, the
Company entered the television entertainment market to produce and broadcast the“Who Wants To Be a
Millionaire?”TV show in the People China.
AAGH, through its
subsidiaries, operates a business-to-business search engine and buyer-supplier
matching web site called“TradeDragon.com”.TradeDragon.comwasinternally developed by the Company
based on a combination of proprietary industry knowledge, andexpertise in global direct marketing,
ecommerce and China sourcing. The Company’s subsidiaries also sell trade
information and online marketing services related to the database to mainland
Chinese companies. The Company also produces offline advertising products such as business-to-business
trade directories and industry trade publications. The Company is headquartered
in Hong Kong, and has offices in the United States of America (“US”) and mainland
China.





Details
of the Company’s subsidiaries and VIE are described below:





Name
            
            Place
      of incorporation
              and
      kind of
              legal
      entity
            
            Principal
      activities
              and
      place of
              operation
            
            Particulars
      of issued/
              registered
      share
              capital
            
            Effective
      interest
              heldSino
      Trade-Intelligent Development Corp., Limited
              (“Sino
      Trade”)
            
            Hong
      Kong, a limited liability company
            
            Publishing
      & information service and advertisement in Hong Kong
            
            5,000,000
      issued shares of HK$1 each
            
            100%Idea
      Asia Limited
              (“Idea
      Asia”)
            
            Hong
      Kong, a limited liability company
            
            Investment
      holding in Hong Kong
            
            10,000
      issued shares of HK$1 each
            
            100%China
      Media Power Limited (“CMP”)
            
            Hong
      Kong, a limited liability company
            
            TV
      entertainment in the PRC
            
            16,000,000
      issued share of HK$1 each
            
            60%Wah
      Mau Corporate Planning Development Co., Ltd (“Wah Mau”)
            
            The
      PRC, a limited liability company
            
            Development
      of corporate images and business promotion in the PRC
            
            RMB1,000,000
            
            100%DYKN
      Corporation *
            
            Malaysia,
      a limited liability company
            
            Publishing
      & information service and advertisement in overseas
            
            1,000
      issued share of US$10 each
            
            100%


F-7


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





* being
variable interest entity





Asia
Global Holdings Corp. and its subsidiaries and variable interest entity are
hereinafter referred to as (the “Company”).





2.         GOING
CONCERN UNCERTAINTIES





These consolidated financial statements
have been prepared assuming that the Company will continue as a going concern,
which contemplates the realization of assets and the discharge of liabilities in
the normal course of business for the foreseeable
future.





AtDecember 31, 2008, the Company had incurred a net loss of
$3,217,339and an accumulated deficit of
$19,015,428. Additionally, the Company has incurred
losses over the past several years.The continuation ofAAGHas agoing concern is dependent upon the
continued financial support from its stockholders, the ability to obtain
necessary equity financing to continue operations, and the attainment of
profitable operations. These factors raise substantial doubt regardingtheCompany’s ability to continue as a going
concern.As a result, the
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of
the Company’s ability to continue as a going
concern.





3.         SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES





l         Basis
of presentation





These accompanying consolidated
financial statements have been prepared in accordance withgenerally accepted accounting principles
in the United States of America (“US GAAP”).





l         Use
of estimates





In preparing these consolidated
financial statements, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities in the balance sheets and revenues
and expenses during the years reported. Actual results may differ from these
estimates.





l         Basis
of consolidation





The consolidated financial statements
include the financial statements of AAGH and its subsidiariesandvariable interest entity.





All significant inter-company balances
and transactions within the Company have been eliminated upon
consolidation.


F-8


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





l         Cash
and cash equivalents





Cash and cash equivalents are carried at
cost and represent cash on hand, demanddeposits placed with banks or other
financial institutions and all highly liquid investments with an original
maturity of three months or less as of the purchase date of such investments.
The Company maintains cash balances at several banks. Accounts heldat financial institutions in the US are
insured by the Federal Deposit Insurance Corporation up to
$100,000.





l         Accounts
receivable and allowance for doubtful accounts





Accounts receivable are recorded at the
invoiced amount and do not bear interest. The Company extends unsecured credit to its
customers in the ordinary course of business but mitigates the associated risks
by performing credit checks and actively pursuing past due accounts. An
allowance for doubtful accounts is established and determined based on managements’assessment of known requirements, aging
of receivables, payment history, the customer’s current credit worthiness and the
economic environment.





l         Inventories





Inventories include material, labor and
direct overhead incurred in the production of television episodes and are
stated at lower of cost or market value, cost being determined on a
first-in-first-out method.The Company periodically reviews
historical sales activity to determine excess, slow moving items and potentially
obsolete items and also
evaluates the impact of any anticipated changes in future demand. The Company
provides inventory allowances based on excess and obsolete inventories
determined principally by customer demand.





l         Property,
plant and equipment





Property, plant andequipment are stated at historical cost
less accumulated depreciation and accumulated impairment losses, if any.
Depreciation is calculated on the straight-line basis over the following
expected useful lives from the date on which they become fully operational, generally ranging from 2 to 5
years:





Depreciable
      lifeComputers and office equipment
            
            
            3-5 yearsFurniture and fixtures
            
            
            2-5 yearsLeasehold improvements
            
            
            5 years





Expenditure
for repairs and maintenance is expensed as incurred. When assets have retired or
sold, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in the results of
operations.





l         Intangible
assets





Intangible
assets consist of costs paid to acquire personal customer information for use in
its advertising and database rental activities. For the year endedDecember 31, 2008, the Company has acquired the
new customer database for the operational use. The Company amortizes the cost of
these assets over a period of 3 to 5 years.





F-9


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





l         Impairment
of long-lived assets





In
accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, property, plant and equipment and
intangible assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and
used is evaluated by a comparison of the carrying amount of assets to estimated
discounted net cashflows
expected to be generated by the assets. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amounts of the assets exceed the fairvalue of the assets. For the
yearsended December 31, 2008 and 2007, the Company made
an impairment charge of $766,217and $2,000,000.





l         Capital
leases





Leases that transfer substantially all
the rewards and risks of ownership to the lessee, other than legal title, are
accounted for as capital leases.Substantially all of the risks or
benefits of ownership are deemed to have been transferred if any one of the four
criteria is met: (i) transfer of ownership to the lessee at the end of the lease
term, (ii) the lease containing a bargain purchase option,(iii) the lease term exceeding 75%
of the estimated economic life of the leased asset, (iv) the present value of
the minimum lease payments exceeding 90% of the fair value. At the inception of
a capital lease, the Company as the lessee records an asset andan obligation at an amount equal to the
present value of the minimum lease payments. The leased asset is amortized over
the shorter of the lease term or its estimated useful life if title does not
transfer to the Company, while the leased asset is depreciated in accordance with the
Company’s normal depreciation policy if the
title is to eventually transfer to the Company. The periodic rent payments made
during the lease term are allocated between a reduction in the obligation and
interest element using theeffective interest method in accordance
with APB Opinion No. 21, “Interest on
Receivables and Payables”.





l         Revenue
recognition





In accordance with the SEC’s Staff Accounting Bulletin No. 104,
“Revenue
Recognition”, the Company
recognizes revenue when persuasive evidence of an arrangement exists,
transfer of title has occurred or services have been rendered, the selling price
is fixed or determinable and collectibility is reasonably
assured.





Revenues from database rentals are
recorded at the time the services are provided. The Company entered into
sale-through agreements with8(2007:9) distributors located in Hong Kong and
China which in turn will be responsible to recruit new members and take orders
from the existing members of TradeDragon.com. The memberscan enjoy the following services from
the Company (a) advertising placement on the business directories and trade
publications that are produced by Sino Trade, (b) internet direct marketing
services by the means of traditional mail and emails distribution, (c) membership to TradeDragon.com
webpage in which the members exhibit their products and services and search for
their buyers or suppliers through search engine marketing tool and international
trade portal.





According to the sale-through agreement,
each of the distributors is
committed to a fixed fee of $256,000 per quarter, and the distributor will sign
separate contracts with the members. Hence, the Company takes orders directly
from the distributors and will services are considered rendered to the
distributors but not the
members.


F-10


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





l         Advertising
costs





The
Company expenses costs of advertising and promotions as incurred with the
exception of direct-response advertising costs. Statement of Position No. 93-7,
"Reporting on Advertising
Costs", provides that direct-response advertising costs that meet
specified criteria should be reported as assets and amortized over the estimated
benefit period, which is generally less than 30 days. The conditions for
reporting the direct-response advertising costs as assets include evidence that
customers have responded specifically to the advertising, and that the
advertising results in probable future benefits. The Company uses
direct-response marketing to attract customers to opt-in to the Company's
database and buy goods offered on its website or a special promotion. The
Company is able to document the responses of each customer to the email
advertising that elicited the response. The percentage of costs attributable to
future rental revenues are segregated and reported as intangible assets.
Advertising expenses for the years ended December 31, 2008 and 2007 were
approximately $2,178,342 and $1,809,580, respectively.





l         Retirement
plan costs





Contributions
to retirement schemes (which are defined contribution plans) are charged to
general and administrative expenses in the consolidated statements of operations
as and when the related employee service is provided.





l         Income
taxes





The Company accounts for income tax
using SFAS No. 109“Accounting for
Income Taxes”, which
requires the asset and
liability approach for financial accounting and reporting for income taxes.
Under this approach, deferred income taxes are provided for the estimated future
tax effects attributable to temporary differences between financial statement
carrying amounts of assets and liabilities
and their respective tax bases, and for the expected future tax benefits from
loss carry-forwards and provisions, if any. Deferred tax assets and liabilities
are measured using the enacted tax rates expected in theyears of recovery or reversal and the
effect from a change in tax rates is recognized in the statements of operations
in the period of enactment. A valuation allowance is provided to reduce the
amount of deferred tax assets if it is considered more likelythan not that some portion of, or all of
the deferred tax assets will not be realized.





