----

----

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

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

| Nevada                          |   | 20-1778374                           |
|---------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of |   | (I.R.S. Employer Identification No.) |
| incorporation or organization)  |   |                                 |

| Large accelerated filer  ̈ |   | Accelerated filer  ̈    |
|--------------------------------|--------|-----------------------------|
| Non-accelerated filer  ̈   |   | Smaller reporting company x |

----

----

----

QUARTERLY 

| PART I     | -      | FINANCIAL INFORMATION                                                                       |   |   |
|------------|--------|---------------------------------------------------------------------------------------------|--------|--------|
|       |   |                                                                                        |   |   |
| Item 1.    |   | Financial Statements                                                                        |   | 3      |
| Item 2.    |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   | 21     |
| Item 3     |   | Quantitative and Qualitative Disclosures About Market Risk                                  |   | 32     |
| Item 4.    |   | Controls and Procedures                                                                     |   | 32     |
|       |   |                                                                                        |   |   |
| PART II    | -      | OTHER INFORMATION                                                                           |   |   |
|       |   |                                                                                        |   |   |
| Item 1.    |   | Legal Proceedings                                                                           |   | 33     |
| Item 1A.   |   | Risk Factors                                                                                |   | 33     |
| Item 2.    |   | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   | 36     |
| Item 3.    |   | Defaults Upon Senior Securities                                                             |   | 36     |
| Item 4.    |   | Removed and Reserved                                                                        |   | 36     |
| Item 5.    |   | Other Information                                                                           |   | 36     |
| Item 6.    |   | Exhibits                                                                                    |   | 36     |
| Signatures |   | 37                                                                                          |

----

Table of Contents

Item 

|                                                                                             |   | Page |
|--------------------------------------------------------------------------------------------------|--------|------|
| Unaudited Consolidated Balance Sheets                                                            |   | 2    |
| Unaudited Consolidated Statements of Operations                                                  |   | 3    |
| Unaudited Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Loss |   | 4    |
| Unaudited Consolidated Statements of Cash Flows                                                  |   | 5    |
| Notes to Consolidated Financial Statements                                                       |   | 6    |

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Table of Contents

China 

|                                                                                                              |   | September 30, |        |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|--------------|--------|
|                                                                                                              |   | 2010          |        |   | 2009         |   |
|                                                                                                              |   | (Unaudited)   |        |   |         |   |
| ASSETS                                                                                                            |   |          |        |   |         |   |
| Current assets:                                                                                                   |   |          |        |   |         |   |
| Cash and cash equivalents                                                                                         |   | $             | 7,808,805   |   |         | $      | 2,190,494 |   |
| Marketable equity securities, available for sale                                                                  |   |          | 33,584      |   |         |   | 47,244 |   |
| Accounts receivable, net                                                                                          |   |          | 320,749     |   |         |   | 213,713 |   |
| Inventory                                                                                                         |   |          | 463,252     |   |         |   | 455,492 |   |
| Prepaid expenses                                                                                                  |   |          | 648,592     |   |         |   | 237,704 |   |
| Loan receivable from related party                                                                                |   |          | 295,995     |   |         |   | 289,974 |   |
| Amounts due from shareholders                                                                                     |   |          | 677,377     |   |         |   | 168,907 |   |
| Other current assets                                                                                              |   |          | 443,475     |   |         |   | 78,478 |   |
| Total current assets                                                                                              |   |          | 10,691,829  |   |         |   | 3,682,006 |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Property and equipment, net                                                                                       |   |          | 5,365,882   |   |         |   | 7,362,641 |   |
| Intangible assets, net                                                                                            |   |          | 11,616,447  |   |         |   | 4,294,614 |   |
| Goodwill                                                                                                          |   |          | 3,874,669   |   |         |   | - |   |
| Amount due from non-controlling interest                                                                          |   |          | 1,492,961   |   |         |   | - |   |
| Investment in equity investment                                                                                   |   |          | 574,907     |   |         |   | - |   |
| Other assets                                                                                                      |   |          | 222,771     |   |         |   | 430,561 |   |
| Total assets                                                                                                      |   | $             | 33,839,466  |   |         | $      | 15,769,822 |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                              |   |          |        |   |         |   |   |   |
| Current liabilities:                                                                                              |   |          |        |   |         |   |   |   |
| Accounts payable                                                                                                  |   | $             | 1,290,398   |   |         | $      | 1,350,076 |   |
| Accrued expenses                                                                                                  |   |          | 1,137,520   |   |         |   | 1,839,272 |   |
| Deferred revenue                                                                                                  |   |          | 1,565,281   |   |         |   | 1,637,283 |   |
| Deferred tax liability                                                                                            |   |          | 281,626     |   |         |   | 281,626 |   |
| Convertible notes payable                                                                                         |   |          | -           |   |         |   | 304,853 |   |
| Warrant liabilities                                                                                               |   |          | -           |   |         |   | 819,150 |   |
| Loan payable                                                                                                      |   |          | 398,960     |   |         |   | 398,960 |   |
| Payable to Shandong Media                                                                                         |   |          | -           |   |         |   | 145,679 |   |
| Payable to Jinan Parent                                                                                           |   |          | 136,022     |   |         |   | 152,268 |   |
| Other current liabilities                                                                                         |   |          | 529,745     |   |         |   | 378,847 |   |
| Total current liabilities                                                                                         |   |          | 5,339,552   |   |         |   | 7,308,014 |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Convertible notes payable                                                                                         |   |          | -           |   |         |   | 4,665,306 |   |
| Contingent purchase consideration liability                                                                       |   |          | 2,750,966   |   |         |   | - |   |
| Deferred tax liability and uncertain tax position liability                                                       |   |          | 1,563,828   |   |         |   | 454,578 |   |
| Total liabilities                                                                                                 |   |          | 9,654,346   |   |         |   | 12,427,898 |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Commitments and Contingencies                                                                                     |   |          |        |   |         |   |   |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Convertible reedeemable preferred stock, $.001 par value; 50,000,000 shares authorized                            |   |          |        |   |         |   |   |   |
| Series A - 7,000,000 shares issued and outstanding, liquidation preference of $3,500,000                          |   |          | 1,261,995   |   |         |   | - |   |
| Series B - 10,266,800 shares issued and outstanding, liquidation preference of $5,133,400                         |   |          | 3,950,358   |   |         |   | - |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Shareholders' equity                                                                                              |   |          |        |   |         |   |   |   |
| Common stock, $.001 par value; 1,500,000,000 shares authorized, 286,728,952 and 64,761,396 issued and outstanding |   |          | 286,729     |   |         |   | 64,762 |   |
| Additional paid-in capital                                                                                        |   |          | 41,983,506  |   |         |   | 14,901,493 |   |
| Accumulated deficit                                                                                               |   |          | (28,984,367 | )      |         |   | (17,215,041 | ) |
| Accumulated other comprehensive income                                                                            |   |          | 722,913     |   |         |   | 331,283 |   |
| Total China Broadband shareholders' equity (deficit)                                                              |   |          | 14,008,781  |   |         |   | (1,917,503 | ) |
| Noncontrolling interests                                                                                          |   |          | 4,963,986   |   |         |   | 5,259,427 |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Total shareholders' equity                                                                                        |   |          | 18,972,767  |   |         |   | 3,341,924 |   |
|                                                                                                              |   |          |        |   |         |   |   |   |
| Total liabilities and shareholders' equity                                                                        |   | $             | 33,839,466  |   |         | $      | 15,769,822 |   |

