**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  **FORM
        10-Q**
 
 (Mark
                  One)x
              **QUARTERLY
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934**For
                  the quarterly period ended:
              **March
                  31, 2008**ORo
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934**For
                  the transition period from _______________ to ______________Commission
                  file number:
              **000-19644**
 
 **CHINA
        BROADBAND, INC.**
 (Exact
        name of small business issuer as specified in its charter)
  **Nevada**
              
              **20-1778374**(State
                  or other jurisdiction of
                incorporation
                  or organization)
              
              (I.R.S.
                  Employer
                Identification
                  No.)**1900
                  Ninth Street, 3rd Floor**
                **Boulder,
                  Colorado 80302**
              
              **(303)
                  449-7733**(Address
                  of principal
                executive
                  offices)
              
              (Issuer’s
                  telephone number)
  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.
 Yes x No o
  Indicate
        by check mark whether the registrant is a shell company (as defined in
        Rule 12b-2 of the Exchange
        Act).
 Yes o No x
  As
        of May
        15, 2008, the issuer had 50,331,214 shares of Common Stock issued and
        outstanding.
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer, or a small reporting
        company:
 
 Large
                  accelerated filero
              Accelerated
                  fileroNon-accelerated
                  filero
              Smaller
                  reporting companyx
    
   **CHINA
        BROADBAND, INC.**
  **March
        31, 2008 FORM 10-Q QUARTERLY REPORT**
  **INDEX**
  PagePART
                  I - FINANCIAL INFORMATION
              F-1Item
                  1.**-**Financial Statements.
              F-1Consolidated
                  Balance Sheets as of
                March
                  31, 2008 (unaudited) and December 31, 2007
              F-1Consolidated
                  Statements of Operations for the
                Three
                  MonthsEnded
                  March 31, 2008 and 2007 (unaudited)
              F-2Consolidated
                  Statements of Cash Flows for the
                Three
                  Months Ended March 31, 2008 and 2007 (unaudited)
              F-3Notes
                  to Unaudited Consolidated Financial Statements
              F-4
                - F-12Item
                  2 - Management's Discussion and Analysis or Plan of
                  Operation.
              1-14Item
                  3 - Quantitative and Qualitative Disclosures About Market
                  Risk.
              14Item
                  4 - Controls and Procedures.
              14-15**PART
                  II - OTHER INFORMATION**
              16Item
                  1 - Legal Proceedings.
              16Item
                  2 - Unregistered Sales of Equity Securities and Use of
                  Proceeds.
              16Item
                  3 - Defaults Upon Senior Securities.
              16Item
                  4 - Submission of Matters to a Vote of Security Holders.
              16Item
                  5 - Other Information.
              16Item
                  6 - Exhibits.
              16
   
 
 **Forward
        Looking Statements**
  This
        Quarterly Report on Form 10-Q and other reports filed by China Broadband,
        Inc.
        (the “company” ,“we”, “us” or “our”) contains
        or may contain forward looking statements and information that are based
        upon
        beliefs of, and information currently available to, the management of the
        company as well as estimates and assumptions made by its management. When
        used
        in the filings, the words “may”, “will”, “should”, “estimates”,
 “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan”
or the negative of these terms and similar expressions as they relate to
        the
        company or its management, identify forward looking statements. Such statements
        reflect the current view of the company with respect to future events and
        are
        subject to risks, uncertainties, assumptions and other factors relating to
        the
        company. Such forward-looking statements include statements regarding, among
        other things:
  ·
            our
                ability to satisfy our obligations under our agreements with respect
                to
                our acquisition of the cable broadband business of Jian Guangdian
                Jiahe
                Digital Television Co., Ltd. located in mainland People’s Republic of
                China (the “PRC” or “China”),  ·
            our
                ability to complete our payments relating to the recent acquisition
                of
                Shandong Radio & Broadcasting Newspaper Group in the PRC if its
                performance goals are met,  ·
            a
                complex and changing regulatory environment in the PRC that limits
                our
                ability to pay dividends, currently permits only partial foreign
                ownership
                of certain PRC based businesses and that requires us to negotiate,
                acquire
                and maintain separate government licenses to operate each internet
                business that we would like to acquire (or any other business we
                would
                like to acquire in the PRC),  ·
            our
                ability to obtain government consent to introduce certain new services
                to
                existing or new customers,  ·
            our
                ability to implement complex operating and revenue sharing arrangements
                that will enable us to consolidate our financial statements with
                our
                partially owned PRC based business or joint ventures, and to modify
                and
                adapt these business arrangements from time to time to satisfy United
                States accounting rules,  ·
            our
                ability to enter into agreements with and to consummate acquisitions
                of
                businesses in the PRC in the Shandong region and
                elsewhere,  ·
            socio-economic
                changes in the regions in the PRC that affect consumer internet
                subscriptions,  ·
            the
                ability of the PRC government to terminate or elect to not renew
                any of
                our licenses for various reasons or to nationalize our industry,
                and  ·
            our
                anticipated needs for working capital.  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. Except as required by applicable law, including
        the
        securities laws of the United States, we do not intend to update any of the
        forward-looking statements to conform these statements to actual
        results.
  
 **PART
        I - FINANCIAL INFORMATION**
 **Item
        1.** **Financial
        Statements**
 
 **China
        Broadband, Inc. and Subsidiaries**
 **CONSOLIDATED
        BALANCE SHEETS**
 **March
                    31,**
                
                **December
                    31,****2008**
                
                **2007****(Unaudited)****Assets**Current
                    assets:Cash
                
                $
                4,716,852
                
                $
                472,670Accounts
                    receivable
                
                
                98,620
                
                
                136,655Inventory
                
                
                697,185
                
                
                642,313Prepaid
                    expenses
                
                
                14,531
                
                
                14,781Other
                    current assets
                
                
                32,161
                
                
                73,947Total
                    current assets
                
                
                5,559,349
                
                
                1,340,366Property
                    and equipment, net
                
                
                10,370,754
                
                
                10,333,105Intangible
                    asset
                
                
                661,770
                
                
                670,478Other
                    assets
                
                
                740,736
                
                
                -Total
                    assets
                
                $
                17,332,609
                
                $
                12,343,949**Liabilities
                    and Shareholders’ Equity**Current
                    liabilities:Accounts
                    payable
                
                $
                691,340
                
                $
                835,257Accrued
                    expenses
                
                
                743,175
                
                
                554,073Payable
                    to Jinan Parent
                
                
                3,455,811
                
                
                3,308,443Other
                    current liabilities
                
                
                117,550
                
                
                25,905Total
                    current liabilities
                
                
                5,007,876
                
                
                4,723,678Convertible
                    notes payable
                
                
                4,488,700
                
                
                -Deferred
                    tax liability
                
                
                121,905
                
                
                124,082Total
                    liabilities
                
                
                9,618,481
                
                
                4,847,760Minority
                    interest in Jinan Broadband
                
                
                4,817,832
                
                
                4,960,601Common
                    shares to be issued
                
                
                -
                
                
                410,053Commitments
                    and contingenciesShareholders’
                    equity:Preferred
                    stock $.001 par value; 5,000,000 shares authorized,no
                    shares issued and outstanding
                
                
                -
                
                
                -Common
                    stock $.001 par value; 95,000,000 shares authorized,50,255,599
                    and 50,048,000 issued and outstanding
                
                
                50,256
                
                
                50,048Additional
                    paid-in capital
                
                
                11,661,754
                
                
                10,485,874Accumulated
                    deficit
                
                
                (9,405,771
                )
                
                (8,808,146
                )Accumulated
                    other comprehensive income
                
                
                590,057
                
                
                397,759Total
                    shareholders’ equity
                
                
                2,896,296
                
                
                2,125,535Total
                    liabilities and shareholders’ equity
                
                $
                17,332,609
                
                $
                12,343,949
 
 See
        notes
        to consolidated financial statements.
 F-1
 
 **China
        Broadband, Inc. and Subsidiaries**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 ( **Unaudited** )
 **Three
                  Months Ended****March
                  31,**
              
              **March
                  31,****2008**
              
              **2007**Revenue
              
              $
              1,054,885
              
              **$**
              **-**Cost
                  of revenue
              
              
              352,198
              
              
              -Gross
                  profit
              
              
              702,687
              
              
              -Selling,
                  general and administrative expenses
              
              
              529,657
              
              
              164,704Professional
                  Fees
              
              
              137,253
              
              
              140,000Depreciation
              
              
              701,895
              
              
              -Loss
                  from operations
              
              
              (666,118
              )
              
              (304,704
              )Interest
                  and other expense, net
              
              
              (75,077
              )
              
              (4,227
              )Loss
                  before minority interest
              
              
              (741,195
              )
              
              (308,931
              )Minority
                  interest loss in Jinan Broadband
              
              
              142,768
              
              
              -Loss
                  before income taxes
              
              
              (598,427
              )
              
              (308,931
              )Income
                  tax benefit
              
              
              (802
              )
              
              -Net
                  loss
              
              $
              (597,625
              )
              $
              (308,931
              )**Net
                  loss per share:**Basic
              
              $
              (0.01
              )
              $
              (0.01
              )Diluted
              
              $
              (0.01
              )
              $
              (0.01
              )**Weighted
                  average shares outstanding:**Basic
              
              
              50,073,094
              
              
              36,036,293Diluted
              
              
              50,073,094
              
              
              36,036,293
  See
        notes
        to consolidated financial statements .
  F-2
  **China
        Broadband, Inc. and Subsidiaries**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 **Three
                    Months Ended****March
                    31,**
                
                **March
                    31,****2008**
                
                **2007**Cash
                    flows from operating activities:Net
                    loss
                
                $
                (597,625
                )
                $
                (308,931
                )Adjustments
                    to reconcile net loss to netcash
                    provided by (used in) operating activities:Stock
                    compensation expense
                
                
                34,539
                
                
                50,748Depreciation
                    and amortization
                
                
                710,603
                
                
                -Deferred
                    income tax
                
                
                (2,177
                )
                
                -Change
                    in assets and liabilitiesAccounts
                    receivable
                
                
                38,035
                
                
                -Inventory
                
                
                (54,872
                )
                
                -Prepaid
                    expenses and other assets
                
                
                42,036
                
                
                (27,570
                )Accounts
                    payable and accrued expenses
                
                
                45,185
                
                
                45,012Other
                
                
                (17,164
                )
                
                -Net
                    cash provided by (used in) operating activities
                
                
                198,560
                
                
                (240,741
                )Cash
                    flows from investing activities:Investment
                    in Jinan Broadband
                
                
                -
                
                
                (2,550,000
                )Investment
                    in Shandong Newspaper Joint Venture
                
                
                (300,000
                )
                
                -Acquisition
                    of property and equipment
                
                
                (739,544
                )
                
                (125
                )Net
                    cash used in investing activities
                
                
                (1,039,544
                )
                
                (2,550,125
                )Cash
                    flows from financing activities:Proceeds
                    from issuance of convertible notes payable
                
                
                4,850,000
                
                
                -Proceeds
                    from private placement offering
                
                
                -
                
                
                3,555,000Issuance
                    costs associated with privateplacement
                    and convertible notes
                
                
                (104,500
                )
                
                (345,414
                )Payable
                    to Jinan Parent
                
                
                339,666
                
                
                -Net
                    cash provided by financing activities
                
                
                5,085,166
                
                
                3,209,586Effect
                    of exchange rates changes on cash
                
                
                -
                
                
                5,341Net
                    increase in cash
                
                
                4,244,182
                
                
                424,061Cash
                    at beginning of period
                
                
                472,670
                
                
                103,170Cash
                    at end of period
                
                $
                4,716,852
                
                $
                527,231Supplemental
                    Cash Flow Information:Cash
                    paid for interest
                
                $
                -
                
                $
                10,490Notes
                    payable converted to common stock
                
                $
                -
                
                $
                325,000Value
                    assigned to shares issued as penalty for non-registration of
                    7%
                    convertible notes
                
                $
                422,178
                
                
                -Debt
                    issuance costs converted into convertible notes
                
                $
                121,250
                
                
                -Value
                    assigned to warrants issued to broker in lieu of cash for debt
                    issuance
                    costs
                
                $
                226,835
                
                
                -
 
 See
        notes
        to consolidated financial statements .
  F-3
  **China
        Broadband, Inc. and Subsidiaries**
 **Notes
        to Unaudited Consolidated Financial Statements**
 
 **1.**  **Basis
        of Presentation**
  China
        Broadband, Inc., a Nevada corporation and its subsidiaries (“China
        Broadband ”,
“we,”
        “us,” or “the Company”) owns
        and
        operates, through its indirect subsidiary in the People’s Republic of China
        (“PRC” or “China”), a cable broadband business based in the Jinan region of
        China and, effective as of May 1, 2008 (after the end of the quarter covered
        by
        this report), a television programming guide publication business joint venture
        in the Shandong Province of China (see Note 3 below). Through March 31, 2008,
        t he
        principal activities of the Company are to provide cable and wireless broadband
        services, principally internet services, Internet Protocol Point wholesale
        services, related network equipment rental and sales, and fiber network
        construction and maintenance.
 