The Company also adopts the provisions
of the Financial Accounting Standards Interpretation No. 48,“Accounting for
Uncertainty in Income Taxes”(“FIN 48”). FIN 48 prescribes a recognition threshold and
measurement process for recording in the financial statements uncertain tax
positions taken or expected to be taken in a tax return.In accordance
with FIN 48, the Company also adopted the policy of recognizing interest and
penalties, if any, related to unrecognized tax positions as income tax expense.
For the years ended December 31, 2008 and 2007, the Company did not have any
interest and penalties associated with tax positions. As of December 31, 2008
and 2007, the Company did not have any significant unrecognized uncertain tax
positions.





The Company conducts its major
businessesinMalaysiaand Hong Kong and is subject to tax in
those jurisdictions. As a result of its business activities, the Company files
tax returns that are
subject to examination by the foreign tax authorities.


F-11


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





l         Net
loss per share





The Company calculates net loss per
share in accordance with SFAS No. 128,“Earnings per
Share.”Basic loss per
share is computed by dividing the net loss by the weighted-average number of common shares
outstanding during the period. Diluted loss per share is computed similar to
basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstandingif the potential common stock equivalents
had been issued and if the additional common shares were
dilutive.





l         Comprehensive
loss





SFAS No. 130,“Reporting
Comprehensive Income”,
establishes standards for reporting and display of comprehensive income, its
components and accumulated
balances. Comprehensive income as defined includes all changes in equity during
a period from non-owner sources. Accumulated comprehensive income consists of
changes in unrealized gains and losses on foreign currency translation.This comprehensive income is not included
in the computation of income tax expense or benefit.





l         Foreign
currencies translation





Transactions denominated in currencies
other than the functional currency are translated into the functional currency
at the exchange rates
prevailing at the dates of the transaction. Monetary assets and liabilities
denominated in currencies other than the functional currency are translated into
the functional currency using the applicable exchange rates at the balance sheet
dates.The resulting exchange differences are
recorded in the consolidated statement of operations.





The reporting currency of the Company is
the United States Dollars
("US$"). The functional currency of the
Company's subsidiaries operating in Hong Kong is Hong Kong Dollars ("HK$") and their financial records are
maintained and its statutory financial statements are prepared in HK$. The functional currency of the
Company's subsidiary established in the PRC is Renminbi Yuan ("RMB") and its financial record is
maintained and its
financial statements are prepared in RMB.





In general, assets and liabilities are
translated intoUS$, in accordance with SFAS No. 52,
“Foreign Currency
Translation”, using the
exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing
during the year. The gains and losses resulting from translation of financial
statements of foreign subsidiaries are recorded as a separate component of
accumulated other comprehensive income within the consolidatedstatements of stockholders’equity.





l         Stock-based
compensation





The
Company adopts SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS
No. 123(R)"), using the fair value method on January 1, 2006, which requires the
measurement and recognition of compensation expense for all share-based awards
made to employees and directors, including employee stock options and shares
issued through its employee stock purchase plan, based on estimated fair
values.


F-12


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





l         Related
parties





Parties, which can be a
corporation or individual,
are considered to be related if the Company has the ability, directly or
indirectly, to control the other party or exercise significant influence over
the other party in making financial and operating decisions. Companies are also
considered to be related if they are
subject to common control or common significant influence.





l         Segment
reporting





SFAS No. 131“Disclosures about
Segments of an Enterprise and Related Information”(“SFAS No. 131”) establishes standards for reporting
information about operating
segments on a basis consistent with the Company’s internal organization structure as
well as information about geographical areas, business segments and major
customers in the financial statements.





In the
first quarter of 2008, the Company discontinued its operation in TV
entertainment business. Hence, the Company operates one reportable segment in
media and advertising business for the year ended December 31,
2008.





l         Fair
value of financial instruments





The
Company values its financial instruments as required by SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments”. The estimated fair value amounts have been
determined by the Company, using available market information and appropriate
valuation methodologies. The estimates presented herein are not necessarily
indicative of amounts that the Company could realize in a current market
exchange.





The
Company’s financial instruments primarily consist of cash and cash equivalents,
restricted cash, accounts receivable, prepayments and other current assets, bank
overdraft, secured bank loan, obligation under capital lease, letters of credit,
accounts payable and accrued liabilities, income tax payable and amounts due
from (to) related parties.





As of the
balance sheet date, the estimated fair values of the financial instruments were
not materially different from their carrying values as presented due to the
short term maturities of these instruments and that the interest rates on the
borrowings approximate those that would have been available for loans of similar
remaining maturity and risk profile at respective year ends.





l         Recent
accounting pronouncements





The Company has reviewed all recently
issued, but not yet effective, accounting pronouncements and do not believe the
future adoption of any such
pronouncements may be expected to cause a material impact on its financial
condition or the results of its operations.





In September 2006, the FASB issued
Statement of Financial Accounting Standard (“SFAS“) No.157,"Fair Value
Measurements"("SFAS No.157"). SFAS No.157 defines fair value, establishes a
framework for measuring fair value and enhances disclosures about fair value
measures required under other accounting pronouncements, but does not change
existing guidance as to whether or not an instrument is carried at fair
value. SFAS No.157 is effective for fiscal years
beginning after November15, 2007. In February 2008, the FASB
deferred SFAS No.157's effective date for all
non-financial assets and liabilities, except those items recognized or disclosed at fair value on
an annual or more frequently recurring basis, until years beginning after
November15, 2008.The
Company believes that SFASNo.157should
not have a material impact on the consolidated financial position or resultsof
operations.


F-13


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





In February 2007, the FASB issued SFAS
No. 159,"The Fair Value
Option for Financial Assets and Financial Liabilities"("SFAS No. 159").SFAS No. 159 permits entities to choose
to measure, on an item-by-item basis, specified financial instruments and certain other items at fair
value. Unrealized gains and losses on items for which the fair value option has
been elected are required to be reported in earnings at each reporting date.
SFAS No. 159 is effective for fiscal years beginning afterNovember 15, 2007, the provisions of
which are required to be applied prospectively. The Company believes that SFASNo.159 should not have a material impact on
the consolidated financial position or results of
operations.





In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations"("SFAS No. 141R"). SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations the Company engages in will be recorded
and disclosed following existing GAAP until January 1, 2009. The Company expects
SFAS No. 141R will have an impact on accounting for business combinations once
adopted but the effect is dependent upon acquisitions at that time. The Company
is still assessing the impact of this pronouncement.





In
December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No.
160" ("SFAS No. 160"). SFAS No. 160 establishes new accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years
beginning on or after December 15, 2008. The Company believes that SFAS 160
should not have a material impact on the consolidated financial position or
results of operations.





In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities" ("SFAS No. 161"). SFAS No. 161
requires companies with derivative instruments to disclose information that
should enable financial-statement users to understand how and why a company uses
derivative instruments, how derivative instruments and related hedged items are
accounted for under FASB Statement No. 133 "Accounting for Derivative
Instruments and Hedging Activities" and how derivative instruments and
related hedged items affect a company's financial position, financial
performance and cash flows. SFAS No. 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008.
The adoption of this statement is not expected to have a material effect on the
Company's future financial position or results of operations.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” ("SFAS No. 162"). This statement identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements in conformity with
generally accepted accounting principles (GAAP) in the United States. This
statement is effective 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles”. The Company
does not expect the adoption of SFAS No. 162 to have a material effect on the
financial condition or results of operations of the Company.


F-14


ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





In May
2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS
No. 163"). SFAS No. 163 interprets Statement 60 and amends existing accounting
pronouncements to clarify their application to the financial guarantee insurance
contracts included within the scope of that Statement. SFAS No. 163 is effective
for financial statements issued for fiscal years beginning after December 15,
2008, and all interim periods within those fiscal years. As such, the Company is
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009. The Company is currently evaluating the impact of SFAS No.
163 on its financial statements but does not expect it to have an effect on the
Company's financial position, results of operations or cash flows.





Also in
May 2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt
Instruments that may be Settled in Cash upon Conversion (Including Partial Cash
Settlement)" ("FSP APB 14-1"). FSP APB 14-1 applies to convertible debt
securities that, upon conversion, may be settled by the issuer fully or
partially in cash. FSP APB 14-1 specifies that issuers of such instruments
should separately account for the liability and equity components in a manner
that will reflect the entity's nonconvertible debt borrowing rate when interest
cost is recognized in subsequent periods. FSP APB 14-1 is effective for
financial statements issued for fiscal years after December 15, 2008, and must
be applied on a retrospective basis. Early adoption is not permitted. The
Company does not expect it to have an effect on the Company's financial
position, results of operations or cash flows.





In June
2008, the FASB issued FASB Staff Position ("FSP") EITF 03-6-1, "Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities"
("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in
share-based payment transactions are participating securities prior to vesting,
and therefore need to be included in the earnings allocation in computing
earnings per share under the two-class method as described in SFAS No. 128,
Earnings per Share. Under the guidance of FSP EITF 03-6-1, unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and shall be
included in the computation of earnings-per-share pursuant to the two-class
method. FSP EITF 03-6-1 is effective for financial statements issued for fiscal
years beginning after December 15, 2008 and all prior-period earnings per share
data presented shall be adjusted retrospectively. Early application is not
permitted. The Company does not expect it to have an effect on the Company's
financial position, results of operations or cash flows.





Also in
June 2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument
(or an Embedded Feature) is Indexed to an Entity's Own Stock" ("EITF
07-5"). EITF 07-5 provides that an entity should use a two-step approach to
evaluate whether an equity-linked financial instrument (or embedded feature) is
indexed to its own stock, including evaluating the instrument's contingent
exercise and settlement provisions. EITF 07-5 is effective for financial
statements issued for fiscal years beginning after December 15, 2008. Early
application is not permitted. The Company is assessing the potential impact of
this EITF 07-5 on the financial condition and results of operations and does not
expect it to have an effect on the Company's financial position, results of
operations or cash flows.