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Table of Contents

China 

|                                                                         |   | Three Months Ended |        |   | Nine Months Ended |   |
|------------------------------------------------------------------------------|--------|--------------------|-------------|--------|-------------------|--------|
|                                                                         |   | September 30,      |        |   | September 30,     |   |   | September 30, |   |   | September 30, |   |
|                                                                         |   | 2010               |        |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                         |   |               |        |   | (Restated)        |   |   |   |   |   | (Restated) |   |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |
| Revenue                                                                      |   | $                  | 2,054,800   |   |              | $      | 2,106,454 |   |   | $ | 5,747,787 |   |   | $ | 6,045,381 |   |
| Cost of revenue                                                              |   |               | 1,262,776   |   |              |   | 1,541,084 |   |   |   | 3,371,860 |   |   |   | 3,817,881 |   |
| Gross profit                                                                 |   |               | 792,024     |   |              |   | 565,370 |   |   |   | 2,375,927 |   |   |   | 2,227,500 |   |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and adminstrative expenses                                  |   |               | 587,819     |   |              |   | 800,198 |   |   |   | 1,927,222 |   |   |   | 2,259,003 |   |
| Professional fees                                                            |   |               | 185,566     |   |              |   | 154,350 |   |   |   | 735,602 |   |   |   | 446,747 |   |
| Depreciation and amortization                                                |   |               | 1,177,704   |   |              |   | 917,299 |   |   |   | 3,080,462 |   |   |   | 2,653,430 |   |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                         |   |               | (1,159,065  | )      |              |   | (1,306,477 | ) |   |   | (3,367,359 | ) |   |   | (3,131,680 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest & other income / (expense)                                      |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                              |   |               | 2,202       |   |              |   | 721 |   |   |   | 4,492 |   |   |   | 6,105 |   |
| Interest expense                                                             |   |               | (256,514    | )      |              |   | (93,085 | ) |   |   | (530,062 | ) |   |   | (270,133 | ) |
| Inducement to convert and reduction in conversion price of convertible notes |   |               | (6,706,141  | )      |              |   | - |   |   |   | (6,706,141 | ) |   |   | - |   |
| Cost of reduction in exercise price of certain warrants                      |   |               | (150,017    | )      |              |   | - |   |   |   | (150,017 | ) |   |   | - |   |
| Change in fair value of warrant liabilities                                  |   |               | 755,404     |   |              |   | 130,575 |   |   |   | 819,150 |   |   |   | (1,110,212 | ) |
| Gain (loss) on sale of securities                                            |   |               | -           |   |              |   | 15,807 |   |   |   | 1,350 |   |   |   | (14,828 | ) |
| Impairment of intangibles                                                    |   |               | -           |   |              |   | - |   |   |   | (900,000 | ) |   |   | - |   |
| Impairment of equipment                                                      |   |               | -           |   |              |   | - |   |   |   | (750,000 | ) |   |   | - |   |
| Other                                                                        |   |               | (53         | )      |              |   | (12,883 | ) |   |   | 423 |   |   |   | (13,158 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss before income taxes and noncontrolling interest                     |   |               | (7,514,184  | )      |              |   | (1,265,342 | ) |   |   | (11,578,164 | ) |   |   | (4,533,906 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                           |   |               | 75,634      |   |              |   | 14,680 |   |   |   | 335,745 |   |   |   | 44,040 |   |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss, net of tax                                                         |   |               | (7,438,550  | )      |              |   | (1,250,662 | ) |   |   | (11,242,419 | ) |   |   | (4,489,866 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Plus:  Net loss attributable to noncontrolling interests           |   |               | 208,193     |   |              |   | 335,066 |   |   |   | 1,788,402 |   |   |   | 719,312 |   |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband                                     |   | $                  | (7,230,357  | )      |              | $      | (915,596 | ) |   | $ | (9,454,017 | ) |   | $ | (3,770,554 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                 |   |               | (2,315,309  | )      |              |   | - |   |   |   | (2,315,309 | ) |   |   | - |   |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband common shareholders                 |   | $                  | (9,545,666  | )      |              | $      | (915,596 | ) |   | $ | (11,769,326 | ) |   | $ | (3,770,554 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per share                                                  |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                        |   | $                  | (0.05       | )      |              | $      | (0.01 | ) |   | $ | (0.10 | ) |   | $ | (0.06 | ) |
| Diluted                                                                      |   | $                  | (0.05       | )      |              | $      | (0.01 | ) |   | $ | (0.10 | ) |   | $ | (0.06 | ) |
|                                                                         |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                          |   |               |        |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                        |   |               | 209,661,044 |   |              |   | 64,104,665 |   |   |   | 113,700,299 |   |   |   | 58,951,679 |   |
| Diluted                                                                      |   |               | 209,661,044 |   |              |   | 64,104,665 |   |   |   | 113,700,299 |   |   |   | 58,951,679 |   |

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Table of Contents

China 

|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   | Accumulated   |        |   | China            |   |    |           |   |   |            |    |   |          |       |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|---------|------------|--------|--------|-----------------|---------|--------|---------------|-------------|--------|------------------|--------|---------|----------------|--------|--------|-----------------|---------|--------|---------------|------------|
|                                                                                                                               |   |   |        |   |   |   |    | Additional |   |   |            |    |   | Other         |        |   | Broadband        |   |    |           |   |   |            |    |   |          |       |
|                                                                                                                               |   | Common |        |   | Par    |   |    | Paid-in    |   |   | Accumulated     |    |   | Comprehensive |        |   | Shareholders'    |   |    | Noncontrolling |   |   | Total           |    |   | Comprehensive |       |
|                                                                                                                               |   | Shares |        |   | Value  |   |    | Capital    |   |   | Deficit         |    |   | Income(loss)  |        |   | (Deficit)/Equity |   |    | Interest       |   |   | Equity          |    |   | Loss          |       |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |
| Balance December 31, 2008                                                                                                          |   |   | 50,585,455  |   |   | $      | 50,586  |       |   | $      | 13,372,359      |    |   | $             | (12,200,289 | )      |             | $      | 320,858 |           |   | $      | 1,543,514       |    |   | $             | 6,637,631  |   |   | $ | 8,181,145 |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Cumulative effect of accounting change for warrants -reclassification of warrants to warrant liabilities                           |   |   | -           |   |   |   | -       |       |   |   | (731,496        | )       |   |          | 424,373     |   |             |   | -       |           |   |   | (307,123        | )       |   |          | -          |   |   |   | (307,123 | ) |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Shandong Media valuation adjustment                                                                                                |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | -           |   |             |   | -       |           |   |   | -               |    |   |          | (275,448   | ) |   |   | (275,448 | ) |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Shares issued as payment for convertible note interest                                                                             |   |   | 921,043     |   |   |   | 921     |       |   |   | 259,637         |    |   |          | -           |   |             |   | -       |           |   |   | 260,558         |    |   |          | -          |   |   |   | 260,558 |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Stock option compensation expense                                                                                                  |   |   | -           |   |   |   | -       |       |   |   | 33,656          |    |   |          | -           |   |             |   | -       |           |   |   | 33,656          |    |   |          | -          |   |   |   | 33,656 |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Shares issued for AdNet acquisition                                                                                                |   |   | 11,254,898  |   |   |   | 11,255  |       |   |   | 1,676,980       |    |   |          | -           |   |             |   | -       |           |   |   | 1,688,235       |    |   |          | -          |   |   |   | 1,688,235 |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Costs related to stock issued for AdNet acquisition                                                                                |   |   | -           |   |   |   | -       |       |   |   | (3,622          | )       |   |          | -           |   |             |   | -       |           |   |   | (3,622          | )       |   |          |       |   |   |   | (3,622 | ) |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Shares issued for cash                                                                                                             |   |   | 2,000,000   |   |   |   | 2,000   |       |   |   | 298,000         |    |   |          | -           |   |             |   | -       |           |   |   | 300,000         |    |   |          | -          |   |   |   | 300,000 |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Costs related to stock issued for cash                                                                                             |   |   | -           |   |   |   | -       |       |   |   | (4,021          | )       |   |          | -           |   |             |   | -       |           |   |   | (4,021          | )       |   |          | -          |   |   |   | (4,021 | ) |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                           |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | (5,439,125  | )      |             |   | -       |           |   |   | (5,439,125      | )       |   |          | (1,102,756 | ) |   |   | (6,541,881 | ) |   | $ | (5,439,125 | ) |
| Foreign currency translation adjustments                                                                                           |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | -           |   |             |   | 28,345  |           |   |   | 28,345          |    |   |          | -          |   |   |   | 28,345 |   |   |   | 28,345 |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Unrealized loss on marketable equity securities                                                                                    |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | -           |   |             |   | (17,920 | )              |   |   | (17,920         | )       |   |          | -          |   |   |   | (17,920 | ) |   |   | (17,920 | ) |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2009                                                                                                     |   |   | 64,761,396  |   |   | $      | 64,762  |       |   | $      | 14,901,493      |    |   | $             | (17,215,041 | )      |             | $      | 331,283 |           |   | $      | (1,917,503      | )       |   | $             | 5,259,427  |   |   | $ | 3,341,924 |   |   | $ | (5,428,700 | ) |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Shares issued as payment for convertible note interest                                                                             |   |   | 653,119     |   |   |   | 653     |       |   |   | 131,982         |    |   |          | -           |   |             |   | -       |           |   |   | 132,635         |    |   |          | -          |   |   |   | 132,635 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Stock option compensation expense                                                                                                  |   |   | -           |   |   |   | -       |       |   |   | 26,557          |    |   |          | -           |   |             |   | -       |           |   |   | 26,557          |    |   |          | -          |   |   |   | 26,557 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Interest expense related to discount and beneficial convertible features in connection with convertible note and warrants issuance |   |   | -           |   |   |   | -       |       |   |   | 90,000          |    |   |          | -           |   |             |   | -       |           |   |   | 90,000          |    |   |          | -          |   |   |   | 90,000 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Common shares issued for services                                                                                                  |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Common shares issued for cash                                                                                                      |   |   | 62,500,000  |   |   |   | 62,500  |       |   |   | 1,997,164       |    |   |          | -           |   |             |   | -       |           |   |   | 2,059,664       |    |   |          | -          |   |   |   | 2,059,664 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Beneficial conversion feature of Series A and Series B preferred stock issued                                                      |   |   | -           |   |   |   | -       |       |   |   | 2,315,309       |    |   |          | -           |   |             |   | -       |           |   |   | 2,315,309       |    |   |          | -          |   |   |   | 2,315,309 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Warrants issued with common stock, Series A and Series B preferred stock                                                           |   |   | -           |   |   |   | -       |       |   |   | 4,486,383       |    |   |          | -           |   |             |   | -       |           |   |   | 4,486,383       |    |   |          | -          |   |   |   | 4,486,383 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Common shares and warrants issued and costs related to the conversion of convertible notes                                         |   |   | 62,855,048  |   |   |   | 62,855  |       |   |   | 9,786,038       |    |   |          | -           |   |             |   | -       |           |   |   | 9,848,893       |    |   |          | -          |   |   |   | 9,848,893 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Warrants issued to placement agent                                                                                                 |   |   | -           |   |   |   | -       |       |   |   | 135,774         |    |   |          | -           |   |             |   | -       |           |   |   | 135,774         |    |   |          | -          |   |   |   | 135,774 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Issuance costs related to the issuance of shares and warrants                                                                      |   |   | -           |   |   |   |  - |       |   |   |  (632,503  | )  |   |          |  -     |   |             |   |  - |           |   |   |  (632,503  | )  |   |          | -          |   |   |   |  (632,503 | )  |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Warrant liability reclassified to equity                                                                                           |   |   | -           |   |   |   | -       |       |   |   | 150,017         |    |   |          | -           |   |             |   | -       |           |   |   | 150,017         |    |   |          | -          |   |   |   | 150,017 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Shares issued for Sinotop Group Ltd acquisition                                                                                    |   |   | 90,859,389  |   |   |   | 90,859  |       |   |   | 4,452,110       |    |   |          | -           |   |             |   | -       |           |   |   | 4,542,969       |    |   |          | -          |   |   |   | 4,542,969 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Warrants and options issued for Sinotop Group Ltd acquisition                                                                      |   |   |  -     |   |   |   |  - |       |   |   |  3,893,282 |    |   |          |  -     |   |             |   |  - |           |   |   |  3,893,282 |    |   |          |  -    |   |   |   |  3,893,282 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Sinotop Beijing joint venture                                                                                                      |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | -           |   |             |   | -       |           |   |   | -               |    |   |          | 1,492,961  |   |   |   | 1,492,961 |   |   |   |   |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                                                                |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                           |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | (11,769,326 | )      |             |   | -       |           |   |   | (11,769,326     | )       |   |          | (1,788,402 | ) |   |   | (13,557,728 | ) |   |   | (11,769,326 | ) |
| Foreign currency translation adjustments                                                                                           |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | -           |   |             |   | 397,290 |           |   |   | 397,290         |    |   |          | -          |   |   |   | 397,290 |   |   |   | 397,290 |   |
|                                                                                                                               |   |   |        |   |   |   |    |       |   |   |            |    |   |          |        |   |             |   |    |           |   |   |            |    |   |          |       |   |   |   |   |   |   |   |   |   |
| Unrealized gain on marketable equity securities                                                                                    |   |   | -           |   |   |   | -       |       |   |   | -               |    |   |          | -           |   |             |   | (5,660  | )              |   |   | (5,660          | )       |   |          | -          |   |   |   | (5,660 | ) |   |   | (5,660 | ) |
| Balance September 30, 2010                                                                                                    |   |   | 286,728,952 |   |   | $      | 286,729 |       |   | $      | 41,983,506      |    |   | $             | (28,984,367 | )      |             | $      | 722,913 |           |   | $      | 14,008,781      |    |   | $             | 4,963,986  |   |   | $ | 18,972,767 |   |   | $ | (11,377,696 | ) |