 The
        unaudited consolidated financial statements included herein have been prepared
        by the Company, without audit, pursuant to the rules and regulations of the
        Securities and Exchange Commission. These unaudited consolidated financial
        statements should be read in conjunction with the financial statements and
        the
        notes thereto included in the Company's latest Annual Report on Form 10-KSB.
        The
        accompanying consolidated balance sheet as of December 31, 2007 has been
        derived
        from the audited balance as of that date included in the Form 10-KSB. In
        the
        opinion of management, this financial information reflects all adjustments
        necessary to present fairly the results for the interim periods. The results
        of
        operations for the three months ended March 31, 2008 are not necessarily
        indicative of the results to be expected for the year ending December 31,
        2008
        or any other subsequent period.
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect certain reported amounts and disclosures.
        Accordingly, actual results could differ from those estimates.
 
 **2.**   **Settlement
        Agreement and Convertible Note and Warrant Financing**
 
 On
        January 11, 2008, the Company entered into a Settlement Agreement (the
“Settlement Agreement”) by and among the Company and its subsidiaries, Stephen
        P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I.
        Lev,
        Wellfleet Partners, Inc., Yue Pu, Clive Ng, Chardan Capital Markets, LLC
        (“Chardan Capital”), Jaguar Acquisition Corporation (“Jaguar”), and China
        Cablecom Holdings, Ltd (“Cablecom Holdings”), pursuant to which the parties
        released certain potential claims against one another, as more fully set
        forth
        in this Note 2 below. As of March 31, 2008, certain events contemplated under
        the Settlement Agreement had not yet occurred and therefore the Company did
        not
        recognize any gain or loss during the three months ended March 31, 2008 related
        to this contingency. All events and conditions subsequent contemplated under
        the
        Settlement Agreement were thereafter satisfied in May 2008 and the Company
        expects to recognize a gain during the second quarter of 2008 from the
        Settlement Agreement and related transactions.
 
 Simultaneously,
        the Company consummated a private convertible note and warrant financing
        with
        gross proceeds of $4,850,000 (the “January 2008 Financing”), through Chardan
        Capital acting as Placement Agent and appointed three additional directors
        to
        the Company. The following is a summary only of the material terms of the
        Settlement Agreement, Employment Agreement Amendments and the January 2008
        Financing related agreements (including the note purchase agreement, the
        form of
        notes and form of warrants) which were filed as exhibits to our Current Report
        on Form 8-K dated January 11, 2008.
  F-4
  **Settlement
        Agreement**
  The
        Settlement Agreement was negotiated by the Company, its advisors and management
        and certain shareholders, for purposes of facilitating the Company’s business
        plan and expediting and facilitating the Company’s financing activities and
        avoiding disputes between management and certain investors and consultants
        concerning possible claims that such investors suggested might be brought
        against these principals for their activities in forming and operating China
        Cablecom and its entry into a merger with a subsidiary of Jaguar as being
        violative of their employment agreements with the Company. The Settlement
        Agreement provides, subject to the terms thereof, for general mutual releases
        of
        all executives and management and their affiliated entities and also provides
        for the modification of employment agreements of both Mr. Clive Ng, our Chairman
        and Mr. Yue Pu our Vice Chairman. The Settlement Agreement also calls for
        the
        transfer of certain securities by Mr. Ng to the Company and to certain of
        the
        Company’s shareholders and consultants, as elaborated further herein in exchange
        for releases in favor of the Company and management and their affiliates.
 
 Among
        other provisions, pursuant to the Settlement Agreement:
  ·
            Clive
                Ng agreed to transfer (and has since transferred), 390,000 shares
                of
                common stock of Cablecom Holdings (the “Cablecom Holdings Shares”) upon
                completion of the redomestication merger of Jaguar with Cablecom
                Holdings,
                the resulting surviving parent entity after the merger. The issuance
                of
                the 390,000 Cablecom Holdings Shares were conditioned upon, among
                other
                things, the consummation of the foregoing described merger and were
                to be
                transferred by Mr. Ng on an “as is basis”, except that such shares would
                have the same lock-up restrictions, registration or other rights,
                privileges or benefits as Mr. Ng has for all other shares to be issued
                to
                him by Cablecom Holdings. The 390,000 Cablecom Holdings Shares
                were transferred by Mr. Ng to the Company in April 2008 upon
                satisfaction of certain conditions in the Settlement Agreement, including,
                receipt of releases from certain parties listed therein and the shares
                have been registered for re-sale by Cablecom Holdings, subject to
                a lock
                up agreement.  ·
            The
                Company and each of Messrs. Ng and Pu, have agreed to modifications
                to the
                employment agreements of such persons (the “Employment Agreement
                Amendments”), reducing their time commitments to the Company and its
                subsidiary and providing that once replacement executive officers
                have
                been hired (and in the case of Mr. Ng, assuming Mr. Pu continues
                in his
                role as chief financial officer, eliminating his executive duties
                and he
                will only continue as the Chairman and a director of China Broadband
                and
                the Company), requiring in the case of Mr. Ng that he be subject
                to an
                ongoing obligation to offer acquisition candidates in the stand-alone,
                independent broadband business to China Broadband in the future (and
                recognizing that acquisition candidates involving acting as a joint
                venture provider of integrated cable television services in the People’s
                Republic of China and related activities, but which does not include
                the
                provision of Stand-Alone Broadband Services are the business of China
                Cablecom) and allowing them to continue to be involved with certain
                other
                activities and to continue in their executive capacities with Cablecom
                Holdings or its successor. In addition, Mr. Ng has waived his right
                to
                receive all accrued salary previously owed to him through January
                11,
                2008.  ·
            Mr.
                Ng assigned 7,017,814 shares of Common Stock owned beneficially by
                him to
                the investors (other than Chardan Capital which did not receive shares
                from Mr. Ng) in the private January 2008 Financing as described below,
                thereby facilitating the January 2008 Financing while avoiding additional
                dilution to the Company’s current stock and warrant
                holders.  ·
            Mr.
                Ng has transferred to certain private investors who acquired shares
                directly from him in July of 2007, an aggregate of 566,790 shares
                of
                Common Stock owned beneficially by him, in exchange for releases
                from such
                persons.  ·
            Chardan
                Capital,our
                placement agent for the January 2008 Financing and a party to the
                Settlement Agreement, completed the January 2008 Financing concurrently
                upon execution by all related parties of the Settlement
                Agreement.  ·
            Mr.
                David Zale, Mr. Jonas Grossman and Mr. James Cassano were appointed
                as
                directors joining Messrs. Yue Pu and Clive Ng on the
                board.  ·
            The
                Company agreed to extend the expiration dates of 4,000,000 warrants
                to
                purchase Common Stock at an exercise price of $2.00 per share, issued
                to
                certain private placement investors (“Investor Warrants”) in the Company’s
                private placement of common stock and warrants in 2007, from March
                of
                2009, through January 11, 2013, upon receipt of releases from holders
                of
                the Investor Warrants. All releases were obtained as of May 2, 2008,
                resulting in the modification of all of the Investor Warrants.  F-5
  ·
            The
                Company has offered to BCGU, LLC, WestPark Capital, Inc., Maxim Financial
                Corporation, who were issued 500,000, 640,000 and 3,974,800 warrants
                exercisable at $.60 per share in January of 2007, respectively, the
                right,
                at their discretion, to extend the exercisability period of their
                respective warrants through January 11, 2013 or, in the alternative,
                the
                right to receive a scrip right to execute the unexercised portion
                of their
                warrants, at any time between the time of expiration date of their
                unexercised warrants and continuing through January 11,
                2013. 
 **Simultaneous
        Closing of $4,971,250 Convertible Note and Warrant Financing, issuance of
        Shares
        and Warrants; January 2008 Financing**
 
 On
        January 11, 2008, simultaneously with the entry into the Settlement Agreement,
        we entered into and consummated a subscription agreement (the “Subscription
        Agreement”) with ten accredited investors (inclusive of Chardan Capital) in the
        January 2008 Financing with respect to the issuance of an aggregate of
        $4,971,250 principal amount of Notes due January 11, 2013, and Class A Warrants
        to purchase an aggregate of 6,628,333 shares of common stock of the Company
        at
        $.60 per share expiring on June 11, 2013.
 
 The
        gross
        proceeds of the January 2008 Financing were $4,850,000. Chardan Capital applied
        its 2.5% cash commission ($121,250) towards a subscription for Notes and
        Class A
        Warrants resulting in the issuance of an aggregate of $4,971,250 principal
        amount of Notes to ten investors including Chardan Capital. Interest on the
        Notes compound monthly at the annual rate of five percent (5%) with the maturity
        date on January 11, 2013, if not paid earlier. Each holder of a Note can
        convert
        all or any portion of the then aggregate outstanding principal amount of
        the
        Note, together with interest, into shares of Common Stock at a conversion
        price
        of $0.75 per share, for a total of 6,628,333 shares as of the date of issuance.
        The Notes have “full ratchet” anti dilution protection for the first three
        years, pursuant to which the conversion price of the Notes will be adjusted
        downward in the event of the issuance by the Company of Common Stock or rights
        to acquire Common Stock at prices below $.75 per share (or below such other
        conversion price of the Notes as is then in effect) to such lower price.
        Thereafter and until repaid, the Notes provide only for weighted average
        anti-dilution price protection adjustment. In addition, the Notes are subject
        to
        certain customary anti-dilution protections for stock splits, combinations
        or
        similar transactions of the Company.
 
 During
        the three months ended March 31, 2008 the Company incurred $56,000 in interest
        expense related to these Notes which is included in accrued expenses in the
        consolidated balance sheet. With the consent of the Note holders, in May
        2008
        the Company issued an aggregate of 75,614 shares to the Note holders, at
        a
        presumed value of $.75 per share as set forth in the Subscription
        Agreement.
 