F-15





ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





In September 2008, the FASB issued FSP
133-1 and FIN 45-4,“Disclosures about
Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No.
133 and FASB Interpretation No. 45; and Clarification of the EffectiveDate of
FASB Statement No. 161”(“FSP FAS
133-1”and “FIN 45-4”).FSPFAS133-1 and FIN 45-4 amends disclosure
requirements for sellers of credit derivatives and financial guarantees. It also
clarifies the disclosure requirements of SFAS No. 161 and is effective for quarterly periods beginning
after November 15, 2008, and fiscal years that include those periods. The
adoption of FSPFAS133-1 and FIN 45-4 did not
have a material impact on the Company’s current consolidated financial
position, results of operation or cash flows.





In October 2008, the FASB issued Staff
Position (“FSP”) No. 157-3,“Determining the Fair
Value of a Financial Asset When the Market for That Asset is Not
Active”(“FSP FAS 157-3.”) FSP FAS 157-3 clarifies the
application of SFASNo.157 in an inactive market.
It illustrated how the fair value of a financial asset is determined when the
market for that financial asset is inactive. FSPFAS157-3 was effective upon issuance,
including prior periods for which financial statements had notbeen issued. The adoption ofFSPFAS 157-3 did not have a material impact
on the Company’s current consolidated financial
position, results of operations or cash flows.





In December 2008, FASB issues Staff
Position(“FSP”)No.140-4 and FIN46(R)-8,“Disclosures by Public
Entities about Transfers of Financial Assets and Interests in Variable Interest
Entities”.The purpose of this FSP is to promptly
increase disclosures by public entities and enterprises until the pending
amendments toSFASNo. 140,“Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities”,(“SFASNo.140”) and FASB Interpretation No. 46
(revised December 2003),“Consolidation of
Variable Interest Entities”, (“FIN 46(R)”) are finalized and approved by
the FASB. The FSP is
effective for reporting periods (interim and annual) ending after December 15,
2008.The
Companyadopted this FSP
fortheyear ended December 31, 2008 and the
adoption did not have any impact ontheconsolidated financial
statements.





4.         DISCONTINUED
OPERATION





On
February 15, 2008, the Board of the Company decided to suspend the production of
new episodes for “Who Wants To
Be a Millionaire?” TV show due to the poor performance of the sales and
distribution team.





On
February 25, 2008, its subsidiary, China Media Power Limited (“CMP”) decided to
discontinue the “Who Wants To
Be a Millionaire?” TV show and will consummate the business restructuring
plan. The Company considered that no additional charges associated with the
business restructuring would be anticipated.





Loss from
discontinued operations was reported as $258,386 and $3,161,920 for the years
ended December 31, 2008 and 2007, respectively. Prior period financial
statements for the year ended December 31, 2007 have been restated to present
the operation in “Who Wants To
Be a Millionaire?” TV show as a discontinued operation. The assets and
liabilities of the discontinued operations as of December 31, 2008 and 2007
consisted of the following:


F-16


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))
  As
      of December 31,2008
                            
                            
                            2007Assets
      of discontinued operation:Cash
      and cash equivalents
                            
                            $
                            287
                            
                            
                            $
                            4,378Accounts
      receivable
                            
                            
                            -
                            
                            
                            
                            78,137Prepayments
      and other current assets
                            
                            
                            6,410
                            
                            
                            
                            46,863Amount
      due from a related party
                            
                            
                            39,677
                            
                            
                            
                            38,053Intangible
      assets, net
                            
                            
                            -
                            
                            
                            
                            5,157Total
      assets
                            
                            $
                            46,374
                            
                            
                            $
                            172,588Liabilities
      of discontinued operation:Accounts
      payable and accrued liabilities
                            
                            
                            123,897
                            
                            
                            
                            171,675Amount
      due to an immediate holding company (to be eliminated upon
      consolidation)
                            
                            
                            885,153
                            
                            
                            
                            705,203Total
      liabilities
                            
                            $
                            1,009,050
                            
                            
                            $
                            876,878





The asset
group related to the “Who
Wants To Be a Millionaire?” TV show was tested for recoverability, an
impairment loss of $2,000,000 was recognized during 2007 which represented the
amount by which the carrying amount of the asset group exceeded its fair value
at the balance sheet date.





Currently,
the Company has no disposal plan for these segment assets and
liabilities.





5.         RESTRICTED
CASH





The
Company maintains a cash reserve in the amount of $20,000 with a bank, which is
restricted as to use as a requirement of the Company's merchant (credit card)
account.





AAGH’s
wholly-owned subsidiary, Sino Trade, maintains pledged fixed deposits of
$260,795, with interest bearing from 1.55% to 3.44% per annum as required per
its bank financing agreements.





6.         ACCOUNTS
RECEIVABLE





The
majority of the Company’s sales are on open credit terms and in accordance with
the terms specified in the sale-through agreements governing the relevant
transactions. Accounts receivable are recorded at the invoiced amount and do not
bear interest, which are due within contractual payment terms, generally 90
days. Credit is extended based on evaluation of a distributor's financial
condition. Accounts receivable outstanding longer than the contractual payment
terms are considered past due. Past due balances over 90 days and over a
specified amount are reviewed individually for collectibility. Management
reviews the adequacy of the allowance for doubtful accounts on an ongoing basis,
using historical collection trends and aging of receivables. Management also
periodically evaluates individual customer’s financial condition, credit
history, and the current economic conditions to make adjustments in the
allowance when it is considered necessary. Account balances are charged off
against the allowance after all means of collection have been exhausted and the
potential for recovery is considered remote.


F-17




ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))




7.         VARIABLE
INTEREST ENTITY





Effective
June 2008, the Company established a branch office (the “Branch”) in Labuan,
Malaysia for the purpose of managing and liaison of the sales arrangements with
new customers in Asia Pacific to meet with the business expansion plan. A branch
office is registered as an offshore company under the Labuan Offshore Financial
Services Authority in Malaysia and is owned by Mr. Michael Mak, the former Chief
Executive Officer on behalf of the Company. Pursuant to FIN 46(R), the Branch is
considered as a variable interest entity, of which the Company is the primary
beneficiary. Accordingly, the result of the Branch is included in the
accompanying financial statements.





8.         AMOUNTS
DUE FROM (TO) RELATED PARTIES





As of
December 31, 2008, amounts due from (to) related parties represented temporary
advances, which were unsecured, interest free and repayable on demand and
included the following:





(i)
            amount
      due from an employee, a director of subsidiary of
  $39,677;


(ii)
            amount
      due to the Company’s President, Mr. Michael Mak, who is also the former
      Chief Executive Officer and the Chief Financial Officer of the Company
      totaling $8,452.





As of
December 31, 2007, amounts due from (to) related parties represented temporary
advances, which were unsecured, interest free and repayable on demand and
included the following:





(i)
            amount
      due from the Company’s President, Mr. Michael Mak, who is also the former
      Chief Executive Officer and the Chief Financial Officer of the Company
      totaling $492,140;


(ii)
            amount
      due from an employee, a director of subsidiary of
  $38,053;


(iii)
            amounts
      due from minority shareholders of $513;
and


(iv)
            amount
      due to an employee, a director of subsidiaries of
  $106,208.





9.         PREPAYMENTS
AND OTHER CURRENT ASSETS





Prepayments
and other current assets consisted of the following:


As
      of December 31,2008
                
                
                2007Utility
      deposits
                
                $
                24,879
                
                
                $
                47,333Purchase
      deposits
                
                
                38,107
                
                
                
                21,197Deposit
      for investment
                
                
                -
                
                
                
                16,983Other
      prepayments and receivables
                
                
                12,486
                
                
                
                1,602$
                75,472
                
                
                $
                87,115


F-18




ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


10.         PROPERTY,
PLANT AND EQUIPMENT





Property,
plant and equipment consist of the following:


As
      of December 31,2008
                  
                  
                  2007Computers
      and office equipment
                  
                  $
                  1,147,400
                  
                  
                  $
                  1,143,482Furniture
      and fixtures
                  
                  
                  167,011
                  
                  
                  
                  162,031Leasehold
      improvements
                  
                  
                  36,057
                  
                  
                  
                  18,522Foreign
      translation difference
                  
                  
                  7,395
                  
                  
                  
                  2,3791,357,863
                  
                  
                  
                  1,326,414Less:
      accumulated depreciation
                  
                  
                  (415,080
                  )
                  
                  
                  (367,282
                  )Less:
      foreign translation difference
                  
                  
                  (4,052
                  )
                  
                  
                  (1,880
                  )Less:
      impairment charges
                  
                  
                  (933,167
                  )
                  
                  
                  (796,218
                  )Property,
      plant and equipment, net
                  
                  $
                  5,564
                  
                  
                  $
                  161,034





Depreciation
expense, including equipment under capital lease for the years ended December
31, 2008 and 2007 were $45,918 and $105,697, respectively.





As of
December 31, 2008, the Company tested for impairment test in accordance with the
SFAS No. 142. Certain equipments were temporarily rendered idle with the closing
of TV entertainment business and were subject to impairment test. The Company
recognized an impairment loss of $136,949 and $796,218, respectively for the
years ended December 31, 2008 and 2007.





As of
December 31, 2008 and 2007, equipment under capital lease was included with the
net book value of $0 and $282,393.





11.         INTANGIBLE
ASSETS, NET





Intangible
assets consist of the following:


As
      of December 31,2008
                        
                        
                        2007Prepaid
      license fee for television program broadcast right
                        
                        $
                        537,533
                        
                        
                        $
                        537,533Prepaid
      broadcasting network fee
                        
                        
                        508,628
                        
                        
                        
                        508,628Website
      development cost
                        
                        
                        427,742
                        
                        
                        
                        425,435Database
      development cost
                        
                        
                        692,769
                        
                        
                        
                        110,000Customers’
      list
                        
                        
                        621,401
                        
                        
                        
                        621,4012,788,073
                        
                        
                        
                        2,202,997Less:
      accumulated amortization
                        
                        
                        (1,251,435
                        )
                        
                        
                        (1,086,991
                        )Less:
      impairment loss
                        
                        
                        (1,534,600
                        )
                        
                        
                        (905,332
                        )Net
      book value
                        
                        $
                        2,038
                        
                        
                        $
                        210,674


F-19


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


Amortization
expense for the years ended December 31, 2008 and 2007 was $164,441 and
$247,526, respectively.