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China 

|                                                                                                                                                                                  |   | Nine Months Ended |        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-------------|
|                                                                                                                                                                                  |   | September 30,     |        |   | September 30, |   |
|                                                                                                                                                                                  |   | 2010              |        |   | 2009 |   |
|                                                                                                                                                                                  |   |              |        |   | (Restated) |   |
| Cash flows from operating                                                                                                                                                             |   |              |        |   |   |   |
| Net loss                                                                                                                                                                              |   | $                 | (11,242,419 | ) |   | $ | (4,489,866 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities                                                                                                   |   |              |        |   |   |   |   |   |
| Stock compensation expense                                                                                                                                                            |   |              | 414,193     |   |   |   | 227,528 |   |
| Interest expense related to discount and beneficial convertible features in connection with convertible note and warrant issuance                                                     |   |              | 90,000      |   |   |   | - |   |
| Depreciation and amortization                                                                                                                                                         |   |              | 3,080,462   |   |   |   | 2,451,400 |   |
| Noncash interest expense - original issue discount                                                                                                                                    |   |              | 305,944     |   |   |   | 75,452 |   |
| Deferred income tax                                                                                                                                                                   |   |              | (335,745    | ) |   |   | (44,040 | ) |
| (Gain) loss on sale of marketable equity securities                                                                                                                                   |   |              | (1,350      | ) |   |   | 14,828 |   |
| Change in fair value of warrant liabilities                                                                                                                                           |   |              | (819,150    | ) |   |   | 1,110,212 |   |
| Inducement to convertible note holders and reduction in conversion price in connection to the July 2010 financing                                                                     |   |              | 6,706,141   |   |   |   | - |   |
| Cost of reduction in exercise price of certain warrants                                                                                                                               |   |              | 150,017     |   |   |   |   |   |
| Adjustment to foreign currency translation account                                                                                                                                    |   |              | 378,332     |   |   |   | - |   |
| Impairment charge to Shandong Media intangibles                                                                                                                                       |   |              | 900,000     |   |   |   | - |   |
| Impairment charge to Jinan equipment                                                                                                                                                  |   |              | 750,000     |   |   |   | - |   |
| Change in assets and liabilities, net of amounts assumed in AdNet acquisition,                                                                                                        |   |              |        |   |   |   |   |   |
| Accounts receivable                                                                                                                                                                   |   |              | (107,629    | ) |   |   | (32,000 | ) |
| Inventory                                                                                                                                                                             |   |              | (5,846      | ) |   |   | 98,635 |   |
| Prepaid expenses and other assets                                                                                                                                                     |   |              | (774,657    | ) |   |   | (62,192 | ) |
| Accounts payable and accrued expenses                                                                                                                                                 |   |              | (748,091    | ) |   |   | 834,550 |   |
| Deferred revenue                                                                                                                                                                      |   |              | (74,062     | ) |   |   | 264,765 |   |
| Other                                                                                                                                                                                 |   |              | 48          |   |   |   | (9 | ) |
| Net cash (used in) provided by operating activities                                                                                                                              |   |              | (1,333,812  | ) |   |   | 449,263 |   |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                                                 |   |              |        |   |   |   |   |   |
| Cash acquired in AdNet acquisition                                                                                                                                                    |   |              | -           |   |   |   | 17,568 |   |
| Proceeds from sale of marketable equity securities                                                                                                                                    |   |              | 9,350       |   |   |   | 174,513 |   |
| Acquisition of property and equipment                                                                                                                                                 |   |              | (1,161,654  | ) |   |   | (554,727 | ) |
| Leasehold improvements                                                                                                                                                                |   |              | (68,975     | ) |   |   | - |   |
| Loan advances to Shandong Media shareholders                                                                                                                                          |   |              | (525,218    | ) |   |   | (553,004 | ) |
| Loan repayments to from Shandong Media shareholders                                                                                                                                   |   |              | 17,458      |   |   |   | - |   |
| Loan to related party                                                                                                                                                                 |   |              | (4,804      | ) |   |   | - |   |
| Investment in equity investment                                                                                                                                                       |   |              | (574,907    | ) |   |   | - |   |
| Net cash used in investing activities                                                                                                                                                 |   |              | (2,308,750  | ) |   |   | (915,650 | ) |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Cash flows from financing activities                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Proceeds from sale of equity securities                                                                                                                                               |   |              | 9,025,000   |   |   |   | 300,000 |   |
| Proceeds from issuance of convertible notes payable                                                                                                                                   |   |              | 600,000     |   |   |   | 304,853 |   |
| Costs associated with July financings and share issuances                                                                                                                             |   |              | (496,728    | ) |   |   | - |   |
| Legal fees associated with AdNet acquisition and share issuance                                                                                                                       |   |              | -           |   |   |   | (7,643 | ) |
| Payments to Jinan Parent                                                                                                                                                              |   |              | (16,246     | ) |   |   | (2,643,213 | ) |
| Net cash provided by (used in) financing activities                                                                                                                                   |   |              | 9,112,026   |   |   |   | (2,046,003 | ) |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Effect of exchange rate changes on cash                                                                                                                                               |   |              | 148,847     |   |   |   | 28,124 |   |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                                                                                                                             |   |              | 5,618,311   |   |   |   | (2,484,263 | ) |
| Cash and cash equivalents at beginning of period                                                                                                                                      |   |              | 2,190,494   |   |   |   | 4,425,529 |   |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Cash and cash equivalents at end of period                                                                                                                                            |   | $                 | 7,808,805   |   |   | $ | 1,941,266 |   |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Supplemental Cash Flow Information:                                                                                                                                                   |   |              |        |   |   |   |   |   |
|                                                                                                                                                                                  |   |              |        |   |   |   |   |   |
| Cash paid for taxes                                                                                                                                                                   |   | $                 | -           |   |   | $ | - |   |
| Cash paid for interest                                                                                                                                                                |   | $                 | 1,176       |   |   | $ | 792 |   |
| Value assigned to shares as payment for interest expense                                                                                                                              |   | $                 | 132,635     |   |   | $ | 193,873 |   |
| Shandong Media valuation adjustment                                                                                                                                                   |   | $                 | -           |   |   | $ | 275,448 |   |
| Cancellation of notes payable by issuance of common stock                                                                                                                             |   | $                 | 20,000      |   |   | $ | - |   |
| Issuance of common stock through assignment of notes receivable                                                                                                                       |   | $                 | 580,000     |   |   | $ | - |   |
| Common stock, warrants and stock options issued for Sinotop acquisition                                                                                                               |   | $                 | 8,346,251   |   |   | $ | - |   |
| Contingent consideration liabiltiy associated with earn-out shares related to Sinotop acquisition                                                                                     |   | $                 | 2,750,966   |   |   | $ | - |   |
| Value of warrants issued to placement agent                                                                                                                                           |   | $                 | 135,774     |   |   | $ | - |   |
| Deemed dividend on preferred stock                                                                                                                                                    |   | $                 | 2,315,309   |   |   | $ | - |   |
| Value of common stock issued upon conversion of convertible notes                                                                                                                     |   | $                 | 3,142,752   |   |   | $ | - |   |
| Value of preferred stock issued upon conversion of convertible notes                                                                                                                  |   | $                 | 2,133,400   |   |   | $ | - |   |
| Amount due from noncontrolling interest                                                                                                                                               |   | $                 | 1,492,961   |   |   | $ | - |   |
| Cumulative effect of change in accounting principle upon adoption of new accounting pronouncement on January 1, 2009, reclassification of warrants from equity to warrant liabilities |   | $                 | -           |   |   | $ | 424,373 |   |