 ***Placement
        Agent Fee to Chardan Capital Markets, LLC***
 
 In
        connection with their engagement as a placement agent, Chardan Capital has
        been
        compensated a $10,000 due diligence fee and reimbursement of legal and other
        expenses, and a cash placement agent fee of 2.5% based on the total amount
        sold
        to investors, or $121,250 based on $4,850,000 of principal amount of Notes
        issued to other investors, which fee has, pursuant to the terms of their
        engagement agreement, been applied their investment in a $121,250 Note and
        161,667 Class A Warrants at the same terms as all other investors in the
        offering and whose value is included and discount applied in the same manner
        as
        the Class A Warrants. In addition, Chardan Capital was compensated warrants
        to
        acquire 1,131,667 shares of the Company’s Common Stock at an exercise price of
        $.50 per share exercisable commencing January 11, 2008 and expiring on June
        11,
        2013 (the “Broker Warrants”). The Broker Warrants are identical to the Class A
        Warrants in all other material respects. The Company is recognizing the presumed
        value of the Broker Warrants of $226,835 as debt issuance costs and is expensing
        the value over the five year life of the Convertible Notes.
  F-6
  ***Assignment
        By Clive Ng of Shares to Investors***
 
 To
        incentivize the investors in January 2008 Financing and facilitate such
        financing, and as contemplated under the terms of the Settlement Agreement,
        Mr.
        Clive Ng, our Chairman and Majority Shareholder, assigned an aggregate of
        7,017,814 shares of Common Stock beneficially owned by him to the January
        2008
        Financing investors (other than Chardan Capital), at a nominal purchase price
        of
        $.01 per share.
 
 ***Release
        of Lock - Up Agreements***
 
 Prior
        to
        the assignment of the above shares to the January 2008 Financing investors,
        the
        Company, 88 Holdings, Inc., China Broadband Partners, Ltd., BCGU, LLC, MVR
        Investments, LLC, Stephen P. Cherner and WestPark Capital, Inc. were each
        shareholder parties to a Lock-Up Agreement dated as of January 23, 2007 (the
        “Lock-Up Agreement”). The Lock-Up Agreement provided, that each such shareholder
        shall only be permitted to sell 5% of the shares originally issued to them
        as
        scheduled in the Lock-Up Agreement, during any 30 day period and, that the
        Company’s management may review the lock up provisions and increase the number
        of shares that may be sold provided that, among other conditions, such
        modification is made *pari
        pasu* among
        all
        shareholders to this Lock-Up Agreement based on their share ownership. As
        a
        condition subsequent to the January 2008 Financing requested by Chardan Capital,
        and to remove any contractual restrictions relating to the 7,017,084 shares
        of
        Common Stock assigned by Mr. Ng to the Note investors to facilitate the
        financing, the Company and each of the shareholder parties to the Lock-Up
        Agreement agreed to the termination of this Lock-Up Agreement for all parties
        effective as of January 13, 2008.
 
 **Appointment
        of Additional Members to Board of Directors**
 
 Simultaneously
        with the closing of the January 2008 Financing, and entry into the Settlement
        Agreement, Messrs. David Zale, James Cassano and Jonas Grossman were appointed
        as directors of the Company, joining Messrs. Clive Ng and Yue Pu. Prior to
        the
        appointment of Messrs. Zale, Cassano and Grossman, such persons had no
        affiliations or business relationship with the Company, except that Mr. Grossman
        was and continues to be, a partner and officer of Chardan Capital.
 
 **3.**  **Shandong
        Newspaper Cooperation Agreement**
  On
        March
        7, 2008, through our indirect WFOE subsidiary in the PRC, we entered into
        a
        Cooperation Agreement (the "Shandong Newspaper Cooperation Agreement") by
        and
        among, Shandong Broadcast & TV Weekly Press and Modern Movie & TV
        Biweekly Press, each PRC companies (collectively "Shandong Newspaper"). The
        Shandong Newspaper Cooperation Agreement provided for, among other terms,
        the
        creation of a joint venture entity in the PRC, Shandong Lushi Media Co.,
        Ltd.
        ("Shandong Media") that would acquire and operate Shandong Newspaper's
        television program guide, newspaper and magazine publishing business in the
        Shandong region of the PRC (the "Shandong Newspaper Business") which businesses
        were previously owned and operated by the Shandong Newspaper entities pursuant
        to exclusive licenses.
  Under
        the
        terms of the Shandong Newspaper Cooperation Agreement and related transaction
        documents, the Shandong Newspaper entities mentioned above will contribute
        their
        entire Shandong Newspaper Business and transfer certain employees, to Shandong
        Media in exchange for a 50% stake in Shandong Media, with the other 50% of
        Shandong Media to be owned by our PRC based operating subsidiary. In exchange
        therefore, the Cooperation Agreement provided for total initial consideration
        from of approximately $1.4 million (based on prevailing exchange rates at
        the
        time for 10 million RMB) which would be contributed to Shandong Media as
        working
        and acquisition capital, of which the Company paid approximately $300,000
        (approximately 2 million RMB) in early March 2008 as a down payment which
        is
        included in “Other Assets” in the consolidated balance sheet, as well as
        $1,100,000 paid in April 2008.
  In
        addition to the initial purchase price of $1.4 million, the Shandong Newspaper
        Cooperation Agreement provides for additional consideration of between 5
        million
        RMB and 20 million RMB (approximately $757,757 and $3,000,000 based on current
        exchange rates), to be paid as a capital contribution to Shandong Media in
        the
        event that certain performance thresholds are met during the first 12 months
        of
        operations after closing the transaction for a purchase price of between
        $2.2
        Million and $4.5 based on current exchange rates.
  F-7
  Specifically,
        in the event that audited annual net profits during the first year after
        closing
        of the transaction relating to the Shandong Newspaper Cooperation Agreement:
  ·
            equals
                or exceeds 16 million RMB, then we will be required to contribute
                an
                additional 20 million RMB (or, approximately $3,000,000 presuming
                current
                exchange rates are in effect at such time) to the Shandong Media
                joint
                venture;  ·
            equals
                or exceeds 4 million RMB but less than 16 million RMB, then we will
                be
                required to contribute 125% of such net profits to the Shandong Media
                joint venture, and  ·
            is
                less then 4 million RMB, then we will be required to contribute only
                an
                additional 5 million RMB (approximately US $757,575 presuming current
                exchange rates are in effect at such time).  ***Additional
        Terms of Shandong Newspaper Cooperation Agreement***
  The
        Shandong Newspaper Cooperation Agreement also provides that these businesses
        will be operated primarily by employees contracted to Shandong Media through
        secondment by the respective Shandong Newspaper entities.
  In
        addition, the Shandong Newspaper entities entered into an Exclusive Advertising
        Agency Agreement and an Exclusive Consulting Services Agreement with Shandong
        Media which require that the Shandong Newspaper entities shall appoint Shandong
        Media as its exclusive advertising agent and provider of technical and
        management support for a fee.
 
 The
        Company closed this transaction during the second quarter of 2008 and the
        results of the Shandong Newspaper Business will be consolidated with the
        Company’s consolidated financial statements as of May 1, 2008.
 
 **4.**    **Convertible
        Notes**
 
 On
        January 11, 2008, as described in Note 2 above, the Company entered into
        and
        consummated the Subscription Agreement with ten accredited investors with
        respect to the issuance of an aggregate of $4,971,250 principal amount of
        Notes
        due January 11, 2013, and Class A Warrants to purchase an aggregate of 6,628,333
        shares of common stock of the Company at $.60 per share expiring on June
        11,
        2013. During the quarter ended March 31, 2008 the Company incurred $56,000
        in
        interest expense related to these Notes which is included in accrued expenses
        in
        the consolidated balance sheet. In May 2008 the Company issued, with the
        consent
        of the Note holders, 75,614 shares to the Note holders in lieu of the foregoing
        interest payment for the period ended March 31, 2008, based on a predetermined
        presumed value of $.75 per share as set forth in the Subscription Agreement
        and
        related documents. No assurance can be made that these holders will be willing
        to accept stock in lieu of cash for future payments.
 
 **5.**    **Net
        Loss Per Share**
 
 Basic
        and
        diluted net loss per share have been computed by dividing the net loss by
        the
        weighted average number of common shares outstanding. The assumed exercise
        of
        dilutive warrants, less the number of treasury shares assumed to be purchased
        from the proceeds of such exercises using the average market price of the
        Company’s common stock during each respective period, have been excluded from
        the calculation of diluted net loss per share as their effect would be
        antidilutive.
 
 **6.**   **Accumulated
        Other Comprehensive Income**
 
 Comprehensive
        income (loss) for the three months ended March 31, 2008 and 2007 is as
        follows:
  F-8
  **Three
                  Months Ended March 31,****2008**
              
              **2007****(Unaudited)**
              
              **(Unaudited)**Net
                  loss
              
              $
              (597,625
              )
              $
              (308,931
              )Other
                  comprehensive income:Currency
                  translation adjustment
              
              
              192,298
              
              
              5,342Comprehensive
                  loss
              
              $
              (405,327
              )
              $
              (303,589
              )
 
 Changes
        in the components of Accumulated Other Comprehensive Income (Loss) are solely
        attributable to the
        currency translation adjustment from the Renminbi to the US dollar. For
        the
        three months ended March 31, 2008 and the year ended December 31, 2007, the
        changes in Accumulated Other Comprehensive Income (Loss) are as
        follows:
 
 **Accumulated
                  Other****Comprehensive****Income
                  (Loss)**BALANCE,
                  December 31, 2007
              
              $
              397,759Change
                  for the three months ended March 31, 2008, net of taxes
              
              
              192,298BALANCE,
                  March 31, 2008
              
              $
              590,057
 
 **7.**    **Accounting
        for Stock Based Compensation**
 
 The
        Company accounts for its stock option awards pursuant to the provisions of
        SFAS
        123(R) and recorded a charge of $18,698 during the three month period ended
        March 31, 2008 in connection with the issuance of stock options to employees.
 
 The
        fair
        value of each option award is estimated on the date of grant using the
        Black-Scholes option valuation model. The Company recognizes the fair value
        of
        each option as compensation expense ratably using the straight-line attribution
        method over the service period, which is generally the vesting period. The
        Black-Scholes model incorporates the following assumptions:
  ·
            Expected
                volatility - the Company estimates the volatility of common stock
                at the
                date of grant using historical
                volatility.  ·
            Expected
                term - the Company estimates the expected term of options granted
                based on
                a combination of vesting schedules, term of the option and historical
                experience.  ·
            Risk-free
                interest rate - the Company estimates the risk-free interest rate
                using
                the U.S. Treasury yield curve for periods equal to the expected term
                of
                the options in effect at the time of
                grant.  ·
            Dividends
                - the Company uses an expected dividend yield of zero. The Company
                intends
                to retain any earnings to fund future operations and, therefore,
                does not
                anticipate paying any cash dividends in the foreseeable
                future. 
 The
        following table outlines the variables used in the Black-Scholes option-pricing
        model.
 **2008**Risk
                  free interest rate
              
              
              3.53
              %Volatility
              
              
              188.76
              %Dividend
                  yield
              
              
              -
              %Expected
                  option life
              
              
              4 years
  F-9
  As
        of
        March 31, 2008, the Company had total unrecognized compensation expense related
        to options granted to employees of $24,648, which will be recognized over
        a
        remaining average period of 3.92 years.
  **8.**   **Stock
        Option Plan**
 
 Effective
        as of the March 13, 2008, the board of directors of the company approved
        the
        China Broadband, Inc. 2008 Stock Incentive Plan (the “Plan”), pursuant to which
        options or other similar securities may be granted. Qualified or Non-qualified
        Options to purchase up to 2,500,000 shares of the Company’s common stock may be
        issued under the Plan. The Plan may also be administered by an independent
        committee of the board of directors. 100,000 options have been issued under
        the
        plan.
 