Starting
from the fourth quarter 2008, global economic conditions have deteriorated
significantly across the countries and the demand for cross-border trading
activities was adversely slowed down.





As of
December 31, 2008 and 2007, the Company tested for impairment on its intangible
assets in accordance with the SFAS No. 142.Based on the results of the
Company's undiscounted cash flows calculation, the Company evaluated whether or
not there was an impairment loss by comparing the fair value of the intangible
asset to its carrying value. Since the carrying value of the intangible assets
exceeded its fair value, the Company recognized an impairment loss of $629,268
and $905,332 for the years ended December 31, 2008 and 2007.





12.         INDEBTEDNESS





(a)           Bank
loans





The
Company’s subsidiary operating in Hong Kong is committed under certain secured
bank term loans bearing interest at the rates ranging from 4.25% per annum to
5.5% per annum, payable in monthly installments, due fully and no later than
February 2009. As of December 31, 2008, total amounts outstanding under bank
loans were $58,442.





In the
fourth quarter of 2008, the Company failed to meet certain loan repayment
requirement under the debt agreements. In accordance with default provisions in
the agreement, overdue interest will be charged at a rate ranging from 5% to
15.25% per annum on such late payments.





(b)           Letters
of credit





The
Company’s subsidiary operating in Hong Kong is committed under certain letters
of credit and other trust receipt loans issued by DBS Bank (Hong Kong) Ltd and
the Hongkong and Shanghai Banking Corporation Limited, independent financial
institutions in Hong Kong, totaling $380,128 expiring through February 16,
2009.





13.         OBLIGATION
UNDER CAPITAL LEASE





The
Company purchased certain equipment under a capital lease arrangement with Dah
Sing Bank, Limited, an independent financial institution in Hong Kong, with an
interest rate of 9.83% per annum, due July 30, 2009 and repayable $13,615
principal and interest monthly.


F-20


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))




The
obligation under the capital lease is as follows:


As
      of December 31,2008
                
                
                2007Capital
      lease
                
                $
                117,670
                
                
                $
                238,678Less:
      current portion
                
                
                (117,670
                )
                
                
                (146,416
                )$
                -
                
                
                $
                92,262





As of
December 31, 2008, the future payments on the equipment lease are as
follows:





Years
      ending December 31:2009
                
                $
                122,538Less:
      interest
                
                
                (4,868
                )Present
      value of net minimum obligation
                
                $
                117,670





The
Company’s studio equipment is held under capital lease and the related
depreciation is included in depreciation expense.





In the
fourth quarter of 2008, the Company failed to meet the with the monthly
installment repayment under the capital lease agreement, totaling $27,230. In
accordance with default provisions in the agreement, overdue interest will be
charged at a rate of 3% per month on such late payment.





14.         INCOME
TAXES





For the
years ended December 31, 2008 and 2007, the local (“United States of America”)
and foreign components loss before income taxes were comprised of the
following:





Years
      ended December 31,2008
                    
                    
                    2007Tax
      jurisdictions from:-
      Local
                    
                    $
                    (124,985
                    )
                    
                    $
                    (5,745,385
                    )-
      Foreign
                    
                    
                    (3,730,794
                    )
                    
                    
                    647,449Loss
      before income taxes and minority interest
                    
                    $
                    (3,855,779
                    )
                    
                    $
                    (5,097,936
                    )


F-21


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


The
(benefit from) provision for income taxes from continuing operations consisted
of the following:





Years
      ended December 31,2008
                        
                        
                        2007Current:-
      Local
                        
                        $
                        -
                        
                        
                        $
                        --
      Foreign
                        
                        
                        (506,349
                        )
                        
                        
                        738,222Deferred:-
      Local
                        
                        
                        -
                        
                        
                        
                        --
      Foreign
                        
                        
                        (132,091
                        )
                        
                        
                        72,387(Benefit
      from) provision for income taxes
                        
                        $
                        (638,440
                        )
                        
                        $
                        810,609





The
effective tax rate in the years presented is the result of the mix of income
earned in various tax jurisdictions that apply a broad range of income tax rate.
The Company operates in various countries: United States of America, Malaysia,
Hong Kong and the PRC that are subject to tax in the jurisdictions in which they
operate, as follows:





United
States of America





AAGH is
registered in the State of Nevada and is subjected to United States tax
law.





As of
December 31, 2008, the United States operation had $17,998,044 cumulative net
operating losses available for federal tax purposes, which are available to
offset future taxable income. The net operating loss carryforwards begin to
expire in 2029. The Company has provided for a full valuation allowance of
$6,119,335 for future tax benefits from net operating loss carryforwards as the
management believes it is more likely than not that these assets will not be
realized in the future.





Hong
Kong





The
Company’s subsidiaries, Sino Trade, Idea Asia and CMP are subject to Hong Kong
Profits Tax, which is charged at the statutory income tax rate of 16.5% and
17.5% on assessable income for years ended December 31, 2008 and 2007,
respectively. The reconciliation of income tax rate to the effective income tax
rate based on (loss) income before income taxes for the years ended December 31,
2008 and 2007 are as follows:




F-22


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


Years
      ended December 31,2008
                  
                  
                  2007(Loss)
      income before income taxes
                  
                  $
                  (7,248,555
                  )
                  
                  $
                  775,750Statutory
      income tax rate
                  
                  
                  16.5
                  %
                  
                  
                  17.5
                  %Income
      tax impact at Hong Kong Profits Tax statutory rate
                  
                  
                  (1,196,012
                  )
                  
                  
                  135,756Tax
      effect of non-taxable income and non-deductible expenses
                  
                  
                  258,926
                  
                  
                  
                  602,066Change
      in deferred tax liabilities
                  
                  
                  (132,091
                  )
                  
                  
                  72,787Over-provision
      of income tax expenses in prior years
                  
                  
                  (512,225
                  )
                  
                  
                  -Net
      operating loss carry back
                  
                  
                  937,086
                  
                  
                  
                  -Income
      tax (benefit) expenses
                  
                  $
                  (644,316
                  )
                  
                  $
                  810,609





Income
taxes recoverable (payable) as of December 31, 2008 and 2007 consists of Hong
Kong Profits Tax of $183,151 and ($435,768), respectively.





During
2008, the Company filed the 2007 tax return and was cleared in July 2008.
Accordingly, the Company recognized $512,225 of income tax benefits from the
recovery of current income tax by means of carry back claims in excess of
amounts previously recognized in prior years.





For the
year ended December 31, 2008, the subsidiaries in Hong Kong incurred net
operating losses and, accordingly, no provision for income taxes has been
recorded. In addition, no benefit for income taxes has been recognized due to
the uncertainty of the realization of any tax assets. As of December 31, 2008,
Hong Kong operation generated approximately $5,679,312 of net operating loss
carryforwards for Hong Kong tax purpose at no expiration.





Malaysia





AAGH’s
consolidated variable interest entity is registered under the Labuan Offshore
Financial Services Authority, Malaysia and subject to Malaysian Income Tax Law
at a preferential rate of 3% of net income or a fixed sum of $5,876 (equivalent
to Ringgit Malaysian 20,000). For the year ended December 31, 2008, the
affiliate generated $3,039,054 from continuing operation before income taxes and
provided for $5,876 of income tax expense.





The
PRC





AAGH’s
subsidiary operating in the PRC is subject to the Corporate Income Tax Law of
the PRC (the “New CIT Law”) at a statutory rate of 25% on the subsidiary's
assessable profits, based on existing PRC tax legislation, interpretations and
practices in respect thereof. The subsidiary was exempted from the Corporate
Income Law because it generated an operating loss for the year ended December
31, 2008.





The
following table sets forth the significant components of the aggregate net
deferred tax assets of the Company as of December 31, 2008 and
2007:




F-23


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


As
      of December 31,2008
                      
                      
                      2007Deferred
      tax assets:Net
      operating loss carryforwards from-
      United States
                      
                      $
                      6,119,335
                      
                      
                      $
                      6,076,840-
      The PRC
                      
                      
                      260,443
                      
                      
                      
                      240,417-
      Hong Kong
                      
                      
                      937,086
                      
                      
                      
                      -Total
      deferred tax assets
                      
                      
                      7,316,864
                      
                      
                      
                      6,317,257Less:
      valuation allowance
                      
                      
                      (7,316,864
                      )
                      
                      
                      (6,317,257
                      )Deferred
      tax assets
                      
                      $
                      -
                      
                      
                      $
                      -





As of
December 31, 2008, the Company incurred $25,413,645 the aggregate net operating
loss carryforwards available to offset its taxable income for income tax
purposes. The Company has provided for a full valuation allowance against the
deferred tax assets of $7,316,864 on the expected future tax benefits from the
net operating loss carryforwards as the management believes it is more likely
than not that these assets will not be realized in the future. For the year
ended December 31, 2008, the valuation allowance increased by $999,607,
primarily relating to net operating loss carryforwards.





15.         STOCKHOLDERS’
EQUITY





(a)
            Series
      A, Convertible Preferred Stock





On August
18, 2006, the Company entered into an employment agreement with its former
president, Michael Mak, for an initial term of five years renewable for an
additional five-year period until terminated by the parties. Compensation
includes (i) a base salary of $60,000 per year, (ii) bonuses ranging from 0% to
120% of base salary; (iii) a signing bonus in the total gross amount of
2,000,000 shares of restricted common stock payable upon execution of the
employment agreement, subject to certain terms and conditions, and (iv) a stock
award of 500,000 shares of Series A Convertible Preferred Stock, convertible at
1 preferred share to 200 shares of common stock, payable upon execution of the
employment agreement.