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CHINA 

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|   | 1) | Reclassified certain warrants from shareholders’ equity to liabilities in accordance with EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (FASB ASC 815-40-15-5) ("ASC 815”).  ASC 815 became effective and should have been adopted by the Company as of January 1, 2009 by classifying certain warrants as liabilities measured at fair value with changes in fair value recognized in earnings each reporting period and recording a cumulative-effect adjustment to the opening balance of accumulated deficit.  The cumulative-effect adjustment at January 1, 2009 was as follows: |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|     |   | Additional      |     |   | Accumulated |   |    | Warrant     |   |
|----------|--------|-----------------|----------|--------|-------------|--------|---------|-------------|--------|
|     |   | Paid-in Capital |     |   | Deficit     |   |    | Liabilities |   |
| Warrants |   | $               | (731,496 | )      |        | $      | 424,373 |        |   | $ | 307,123 |   |

|   | 2) | Corrected an error related to the valuation of our Shandong Media intangibles which include our publication rights, operating permits and customer relationships and minor changes to the valuation of property and equipment.  The correction resulted in a decrease to the value of our intangible assets and property and equipment by reclassifying approximately $275,000 from non-controlling interest. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3) | Adjusted the original purchase accounting for our AdNet acquisition.  Our AdNet intangible asset was decreased by approximately $1,150,000 and approximately $1,239,000 was recorded to goodwill, $100,000 was recorded to amount due from former AdNet shareholders and approximately $189,000 was recorded to deferred tax liability.  In addition, for the three months and nine months ended September 30, 2009, amortization expense was recorded of approximately $63,000 and $126,000, respectively. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4) | Reclassified legal costs for approximately $8,000 related to stock issued for our AdNet acquisition and related to stock issued for cash to additional paid in capital. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Charter / VIE agreements                |   | $  | 3,858,002  |   |
|-----------------------------------------|--------|---------|------------|--------|
| Noncompete agreement                    |   |    | 4,899,541  |   |
| Deferred tax liability                  |   |    | (1,444,995 | )      |
| Net identifiable assets and liabilities |   |    | 7,312,548  |   |
| Goodwill                                |   |    | 3,874,669  |   |
| Consideration paid                      |   | $       | 11,187,217 |   |

|                   |   | 20% at Acquisition |        |   | 5% Earnout |   |      |        |   |
|------------------------|--------|--------------------|-------------|--------|------------|--------|-----------|-------------|--------|
|                   |   | Number of          |        |   |       |   |      | Number of   |   |   |   |   |   | Total |   |
| Class of consideration |   | Instruments        |        |   | Fair Value |   |      | Instruments |   |   | Fair Value |   |   | Fair Value |   |
| Common stock           |   |               | 90,859,389  |   |       | $      | 4,542,969 |        |   |   | 30,286,464 |   |   | $ | 1,514,324 |   |   | $ | 6,057,293 |   |
| Warrants               |   |               | 128,536,962 |   |       |   | 3,159,872 |        |   |   | 42,845,654 |   |   |   | 1,053,290 |   |   |   | 4,213,162 |   |
| Stock options          |   |               | 15,000,000  |   |       |   | 733,410   |        |   |   | 3,750,000 |   |   |   | 183,352 |   |   |   | 916,762 |   |
| Total                  |   |               |        |   |       | $      | 8,436,251 |        |   |   |   |   |   | $ | 2,750,966 |   |   | $ | 11,187,217 |   |

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|   | · | Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | September 30, 2010      |   |   |    |   |
|-----------------------------------|--------|-------------------------|--------|--------|---------|--------|
|                              |   | Fair Value Measurements |   |   |    |   |
|                              |   | Level 1                 |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair Value |   |
| Assets                            |   |                    |   |   |    |   |   |   |   |   |   |   |
| Available-for-sale securities     |   | $                       | 33,584 |   |    | $      | - |   |   | $ | - |   |   | $ | 33,584 |   |
| Liabilities                       |   |                    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Contingent purchase consideration |   | $                       | -      |   |    | $      | - |   |   | $ | 2,750,966 |   |   | $ | 2,750,966 |   |
|                              |   |                    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | December 31, 2009       |   |   |    |   |   |
|                              |   | Fair Value Measurements |   |   |    |   |   |
|                              |   | Level 1                 |   |   | Level 2 |   |   | Level 3 |   |   | Total Fair Value |   |
| Assets                            |   |                    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale securities     |   | $                       | 47,244 |   |    | $      | - |   |   | $ | - |   |   | $ | 47,244 |   |
| Liabilities                       |   |                    |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Fair value of warrants            |   | $                       | -      |   |    | $      | - |   |   | $ | 819,150 |   |   | $ | 819,150 |   |

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|                                      |   | September 30, |        |   | December 31, |   |
|-------------------------------------------|--------|---------------|-------------|--------|--------------|--------|
|                                      |   | 2010          |        |   | 2009         |   |
|                                      |   |          |        |   |         |   |
| Furniture and office equipment            |   | $             | 1,031,000   |   |         | $      | 984,000 |   |
| Headend facilities and machinery          |   |          | 15,350,000  |   |         |   | 14,172,000 |   |
| Vehicles                                  |   |          | 30,000      |   |         |   | 30,000 |   |
| Total property and equipment              |   |          | 16,411,000  |   |         |   | 15,186,000 |   |
| Less:  accumulated depreciation |   |          | (10,295,000 | )      |         |   | (7,823,000 | ) |
| Less:  impairment charge        |   |          | (750,000    | )      |         |   | - |   |
| Net carrying value                        |   | $             | 5,366,000   |   |         | $      | 7,363,000 |   |
|                                      |   |          |        |   |         |   |   |   |
| Depreciation expense                      |   | $             | 2,268,000   |   |         | $      | 2,281,000 |   |

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|                              |   | Balance at   |      |   |      |   |      | Amortization/ |          |   |       |   |   | Balance at    |         |
|-----------------------------------|--------|--------------|-----------|--------|-----------|--------|-----------|---------------|---------------|--------|------------|--------|--------|---------------|--------------|
|                              |   | December 31, |      |   |      |   |      | Impairment    |          |   | Other      |   |   | September 30, |         |
|                              |   | 2009         |      |   | Additions |   |      | Charge        |          |   | Changes    |   |   | 2010          |         |
| Amortized intangible assets:      |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |
| Service agreement                 |   | $            | 1,483,762 |   |      | $      | -         |          |          | $      | (65,040    | )      |   | $             | -            |   |   | $ | 1,418,722 |   |
| Publication rights                |   |         | 824,812   |   |      |   | -         |          |          |   | (360,653   | )      |   |          | -            |   |   |   | 464,159 |   |
| Customer relationships            |   |         | 183,730   |   |      |   | -         |          |          |   | (85,476    | )      |   |          | -            |   |   |   | 98,254 |   |
| Operating permits                 |   |         | 1,234,583 |   |      |   | -         |          |          |   | (539,830   | )      |   |          | -            |   |   |   | 694,753 |   |
| Software technology               |   |         | 567,727   |   |      |   | -         |          |          |   | (189,243   | )      |   |          | -            |   |   |   | 378,484 |   |
| Charter / VIE agreements          |   |         | -         |   |      |   | 3,858,002 |          |          |   | (32,150    | )      |   |          | -            |   |   |   | 3,825,852 |   |
| Noncompete agreement              |   |         | -         |   |      |   | 4,899,541 |          |          |   | (163,318   | )      |   |          | -            |   |   |   | 4,736,223 |   |
| Total amortized intangible assets |   | $            | 4,294,614 |   |      | $      | 8,757,543 |          |          | $      | (1,435,710 | )      |   | $             | -            |   |   | $ | 11,616,447 |   |
|                              |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
| Unamortized intangible assets:    |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
| Goodwill                          |   | $            | -         |   |      | $      | 3,874,669 |          |          | $      | -          |   |   | $             | -            |   |   | $ | 3,874,669 |   |
|                              |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
|                              |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
|                              |   | Balance at   |      |   |      |   |      |          | Amortization/ |   |       |   |   |          |         | Balance at |   |
|                              |   | December 31, |      |   |      |   |      |          | Impairment    |   |       | Other  |   |          | December 31, |   |
|                              |   | 2008         |      |   | Additions |   |      | Charge        |          |   | Changes    |   |   | 2009          |         |
| Amortized intangible assets:      |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
| Service agreement                 |   | $            | 1,570,482 |   |      | $      | -         |          |          | $      | (86,720    | )      |   | $             | -            |   |   | $ | 1,483,762 |   |
| Publication rights                |   |         | 968,977   |   |      |   | -         |          |          |   | (42,250    | )      |   |          | (101,915     | ) |   |   | 824,812 |   |
| Customer relationships            |   |         | 228,933   |   |      |   | -         |          |          |   | (20,491    | )      |   |          | (24,712      | ) |   |   | 183,730 |   |
| Operating permits                 |   |         | 1,450,366 |   |      |   | -         |          |          |   | (63,236    | )      |   |          | (152,547     | ) |   |   | 1,234,583 |   |
| Software technology               |   |         | -         |   |      |   | 756,969   |          |          |   | (189,242   | )      |   |          | -            |   |   |   | 567,727 |   |
| Total amortized intangible assets |   | $            | 4,218,758 |   |      | $      | 756,969   |          |          | $      | (401,939   | )      |   | $             | (279,174     | ) |   | $ | 4,294,614 |   |
|                              |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
| Unamortized intangible assets:    |   |         |      |   |      |   |      |          |          |   |       |   |   |          |         |   |   |   |   |   |
| Goodwill                          |   | $            | -         |   |      | $      | 1,239,291 |          |          | $      | (1,239,291 | )      |   | $             | -            |   |   | $ | - |   |