 A
        summary
        of option activity under the Plan as of March 31, 2008, and changes during
        the
        period then ended, is presented below:
 
 **Shares**
              
              **Weighted
                  Average Exercise Price**
              
              **Weighted
                  Average Remaining Contractual Term**Options
                  outstanding at January 1, 2008
              
              
              -
              
              $
              -
              
              
              -Options
                  granted
              
              
              100,000
              
              
              1.00
              
              
              4Options
                  exercised
              
              
              -
              
              
              -
              
              
              -Options
                  terminated and expired
              
              
              -
              
              
              -
              
              
              -Options
                  outstanding at March 31, 2008
              
              
              100,000
              
              $
              1.00
              
              
              4Options
                  exercisable at March 31, 2008
              
              
              25,000
              
              $
              1.00
              
              
              4
 
 **9.**   **Warrants**
 
 In
        connection with the Company’s Share Exchange and capital raising efforts in 2007
        and the Company’s January 2008 Financing of Convertible Notes and Class A
        Warrants described in Note 1 above, the Company has issued warrants to investors
        and service providers to purchase shares of the Company at a fixed exercise
        price and for a specified period of time. The following table outlines the
        warrants outstanding as of March 31, 2008:
  F-10
  
 **Number
                  of****Warrants**
              **Exercise**
              **Expiration****Name**
              
              **Issued**
              **Price**
              **Date**Maxim
                  Financial Corporation
              
              3,974,800
              $0.60
              1/11/2013WestPark
                  Capital, Inc.
              
              640,000
              $0.60
              1/11/2013BCGU
                  LLC
              
              500,000
              $0.60
              1/11/20132007
                  Private Placement Investor Warrants
              
              4,000,000
              $2.00
              1/11/2013January
                  2008 Financing Class A Warrants
              
              6,628,333
              $0.60
              6/11/2013Chardan
                  Capital Broker Warrants
              
              1,131,667
              $0.50
              6/11/2013Other
                  Warrants
              
              67,500
              $0.60
              3/13/2013**16,942,300**
 
 On
        January 11, 2008, as part of the Settlement Agreement described above, the
        Company agreed to extend the expiration date of the Maxim Financial Corporation,
        WestPark Capital, BCGU and the 2007 Private Placement Investor warrants issued
        in 2007 until January 11, 2013. As
        of
        March 31, 2008, all obligations under the Settlement Agreement were not
        completed and therefore the Company did not recognize any gain or loss during
        the three months ended March 31, 2008 related to the warrant extensions granted
        as part of the Settlement Agreement.
 
 On
        January 11, 2008 the Company issued warrants in connection with the January
        2008
        Financing of Notes and Class A Warrants to ten accredited investors and Chardan
        Capital as broker. The
        Company recorded the value of the Class A Warrants of $504,661 as a discount
        to
        the Notes issued therewith and is amortizing this discount over the five
        year
        life of the Notes.
 
 On
        January 11, 2008 the Company issued Broker Warrants expiring June 11, 2013
        (see
        Note 1 above) in connection with the January 2008 Financing of Notes and
        Class A
        Warrants to Chardan Capital as broker. The
        Company is recognizing the value of the Broker Warrants of $226,835 as debt
        issuance costs and in expensing the value over the five year life of the
        Convertible Notes.
 
 Pursuant
        to an agreement entered into in April 2007, the Company also issued warrants
        to
        a consultant for services provided on March 13, 2008, exercisable at $.60
        per
        share. The Company incurred an expense of $14,198 during the three months
        ended
        March 31, 2008 related to the issuance of these warrants and had total
        unrecognized compensation expense related to these warrants of $7,099, which
        will be recognized in April 2009.
 
 **10.**    **Intangible
        Asset**
 
 In
        July
        2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 142,
“Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 142 requires
        that goodwill and intangible assets with indefinite useful lives no longer
        be
        amortized, but instead be tested for impairment at least annually. This
        pronouncement also requires that intangible assets with estimable useful
        lives
        be amortized over their respective estimated useful lives and reviewed for
        impairment in accordance with SFAS No. 144, “Accounting for the Impairment or
        Disposal of Long-Lived Assets.”
 
 In
        accordance with SFAS No. 142, goodwill is allocated to reporting units, which
        are either the operating segment or one reporting level below the operating
        segment. We have determined that our reporting unit for purposes of applying
        the
        provisions of SFAS No. 142 is our operating subsidiary Jinan Broadband.
 
 On
        an
        annual basis, we test goodwill and other indefinite life intangible assets
        for
        impairment. To determine the fair value of these intangible assets, there
        are
        many assumptions and estimates used that directly impact the results of the
        testing. In making these assumptions and estimates, we will use set criteria
        that are reviewed and approved by various levels of management, and we will
        estimate the fair value of our reporting units by using discounted cash flow
        analyses.
  F-11
  As
        of
        March 31, 2008 we had no goodwill and our only intangible asset relates to
        the
        excess purchase price associated with the service agreement resulting from
        our
        Jinan Broadband subsidiary acquisition. In accordance with SFAS No. 142,
        the
        Company is amortizing this service agreement over the 20 year term of this
        agreement, resulting in a recorded amortization expense of $8,708 during
        the
        three months ended March 31, 2008.
 
 **11.**   **Income
        Taxes**
 
 In
        June
        2006, the FASB issued Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes - an Interpretation of FASB Statement No.
        109* (FIN
        48). FIN 48 is intended to clarify the accounting for uncertainty in income
        taxes recognized in a company’s financial statements and prescribes the
        recognition and measurement of a tax position taken or expected to be taken
        in a
        tax return. FIN 48 also provides guidance on de-recognition, classification,
        interest and penalties, accounting in interim periods, disclosure and
        transition.
 
 Under
        FIN
        48, evaluation of a tax position is a two-step process. The first step is
        to
        determine whether it is more-likely-than-not that a tax position will be
        sustained upon examination, including the resolution of any related appeals
        or
        litigation based on the technical merits of that position. The second step
        is to
        measure a tax position that meets the more-likely-than-not threshold to
        determine the amount of benefit to be recognized in the financial statements.
        A
        tax position is measured at the largest amount of benefit that is greater
        than
        50% likely of being realized upon ultimate settlement.
 
 Tax
        positions that previously failed to meet the more-likely-than-not recognition
        threshold should be recognized in the first subsequent period in which the
        threshold is met. Previously recognized tax positions that no longer meet
        the
        more-likely-than-not criteria should be de-recognized in the first subsequent
        financial reporting period in which the threshold is no longer met.
 
 The
        adoption of FIN 48 during the year ended December 31, 2007 did not have a
        material effect on the Company’s financial position
 
 The
        Company is subject to a 5% business tax on the business income of our Jinan
        Broadband subsidiary.
 
 Deferred
        taxes are recognized for the future tax consequences attributable to temporary
        differences between the carrying amounts of assets and liabilities for financial
        statement purposes and income tax purposes using enacted rates expected to
        be in
        effect when such amounts are realized or settled. The effect on deferred
        taxes
        of a change in tax rates is recognized in income in the period that includes
        the
        enactment date.
  **12.**   **Going
        Concern**
 
 The
        accompanying financial statements are presented on a going concern basis.
        The
        Company generated a net loss of approximately $597,625 and $1,977,000 during
        the
        three months ended March 31, 2008 and year ended December 31, 2007,
        respectively. This condition raises substantial doubt about the Company’s
        ability to continue as a going concern. The Company's continuation as a going
        concern is dependent on its ability to meet its obligations, to obtain
        additional financing as may be required and ultimately to attain profitability.
        The financial statements do not include any adjustments that might result
        from
        the outcome of this uncertainty.
 
 Management
        plans to raise additional funds through debt or equity offerings or to seek
        merger opportunities with other companies. Management has yet to decide what
        type of offering the Company will use, how much capital the Company will
        raise
        or which companies it may seek merger opportunities with. There is no guarantee
        that the Company will be able to raise any capital through any type of offerings
        or merge with any other company.
  F-12
  **Item
        2. Management's Discussion and Analysis of Financial Condition and Results
        of
        Operation.**
  The
        following discussion and analysis should be read in conjunction with our
        unaudited financial statements and related notes included in this report
        and the
“Forward Looking Statements” in the beginning of this report and the “Risk
        Factors” set forth in our Annual Report on Form 10-KSB for the year ended
        December 31, 2007 and our Current Reports on Form 8-K filed with the SEC,
        each
        as amended. The statements contained in this report that are not historic
        in
        nature, particularly those that utilize terminology such as “may,” “will,”
“should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or
        comparable terminology are forward-looking statements based on current
        expectations and assumptions. These statements are based on current information
        available to management.
  Various
        risks and uncertainties could cause actual results to differ materially from
        those expressed in forward-looking statements. Factors that could cause actual
        results to differ from expectations include, but are not limited to, those
        set
        forth under the sections “Forward Looking Statements” in the forepart of this
        report and “Risk Factors” set forth in our Annual Report on Form 10-KSB for the
        year ended December 31, 2007 and our Current Reports on Form 8-K, all of
        which
        should be read together.
  **Background**
  We
        own
        and operate, through our indirect subsidiary in the People’s Republic of China
        (“PRC”), a cable broadband business based in the Jinan region of China and,
        effective May 1, 2008, acquired a television programming guide publication
        business joint venture in the Shandong Province of China (see below and Note
        1
        to Financial Statements above). Our principal
        activity is to provide cable and wireless broadband services, principally
        internet services, Internet Protocol Point wholesale services, related network
        equipment rental and sales, and fiber network construction and maintenance.
        We operate
        in a
        single
        segment.
 
 **Settlement
        Agreement and Convertible Note and Warrant Financing**
 
 On
        January 11, 2008, the Company entered into a Settlement Agreement (the
“Settlement Agreement”) by and among the Company and its subsidiaries, Stephen
        P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I
        Lev,
        Wellfleet Partners, Inc., Yue Pu, Clive Ng, Chardan Capital Markets, LLC
        (“Chardan Capital”), Jaguar Acquisition Corporation (“Jaguar”), and China
        Cablecom Holdings, Ltd (“Cablecom Holdings”). As of March 31, 2008, all
        obligations under the Settlement Agreement were not completed and therefore
        the
        Company did not recognize any gain or loss during the three months ended
        March
        31, 2008 related to this Settlement Agreement. All obligations under the
        Settlement Agreement were completed in May 2008 and the Company expects to
        recognize a gain during the second quarter of 2008.
 
 Simultaneously,
        the Company consummated a private convertible note and warrant financing
        with
        gross proceeds of $4,971,250 (the “January 2008 Financing”), through Chardan
        Capital acting as Placement Agent and appointed three additional directors
        to
        the Company. The following is a summary only of the material terms of the
        Settlement Agreement, Employment Agreement Amendments and the January 2008
        Financing related agreements (including the note purchase agreement, the
        form of
        Notes and form of warrants) which were filed as exhibits to our Current Report
        on Form 8-K dated January 11, 2008.
 