On
October 9, 2007, the Company authorized the conversion of 100,000 shares of
Series A Preferred Stock at a ratio of 1:200 into 20,000,000 shares of 144
restricted common stock to Mr. Michael Mak, the former Chief Executive Officer
pursuant to the Agreement. Upon the conversion of 100,000 shares of Series A
Preferred Stock, the par value of common stock totaling $20,000 is recognized as
common stock issued and outstanding. The excess of $19,900 is recognized as a
reduction to the additional paid-in capital.





On
November 17, 2008, the Board of Directors approved the surrender of the 150,000
shares of the Series A Stock from Mr. Michael Mak, the former Chief Executive
Officer. After the return, the 150,000 shares of the Series A Stock were
cancelled and Mr. Michael Mak, the former Chief Executive Officer still controls
the remaining 250,000 shares of the Series A Stock as of December 31,
2008.





As of
December 31, 2008, the number of authorized and outstanding shares of the
Company’s Series A Preferred Stock was 500,000 shares and 250,000 shares,
respectively.


F-24


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


(b)
            Common
      stock





For the
years ended December 31, 2008 and 2007, the Company had entered into various
stock-based compensation agreements for services received relating to management
services, business advisory, and legal and professional services and as
compensation to the Company’s President pursuant to the Agreement. The shares of
common stock issued or to be issued are as follows:





(i)
              On
      May 22, 2008, the Company issued 2,000,000 shares of its common stock to
      Mr. Michael Mak, the former Chief Executive Director to compensate as
      signing bonus under the employment agreement dated August 18, 2006. The
      fair value of the common stock signing bonus totaled $414,000 and was
      recognized ratably over the one-year service period through August 17,
      2007, under the employment agreement. The fair value was based on the
      quoted market value at $0.207 per share of the Company’s common stock as
      of the date of the employment agreement. For the period ended June 30,
      2007, the Company recognized $204,164 of stock based compensation expense
      to the statement of operation; and


(ii)
            At
      the same day of May 22, 2008, the Company approved and issued 1,000,000
      shares and 500,000 shares of its common stock to Mr. John Leper, a
      director of the Company and Mr. Ng Hing, a former director of the
      subsidiary as remuneration compensation for their services. The fair value
      of these stock issuances was determined using the fair value of the
      Company’s common stock on the grant date, at a market quoted price of
      $0.0825 per share. The Company recognized $123,750 to the statements of
      operations for the year ended December 31,
2008.





(iii)
              On
      January 31, 2007, the Company issued 26,500,000 unrestricted shares of
      common stock for services received relating to management services,
      business advisory, and legal and professional services valued at the fair
      market value on the dates of grant. The aggregate fair value of the
      26,500,000 unrestricted shares of common stock granted was $2,757,325. The
      shares were issued under AAGH's Registration Statement on Form S-8
      relating to the registration of the AAGH's 2007 Non-Qualified Incentive
      Stock Compensation Plan as filed with the SEC on January 31, 2007;
      and


(iv)
            On
      August 27, 2007, the Company issued 28,500,000 unrestricted shares of
      common stock for services received relating to management services,
      business advisory, and legal and professional services valued at the fair
      market value on the dates of grant. The aggregate fair value of the
      28,500,000 unrestricted shares of common stock granted was $2,536,500. The
      shares were issued under AAGH's Registration Statement on Form S-8
      relating to the registration of the AAGH's 2007 Non-Qualified Incentive
      Stock Compensation Plan as filed with the SEC on August 27,
      2007.





As of
December 31, 2008, the number of authorized and outstanding shares of the
Company’s common stock was 300,000,000 shares and 133,362,000 shares,
respectively.


F-25


ASIA
GLOBAL HOLDINGS CORP.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007
 (Currency
expressed in United States Dollars (“US$”))


16.         NET
LOSS PER SHARE





Basic
loss per share is computed as net loss divided by the weighted average number of
common shares outstanding for the period. Diluted loss per share reflects the
potential dilution that could occur from common shares issuable through stock
options, warrants, and other convertible securities, such as convertible
preferred stock. No potential common stock is considered in the diluted loss per
share calculation when the Company incurs loss from continuing operations since
the effect would be anti-dilutive. The computation of diluted loss per share for
the years ended December 31, 2008 and 2007, did not assume the exercise of the
potential dilution of Series A Preferred Stock is anti-dilutive.





17.         PENSION
PLANS





The
Company's Hong Kong subsidiaries, Sino Trade, Idea Asia and CMP participate in a
defined contribution pension scheme under the Mandatory Provident Fund Schemes
Ordinance ("MPF Scheme") for all of its eligible employees in Hong
Kong.





The MPF
Scheme is available to all employees aged 18 to 64 with at least 60 days of
service in the employment in Hong Kong. Contributions are made by the Company's
Hong Kong subsidiaries operating in Hong Kong at 5% of the participants'
relevant income with a ceiling of HK$20,000. The participants are entitled to
100% of the Hong Kong subsidiaries' contributions together with accrued returns
irrespective of their length of service with them, but the benefits are required
by law to be preserved until the retirement age of 65. The total contributions
made for MPF Scheme were $5,917 and $3,644 for the years ended December 31, 2008
and 2007, respectively.





Under the
PRC Law, full-time employees of the Company's subsidiary, Wah Mau are entitled
to staff welfare benefits including medical care, welfare subsidies,
unemployment insurance and pension benefits through a China government-mandated
multi-employer defined contribution plan. Wah Mau is required to accrue for
these benefits based on certain percentages of the employees' salaries. The
total contributions made for such employee benefits were $6,886 and $4,976 for
the years ended December 31, 2008 and 2007, respectively.





18.         STATUTORY
RESERVES





Under the
PRC Law the Company’s subsidiary, Wah Mau is required to make appropriations to
the statutory reserve based on after-tax net earnings and determined in
accordance with generally accepted accounting principles of the PRC (the “PRC
GAAP”). Appropriation to the statutory reserve should be at least 10% of the
after-tax net income until the reserve is equal to 50% of the registered
capital. The statutory reserve is established for the purpose of providing
employee facilities and other collective benefits to the employees and is
non-distributable other than in liquidation.





Since Wah
Mau has incurred a net operating loss under the PRC GAAP for the years ended
December 31, 2008 and 2007, no appropriation to statutory reserves was made
during these periods.


F-26




ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))





19.         CONCENTRATIONS
OF RISK





The
Company is exposed to the following concentrations of risk:





(a)         Major
customers





For the
year ended December 31, 2008, customers who account for 10% or more of revenues
are presented as follows:


Year
      ended December 31, 2008
                      
                      
                      
                      December
      31, 2008Customers
                      
                      Revenues
                      
                      
                      Percentage
                        of
      revenues
                      
                      
                      
                      Accounts
                        receivable,
      netCustomer
      A
                      
                      $
                      609,323
                      
                      
                      
                      12
                      %
                      
                      
                      $
                      -Customer
      C
                      
                      
                      625,356
                      
                      
                      
                      13
                      %
                      
                      
                      
                      -Customer
      D
                      
                      
                      597,436
                      
                      
                      
                      12
                      %Customer
      E
                      
                      
                      700,262
                      
                      
                      
                      14
                      %
                      
                      
                      
                      -Customer
      F
                      
                      
                      512,674
                      
                      
                      
                      10
                      %
                      
                      
                      
                      -Customer
      G
                      
                      
                      680,131
                      
                      
                      
                      14
                      %
                      
                      
                      
                      -Total:
                      
                      $
                      3,725,182
                      
                      
                      
                      75
                      %
                      Total:
                      
                      $
                      -





For the
year ended December 31, 2007, customers who account for 10% or more of revenues
are presented as follows:


Year
      ended December 31, 2007
                                          
                                          
                                          
                                          December
      31, 2007Customers
                                          
                                          Revenues
                                          
                                          
                                          Percentage
                                            of
      revenues
                                          
                                          
                                          
                                          Accounts
                                            receivable,
      netCustomer
      A
                                          
                                          $
                                          1,626,349
                                          
                                          
                                          
                                          15
                                          %
                                          
                                          
                                          $
                                          298,754Customer
      B
                                          
                                          
                                          1,440,245
                                          
                                          
                                          
                                          13
                                          %
                                          
                                          
                                          
                                          443,308Customer
      C
                                          
                                          
                                          1,279,003
                                          
                                          
                                          
                                          12
                                          %
                                          
                                          
                                          
                                          434,285Customer
      D
                                          
                                          
                                          1,277,377
                                          
                                          
                                          
                                          12
                                          %
                                          
                                          
                                          
                                          270,026Customer
      E
                                          
                                          
                                          1,253,951
                                          
                                          
                                          
                                          12
                                          %
                                          
                                          
                                          
                                          407,072Customer
      F
                                          
                                          
                                          1,158,256
                                          
                                          
                                          
                                          11
                                          %
                                          
                                          
                                          
                                          268,095Customer
      G
                                          
                                          
                                          1,088,408
                                          
                                          
                                          
                                          10
                                          %
                                          
                                          
                                          
                                          372,138Total:
                                          
                                          $
                                          9,123,589
                                          
                                          
                                          
                                          85
                                          %
                                          Total:
                                          
                                          $  2,493,678





(b)         Major
vendors





For the
year ended December 31, 2008, vendors who account for 10% or more of purchases
are presented as follows:


Year
      ended December 31, 2008
                              
                              
                              
                              December
      31, 2008Vendors
                              
                              Purchases
                              
                              
                              Percentage
                                of
      purchases
                              
                              
                              
                              Accounts
                                payableVendor
      A
                              
                              $
                              2,301,282
                              
                              
                              
                              56
                              %
                              
                              
                              $
                              142,949Vendor
      B
                              
                              
                              1,776,923
                              
                              
                              
                              43
                              %
                              
                              
                              
                              309,615Total:
                              
                              $
                              4,078,205
                              
                              
                              
                              99
                              %
                              Total:
                              
                              $
                              452,564




F-27




ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))




For the
year ended December 31, 2007, vendors who account for 10% or more of purchases
are presented as follows:


Year
      ended December 31, 2007
                            
                            
                            
                            December
      31, 2007Vendors
                            
                            Purchases
                            
                            
                            Percentage
                              of
      purchases
                            
                            
                            
                            Accounts
                              payableVendor
      A
                            
                            $
                            1,726,923
                            
                            
                            
                            39
                            %
                            
                            
                            $
                            366,785Vendor
      B
                            
                            
                            1,036,154
                            
                            
                            
                            23
                            %
                            
                            
                            
                            -Vendor
      C
                            
                            
                            732,051
                            
                            
                            
                            16
                            %
                            
                            
                            
                            111,218Total:
                            
                            $
                            3,495,128
                            
                            
                            
                            78
                            %
                            Total:
                            
                            $
                            478,003





(c)         Credit
risk





Financial
instruments that potentially subject the Company to significant concentrations
of credit risk consist principally of cash and trade accounts receivable. The
Company performs ongoing credit evaluations of its customers’ financial
condition, but does not require collateral to support such
receivables.