|                                |   | Jinan     |      |   | Shandong |   |      | AdNet  |   |   |    |   |   |   |      |
|-------------------------------------|--------|-----------|-----------|--------|----------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|-----------|
| Years ending December 31,           |   | Broadband |      |   | Media    |   |      | Media  |   |   | Sinotop |   |   | Total  |      |
| 2010 (three months)                 |   | $         | 21,680    |   |     | $      | 19,492    |   |   | $      | 63,081  |   |   | $      | 293,202   |   |   | $ | 397,455 |   |
| 2011                                |   |      | 86,720    |   |     |   | 77,968    |   |   |   | 252,322 |   |   |   | 1,172,808 |   |   |   | 1,589,818 |   |
| 2012                                |   |      | 86,720    |   |     |   | 77,968    |   |   |   | 63,081  |   |   |   | 1,172,808 |   |   |   | 1,400,577 |   |
| 2013                                |   |      | 86,720    |   |     |   | 77,968    |   |   |   | -       |   |   |   | 1,172,808 |   |   |   | 1,337,496 |   |
| 2014                                |   |      | 86,720    |   |     |   | 77,968    |   |   |   | -       |   |   |   | 1,172,808 |   |   |   | 1,337,496 |   |
| Thereafter                          |   |      | 1,050,162 |   |     |   | 925,802   |   |   |   | -       |   |   |   | 3,577,641 |   |   |   | 5,553,605 |   |
| Total amortization to be recognized |   | $         | 1,418,722 |   |     | $      | 1,257,166 |   |   | $      | 378,484 |   |   | $      | 8,562,075 |   |   | $ | 11,616,447 |   |

|             |   | September 30, |      |   | December 31, |   |
|------------------|--------|---------------|-----------|--------|--------------|--------|
|             |   | 2010          |      |   | 2009         |   |
|             |   |          |      |   |         |   |
| Accrued expenses |   | $             | 403,000   |   |         | $      | 1,053,000 |   |
| Accrued payroll  |   |          | 735,000   |   |         |   | 786,000 |   |
|             |   | $             | 1,138,000 |   |         | $      | 1,839,000 |   |

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|                                     |   | September 30, |     |   | December 31, |   |
|------------------------------------------|--------|---------------|----------|--------|--------------|--------|
|                                     |   | 2010          |     |   | 2009         |   |
| Convertible notes, noncurrent            |   | $             | -        |   |         | $      | 4,971,250 |   |
| Less:  Original issue discount |   |          | ( - | )      |         |   | ( 305,944 | ) |
|                                     |   | $             | -        |   |         | $      | 4,665,306 |   |
|                                     |   |          |     |   |         |   |   |   |
| Convertible notes, current               |   | $             | -        |   |         | $      | 304,853 |   |

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|                     |   | Gross Proceeds |      |
|--------------------------|--------|----------------|-----------|
|                     |   |           |      |
| Common Stock             |   | $              | 2,059,664 |   |
| Series A Preferred Stock |   |           | 1,261,995 |   |
| Series B Preferred Stock |   |           | 1,816,958 |   |
| Warrants                 |   |           | 4,486,383 |   |
|                     |   | $              | 9,625,000 |   |

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|     |   | Additional      |     |   | Accumulated |   |    | Warrant     |   |
|----------|--------|-----------------|----------|--------|-------------|--------|---------|-------------|--------|
|     |   | Paid-in Capital |     |   | Deficit     |   |    | Liabilities |   |
| Warrants |   | $               | (731,496 | )      |        | $      | 424,373 |        |   | $ | 307,123 |   |

|                     |   | Three Months Ended |        |   | Nine Months Ended |   |
|--------------------------|--------|--------------------|-------------|--------|-------------------|--------|
|                     |   | September 30,      |        |   | September 30,     |   |
|                     |   | 2010               |        |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Warrants                 |   |               | 643,684,822 |   |              |   | 16,874,800 |   |   |   | 643,684,822 |   |   |   | 16,874,800 |   |
| Options                  |   |               | 317,500     |   |              |   | 317,500 |   |   |   | 317,500 |   |   |   | 317,500 |   |
| Series A Preferred Stock |   |               | 70,000,000  |   |              |   | - |   |   |   | 70,000,000 |   |   |   | - |   |
| Series B Preferred Stock |   |               | 102,668,000 |   |              |   | - |   |   |   | 102,668,000 |   |   |   | - |   |

|                                                   |   | Three Months Ended |       |   | Nine Months Ended |   |
|--------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                                   |   | September 30,      |       |   | September 30,     |   |
|                                                   |   | 2010               |       |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Net loss attributable to shareholders                  |   | $                  | (9,545,666 | )      |              | $      | (915,596 | ) |   | $ | (11,769,326 | ) |   | $ | (3,770,554 | ) |
| Other comprehensive income (loss):                     |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Currency translation adjustment                        |   |               | (13,059    | )      |              |   | 6,407 |   |   |   | 397,290 |   |   |   | 28,128 |   |
| Unrealized gain (loss) on marketable equity securities |   |               | (14,291    | )      |              |   | 38,735 |   |   |   | (5,660 | ) |   |   | 2,444 |   |
| Comprehensive loss                                     |   | $                  | (9,573,016 | )      |              | $      | (870,454 | ) |   | $ | (11,377,696 | ) |   | $ | (3,739,982 | ) |

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|                                 |   | Three Months Ended |   |   | Nine Months Ended |   |
|--------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                 |   | September 30,      |   |   | September 30,     |   |   | September 30, |   |   | September 30, |   |
|                                 |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Stock option amortization            |   | $                  | -      |   |              | $      | - |   |   | $ | 27,000 |   |   | $ | 27,000 |   |
| Warrant amortization                 |   |               | -      |   |              |   | - |   |   |   | - |   |   |   | 7,000 |   |
| Stock issued as payment for interest |   |               | -      |   |              |   | 67,000 |   |   |   | 132,000 |   |   |   | 194,000 |   |
|                                 |   | $                  | -      |   |              | $      | 67,000 |   |   | $ | 159,000 |   |   | $ | 228,000 |   |

|                                                     |   | Number of |        |   |     |   |       |
|----------------------------------------------------------|--------|-----------|-------------|--------|----------|--------|------------|
|                                                     |   | Warrants  |        |   | Exercise |   | Expiration |
| Name                                                     |   | Issued    |        |   | Price    |   | Date       |
| Share Exchange Consulting Warrants                       |   |      | 4,474,800   |   |     | $      | 0.60       |   | 1/11/2013 |
| 2007 Private Placement Broker Warrants                   |   |      | 640,000     |   |     | $      | 0.60       |   | 1/11/2013 |
| 2007 Private Placement Investor Warrants                 |   |      | 4,000,000   |   |     | $      | 2.00       |   | 1/11/2013 |
| January 2008 Financing Class A Warrants                  |   |      | 6,628,333   |   |     | $      | 0.60       |   | 6/11/2013 |
| January 2008 Financing Broker Warrants                   |   |      | 1,131,667   |   |     | $      | 0.50       |   | 6/11/2013 |
| April 2010 Financing  Warrants                 |   |      | 1,000,000   |   |     | $      | 0.05       |   | 4/14/2015 |
| July 2010 Financing Investor Warrants                    |   |      | 386,500,000 |   |     | $      | 0.05       |   | 7/30/2015 |
| July 2010 Conversion of Convertible Note Holder Warrants |   |      | 105,523,060 |   |     | $      | 0.05       |   | 7/30/2015 |
| July 2010 Financing Broker Warrants                      |   |      | 5,250,000   |   |     | $      | 0.05       |   | 7/30/2015 |
| July 2010 Sinotop Acquisition Warrants                   |   |      | 1,278,700   |   |     | $      | 0.60       |   | 1/11/2013 |
| July 2010 Sinotop Acquisition Warrants                   |   |      | 1,000,000   |   |     | $      | 2.00       |   | 1/11/2013 |
| July 2010 Sinotop Acquisition Warrants                   |   |      | 1,657,083   |   |     | $      | 0.20       |   | 6/11/2013 |
| July 2010 Sinotop Acquisition Warrants                   |   |      | 282,917     |   |     | $      | 0.50       |   | 6/11/2013 |
| July 2010 Sinotop Acquisition Warrants                   |   |      | 124,318,262 |   |     | $      | 0.05       |   | 7/30/2015 |
|                                                     |   |      |        |   |     |   |       |   |   |
|                                                     |   |      | 643,684,822 |   |     |   |       |   |   |