 ***Settlement
        Agreement***
  The
        Settlement Agreement was negotiated by the Company, its advisors and management
        and certain shareholders, for purposes of facilitating the Company’s business
        plan and expediting and facilitating the Company’s financing activities and
        resolving all disputes with management and certain investors and consultants
        concerning possible claims that such investors suggested might be brought
        against Mr. Ng, our Chairman, for his activities in forming China Cablecom
        and
        its entry into a merger with a subsidiary of Jaguar as violative of his
        employment agreement with the Company. The Settlement Agreement provides,
        subject to the terms thereof, for general mutual releases of all executives
        and
        management and their affiliated entities and also provides for the modification
        of employment agreements of both Mr. Clive Ng and Mr. Yue Pu. The Settlement
        Agreement also calls for the transfer of certain securities by Mr. Ng to
        the
        Company and to certain of the Company’s shareholders and consultants, as
        elaborated further herein in exchange for releases in favor of the Company
        and
        management and their affiliates.
  1
  Among
        other provisions, pursuant to the Settlement Agreement:
  ·
            Clive
                Ng has agreed to transfer (and has since transferred), after the
                closing
                of the merger of a subsidiary of Cablecom Holdings, as successor
                to Jaguar
                in its redomestication merger, with and into China Cablecom, Ltd.,
                a
                private limited liability British Virgin Islands company (“China
                Cablecom”), 390,000 shares of common stock of Cablecom Holdings (the
                “Cablecom Holdings Shares”), the resulting surviving parent entity after
                the merger. The 390,000 Cablecom Holdings Shares were to only be
                issued in
                the event of consummation of the merger (which has since occurred
                in April
                2008) and were to be transferred by Mr. Ng on an “as is basis”, except
                that such shares have the same lock-up restrictions, registration
                or other
                rights, privileges or benefits as Mr. Ng has for all other shares
                to be
                issued to him by Cablecom Holdings under the merger terms. The 390,000
                Cablecom Holdings Shares were issued to the Company in April 2008
                after
                completion of the merger and upon receipt of releases from certain
                parties
                listed in the Settlement Agreement and the Company has entered into
                a
                lock-up agreement described below;  ·
            The
                Company and each of Messrs. Ng and Pu, have agreed to modifications
                to the
                employment agreements of such persons (the “Employment Agreement
                Amendments”), reducing their time commitments to the Company and its
                subsidiary and providing that once replacement executive officers
                have
                been hired (and in the case of Mr. Ng, assuming Mr. Pu continues
                in his
                role as chief financial officer, eliminating his executive duties
                and he
                will only continue as the Chairman and a director of China Broadband
                and
                the Company), requiring in the case of Mr. Ng that he be subject
                to an
                ongoing obligation to offer acquisition candidates in the stand-alone,
                independent broadband business to China Broadband in the future (and
                recognizing that acquisition candidates involving acting as a joint
                venture provider of integrated cable television services in the People’s
                Republic of China and related activities, but which does not include
                the
                provision of Stand-Alone Broadband Services are the business of China
                Cablecom) and allowing them to continue to be involved with certain
                other
                activities and to continue in their executive capacities with Cablecom
                Holdings or its successor after the Proposed Merger. In addition,
                Mr. Ng
                has waived his right to receive all accrued salary previously owed
                to
                him;  ·
            Mr.
                Ng assigned 7,017,814 shares of Common Stock owned beneficially by
                him to
                the investors (other then Chardan Capital which did not receive shares
                from Mr. Ng) in the private January 2008 Financing as described below,
                thereby facilitating the January 2008 Financing while avoiding additional
                dilution to the Company’s current stock and warrant
                holders;  ·
            Mr.
                Ng has agreed to transfer and did transfer to certain private investors
                who acquired shares directly from him in July of 2007, an aggregate
                of
                566,790 shares of Common Stock owned beneficially by him, in exchange
                for
                releases;  ·
            Chardan
                Capital, our placement agent in the private January 2008 Financing
                and a
                party to the Settlement Agreement, completed the January 2008 Financing
                concurrently upon execution by all related parties of the Settlement
                Agreement;  ·
            Mr.
                David Zale and Mr. Jonas Grossman were appointed as directors joining
                Messrs. Yue Pu and Clive Ng on the board. Additionally, as a condition
                to
                Closing of the January 2008 Financing, Mr. James Cassano was appointed
                to
                the Board;  ·
            The
                Company agreed to extend the expiration dates of 4,000,000 warrants
                to
                purchase Common Stock at an exercise price of $2.00 per share, issued
                to
                certain private placement investors (“Investor Warrants”) in the Company’s
                private placement of common stock and warrants in 2007, from March
                of
                2009, through January 11, 2013, upon receipt of releases from such
                Investor Warrant holders, all of which have been received and accepted
                by
                May 2, 2008; and  2
  ·
            The
                Company has offered to BCGU, LLC, WestPark Capital, Inc., Maxim Financial
                Corporation, who were issued 500,000, 640,000 and 3,974,800 warrants
                exercisable at $.60 per share in January of 2007, the right, at their
                discretion, to extend the exercisability period of their respective
                warrants through January 11, 2013 or, in the alternative, the right
                to
                receive a scrip right to execute the unexercised portion of their
                warrants, at any time between the time of expiration date of their
                unexercised warrants and continuing through January 11, 2013. 
 **Simultaneous
        Closing of $4,971,250 Convertible Note and Warrant Financing, issuance of
        Shares
        and Warrants**
 
 On
        January 11, 2008, and simultaneously with the entry into the Settlement
        Agreement and in connection with completion of the January 2008 Financing,
        we
        entered into and consummated a subscription agreement (the “Subscription
        Agreement”) with ten accredited investors (inclusive of Chardan Capital) with
        respect to the issuance of an aggregate of $4,971,250 principal amount of
        Notes
        due January 11, 2013, and Class A Warrants to purchase an aggregate of 6,628,333
        shares of common stock of the Company at $.60 per share expiring on June
        11,
        2013.
 
 The
        gross
        proceeds of the offering were $4,850,000, and Chardan Capital which applied
        its
        2.5% cash commission ($121,250) towards a subscription for Notes (“Notes”) and
        Class A Warrants resulting in the issuance of an aggregate of $4,971,250
        principal amount of Notes to ten investors including Chardan Capital. Interest
        on the Notes compound monthly at the annual rate of five percent (5%) with
        the
        maturity date on January 11, 2013, if not paid earlier. Each holder of a
        Note
        can convert all or any portion of the then aggregate outstanding principal
        amount of the Note, together with interest, into shares of Common Stock at
        a
        conversion price of $0.75 per share, for or a total of 6,628,333 shares as
        of
        the date of issuance. The Notes have “full ratchet” anti dilution protection for
        the first three years, pursuant to which the conversion price of the Notes
        will
        be adjusted downward in the event of the issuance by the Company of Common
        Stock
        or rights to acquire Common Stock at prices below $.75 per share (or below
        such
        other conversion price of the Notes as is then in effect) to such lower price.
        Thereafter and until repaid, the Notes provide only for weighted average
        anti-dilution price protection adjustment. In addition, the Notes are subject
        to
        certain customary anti dilution protections for stock splits, combinations
        or
        similar transactions of the Company.
 
 During
        the three months ended March 31, 2008 the Company incurred $56,000 in interest
        expense related to these Notes which is included in accrued expenses in the
        consolidated balance sheet. With the consent of the Note holders, in May
        2008
        the Company issued, an aggregate of 75,614 shares to the Note holders in
        lieu of
        interest through March 31, 2008, plus late penalty fees.
 
 An
        aggregate of 6,628,333 Class A Warrants, exercisable at $0.60 per share and
        expiring on June 11, 2013 were issued pursuant to the January 2008 Financing.
        The Class A Warrants shall be exercisable (with cash or via cashless exercise)
        commencing one hundred and eighty-one (181) days after the closing date of
        the
        January 2008 Financing until 65 months thereafter, June 11, 2013. The Class
        A
        Warrants are subject to “full ratchet” anti-dilution protection for the first
        three years, pursuant to which the exercise price of the Class A Warrants
        will
        be adjusted downward in the event of the issuance by the Company of Common
        Stock
        or rights to acquire Common Stock at prices below $.60 per share (or below
        such
        other exercise price of the Class A Warrants as is then in effect) to such
        lower
        price. Thereafter and until all Class A Warrants are exercised or expire,
        the
        Class A Warrants provide only for weighted average anti-dilution price
        protection adjustment. In addition, the Class A Warrants are subject to certain
        customary anti-dilution protections for stock splits, combinations or similar
        transactions of the Company. The Company recorded the value of the Class
        A
        Warrants of $504,661 as a discount to the Notes issued therewith and is
        amortizing this discount over the five year life of the Notes.
  3
  ***Placement
        Agent Fee to Chardan Capital Markets, LLC***
 
 In
        connection with their engagement as a placement agent, Chardan Capital has
        been
        compensated a $10,000 due diligence fee and reimbursement of legal and other
        expenses, and a cash placement agent fee of 2.5% based on the total amount
        sold
        to investors, or $121,250 based on $4,850,000 of principal amount of Notes
        issued to other investors, which fee has, pursuant to the terms of their
        engagement agreement, been applied their investment in a $121,250 Note and
        161,667 Class A Warrants at the same terms as all other investors in the
        offering and whose value is included and discount applied in the same manner
        as
        the Class A Warrants. In addition, Chardan Capital was compensated warrants
        to
        acquire 1,131,667 shares of the Company’s Common Stock at an exercise price of
        $.50 per share exercisable commencing January 11, 2008 and expiring on June
        11,
        2013 (the “Broker Warrants”). The Broker Warrants are identical to the Class A
        Warrants in all other material respects. The Company is recognizing the value
        of
        the Broker Warrants of $226,835 as debt issuance costs and in expensing the
        value over the five year life of the Convertible Notes.
 
 ***Assignment
        By Clive Ng of Shares to Investors***
 
 To
        incentivize the investors in January 2008 Financing and facilitate such
        financing, and as contemplated under the terms of the Settlement Agreement,
        Mr.
        Clive Ng assigned an aggregate of 7,017,814 shares of Common Stock beneficially
        owned by him to the January 2008 Financing investors, other than Chardan
        Capital, at a nominal purchase price of $.01 per share.
 
 ***Release
        of Lock - Up Agreement***
 
 Prior
        to
        the assignment of the above shares to the January 2008 Financing investors,
        the
        Company, 88 Holdings, Inc., China Broadband Partners, Ltd., BCGU, LLC, MVR
        Investments, LLC, Stephen P. Cherner and WestPark Capital, Inc. were each
        shareholder parties to a Lock-Up Agreement dated as of January 23, 2007 (the
        “Lock-Up Agreement”). The Lock-Up Agreement provided, that each such shareholder
        shall only be permitted to sell 5% of the shares originally issued to them
        as
        scheduled in the Lock-Up Agreement, during any 30 day period and, that the
        Company’s management may review the lock up provisions and increase the number
        of shares that may be sold provided that, among other conditions, such
        modification is made *pari
        pasu* among
        all
        shareholders to this Lock-Up Agreement based on their share ownership. As
        a
        condition subsequent to the January 2008 Financing requested by Chardan Capital,
        and to remove any contractual restrictions relating to the 7,017,084 shares
        of
        Common Stock assigned by Mr. Ng to the Note investors to facilitate the
        financing, the Company and each of the shareholder parties to the Lock-Up
        Agreement agreed to the termination of this Lock-Up Agreement for all parties
        effective as of January 13, 2008.
 
 ***Appointment
        of Additional Members to Board of Directors***
 
 Simultaneously
        with the closing of the January 2008 Financing, and entry into the Settlement
        Agreement, Messrs. David Zale, James Cassano and Jonas Grossman were appointed
        as directors of the Company, joining Messrs. Clive Ng and Yue Pu. Prior to
        the
        appointment of Messrs. Zale, Cassano and Grossman, such persons had no
        affiliations or business relationship with the Company, except that Mr. Grossman
        was and continues to be, a partner and officer of Chardan Capital.
 