(d) Interest
rate risk





As the
Company has no significant interest-bearing assets, the Company’s income and
operating cash flows are substantially independent of changes in market interest
rates.





The
Company’s interest-rate risk arises from short-term and long-term borrowings.
Borrowings issued at variable rates expose the Company to cash flow
interest-rate risk. Borrowings issued at fixed rates expose the Company to fair
value interest-rate risk. Company policy is to maintain approximately all of its
borrowings in fixed rate instruments. As of December 31, 2008, all of borrowings
were at fixed rates.





(e)         Exchange
rate risk





The
reporting currency of the Company is US$, to date the majority of the revenues
and costs are denominated in RMB and a significant portion of the assets and
liabilities are denominated in RMB. As a result, the Company is exposed to
foreign exchange risk as its revenues and results of operations may be affected
by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates
against US$, the value of RMB revenues and assets as expressed in US$ financial
statements will decline. The Company does not hold any derivative or other
financial instruments that expose to substantial market risk.





20.         COMMITMENTS
AND CONTINGENCIES





(a)         Litigation





The
Company is subject to a limited number of claims and actions that arise in the
ordinary course of business. The litigation process is inherently uncertain, and
it is possible that the resolution of the Company exists and future litigation
may adversely affect the Company. Management is unaware of any matters that may
have a material impact on the Company's financial position, results of
operations, or cash flows.


F-28




ASIA
GLOBAL HOLDINGS CORP.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


FOR
THE YEARS ENDED DECEMBER 31, 2008 AND 2007


(Currency
expressed in United States Dollars (“US$”))


(b)         Operating
leases





The
subsidiaries operating in Hong Kong and the PRC was committed under various
non-cancelable operating leases with a term of 2 years with fixed monthly
rentals, due June 15, 2010. Total rent expenses for the years ended December 31,
2008 and 2007 was $94,152 and $152,338.





Future
minimum rental payments due under a non-cancelable operating lease are as
follows:


Year
      ending December 31:2009
                
                $
                84,4322010
                
                
                33,616Total:
                
                $
                118,048





(c)         Contractual
obligations





The
Company has incurred various contractual obligations and financial commitments
in the normal course of the operating and financing activities. As of December
31, 2008, the Company has the future contractual cash obligations with the
aggregate interest charges and principals totaling $566,696 due with the next 12
months.





21.         COMPARATIVE
FIGURES





Certain
amounts in the prior periods presented have been reclassified to conform to the
current period financial statement presentation.


F-29


Item
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure





Based on
their evaluation as of December 31, 2008, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures (as
definded in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended) were sufficiently effective to ensure that the information
required to be disclosed by us in this Annual Report on Form 10-K was recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and instructions for Form 10-K.





ITEM
9A(T). Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





In
accordance with the rules required by the SEC for information required to be
disclosed, in this annual report, the Company’s management evaluated, with the
participation of the Company’s Chief Executive Officer and Chief Financial
Officer, the effectiveness and the operation of the Company’s disclosure
controls and procedures. Based upon their evaluation of these disclosure
controls and procedures, Chief Executive Officer and Chief Financial Officer
have concluded that the Company’s disclosure controls and procedures were
effective for accumulating recording, processing, summarizing and communicating,
to the Company’s management, to ensure timely decisions regarding disclosure
information needed within the time periods specified in the SEC rules and
forms.





Management’s
Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as such term is defined in Exchange Act Rule
13a - 15(f). Our internal control system was designed to provide reasonable
assurance to our management and the Board of Directors regarding the preparation
and fair presentation of published financial statements. All internal control
systems, no matter how well designed have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation. Our management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2008. In making this assessment, our management used the
criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") in Internal Control - Integrated Framework -
Guidance for Smaller Public Companies (the COSO criteria). Based on our
assessment we believe that, as of December 31, 2008, our internal control over
financial reporting is effective based on those criteria.





This
report does not include an attestation report by our independent registered
public accounting firm, regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm pursuant to temporary
rules of the SEC that permits the Company to only provide management’s report in
this Form 10-K.





Changes
in Internal Control over Financial Reporting





There
were no changes in our internal control over financial reporting that occurred
during the year ended December 31, 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.





Item
9B. Other Information





On
October 30, 2008, the Company filed with the Commission a Form 8-K stating that
it had accepted the resignation of Michael Mak as the Chief Executive Officer,
Interim Chief Financial Officer and Director of the Company.  The
Company appointed John Leper to serve as Chief Executive Officer and Interim
Chief Financial Officer and Hin Lee Kwong as a Director.





On
December 2, 2008, the Company filed with the Commission a Form 8-K stating that
Michael Mak would surrender 150,000 shares of the Series A Convertible Preferred
Stock he has received pursuant to an employment agreement.


Page 24
of 33





PART
III.





Item 10. Directors, Executive
Officers and Corporate Governance.





DIRECTORS
AND EXECUTIVE OFFICERS





Our
directors and officers, as of December 31, 2008, are set forth below. The
directors hold office for their respective term and until their successors are
duly elected and qualified. Vacancies in the existing Board are filled by a
majority vote of the remaining directors. The officers serve at the will of the
Board of Directors.





Name
              
              Age
              
              Position
              
              Director
      SinceJohn
      A. Leper
              
              53
              
              Chief
      Executive Officer, Interim
              
              2004Financial
      Officer and DirectorHin
      Lee Kwong
              
              50
              
              Secretary
      and Director
              
              2008





John A.
Leper is our Secretary and director. Prior joining us, Mr. Leper served as our
Vice President in charge of developing our China-USA trade portal called
TradeDragon, as well as consulting in the areas of marketing, business
development, corporate planning and strategy. From May 2001 to September 2003,
Mr. Leper served as the Chief Marketing Officer and Strategist of Stanford
International Holding Corporation, our parent company. From 1994 to 2001, Mr.
Leper served as the President and was the Founder of TransMedia Communications,
a new-media company with a focus on developing and marketing new consumer
products and services.





Hin Lee
Kwong, 50, has served as a Director of the Company’s wholly-owned subsidiary
Sino Trade-Intelligent Development Corp. Ltd. (“Sino Trade”). Since joining Sino
Trade, Mr. Kwong has been responsible for the overall strategy and
administrative affairs of the Company. Prior to joining Sino Trade, Mr. Kwong
served in key management roles in several Hong Kong and PRC companies
specializing in the areas of business development and marketing. Mr. Kwong
served as Production and Quality Control Manager for Outboard Marine Asia
Limited for eight years, managing the Company’s production facilities. Mr. Kwong
then joined LTK Industrial Limited, an electrical and power cable manufacturing
company, as Product Marketing Manager and oversaw their production and product
management. In 1991, Mr. Kwong joined SongLam Industrial Limited as Business
Development Manager. With SongLam, Mr. Kwong’s primary responsibility was
promotion and marketing of the Company’s portfolio of merchandises.





(a)
Significant Employees





Other
than our officers, there are no employees who are expected to make a significant
contribution to our corporation.





(b)
Family Relationships





Our
directors currently have terms which will end at our next annual meeting of the
stockholders or until their successors are elected and qualify, subject to their
prior death, resignation or removal. Officers serve at the discretion of the
Board of Directors. There are no family relationships among any of our directors
and executive officers. There are no family relationships among our officers,
directors, or persons nominated for such positions.





LEGAL
PROCEEDINGS





No
officer, director, or persons nominated for these positions, and no promoter or
significant employee of our corporation has been involved in legal proceedings
that would be material to an evaluation of our management.





AUDIT
COMMITTEE





Our Board
of Directors does not have a separate audit committee. The Board has determined
that it does not have a member of its Board that qualifies as an "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K,
and is "independent" as the term is used in Item 407(d) of Regulation
S-K.


Page 25
of 33





We
believe that the members of our Board of Directors are collectively capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting. However, the Company is
considering appointing an independent qualified financial expert as well as an
additional independent professional to its Board of Directors in order to
strengthen and improve its internal disclosure controls and procedures. We are
also in the process of searching for qualified candidates to serve as our Chief
Financial Officer and/or on our audit committee and as an audit committee
financial expert.





CODE OF
ETHICS





We are in
the process of preparing a code of ethics that applies to our principal Chief
Executive Officer, Chief Financial Officer, principal accounting officer or
controller, or persons performing similar functions.





COMPLIANCE
WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934





Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and executive officers and beneficial holders of more than 10% of our common
stock to file with the Commission initial reports of ownership and reports of
changes in ownership of our equity securities. As of the date of this Report,
the Company is in the process of reviewing all transactions that may cause
initial reports of ownership or changes in ownership to be filed on Form 3
(Initial Statement of Beneficial Ownership), Form 4 (Changes in Beneficial
Ownership) and Form 5 (Annual Statement of Changes in Beneficial Ownership)
which is required to be filed under applicable rules of the
Commission.