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| Warrants converted at 5%                                 |   |   |        |   |
|----------------------------------------------------------|--------|--------|-------------|--------|
| January 2008 Financing Class A Warrants                  |   |   | 6,628,333   |   |
| January 2008 Financing Broker Warrants                   |   |   | 1,131,667   |   |
| July 2010 Sinotop Acquisition Warrants                   |   |   | 1,657,083   |   |
| July 2010 Sinotop Acquisition Warrants                   |   |   | 282,917     |   |
|                                                     |   |   | 9,700,000   |   |
| Conversion rate                                          |   |   | 5           | %      |
| Common shares issued                                     |   |   | 485,000     |   |
|                                                     |   |   |        |   |
| Warrants converted at 60%                                |   |   |        |   |
| April 2010 Financing  Warrants                 |   |   | 1,000,000   |   |
| July 2010 Financing Investor Warrants                    |   |   | 386,500,000 |   |
| July 2010 Conversion of Convertible Note Holder Warrants |   |   | 105,523,060 |   |
| July 2010 Financing Broker Warrants                      |   |   | 5,250,000   |   |
| July 2010 Sinotop Acquisition Warrants                   |   |   | 124,318,262 |   |
| Total warrants                                           |   |   | 622,591,322 |   |
| Conversion rate                                          |   |   | 60          | %      |
| Common shares issued                                     |   |   | 373,554,793 |   |
|                                                     |   |   |        |   |
| Remaining warrants outstanding                           |   |   |        |   |
| Share Exchange Consulting Warrants                       |   |   | 4,474,800   |   |
| 2007 Private Placement Investor Warrants                 |   |   | 4,000,000   |   |
| 2007 Private Placement Broker Warrants                   |   |   | 640,000     |   |
| July 2010 Sinotop Acquisition Warrants                   |   |   | 1,278,700   |   |
| July 2010 Sinotop Acquisition Warrants                   |   |   | 1,000,000   |   |
|                                                     |

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Item 

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|   | · | a combined subscription basis of approximately 250,000 subscribers; |
|--------|--------|---------------------------------------------------------------------|

|   | · | five publishing assets focused on different readership segments; |
|--------|--------|------------------------------------------------------------------|

|   | · | retail and subscription incomes accounting for more than 75% of total revenue, indicating great growth potential for advertising revenue; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | unique publishing titles and exclusive copyrights. |
|--------|--------|----------------------------------------------------|

|   | · | Shandong Broadcast and TV Weekly Newspaper. Established in 1954, Shandong Broadcast & TV Weekly is a provincial TV programming guide & general entertainment newspaper.  Published on weekly basis, it has maintained 90,000 average copies in circulation per week.   Target readership of Shandong Broadcast & TV Weekly consists primarily of middle-age to senior readers in the Shandong region. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | TV Weekly Magazine.  TV Weekly Magazine is a national PRC magazine title, ranked among China’s top 5 TV Guide & general entertainment magazines.  Published on a weekly basis, this magazine’s average circulation is 40,000 copies in the Shandong region.  The unique national publishing title encourages TV Weekly to expand it’s target market to neighboring regions in northern China. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Modern Movie Times Magazine (Bi-Weekly).  Modern Movie Time Magazine is published jointly by Shandong TV Drama and Movie Production Center and Shandong TV Station.  Ranked among the top 100 magazine for 5 consecutive years in China, it’s among the most popular magazine in northern China.  Modern Movie Times Magazine reached 125,000 copies in circulation on a bi-weekly basis in 2009. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Music Review and Korea Drama (Monthly). These are two smaller publications that were acquired in 2009.  Circulation in each of these magazines is small.  They are currently distributed in larger cities.  We feel that there is good growth potential for both publications as we integrate them into our distribution and content channels. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Growth in the Chinese Economy. We operate in China and derive almost all of our revenues from sales to customers in China. Economic conditions in China, therefore, affect virtually all aspects of our operations, including the demand for our products, the availability and prices of our raw materials and our other expenses. China has experienced significant economic growth, achieving a compound annual growth rate of over 10% in gross domestic product from 1996 through 2008. China is expected to experience continued growth in all areas of investment and consumption, even in the face of a global economic recession. However, China has not been entirely immune to the global economic slowdown and is experiencing a slowing of its growth rate. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | PRC Economic Stimulus Plans. The PRC government has issued a policy entitled “Central Government PolicyOn Stimulating Domestic Consumption To Counter The Damage Result From Export Business Of The Country,” pursuant to which the PRC Central Government is dedicating approximately $580 billion to stimulate domestic consumption. Companies that are either directly or indirectly related to construction, and to the manufacture and sale of building materials, electrical household appliances and telecommunication equipment, are expected to benefit.   China Broadband could potentially benefit if the stimulus plan injects funds into cable infrastructure allowing access to our PPV network. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Deployment of Value-added Services. To augment our product offerings and create other revenue sources, we work with strategic partners to deploy value-added services to our cable broadband customers.  Value-added services, including but not limited to the synergies created by the additions of our new assets, will become a focus of revenue generation for our company. No assurance can be made that we will add other value-added services, or if added, that they will succeed. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                         |   | 3 Months Ended |       |   |          |   |       |   |   |
|------------------------------------------------------------------------------|--------|----------------|------------|--------|---------------|--------|------------|--------|--------|
|                                                                         |   | September 30,  |       |   | September 30, |   |       | Amount |   |   | % |   |
|                                                                         |   | 2010           |       |   | 2009          |   |       | Change |   |   | Change |   |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |
| Revenue                                                                      |   | $              | 2,055,000  |   |          | $      | 2,106,000  |   |   | $ | (51,000 | ) |   |   | -2 | % |
| Cost of revenue                                                              |   |           | 1,263,000  |   |          |   | 1,541,000  |   |   |   | (278,000 | ) |   |   | -18 | % |
| Gross profit                                                                 |   |           | 792,000    |   |          |   | 565,000    |   |   |   | 227,000 |   |   |   | 40 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Selling, general and adminstrative expenses                                  |   |           | 588,000    |   |          |   | 800,000    |   |   |   | (212,000 | ) |   |   | -27 | % |
| Professional fees                                                            |   |           | 185,000    |   |          |   | 154,000    |   |   |   | 31,000 |   |   |   | 20 | % |
| Depreciation and amortization                                                |   |           | 1,178,000  |   |          |   | 917,000    |   |   |   | 261,000 |   |   |   | 28 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                         |   |           | (1,159,000 | )      |          |   | (1,306,000 | )      |   |   | 147,000 |   |   |   | -11 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Interest & other income / (expense)                                      |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Interest income                                                              |   |           | 2,000      |   |          |   | 1,000      |   |   |   | 1,000 |   |   |   | 100 | % |
| Interest expense                                                             |   |           | (257,000   | )      |          |   | (93,000    | )      |   |   | (164,000 | ) |   |   | 176 | % |
| Inducement to convert and reduction in conversion price of convertible notes |   |           | (6,706,000 | )      |          |   | -          |   |   |   | (6,706,000 | ) |   |   | - |   |
| Cost of reduction in exercise price of certain warrants                      |   |           | (150,000   | )      |          |   | -          |   |   |   | (150,000 | ) |   |   | - |   |
| Change in fair value of warrant liabilities                                  |   |           | 755,000    |   |          |   | 131,000    |   |   |   | 624,000 |   |   |   | - |   |
| Gain (loss) on sale of securities                                            |   |           | -          |   |          |   | 16,000     |   |   |   | (16,000 | ) |   |   | -100 | % |
| Other                                                                        |   |           | -          |   |          |   | (14,000    | )      |   |   | 14,000 |   |   |   | - |   |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Loss before income taxes and noncontrolling interests                        |   |           | (7,515,000 | )      |          |   | (1,265,000 | )      |   |   | (6,250,000 | ) |   |   | 494 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                           |   |           | 76,000     |   |          |   | 15,000     |   |   |   | 61,000 |   |   |   | 407 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss, net of tax                                                         |   |           | (7,439,000 | )      |          |   | (1,250,000 | )      |   |   | (6,189,000 | ) |   |   | 495 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss attributable to noncontrolling interests                            |   |           | 208,000    |   |          |   | 335,000    |   |   |   | (127,000 | ) |   |   | -38 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband shareholders                        |   |           | (7,231,000 | )      |          |   | (915,000   | )      |   |   | (6,316,000 | ) |   |   | 690 | % |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                 |   |           | (2,315,000 | )      |          |   | -          |   |   |   | (2,315,000 | ) |   |   | - |   |
|                                                                         |   |           |       |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband common shareholders                 |   | $              | (9,546,000 | )      |          | $      | (915,000   | )      |   |   | (8,631,000 | ) |   |   | 943 | % |