 **Shandong
        Newspaper Cooperation Agreement**
  On
        March
        7, 2008, through our indirect WFOE subsidiary in the PRC, we entered into
        a
        Cooperation Agreement (the "Shandong Newspaper Cooperation Agreement") by
        and
        among, Shandong Broadcast & TV Weekly Press and Modern Movie & TV
        Biweekly Press, each PRC companies (collectively "Shandong Newspaper"). This
        transaction was consummated on May 1, 2008. The Shandong Newspaper Cooperation
        Agreement provided for, among other terms, the creation of a joint venture
        entity in the PRC, Shandong Lushi Media Co., Ltd. ("Shandong Media") that
        would
        own and operate Shandong Newspaper's television program guide, newspaper
        and
        magazine publishing business in the Shandong region of the PRC (the "Shandong
        Newspaper Business") which businesses were previously owned and operated
        by the
        Shandong Newspaper entities pursuant to exclusive licenses.
  4
  Under
        the
        terms of the Shandong Newspaper Cooperation Agreement and related transaction
        documents, the Shandong Newspaper entities mentioned above will contribute
        their
        entire Shandong Newspaper Business and transfer certain employees, to Shandong
        Media in exchange for a 50% stake in Shandong Media, with the other 50% of
        Shandong Media to be owned by our PRC based operating subsidiary. In exchange
        therefore, the Cooperation Agreement provides for total initial consideration
        from of approximately $1.3 million (based on existing exchange notes for
        10
        million RMB at the time) which was contributed to Shandong Media as working
        and
        acquisition capital, of which the Company paid approximately $300,000
        (approximately 2 million RMB) in early March 2008 as a down payment which
        is
        included in “Other Assets” in the consolidated balance sheet.
  In
        addition to the initial purchase price of $1.3 million (10 million RMB),
        the
        Shandong Newspaper Cooperation Agreement provides for additional consideration
        of approximately US $757,757 and US $3,000,000 (between 5 million RMB and
        20
        million RMB, respectively, based on current exchange rates at the time) to
        be
        paid as a capital contribution to Shandong Media in the event that certain
        performance thresholds are met during the first 12 months of operations after
        closing the transaction for a total maximum purchase price of approximately
        $4.5
        (30 million RMB based on exchange rates at the time).
  In
        the
        event that audited annual net profits during the first year after closing
        of the
        transaction relating to the Shandong Newspaper Cooperation
        Agreement:
  ·
            equals
                or exceeds 16 million RMB, then we will be required to contribute
                an
                additional 20 million RMB (or, approximately $3,000,000 presuming
                current
                exchange rates exist at such time) to the Shandong Media joint venture;  ·
            equals
                or exceeds 4 million RMB but less than 16 million RMB, then we will
                be
                required to contribute 125% of such net profits to the Shandong Media
                joint venture, and  ·
            is
                less then 4 million RMB, then only an additional 5 million RMB
                (approximately US $757,575 presuming current exchange rates exist
                at such
                time).  ***Description
        of Shandong Newspaper Business Acquired***
  The
        Shandong Newspaper Business acquired from Shandong Newspaper by the Shandong
        Media joint venture on May 1, 2008, includes the distribution of periodicals,
        the publication of advertising, the organization of public relations events,
        the
        provision of information related services, copyright transactions, the
        production of audio and video products, the provision of audio value added
        communication services. The Shandong Newspaper Cooperation Agreement also
        provides that these businesses will be operated primarily by employees
        contracted to Shandong Media through secondment by the respective Shandong
        Newspaper entities.
  In
        addition, the Shandong Newspaper entities, at closing, entered into an
        Exclusive Advertising Agency Agreement and an Exclusive Consulting Services
        Agreement with Shandong Media which required that the Shandong Newspaper
        entities appoint Shandong Media as its exclusive advertising agent and provider
        of technical and management support for a fee.
 
 The
        Company closed this transaction during the second quarter of 2008.
  5
  The
        following table presents the increases (decreases) in each major statement
        of
        operations category for the three months ended March 31, 2008 and 2007,
        respectively. The following discussion of “Results of Operations references
        these increases (decreases).
 
 
 **Increase
                  (Decrease) in Consolidated****Statements
                  of Operations Categories****For
                  the three months ended****March
                  31, 2008 vs. 2007****Amount
                  ($)**
              
              **%**Revenues
              
              $
              1,054,885
              
              
              100
              %Cost
                  of sales
              
              
              352,198
              
              
              100
              %Total
                  gross margin
              
              
              702,687
              
              
              100
              %Selling,
                  general and administrative
              
              
              364,953
              
              
              222
              %Professional
                  fees
              
              
              (2,747
              )
              
              -2
              %Depreciation
              
              
              701,895
              
              
              100
              %Operating
                  loss
              
              
              (361,414
              )
              
              119
              %Interest
                  and other income
              
              
              (70,850
              )
              
              1676
              %Pre-tax
                  loss
              
              
              (432,264
              )
              
              140
              %Minority
                  interest
              
              
              142,768
              
              
              100
              %Pre-tax
                  loss
              
              
              (289,496
              )
              
              94
              %Taxes
              
              
              (802
              )
              
              100
              %Net
                  loss
              
              $
              (288,694
              )
              
              93
              %
  **Results
        of Operations**
  The
        Company was a development stage company with no business operations during
        the
        first three months 2007. Effective January 23, 2007 we acquired China Broadband,
        Ltd. (“China Broadband Cayman”) and its operations which was already a party to
        a Cooperation Agreement to acquire PRC based Jinan Broadband. Effective April
        1,
        2007, China Broadband Cayman and our WFOE, completed the acquisition of the
        Jinan Broadband subsidiary. During the first three months of 2007 Jinan
        Broadband did not operate as its own separate entity and constituted assets
        within a business division that was separated out immediately prior to our
        acquisition. Accordingly, Jinan Broadband results for the three months ended
        March 31, 2007 were not included for comparative purposes as management believes
        that they are not meaningful.
  Our
        revenues are based on the number of paying cable broadband internet customers
        in
        the Shandong province of China. As of March 31, 2008 Jinan Broadband had
        approximately 59,000 active paying subscribers for its services in this region
        as compared to 58,000 and 45,000 at December 31, 2007 and 2006, respectively.
        The increase is a result of increased efforts on internal growth by Jinan
        Broadband after our acquisition of them.
  6
  Our
        gross
        revenues are dependent on several factors:
  ·
            the
                amount that we are permitted to charge for cable broadband internet
                services in the regions we operate in, ·
            the
                number of subscribers we have in each
                region, ·
            advertising
                revenues, and ·
            other
                revenues from other permitted value added services that we
                perform. 
 We
        intend
        to develop our business by growing internally to increase the subscribers
        for
        our services in the regions we operate, acquiring other complimentary media
        assets in the region and by acquiring licenses to operate the cable broadband
        business in other regions.
 
 Our
        cost
        of revenue consists primarily of the costs of products or services sold to
        customers and personnel and other direct costs associated with providing
        technical services. In the future, we may expand or increase the discounts
        we
        offer to our customers and may otherwise alter our pricing structures and
        policies. These changes would negatively reduce our gross margins. We may
        also
        offer cross promotional discounts with other assets that we acquire in order
        to
        grow overall company revenue to draw attention to our other product offerings.
        In addition to pricing strategy, our gross margins will fluctuate based on
        other
        factors, including:
 
 ·
            the
                cost of our products, including the extent of purchase volume discounts
                we
                are able to obtain from our suppliers; ·
            promotions
                or special offers that we offer to attract new customers;
                and ·
            the
                mix of products within each brand category that our customers
                purchase.  Our
        selling, general and administrative expenses consist of personnel costs
        including taxes and benefits, rent and utilities, contract labor, insurance,
        marketing, telecommunication and Internet costs, and other administrative
        expenses. We expect selling, general and administrative expenses to increase
        as
        we grow our business ***.***
  ***Three
        Months Ended March 31, 2008*** **** ***Compared
        to the Three Months Ended March 31, 2007***
 
 *Revenues*
 
 Revenue
        for the three months ended March 31, 2008 was $1,055,000 as compared to $0
        for
        the three months ended March 31, 2007. During the three months ended March
        31,
        2007 we had no operations. Revenue during the three months ended March 31,
        2008
        was attributed to our PRC subsidiary, Jinan Broadband and consisted of sales
        to
        our PRC based Internet consumers, cable modem consumers, business customers
        and
        other internet and cable services. We expect that our revenues will increase
        as
        we continue to grow our business and add new regions.
 
 *Gross
        Profit*
 
 Gross
        profit for the three months ended March 31, 2008 was $703,000 as compared
        to $0
        for the three months ended March 31, 2007. During the 2007 period we had
        no
        operations. Gross profit as a percentage of revenue was 66.6% for the three
        months ended March 31, 2007.
 
 *Selling,
        General and Administrative Expenses*
 
 Selling,
        general and administrative expenses for the three months ended March 31,
        2008
        increased approximately $365,000 to $530,000 as compared to $165,000 for
        the
        three months ended March 31, 2007. During the 2007 period we had no operations
        and expenses during the period consisted of approximately $75,000 in travel
        expenses, $36,000 in payroll expense, $36,000 in rent expense and $13,000
        in
        marketing and promotional expenses. Selling, general and administrative expenses
        during the 2008 period included salaries and personnel costs of approximately
        $294,000, network connection costs of $93,000 and insurance costs of $20,000.
        We
        expect that our selling, general and administrative expenses will increase
        as we
        continue to grow our business and add new regions.
  7
  *Professional
        Fees*
 
 Professional
        fees for the three months ended March 31, 2008 decreased by $3,000 to $137,000
        as compared to $140,000 for the three months ended March 31, 2007. During
        the
        2007 period we had no operations and all expenses during the period included
        legal, accounting and consulting fees related to the acquisition of China
        Broadband Cayman via a share exchange. Professional Fees during the 2008
        period
        included legal costs of approximately $37,000, accounting fees of approximately
        $53,000, consultant costs of approximately $48,000. We expect our costs for
        professional services to remain significant as we continue to acquire new
        entities and implement our growth strategy as set forth.
 
 *Depreciation*
 
 Depreciation
        expense for the three months ended March 31, 2008 was $702,000 as compared
        to $0
        for the three months ended March 31, 2007. During the period ended March
        2007 we
        had no material operating assets. Depreciation expense during the 2008 period
        relates to the depreciation on the property, plant and equipment, net at
        our
        Jinan broadband subsidiary.
 
 *Interest
        and Other Income (Expense), net*
 
 We
        incurred an expense of $75,000, in interest and other income (expense), net,
        during the three months ended March 31, 2008. This amount consisted primarily
        of
        interest expense related to the 5% Convertible Notes issued on January 11,
        2008
        in the amount of $56,000, the expense related to our requirement to issue
        new
        shares in the amount of $12,000, as a result of our not registering the
        1,300,000 shares issued upon the conversion of our 7% Convertible Promissory
        Notes issued by China Broadband Cayman in 2006 and assumed by the Company
        upon
        the purchase of China Broadband Cayman in the time frame required and $22,000
        of
        amortization expense related to the quarterly amortization of the Class A
        Warrant discount applied to the Convertible Notes. These amounts were partially
        offset by $16,000 of interest income earned on our cash balances.
 
 During
        the three months ended March 31, 2007 we had no operations and incurred $4,227
        in interest expense related to China Broadband Cayman’s $325,000 principal
        amount of 7% Convertible Promissory Notes. All of the 7% Convertible Promissory
        Notes were converted at the end of February 2007 with all interest paid thereon.
 
 We
        expect
        to continue to incur interest expenses in connection with our issuance of
        our
        $ 4,971,250
        principal amount of Notes issued in January 2008, which compounds monthly
        at the
        annual rate of five percent (5%) with the maturity date on January 11, 2013.
 
 *Minority
        Interest*
 
 49%
        of
        the operating loss of our Jinan Broadband subsidiary is allocated to Jinan
        Parent. During the three months ended March 31, 2008 $143,000 of our operating
        losses were allocated to Jinan Parent. During the three months ended March
        31,
        2007 we had no operations.
 
 *Income
        Tax Benefit*
 
 Our
        income tax benefit was $802 for the three months ended March 31, 2008. During
        the three months ended March 31, 2007 we had no operations.
 