Item
11. Executive Compensation





COMPENSATION
DISCUSSION AND ANALYSIS





Background
and Compensation Philosophy





Our board
of directors consists of two individuals:  (1) John Leper, our Chief
Executive Officer, Interim Chief Financial Officer; and (2) Hin Lee Kwong, our
Secretary.  Our board of directors have historically determined the
compensation to be paid to our executive officers based on our financial and
operating performance and prospects, the level of compensation paid to similarly
situated executives in comparably sized companies and contributions made by the
officers’ to our success.  Each of the named officers will be measured
by a series of performance criteria by the board of directors, or the
compensation committee when it is established, on a yearly
basis.  Such criteria will be set forth based on certain objective
parameters such as job characteristics, required professionalism, management
skills, interpersonal skills, related experience, personal performance and
overall corporate performance.





Our board
of directors have not adopted or established a formal policy or procedure for
determining the amount of compensation paid to our executive
officers.





As our
executive leadership and board of directors grow, our board of directors may
decide to form a compensation committee charged with the oversight of executive
compensation plans, policies and programs.





Elements
of Compensation





We
provide our executive officers solely with a base salary to compensate them for
services rendered during the year.  Our policy of compensating our
executives with a cash salary has served us well.  Because of our
history of attracting and retaining executive talent, we do not believe it is
necessary at this time to provide our executives discretionary bonuses, equity
incentives, or other benefits in order for us to continue to be
successful.





Base
Salary





The
yearly base salary of our former CEO Mr. Michael Mak for the years of 2008 and
2007 was $60,000 of which $0 was paid in 2007 and $0 was paid in 2008. Mr. John
Leper and Mr. Hin Lee Kwong received no salary in 2008 or 2007.





Discretionary
Bonus





We have
not provided our executive officers with any discretionary bonuses at the moment
but our board of directors may consider the necessity of such scheme in the
future based on our financial and operating performance and prospects, the level
of compensation paid to similarly situated executives in comparably sized
companies and contributions made by the officers’ to our success.


Page 26
of 33





Equity
Incentives





We have not established equity based incentive
program and have not granted stock based awards as a component of compensation,
apart from the common stock award of approximately 2,000,000 shares of
restricted common stock and an award of 500,000 shares of series A convertible
preferred stocktoour former CEOMr. Michael Mak as an employment
signing bonus.  In the future, we may adopt and establish an equity
incentive plan pursuant to which awards may be granted if our board of directors determines that it is in the best interests of our stockholdersand the Company to do so.




Retirement
Benefits





Our
executive officers are not presently entitled to company-sponsored retirement
benefits.





Perquisites





We have
not provided our executive officers with any material perquisites and other
personal benefits and, therefore, we do not view perquisites as a significant or
necessary element of our executive’s compensation.





Deferred
Compensation





We do not
provide our executives the opportunity to defer receipt of annual
compensation.





The
following table sets forth information for the period indicated with respect to
the persons who served as our CEO, CFO and other most highly compensated
executive officers who served on our board of
directors.





SUMMARY
COMPENSATION TABLE





Name and
                                Position
                              
                              Year
                              
                              Salary
                                ($)
                              
                              
                              Bonus
                                Shares ($)
                              
                              
                              Stock
                                Awards
                                ($)
                              
                              
                              Option
                                Awards
                                ($)
                              
                              
                              Non-Equity
                                Incentive Plan
                                Compensation
                                ($)
                              
                              
                              Nonqualified
                                Deferred
                                Compensation
                                Earnings ($)
                              
                              
                              All Other
                                Compensation
                                ($)
                              
                              
                              Total
                                ($)Michael
      Mak, Former CEO & CFO
                              
                              20082007
                              
                              
                              60,000
                              
                              
                              
                              260,877
                              (1)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              320,877John
      Leper,CEO
                              
                              2008
                              
                              
                              0
                              
                              
                              
                              82,500
                              (2)
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              82,5002007
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0





(1)
            Bonus
      awards represented 2,000,000 shares of restricted common stock payable to
      the Company’s former President, Mr. Michael Mak as a signing bonus to be
      earned over one year as part of a compensation package upon the execution
      of the employment agreement


(2)
            Bonus
      shares represented 1,000,000 shares of restricted common stock payable to
      the Company’s Chief Executive Officer, Mr. John Leperas remuneration
      compensation for his services





SERVICE
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS





On
October 29, 2008, the Company accepted the resignation of Michael Mak as the
Company’s Chief Executive Officer, Chief Financial Officer and as a Director.
Previously, on August 18, 2006, we entered
into an Employment Agreement with Mr. Michael Mak which was terminated upon his
resignation.  Prior to the acceptance of Mr. Mak’s resignation, the
Board of Directors appointed John Leper, Chairman of the Board of Directors,
Chief Executive Officer and Chief Financial Officer. The Board also appointed
Hin Lee Kwong as Secretary and as a Director of the Board.




Page 27
of 33


We will
bear all travelling and travel-related expenses, entertainment expenses and
other out-of-pocket expenses reasonably incurred by Mr. Leper or Mr. Kwong in
the process of discharging their respective duties on our behalf.





Except as
disclosed herein, we have no other existing
or proposed agreements with any of our
officers and directors.





BONUSES
AND DEFERRED COMPENSATION





We do not
have any deferred compensation or retirement plans.  We do not have a
compensation committee; all decisions regarding compensation are determined by
our entire board of directors.





OPTION
GRANTS IN THE LAST FISCAL YEAR





We did
not grant any options or stock appreciation rights to our named executive
officers or directors in the fiscal year 2008.  As of December 31,
2008, none of our executive officers or directors owned any of our derivative
securities.





INDEMNIFICATION
OF DIRECTORS AND EXECUTIVE OFFICERS





Our
bylaws provide for the indemnification of our present and prior directors and
officers or any person who may have served at our request as a director or
officer of another corporation in which we own shares of capital stock or of
which we are a creditor, against expenses actually and necessarily incurred by
them in connection with the defense of any actions, suits or proceedings in
which they, or any of them, are made parties, or a party, by reason of being or
having been director(s) or officer(s) of us or of such other corporation, in the
absence of negligence or misconduct in the performance of their duties. This
indemnification policy could result in substantial expenditure by us, which we
may be unable to recoup.





Insofar
as indemnification by us for liabilities arising under the Securities Exchange
Act of 1934 may be permitted to our directors, officers and controlling persons
pursuant to provisions of the Amended Articles of Incorporation and Bylaws, or
otherwise, we have been advised that in the opinion of the SEC, such
indemnification is against public policy and is, therefore, unenforceable. In
the event that a claim for indemnification by such director, officer or
controlling person of us is in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person in
connection with the securities being offered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
us is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.





At the
present time, there is no pending litigation or proceeding involving a director,
officer, employee or other agent of ours in which indemnification would be
required or permitted. We are not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.





Compensation
of Directors





Members
of our Board of Directors receive no compensation for such service.





Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.





Security
Ownership - Certain Beneficial Owners





Beneficial
ownership is shown as of March 24, 2008, for shares held by (i) each person or
entity known to us to be the beneficial owner of more than 5% of our issued and
outstanding shares of common stock based solely upon a review of filings made
with the Commission and our knowledge of the issuances by us, (ii) each of our
directors, (iii) our Chief Executive Officer and our three other most highly
compensated officers whose compensation exceeded $100,000 during the fiscal year
ended December 31, 2007, or the Named Executive Officers, and (iv) all of our
current directors and executive officers as a group. Unless otherwise indicated,
the persons listed below have sole voting and investment power with respect to
the shares and may be reached at Millenium City 1, 32/F, Tower 1, Millenium
City, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong


Page 28
of 33


Security
Ownership - Certain Beneficial Owners





AmountAnd
                        
                        
                        
                        
                        
                        PercentageNature
      of
                        
                        
                        
                        
                        
                        of
      ClassBeneficial
                        
                        
                        
                        
                        
                        BeneficiallyBeneficial Owner (including
      address)
                        Title of class
                        
                        Ownership
      (1)
                        
                        
                        Total
                        
                        
                        OwnedStanford
      International Holding Corporation(2)
                        Common
                        
                        
                        11,500,000
                        D
                        
                        
                        11,500,000
                        
                        
                        
                        8.6
                        %834
      S. Broadway, 5th
      Floor, Los Angeles, CA 90014





Notes:





(1)
            (D)
      stands for direct ownership; (I) stands for indirect
    ownership





(2)
            Michael
      Mak, our former Chief Executive Officer, former interim Chief Financial
      Officer and former Director, is also the Chief Executive Officer and
      beneficial owner of 100% of Stanford International Holding Corporation
      (“Stanford”).  According to the Schedule 13D filed with the
      Commission on June 28, 2004, by Stanford, in which Stanford owns
      11,500,000 shares (approximately 8.6%) of our issued and outstanding
      Common Stock.