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Table of Contents

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Table of Contents

|                                                                         |   |      |      |   | 3 Months Ended     |   |   |      |   |   |       |   |   | 3 Months Ended     |       |   |      |      |
|------------------------------------------------------------------------------|--------|-----------|-----------|--------|--------------------|--------|--------|-----------|--------|--------|------------|--------|--------|--------------------|------------|--------|-----------|-----------|
|                                                                         |   |      |      |   | September 30, 2010 |   |   |      |   |   |       |   |   | September 30, 2009 |       |   |      |      |
|                                                                         |   |      |      |   | % of          |   |   |      |   |   |       |   |   |               |       |   | % of |      |   |   |   |   |   |   |
|                                                                         |   |      |      |   | Total              |   |   | Non-      |   |   |       |   |   |               |       |   | Total     |      |   | Non- |   |   |   |   |
|                                                                         |   | Operating |      |   | Revenue            |   |   | Operating |   |   | Total      |   |   | Operating          |       |   | Revenue   |      |   | Operating |   |   | Total |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |
| Revenue                                                                      |   | $         | 2,055,000 |   |               |   |   |      | $      | -      |       |   | $      | 2,055,000          |       |   | $         | 2,106,000 |   |   |   |   |   | $ | - |   |   | $ | 2,106,000 |   |
| Cost of revenue                                                              |   |      | 1,263,000 |   |               |   |   |      |   | -      |       |   |   | 1,263,000          |       |   |      | 1,541,000 |   |   |   |   |   |   | - |   |   |   | 1,541,000 |   |
| Gross profit                                                                 |   |      | 792,000   |   |               |   | 39     | %         |   |   | -          |   |   |               | 792,000    |   |      |      | 565,000 |   |   |   | 27 | % |   |   | - |   |   |   | 565,000 |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and adminstrative expenses                                  |   |      | 580,000   |   |               |   | 28     | %         |   |   | 8,000      |   |   |               | 588,000    |   |      |      | 579,000 |   |   |   | 27 | % |   |   | 221,000 |   |   |   | 800,000 |   |
| Professional fees                                                            |   |      | -         |   |               |   | 0      | %         |   |   | 185,000    |   |   |               | 185,000    |   |      |      | 23,000 |   |   |   | 1 | % |   |   | 131,000 |   |   |   | 154,000 |   |
| Depreciation and amortization                                                |   |      | 648,000   |   |               |   | 32     | %         |   |   | 530,000    |   |   |               | 1,178,000  |   |      |      | 772,000 |   |   |   | 37 | % |   |   | 145,000 |   |   |   | 917,000 |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                         |   |      | (436,000  | )      |               |   | -11    | %         |   |   | (723,000   | )      |   |               | (1,159,000 | )      |      |      | (809,000 | ) |   |   | -38 | % |   |   | (497,000 | ) |   |   | (1,306,000 | ) |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest & other income / (expense)                                      |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                              |   |      | 2,000     |   |               |   |   |      |   |   | -          |   |   |               | 2,000      |   |      |      | 1,000 |   |   |   |   |   |   |   | - |   |   |   | 1,000 |   |
| Interest expense                                                             |   |      | (1,000    | )      |               |   |   |      |   |   | (256,000   | )      |   |               | (257,000   | )      |      |      | - |   |   |   |   |   |   |   | (93,000 | ) |   |   | (93,000 | ) |
| Inducement to convert and reduction in conversion price of convertible notes |   |      | -         |   |               |   |   |      |   |   | (6,706,000 | )      |   |               | (6,706,000 | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Cost of reduction in exercise price of certain warrants                      |   |      | -         |   |               |   |   |      |   |   | (150,000   | )      |   |               | (150,000   | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Change in fair value of warrant liabilities                                  |   |      | -         |   |               |   |   |      |   |   | 755,000    |   |   |               | 755,000    |   |      |      | - |   |   |   |   |   |   |   | 131,000 |   |   |   | 131,000 |   |
| Gain (loss) on sale of securities                                            |   |      | -         |   |               |   |   |      |   |   | -          |   |   |               | -          |   |      |      | - |   |   |   |   |   |   |   | 16,000 |   |   |   | 16,000 |   |
| Impairment of intangibles                                                    |   |      | -         |   |               |   |   |      |   |   | -          |   |   |               | -          |   |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Impairment of equipment                                                      |   |      | -         |   |               |   |   |      |   |   | -          |   |   |               | -          |   |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Other                                                                        |   |      | -         |   |               |   |   |      |   |   | -          |   |   |               | -          |   |      |      | (14,000 | ) |   |   |   |   |   |   | - |   |   |   | (14,000 | ) |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes and noncontrolling interest                         |   |      | (435,000  | )      |               |   |   |      |   |   | (7,080,000 | )      |   |               | (7,515,000 | )      |      |      | (822,000 | ) |   |   |   |   |   |   | (443,000 | ) |   |   | (1,265,000 | ) |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                           |   |      | -         |   |               |   |   |      |   |   | 76,000     |   |   |               | 76,000     |   |      |      | - |   |   |   |   |   |   |   | 15,000 |   |   |   | 15,000 |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                            |   |      | (435,000  | )      |               |   |   |      |   |   | (7,004,000 | )      |   |               | (7,439,000 | )      |      |      | (822,000 | ) |   |   |   |   |   |   | (428,000 | ) |   |   | (1,250,000 | ) |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to noncontrolling interest                             |   |      | 208,000   |   |               |   |   |      |   |   | -          |   |   |               | 208,000    |   |      |      | 335,000 |   |   |   |   |   |   |   | - |   |   |   | 335,000 |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to shareholders                                        |   |      | (227,000  | )      |               |   |   |      |   |   | (7,004,000 | )      |   |               | (7,231,000 | )      |      |      | (487,000 | ) |   |   |   |   |   |   | (428,000 | ) |   |   | (915,000 | ) |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                 |   |      | -         |   |               |   |   |      |   |   | (2,315,000 | )      |   |               | (2,315,000 | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
|                                                                         |   |      |      |   |               |   |   |      |   |   |       |   |   |               |       |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband common shareholders                 |   | $         | (227,000  | )      |               |   |   |      |   | $      | (9,319,000 | )      |   | $                  | (9,546,000 | )      |      | $         | (487,000 | ) |   |   |   |   |   | $ | (428,000 | ) |   | $ | (915,000 | ) |

|                                                                         |   | 9 Months Ended |        |   |          |   |       |   |   |
|------------------------------------------------------------------------------|--------|----------------|-------------|--------|---------------|--------|------------|--------|--------|
|                                                                         |   | September 30,  |        |   | September 30, |   |       | Amount |   |   | % |   |
|                                                                         |   | 2010           |        |   | 2009          |   |       | Change |   |   | Change |   |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |
| Revenue                                                                      |   | $              | 5,748,000   |   |          | $      | 6,045,000  |   |   | $ | (297,000 | ) |   |   | -5 | % |
| Cost of revenue                                                              |   |           | 3,372,000   |   |          |   | 3,818,000  |   |   |   | (446,000 | ) |   |   | -12 | % |
| Gross profit                                                                 |   |           | 2,376,000   |   |          |   | 2,227,000  |   |   |   | 149,000 |   |   |   | 7 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Selling, general and adminstrative expenses                                  |   |           | 1,927,000   |   |          |   | 2,259,000  |   |   |   | (332,000 | ) |   |   | -15 | % |
| Professional fees                                                            |   |           | 736,000     |   |          |   | 447,000    |   |   |   | 289,000 |   |   |   | 65 | % |
| Depreciation and amortization                                                |   |           | 3,080,000   |   |          |   | 2,653,000  |   |   |   | 427,000 |   |   |   | 16 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                         |   |           | (3,367,000  | )      |          |   | (3,132,000 | )      |   |   | (235,000 | ) |   |   | 8 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Interest & other income / (expense)                                      |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Interest income                                                              |   |           | 4,000       |   |          |   | 6,000      |   |   |   | (2,000 | ) |   |   | -33 | % |
| Interest expense                                                             |   |           | (530,000    | )      |          |   | (270,000   | )      |   |   | (260,000 | ) |   |   | 96 | % |
| Inducement to convert and reduction in conversion price of convertible notes |   |           | (6,706,000  | )      |          |   | -          |   |   |   | (6,706,000 | ) |   |   | - |   |
| Cost of reduction in exercise price of certain warrants                      |   |           | (150,000    | )      |          |   | -          |   |   |   | (150,000 | ) |   |   | - |   |
| Change in fair value of warrant liabilities                                  |   |           | 819,000     |   |          |   | (1,110,000 | )      |   |   | 1,929,000 |   |   |   | -174 | % |
| Gain (loss) on sale of securities                                            |   |           | 1,000       |   |          |   | (15,000    | )      |   |   | 16,000 |   |   |   | -107 | % |
| Impairment of intangibles                                                    |   |           | (900,000    | )      |          |   | -          |   |   |   | (900,000 | ) |   |   | - |   |
| Impairment of equipment                                                      |   |           | (750,000    | )      |          |   | -          |   |   |   | (750,000 | ) |   |   | - |   |
| Other                                                                        |   |           | 1,000       |   |          |   | (13,000    | )      |   |   | 14,000 |   |   |   | - |   |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Loss before income taxes and noncontrolling interest                         |   |           | (11,578,000 | )      |          |   | (4,534,000 | )      |   |   | (7,044,000 | ) |   |   | 155 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                           |   |           | 336,000     |   |          |   | 44,000     |   |   |   | 292,000 |   |   |   | 664 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss, net of tax                                                         |   |           | (11,242,000 | )      |          |   | (4,490,000 | )      |   |   | (6,752,000 | ) |   |   | 150 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Plus: Net loss attributable to noncontrolling interests                      |   |           | 1,788,000   |   |          |   | 719,000    |   |   |   | 1,069,000 |   |   |   | 149 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband shareholders                        |   |           | (9,454,000  | )      |          |   | (3,771,000 | )      |   |   | (5,683,000 | ) |   |   | 151 | % |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                 |   |           | (2,315,000  | )      |          |   | -          |   |   |   | (2,315,000 | ) |   |   | - |   |
|                                                                         |   |           |        |   |          |   |       |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband common shareholders                 |   | $              | (11,769,000 | )      |          | $      | (3,771,000 | )      |   | $ | (7,998,000 | ) |   |   | 212 | % |