 **Liquidity
        and Capital Resources**
 
 As
        of
        March 31, 2008 we had $4,717,000 of cash on hand and working capital of
        $551,473. As of March 31, 2008, we had total current liabilities of $5,008,000.
  8
  On
        January 11, 2008 we entered into and consummated a subscription agreement
        with
        ten accredited investors with respect to the issuance of an aggregate of
        $4,971,250 principal amount of Notes due January 11, 2013, and Class A Warrants
        to purchase an aggregate of 6,628,333 shares of common stock of the Company
        at
        $.60 per share expiring on June 11, 2013. In March 2008 we used approximately
        $3.2 million of these proceeds to fund our second payment for our purchase
        of
        Jinan Broadband. In addition, in March 2008 we used $300,000 to fund our
        down
        payment under the Shandong Newspaper Cooperation Agreement to Shandong Media
        and
        in April 2008 utilized an additional $1.2 million to fund the remaining portion
        of our required working capital contribution. During the quarter ended March
        31,
        2008 the Company incurred $56,000 in interest expense related to these notes
        which is included in accrued expenses in the consolidated balance sheet.
        In
        addition, in April 2008 we received the 390,000 Cablecom Holdings Shares
        that
        were part of the Settlement Agreement described above.
  *Cash
        Flows*
 
 Operating
        activities for three months ended March 31, 2008 and 2007, after
        adding back non-cash items, provided (used) cash of approximately $145,000
        and
        $(258,000), respectively . During
        such period other changes in working capital provided cash of approximately
        $53,000 and $17,000 respectively, resulting in cash being provided by (used
        in)
        operating activities of $199,000 and $(241,000), respectively.
 
 Investing
        activities for three months ended March 31, 2008 and 2007 used cash of
        $1,040,000 and $2,550,000, respectively. The 2008 amounts consisted of additions
        to property and equipment in the amount of $740,000 and the down payment
        for the
        acquisition of Shandong Newspaper in the amount of $300,000. The 2007 amounts
        primarily consisted of our investment in Jinan Broadband.
  Financing
        activities for three months ended March 31, 2008 and 2007 provided cash of
        $5,085,000 and $3,210,000, respectively. For 2008 this amount consisted of
        proceeds from the issuance of the convertible notes of $4,850,000 partially
        offset by $104,500 of payments related to issuance costs associated with
        the
        convertible notes and an
        increase in the payable to Jinan Parent in the amount of $340,000 .
        For
        2007, this amount proceeds from the private placement of $3,555,000 partially
        offset by $345,000 of payments related to issuance costs associated with
        the
        private placement offering.
 
 Our
        WOFE
        and our Jinan Broadband subsidiary, which is our only operating subsidiary
        as of
        March 31, 2008, are located in China. All of their operations are conducted
        in
        the local currency the Chinese Yuan also known as Renminbi or RMB. The effect
        of
        exchange rates on cash between the Chinese Yuan and the United States dollar,
        provided cash of $0 and $5,341 during the three months ended March 31, 2008
        and
        2007.
 
 *Need
        for Additional Capital*
 
 We
        have
        raised $4.85 million (net of cost of capital and expenses) in our January
        2008
        Financing in order to fund our second payment for our purchase of Jinan
        Broadband, which payment was due in January of 2008 and to acquire Shandong
        Newspaper and cover the cost of interim operations. We made the second and
        last
        payment for Jinan Broadband in March of 2008 and incurred no penalty for
        making
        this payment in March. In
        addition, in March 2008 we used $300,000 to fund our down payment under the
        Shandong Newspaper Cooperation Agreement to Shandong Media and in April 2008
        utilized an additional $1.1 million to fund the remaining portion of our
        required working capital contribution. In
        addition, in accordance with the Settlement Agreement, we received 390,000
        shares of Cablecom Holdings Shares from Mr. Ng, in April 2008 of which 260,000
        are subject to lock-up provisions for the next 12 months. Management does
        not
        believe that the Company has sufficient capital to continue its growth and
        acquisition strategy without raising additional capital and/or liquidating
        some
        of the Cablecom Holdings Shares.
 
 We
        intend
        to grow primarily through marketing to increase our subscriber base and through
        acquisitions of China based broadband, internet and cable businesses. Our
        strategy also includes the purchasing of other complimentary media assets
        in the
        same regions. Our first purchase of this nature was the completion of our
        acquisition of Shandong Newspaper on April 24, 2008 in a Joint Venture. Shandong
        Newspaper’s business includes three main magazines: Shandong Broadcast & TV
        Weekly (Newspaper), TV Weekly Magazine and Modern Movie Times Magazine
        (Bi-Weekly). We intend to invest our acquisition cost in this Joint Venture
        to
        increase sales and advertising revenues of its periodicals in order to become
        profitable, and to cross market with our other asset, Jinan Broadband. No
        assurance can be made that we will be able to raise capital if and as needed
        to
        implement this business plan or, if implemented, that it will be successful.
  9
  The
        amount and timing of our future capital requirements will depend upon many
        factors, including the number and size of opportunities available to us,
        the
        level of funding received by us, anticipated private placements of our common
        stock, the level of funding obtained through other financing sources, and
        the
        timing of such funding. In the event we are unable to raise additional capital
        we will not be able to sustain any growth or continue to operate.
 
 *Dividends*
  We
        intend
        to retain any future earnings to finance the expansion of our business and
        any
        necessary capital expenditures, and for general corporate purposes. Moreover,
        even if we are profitable as a result of our PRC based operations and
        subsidiaries, PRC regulations prevent the payment of dividends absent compliance
        with certain rules and obtaining appropriate government consents, which we
        believe will not happen in the near future, if ever.
 
 *Financial
        Commitments*
  The
        Company pays approximately $55,000 (400,000 RMB) annually for rent at its
        facilities in Jinan, China, renewable on an annual basis.
 
 The
        Company utilizes approximately 1,000 square feet of space from Maxim Financial
        Corporation for its corporate headquarters for a monthly rental fee of $2,000.
        Maxim Financial Corporation provided consulting services to the Company during
        the years ended December 31, 2007 and 2006 and has agreed to discharge all
        rental costs under the terms of its consulting agreement with the Company
        through December 2007. In addition, Maxim Financial Corporation has agreed
        to
        defer all monthly rental payments beginning January 2008 until the Company’s
        next capital raise subsequent to January 2008.
 
 **Recent
        Events**
 
 In
        late
        April 2008, the Company received the 390,000 Cablecom Holdings Shares from
        Clive
        Ng, in connection with the Settlement Agreement. In accordance with the terms
        of
        the Settlement Agreement, the Company was to receive the Cablecom Holdings
        Shares from Mr. Ng subject to any lock up or similar restriction applicable
        to
        Clive Ng. Accordingly, the Company entered into a lock up agreement with
        China
        Cablecom Holdings with respect to the Cablecom Holdings Shares, containing
        substantially similar lock up restrictions as in effect with Mr. Ng’s shares of
        China Cablecom Holdings, dated as of April 24, 2008 (the “Cablecom Lock Up
        Agreement”).
 
 Pursuant
        to the Cablecom Lock Up Agreement, **** the
        Company has agreed that without the consent of China Cablecom Holdings, except
        as otherwise provided in the Lock Up Agreement (i) until the earlier
        of the date (the "Trade Commencement Date"), that (x) is six months after
        April
        9, 2008, and (y) a registration statement with respect to such shares, shall
        be
        declared effective by the Securities and Exchange Commission (which was declared
        effective on May 2, 2008), the Company shall not directly or indirectly offer,
        sell, contract to sell, gift, exchange, assign, pledge or otherwise encumber
        or
        dispose of the Shares (or enter into any transaction which is designed to,
        or
        might reasonably be expected to, result in the disposition, (whether by actual
        disposition or effective economic disposition due to cash settlement or
        otherwise), or any affiliate of the Company other than China Cablecom Holdings,
        or any person in privity with the Company or any affiliate of the Company,
        other
        than China Cablecom Holdings), directly or indirectly, including the
        establishment or increase in a put equivalent position or liquidation or
        decrease in a call equivalent position within the meaning of Section 16 of
        the
        Exchange Act and the rules and regulations of the SEC promulgated thereunder
        (each of the foregoing referred to as a "Disposition"); (ii) for a period
        of 6
        months after the Trade Commencement Date, not to effect a Disposition of
        more
        than 331⁄3% of the shares and (iii) for a period of 12 months after the Trade
        Commencement Date not to effect a disposition of more than 662⁄3% of the
        shares.
  10
  The
        foregoing is a summary only of the Cablecom Lock Up Agreement. A registration
        statement with respect to the 390,000 Cablecom Holdings Shares has been
        declared effective on May 2, 2008, however, no assurance can be made that
        the
        registration statement will remain effective for any period of time, or that
        the
        shares will be liquid at favorable prices at times that the Company desires
        and
        is able to sell such shares.
 
 **Critical
        Accounting Policies**
 
 Our
        discussion and analysis of financial condition and results of operations
        is
        based on our consolidated financial statements, which have been prepared
        in
        accordance with accounting principles generally accepted in the United States. The
        preparation of financial statements and related disclosures in conformity
        with
        accounting principles generally accepted in the United States of America
        requires our management to make judgments, assumptions and estimates that
        affect
        the amounts reported in the consolidated financial statements and accompanying
        notes. Note 2 to the consolidated financial statements included in our Annual
        Report on Form 10-KSB describes the significant accounting policies and methods
        used in the preparation of the consolidated financial statements. The following
        critical accounting policies are impacted significantly by judgments,
        assumptions and estimates used in the preparation of the consolidated financial
        statements.
 
 *Principles
        of Consolidation*
 
 The
        consolidated financial statements include the accounts of China Broadband,
        Inc.
        and its subsidiaries, China Broadband Cayman, its WOFE and Jinan Broadband.
        All
        material intercompany transactions and balances are eliminated in
        consolidation.
 
 *Accounting
        Method*
 
 The
        Company's policy is to use the accrual method of accounting to prepare and
        present financial statements, which conform to generally accepted accounting
        principles (GAAP). The Company has elected a December 31, year-end.
 
 *Estimates*
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenues and expenses during the reporting period.
        Actual results could differ from those estimates.
 
 *Accounts
        Receivable*
  Accounts
        receivable are recorded at the invoiced amount after deduction of trade
        discounts, business tax and allowance. The Company considers accounts receivable
        to be fully collectible; accordingly, no allowance for doubtful accounts
        has
        been established.
 
 *Inventories*
 
 Inventories,
        consisting of cables, fiber, connecting material, power supplies and spare
        parts
        are stated at the lower of cost or market value. Cost is determined using
        the
        first-in, first-out (FIFO) method.
  11
  *Property
        and Equipment*
 
 Property
        and equipment are stated at cost less accumulated depreciation. Expenditures
        for
        major renewals and betterments, which extend the original estimated economic
        useful lives or applicable assets, are capitalized. Expenditures for normal
        repairs and maintenance are charged to expense as incurred. The costs and
        related accumulated depreciation of assets sold or retired are removed from
        the
        accounts, any gain or loss thereon is reflected in operations.
 
 Depreciation
        is provided for on the straight line basis over the estimated useful lives
        of
        the respective assets over a period of five years.
 
 *Intangible
        Assets*
 
 We
        will
        perform indefinite life intangible asset impairment
        tests on an annual basis and between annual tests in certain
        circumstances. To
        determine the fair value of these intangible assets, there are many assumptions
        and estimates used that directly impact the results of the testing. In making
        these assumptions and estimates, the
        Company must make various assumptions regarding estimated future cash flows
        and
        other factors in determining the fair values of the respective assets.
        W e
        will
        use set criteria that are reviewed and approved by various levels of management,
        and we will estimate the fair value of our reporting units by using discounted
        cash flow analyses. If these
        estimates or their related assumptions change in the future, the Company
        may be
        required to record impairment charges for these assets in future periods.
        Any
        such resulting impairment charges could be material to the Company’s results of
        operations.
 