Security
Ownership – Management





AmountAnd
                              
                              
                              
                              
                              
                              PercentageNature
      of
                              
                              
                              
                              
                              
                              of
      ClassBeneficial
                              
                              
                              
                              
                              
                              BeneficiallyBeneficial Owner (including
      address)
                              
                              Title
      of class
                              
                              
                              Ownership
      (1)
                              
                              
                              Total
                              
                              
                              OwnedMichael
      Mak (3)
                              
                              Common
                              
                              
                              
                              22,000,000
                              (2) D
                              
                              
                              22,000,000
                              
                              
                              
                              16.5
                              %John
      Leper (4)(5)-
                              
                              
                              
                              1,000,000
                              
                              
                              
                              1,000,000
                              
                              
                              
                              0.75
                              %All
      officers & directors (as a group)
                              
                              
                              -
                              
                              
                              
                              23,000,000
                              
                              
                              
                              23,000,000
                              
                              
                              
                              17.2
                              %





Notes:





(1)
            (D)
      stands for direct ownership; (I) stands for indirect
    ownership





(2)
            Pursuant
      to an Employment Agreement (dated August 18, 2006) with Mr. Michael Mak,
      our former Chief Executive Officer, Mr. Mak received 500,000 shares of
      Series A Convertible Preferred Stock (“Series A Shares”), which is
      convertible to 100,000,000 shares of the Company’s Common
      Stock.  On October 9, 2007, Mr. Mak requested that 100,000
      shares of the Series A Shares be converted into 20,000,000 144 Restricted
      shares of the Company’s Common Stock, which have been included as part of
      Mr. Mak’s total beneficial ownership. On November 17, 2008, Mr. Mak
      notified the Board of Directors that he was surrendering 150,000 shares of
      Series A Stock back to the Company for cancellation. The Board of
      Directors approved the surrendering of the 150,000 shares of the Series A
      Stock. After the return of the 150,000 shares of the Series A Stock, Mr.
      Mak still controls 250,000 shares of the Series A Stock. The Company
      contacted its transfer agent to cancel the 150,000 shares of the Series A
      Stock.





(3)
            Mr.
      Michael Mak, our former Chief Executive Officer, former interim Chief
      Financial Officer and former director, has 250,000 shares of Series A
      Convertible Preferred Stock (“Series A Shares”), which is convertible to
      50,000,000 Shares of the Company’s Common Stock. Pursuant to the
      Certificate of Designation, the Series A Shares have the right to vote as
      if converted. If Mr. Mak was to convert all his Series A Shares, the total
      outstanding would increase to 184,862,000 shares. Mr. Mak, through his
      holdings and that of Stanford would then control 45.2% of the Company’s
      outstanding shares.




Page 29
of 33


(4)
            Officer





(5)
            Director





Changes
in Control





There are
no arrangements, known to the Registrant, including any pledge by any person of
securities of the Registrant which may at a subsequent date result in a change
in control of the Registrant.





Securities
Authorized for Issuance Under Equity Compensation Plans





None.





Item
13. Certain Relationships and Related Transactions, and Director
Independence





Premises


On
March 1, 2004, we began renting warehouse and office facilities consisting of
approximately 5,000 square feet from Stanford (which leases the premises from an
unrelated third party) on a month-to-month basis at $6,000 per month. In July,
2004, our monthly rental obligation decreased to $3,500. In July, 2005, our
monthly rental obligation decreased to $800. In November of 2005, we started to
pay a monthly rent of $995 directly to this unrelated third party. During the
twelve months ended December 31, 2007, payments to Stanford related to rent were
$13,885 (2006: $9,600).





Amounts
Due From/To Affiliate





As of
December 31, 2008, a balance of $8,452 due to the former Chief Executive Officer
and the former Chief Financial Officer of the Company, Mr. Michael Mak,
represented temporary advance to the Company which was unsecured, interest-free
and had no fixed repayment term.





Director
Independence





At this
time, the Company has no directors that meet the requirements as “independent”
(as defined by Item 407(a)(1) of Regulation S-K).





Item
14. Principal Accountant Fees and Services.





The
following is a summary of the fees billed to us by HLB Hodgson Impey Cheng
(“HLB”), the Company’s former auditors, Clancy and Co., P.L.L.C. ("Clancy" for
the services rendered during the year ended December 31, 2007) and the Company's
current auditors, ZYCPA Company Limited (formerly Zhong Yi (Hong Kong) C.P.A.
Company Limited) ("ZYCPA") for professional services rendered for the years
ended December 31, 2008 and 2007:





2008
                          
                          
                          2007Service
                          
                          ZYCPA
                          
                          
                          ZYCPA
                          
                          
                          HLB
                          
                          
                          ClancyAudit
      Fees
                          
                          $
                          40,000
                          
                          
                          $
                          70,000
                          
                          
                          $
                          32,000
                          
                          
                          $
                          16,750Audit
      Related
                          
                          
                          
                          
                          
                          
                          3,500
                          
                          
                          
                          5,000FeesTax
      FeesAll
      Other FeesTOTAL
                          
                          $
                          40,000
                          
                          
                          $
                          73,500
                          
                          
                          $
                          37,000
                          
                          
                          $
                          16,750





Audit
fees consist of the aggregate fees billed for services rendered for the audit of
our annual financial statements, the reviews of the financial statements
included in our Forms 10-Q and for any other services that are normally provided
by our independent auditors in connection with our statutory and regulatory
filings or engagements.




Page 30
of 33


Audit
related fees consist of the aggregate fees billed for professional services
rendered for assurance and related services that reasonably related to the
performance of the audit or review of our financial statements that were not
otherwise included in Audit Fees.





Tax fees
consist of the aggregate fees billed for professional services rendered for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal, state and local tax compliance and consultation in connection
with various transactions and acquisitions.





All other
fees consist of the aggregate fees billed for products and services provided by
our independent auditors and not otherwise included in Audit Fees, Audit Related
fees or Tax Fees.





Item
15. Exhibits, Financial Statement Schedules.





(a)
Financial Statements





The
financial statements are set forth under Item 8 of this Annual Report on
Form 10-K. Financial statement schedules have been omitted since they are either
not required, not applicable, or the information is otherwise
included.





(b)
Exhibits





2.1
            Articles
      of Incorporation filed with the Nevada Secretary of State on February 1,
      2002 (Exhibit 3.1 to Registration Statement on Form SB-2 filed with the
      Commission on April 25, 2002)





2.2
            First
      Amendment to Articles of Incorporation filed with the Nevada Secretary of
      State on May 20, 2004 (Exhibit 3.1 to Form 8-K/A filed with the Commission
      on May 26, 2004)





2.3
            Second
      Amendment to Articles of Incorporation filed with the Nevada Secretary of
      State on June 9, 2006 (Exhibit 3.1 to Form 8-K filed with the Commission
      on July 31, 2006)





2.4
            Third
      Amendment to Articles of Incorporation filed with the Nevada Secretary of
      State on August 22, 2006 (Exhibit 3.1 to Form 8-K filed with the
      Commission on September 13, 2006)





2.5
            Bylaws
      (Exhibit 3.4 to Registration Statement on Form SB-2 filed with the
      Commission on April 25, 2002)





2.6
            Amended
      Bylaws (Exhibit 3.2 to Form 10Q-SB filed with the Commission on February
      19, 2003)





3.1
            Form
      of Stock Certificate (Exhibit 4.1 to Registration Statement on Form SB-2
      filed with the Commission on April 25,
2002)





3.2
            Demand
      Promissory Note in the principal amount of US$100,000, dated April 3, 2002
      from the Company in favor of Archer Pacific Management Inc. (Exhibit 4.2
      to Form SB-2 filed with the Commission on April 25,
  2002)





3.3
            Demand
      Promissory Note in the principal amount of US$39,010.97, dated March 8,
      2002 from the Company in favor of Archer Pacific Management Inc. (Exhibit
      4.3 to Form SB-2 filed with the Commission on April 25,
    2002)





3.4
            Demand
      Promissory Note in the principal amount of US$19,506.16, dated March 8,
      2002 from the Company in favor of Fred Tse (Exhibit 4.4 to Form SB-2 filed
      with the Commission on April 25,
2002)





3.5
            Assignment,
      dated June 30, 2004, between the Company and Archer Pacific Management
      Inc. (Exhibit 10.1 to Form 10-QSB filed with the Commission on November
      22, 2004).





3.6
            Assignment,
      dated June 30, 2004, between the Company and Fred Tse (Exhibit 10.2 to
      Form 10-QSB filed with the Commission on November 22,
    2004).





3.7
            Share
      Exchange Agreement (Exhibit 10.1 to Form 8-K filed with the Commission on
      March 9, 2004)





4.1
            Form
      of Subscription Agreement (Exhibit 99.1 to Form SB-2 filed with the
      Commission on April 25, 2002)





6.1
            Management
      Agreements (Exhibit 10.1through 10.12 to Form 8-K filed with the
      Commission on November 3, 2006)




Page 31
of 33





6.2
            Employment
      Agreement with Michael Mak (Exhibit 10.1 to Form 8-K filed with the
      Commission on October 27, 2006)





21
            *Subsidiaries
      List (filed herewith)





24
            *Power
      of Attorney (filed herewith) (see signature
  page)





31.1
            *Certification
      of Chief Executive Officer pursuant to 13a-14 and 15d-14 of the Exchange
      Act (filed herewith)





31.2
            *Certification
      of Chief Financial Officer pursuant to 13a-14 and 15d-14 of the Exchange
      Act (filed herewith)





32.1
            *Certificate
      pursuant to 18 U.S.C. ss. 1350 for John Leper, Chief Executive Officer
      (filed herewith)





32.2
            *Certificate
      pursuant to 18 U.S.C. ss. 1350 for John Leper, Chief Financial Officer
      (filed herewith)





* - Filed
herein





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




ASIA
      GLOBAL HOLDINGS CORP./s/ John A. LeperJOHN
      A. LEPER, Chief Executive Officer(Principal
      executive officer)




/s/ John A. LeperJOHN
      A. LEPER, Interim Chief Financial Officer(Principal
      financial officer)Dated:
      April 15, 2009





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities indicated on April 15, 2008.


Page 32
of 33


Each
person whose signature appears below constitutes and appoints John A. Leper as
his true and lawful attorneys-in-fact and agents, each acting alone, with full
power of substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this Annual
Report on Form 10-K and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the U.S. Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.





Signature
                        
                        Title/s/
      John A. Leper
                        
                        Chief
      Executive Officer, Interim Chief Financial
                          Officer
      (Principal executive officer and Director)John
      A. Leper/s/
      Hin Lee Kwong
                        
                        Secretary
      and DirectorHin
      Lee Kwong




Page 33
of 33