 *Revenue
        Recognition*
 
 Sales
        are
        recorded as services are provided to customers. Provision for discounts and
        rebates to customers, estimated returns and allowances and other adjustments
        are
        provided for in the same period when related sales are recorded.
 
 *Income
        taxes*
 
 Deferred
        taxes are recognized for the future tax consequences attributable to temporary
        differences between the carrying amounts of assets and liabilities for financial
        statement purposes and income tax purposes using enacted rates expected to
        be in
        effect when such amounts are realized or settled. The effect on deferred
        taxes
        of a change in tax rates is recognized in income in the period that includes
        the
        enactment date.
 
 *Foreign
        Currency Translation*
 
 The
        Company’s Jinan Broadband subsidiary located in China uses its local currency
        (RMB) as its functional currency. Translation adjustments are reported as
        other
        comprehensive income or expenses and accumulated as other comprehensive income
        in the equity section of the balance sheet. The financial information is
        translated into U.S. Dollars at prevailing or current rates respectively,
        except
        for revenue and expenses which are translated at average current rates during
        the reporting period.
 
 **Recent
        Accounting Pronouncements**
  In
        February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date
        of
        FASB Statement No. 157 ("FSP 157-2"), which delays the effective date of
        SFAS
        157 for nonfinancial assets and nonfinancial liabilities. Therefore, the
        Company
        has delayed application of SFAS 157 to its nonfinancial assets and nonfinancial
        liabilities, which include assets and liabilities acquired in connection
        with a
        business combination, goodwill, intangible assets and asset retirement
        obligations recognized in connection with final capping, closure and
        post-closure landfill obligations, until January 1, 2009. The Company is
        currently evaluating the impact of SFAS 157 for nonfinancial assets and
        liabilities on the Company's financial position and results of
        operations.
  12
  In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities. SFAS No. 159 permits companies to choose
        to
        measure many financial instruments and certain other items at fair value.
        SFAS
        No. 159 is effective for financial statements issued for fiscal years beginning
        after November 15, 2007. The adoption of SFAS No. 159 did not have a material
        impact on our consolidated financial statements.
  In
        December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and
        SFAS
        No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS
        No.
        141 (R) requires an acquirer to measure the identifiable assets acquired,
        the
        liabilities assumed and any noncontrolling interest in the acquiree at their
        fair values on the acquisition date, with goodwill being the excess value
        over
        the net identifiable assets acquired. SFAS No. 160 clarifies that a
        noncontrolling interest in a subsidiary should be reported as equity in the
        consolidated financial statements. The calculation of earnings per share
        will
        continue to be based on income amounts attributable to the parent. SFAS No.
        141
        (R) and SFAS No. 160 are effective for financial statements issued for fiscal
        years beginning after December 15, 2008. Early adoption is prohibited. The
        Company has not yet determined the effect on our consolidated financial
        statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No.
        160.
  In
        December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
        Consolidated Financial Statements - an Amendment of ARB No. 51 ("SFAS 160"),
        which establishes accounting and reporting standards for the noncontrolling
        interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS
        No.
        160 clarifies that a noncontrolling interest in a subsidiary is an ownership
        interest in the consolidated entity that should be reported as equity in
        the
        consolidated financial statements. SFAS No. 160 also requires consolidated
        net
        income to be reported at amounts that include the amounts attributable to
        both
        the parent and the noncontrolling interest. It also requires disclosure,
        on the
        face of the consolidated statement of income, of the amounts of consolidated
        net
        income attributable to the parent and to the noncontrolling interest. SFAS
        No.
        160 also provides guidance when a subsidiary is deconsolidated and requires
        expanded disclosures in the consolidated financial statements that clearly
        identify and distinguish between the interests of the parent’s owners and the
        interests of the noncontrolling owners of a subsidiary. SFAS 160 is effective
        for fiscal years, and interim periods within those fiscal years, beginning
        on or
        after December 15, 2008. The Company is currently evaluating the impact this
        statement will have on its financial position and results of
        operations.
  In
        March
        2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
        and
        Hedging Activities ("SFAS 161"), which amends and expands the disclosure
        requirements of FASB Statement No. 133, Accounting for Derivative Instruments
        and Hedging Activities ("SFAS 133"), with the intent to provide users of
        financial statements with an enhanced understanding of: (a) how and why an
        entity uses derivative instruments; (b) how derivative instruments and related
        hedged items are accounted for under SFAS No. 133 and its related
        interpretations; and (c) how derivative instruments and related hedged items
        affect an entity’s financial position, financial performance and cash flows.
        SFAS 161 requires qualitative disclosures about objectives and strategies
        for
        using derivatives, quantitative disclosures about fair value amounts of and
        gains and losses on derivative instruments and disclosures about
        credit-risk-related contingent features in derivative instruments. This
        statement applies to all entities and all derivative instruments. SFAS 161
        is
        effective for financial statements issued for fiscal years and interim periods
        beginning after November 15, 2008. The Company has not yet determined the
        effect
        on our consolidated financial statements, if any, upon adoption of SFAS No.
        161.
  Management
        does not believe that any recently issued, but not yet effective, accounting
        standards, if currently adopted, would have a material effect on the
        accompanying financial statements.
  13
  **Off-Balance
        Sheet Arrangements**
 
 We
        do not
        have any off balance sheet arrangements that are reasonably likely to have
        a
        current or future effect on our financial condition, revenues, results of
        operations, liquidity or capital expenditures.
 
 **Item
        3.**  **Quantitative
        and Qualitative Disclosures About Market Risk** **.**
  All
        of
        our foreign operations are conducted in China and the Renminbi is the national
        currency in which its operations are conducted. We have not utilized any
        derivative financial instruments or any other financial instruments, nor
        do we
        utilize any derivative commodity instruments in its operations, nor any similar
        market sensitive instruments.
  The
        exchange rate between the Renminbi and the U.S. dollar is subject to the
        PRC
        foreign currency conversion policies which may change at any time. The exchange
        rate at May 13, 2008 was approximately 6.99 Renminbi to 1 U.S. dollar, and
        the
        exchange rate is currently permitted to float within a very limited range.
  We
        believe that the weakening US dollar currently exposes us to significant
        market
        risk. We currently raise capital in the US to fund our acquisitions and growth
        in China. If the US dollar continues to weaken against the Renminbi we may
        be
        required to raise additional capital not anticipated or we may not be able
        to
        continue to operate, make required payments for agreements entered into or
        fund
        new acquisitions.
 
 The
        Company primarily invests its cash in checking, bank money market and savings
        accounts. As of
        May 13, 2008, the Company had not entered into any type of hedging or interest
        rate swap transaction.
 
 **Item
        4. Controls and Procedures.**
 
 *Evaluation
        of Disclosure Controls and Procedures*
  Management
        has reviewed the effectiveness of our "disclosure controls and procedures"
        (as
        defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e))
        as
        of the end of the period covered by this report and have concluded that the
        disclosure controls and procedures are effective to ensure that material
        information relating to the Company is recorded, processed, summarized, and
        reported in a timely manner.
 
 *Changes
        in Internal Control Over Financial Reporting*
 
 There
        have been no changes in the Company's internal control over financial reporting
        during the last quarterly period covered by this report that have materially
        affected, or are reasonably likely to materially affect, the Company's internal
        control over financial reporting.
 
 *Management’s
        Report on Internal Control Over Financial Reporting*
 
 Management
        is responsible for establishing and maintaining adequate internal control
        over
        financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
        Securities Exchange Act of 1934, as amended. The Company’s internal control over
        financial reporting is designed to provide reasonable assurance regarding
        the
        reliability of financial reporting and the preparation of financial statements
        for external purposes in accordance with generally accepted accounting
        principles. The Company’s internal control over financial reporting includes
        those policies and procedures that:
 
 (i)  pertain
        to the maintenance of records that, in reasonable detail, accurately and
        fairly
        reflect the transactions and dispositions of the assets of the
        Company;
  14
  (ii)  provide
        reasonable assurance that transactions are recorded as necessary to permit
        preparation of financial statements in accordance with generally accepted
        accounting principles, and that receipts and expenditures of the Company
        are
        being made only in accordance with authorization of Management; and
 
 (iii)
        provide reasonable assurance regarding prevention or timely detection of
        unauthorized acquisition, use or disposition of the Company’s assets that could
        have a material effect on the financial statements.
 
 Because
        of inherent limitations, internal control over financial reporting may not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to risk that controls may become
        inadequate because of changes in conditions, or the degree of compliance
        may
        deteriorate.
 
 Management
        assessed the effectiveness of the Company’s internal control over financial
        reporting as of March 31, 2008. In making this assessment, management used
        the
        criteria set forth by the Committee of Sponsoring Organization of the Treadway
        Commission (COSO) in Internal Control-Integrated Framework. Based on that
        assessment, Management has concluded that the Company’s internal control over
        financial reporting was effective as of March 31, 2008. Nonetheless, because
        of
        previous late filings during the 2007 year and because of our PRC operations,
        management has retained a PRC based consultant to assist with financial
        accounting processing and reporting.
 
 This
        Form
        10-Q does not include an attestation report of the Company's registered public
        accounting firm regarding internal control over financial reporting.
        Management's report was not subject to attestation by the company's registered
        public accounting firm pursuant to temporary rules of the Securities and
        Exchange **** Commission
        that permit the Company to provide only management's report in this report.
 
  15
  **PART
        II - OTHER INFORMATION**
 
 **Item
        1. Legal Proceedings.**
  None.
 
 **Item
        2. Unregistered Sales of Equity Securities and Use of
        Proceeds.**
 
 The
        Company has not made any sales of unregistered Securities during the quarter
        ended March 31, 2008 or thereafter other than has been disclosed in Current
        Reports on Form 8-K.
 
 In
        May
        2008 the Company issued, an aggregate of 75,614 shares to the ten Note holders
        (all of whom are accredited investors) in lieu of interest through March
        31,
        2008, plus late penalty fees. The Company believes that this issuance was
        exempt
        from the registration requirements of the Securities Act of 1933, as amended
        pursuant to Section 4(2) as this issuance of restricted shares was only made
        to
        certain accredited investors and not pursuant to an offering or other public
        distribution.
  **Item
        3. Defaults Upon Senior Securities.**
  None.
  **Item
        4. Submission of Matters to a Vote of Security Holders.**
 
 None.
 
 **Item****5.
        Other Information.**
 
 None.
 
 **Item
        6. Exhibits.**
 
 31.1
              
              Certification
                  by Principal Executive Officer pursuant to Sarbanes Oxley Section
                  302.*31.1
              
              Certification
                  by Principal Accounting Officer pursuant to Sarbanes Oxley Section
                  302.*32.1
              
              Certification
                  by Principal Executive Officer and Principal Accounting Officer
                  pursuant
                  to 18 U.S.C. Section 1350.*32.2
              
              Certification
                  by Principal Accounting Officer pursuant to 18 U.S.C. Section
                  1350.*
 
 *
        Filed
        herewith.
  16
  
 **SIGNATURES**
  Pursuant
        to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant
        has duly caused this Quarterly Report on Form 10-Q for the period ended March
        31, 2008, to be signed on its behalf by the undersigned on May 20, 2008,
        thereunto duly authorized.
  **CHINA
                BROADBAND, INC.**By:
              /s/
                  Marc UrbachName:
                Marc UrbachTitle:
                  President (Principal Executive
                  Officer)
  By:
              /s/
                  Yue PuName:
                Yue PuTitle:
                  Vice Chairman (Principal Accounting Officer, Principal Financial
                  Officer)
  17