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Table of Contents

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Table of Contents

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Table of Contents

|                                                                         |   |      |       |   | 9 Months Ended     |   |   |      |   |   |       |   |   | 9 Months Ended     |        |   |      |      |
|------------------------------------------------------------------------------|--------|-----------|------------|--------|--------------------|--------|--------|-----------|--------|--------|------------|--------|--------|--------------------|-------------|--------|-----------|-----------|
|                                                                         |   |      |       |   | September 30, 2010 |   |   |      |   |   |       |   |   | September 30, 2009 |        |   |      |      |
|                                                                         |   |      |       |   | % of          |   |   |      |   |   |       |   |   |               |        |   | % of |      |   |   |   |   |   |   |
|                                                                         |   |      |       |   | Total              |   |   | Non-      |   |   |       |   |   |               |        |   | Total     |      |   | Non- |   |   |   |   |
|                                                                         |   | Operating |       |   | Revenue            |   |   | Operating |   |   | Total      |   |   | Operating          |        |   | Revenue   |      |   | Operating |   |   | Total |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |
| Revenue                                                                      |   | $         | 5,748,000  |   |               |   |   |      | $      | -      |       |   | $      | 5,748,000          |        |   | $         | 6,045,000 |   |   |   |   |   | $ | - |   |   | $ | 6,045,000 |   |
| Cost of revenue                                                              |   |      | 3,372,000  |   |               |   |   |      |   | -      |       |   |   | 3,372,000          |        |   |      | 3,818,000 |   |   |   |   |   |   | - |   |   |   | 3,818,000 |   |
| Gross profit                                                                 |   |      | 2,376,000  |   |               |   | 41     | %         |   |   | -          |   |   |               | 2,376,000   |   |      |      | 2,227,000 |   |   |   | 37 | % |   |   | - |   |   |   | 2,227,000 |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and adminstrative expenses                                  |   |      | 1,531,000  |   |               |   | 27     | %         |   |   | 396,000    |   |   |               | 1,927,000   |   |      |      | 1,635,000 |   |   |   | 27 | % |   |   | 624,000 |   |   |   | 2,259,000 |   |
| Professional fees                                                            |   |      | 2,000      |   |               |   | 0      | %         |   |   | 734,000    |   |   |               | 736,000     |   |      |      | 38,000 |   |   |   | 1 | % |   |   | 409,000 |   |   |   | 447,000 |   |
| Depreciation and amortization                                                |   |      | 2,270,000  |   |               |   | 39     | %         |   |   | 810,000    |   |   |               | 3,080,000   |   |      |      | 2,282,000 |   |   |   | 38 | % |   |   | 371,000 |   |   |   | 2,653,000 |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                         |   |      | (1,427,000 | )      |               |   | -25    | %         |   |   | (1,940,000 | )      |   |               | (3,367,000  | )      |      |      | (1,728,000 | ) |   |   | -29 | % |   |   | (1,404,000 | ) |   |   | (3,132,000 | ) |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest & other income / (expense)                                      |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                              |   |      | 4,000      |   |               |   |   |      |   |   | -          |   |   |               | 4,000       |   |      |      | 6,000 |   |   |   |   |   |   |   | - |   |   |   | 6,000 |   |
| Interest expense                                                             |   |      | (1,000     | )      |               |   |   |      |   |   | (529,000   | )      |   |               | (530,000    | )      |      |      | - |   |   |   |   |   |   |   | (270,000 | ) |   |   | (270,000 | ) |
| Inducement to convert and reduction in conversion price of convertible notes |   |      | -          |   |               |   |   |      |   |   | (6,706,000 | )      |   |               | (6,706,000  | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Cost of reduction in exercise price of certain warrants                      |   |      | -          |   |               |   |   |      |   |   | (150,000   | )      |   |               | (150,000    | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Change in fair value of warrant liabilities                                  |   |      | -          |   |               |   |   |      |   |   | 819,000    |   |   |               | 819,000     |   |      |      | - |   |   |   |   |   |   |   | (1,110,000 | ) |   |   | (1,110,000 | ) |
| Gain (loss) on sale of securities                                            |   |      | -          |   |               |   |   |      |   |   | 1,000      |   |   |               | 1,000       |   |      |      | - |   |   |   |   |   |   |   | (15,000 | ) |   |   | (15,000 | ) |
| Impairment of intangibles                                                    |   |      | -          |   |               |   |   |      |   |   | (900,000   | )      |   |               | (900,000    | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Impairment of equipment                                                      |   |      | (750,000   | )      |               |   |   |      |   |   | -          |   |   |               | (750,000    | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Other                                                                        |   |      | -          |   |               |   |   |      |   |   | 1,000      |   |   |               | 1,000       |   |      |      | (13,000 | ) |   |   |   |   |   |   | - |   |   |   | (13,000 | ) |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss before income taxes and noncontrolling interest                         |   |      | (2,174,000 | )      |               |   |   |      |   |   | (9,404,000 | )      |   |               | (11,578,000 | )      |      |      | (1,735,000 | ) |   |   |   |   |   |   | (2,799,000 | ) |   |   | (4,534,000 | ) |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                           |   |      | -          |   |               |   |   |      |   |   | 336,000    |   |   |               | 336,000     |   |      |      | - |   |   |   |   |   |   |   | 44,000 |   |   |   | 44,000 |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss, net of tax                                                         |   |      | (2,174,000 | )      |               |   |   |      |   |   | (9,068,000 | )      |   |               | (11,242,000 | )      |      |      | (1,735,000 | ) |   |   |   |   |   |   | (2,755,000 | ) |   |   | (4,490,000 | ) |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Plus: Net loss attributable to noncontrolling interest                       |   |      | 1,788,000  |   |               |   |   |      |   |   | -          |   |   |               | 1,788,000   |   |      |      | 719,000 |   |   |   |   |   |   |   | - |   |   |   | 719,000 |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to shareholders                                        |   |      | (386,000   | )      |               |   |   |      |   |   | (9,068,000 | )      |   |               | (9,454,000  | )      |      |      | (1,016,000 | ) |   |   |   |   |   |   | (2,755,000 | ) |   |   | (3,771,000 | ) |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                 |   |      | -          |   |               |   |   |      |   |   | (2,315,000 | )      |   |               | (2,315,000  | )      |      |      | - |   |   |   |   |   |   |   | - |   |   |   | - |   |
|                                                                         |   |      |       |   |               |   |   |      |   |   |       |   |   |               |        |   |      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to China Broadband common shareholders                 |   | $         | (386,000   | )      |               |   |   |      |   | $      | (9,068,044 | )      |   | $                  | (11,769,000 | )      |      | $         | (1,016,000 | ) |   |   |   |   |   | $ | (2,755,000 | ) |   | $ | (3,771,000 | ) |

|                                                |   | Nine Months Ended |       |
|-----------------------------------------------------|--------|-------------------|------------|
|                                                |   | September 30,     |       |   | September 30, |   |
|                                                |   | 2010              |       |   | 2009 |   |
| Net cash (used in) provided by operating activities |   | $                 | (1,334,000 | ) |   | $ | 449,000 |   |
| Net cash used in investing activities               |   |              | (2,309,000 | ) |   |   | (916,000 | ) |
| Net cash provided by (used in) financing activities |   |              | 9,112,000  |   |   |   | (2,046,000 | ) |
| Effect of exchange rate changes on cash             |   |              | 149,000    |   |   |   | 28,000 |   |
| Net decrease in cash and cash equivalents           |   |              | (5,618,000 | ) |   |   | (2,484,000 | ) |
| Cash and cash equivalents at beginning of period    |   |              | 2,191,000  |   |   |   | 4,426,000 |   |
| Cash and cash equivalents at end of period          |   |              | 7,809,000  |   |   |   | 1,941,000 |   |

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|   | · | Variable Interest Entities.  We account for entities qualifying as VIEs in accordance with ASC 810, Consolidation. VIEs are required to be consolidated by the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the variable interest entity. A VIE is an entity for which the primary beneficiary’s interest in the entity can change with changes in factors other than the amount of investment in the entity. |
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|   | · | Revenue Recognition.  Revenue is recorded as services are provided to customers.  We generally recognize all revenue in the period in which the service is rendered, provided that persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured.  We record deferred revenue for payments received from customers for the performance of future services and recognizes the associated revenue in the period that the services are performed.  Provision for discounts and rebates to customers and other adjustments, if any, are provided for in the same period the related sales are recorded. |
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|   | · | 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. |
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|   | · | Business Combinations.  The Company adopted ASC topic 805, “Business Combinations” (“ASC 805”) for acquisition consummated beginning January 1, 2009. ASC 805 establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree, as well as the goodwill acquired. The Company records 100% of all assets and liabilities of the acquired business, including goodwill, generally at fair value for all business combinations (whether partial, full or step acquisitions) and recognizes contingent consideration at fair value on the acquisition date. The excess purchase price over the fair value is recorded as goodwill. ASC Topic 350 (“Goodwill and Intangible Assets”) indicates that goodwill and purchased intangibles with indefinite lives are not amortized but are reviewed for impairment annually, or more frequently, if impairment indicators arise. Purchased intangibles with definite lives are amortized over their respective useful lives. |
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|   | · | Investment in Equity Investment.  Investment in affiliates, which are not controlled by the Company but where the Company has the ability to exercise significant influence over, are accounted for using the equity-method where the earnings and losses attributable to the investment are recorded in the accompanying consolidated statements of operations. |
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|   | · | Intangible Assets.  We follow Financial Accounting Standards Board, or FASB, ASC 350, Intangibles-Goodwill and Other, or ASC 350.  ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually.  ASC 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events indicate the carrying amount may not be recoverable.  In accordance with ASC 350, goodwill is allocated to reporting units, which are either the operating segment or one reporting level below the operating segment. On an annual basis, we must 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 and other valuation methods. |
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|   | · | 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. |
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|   | · | Warrant Liabilities.  We account for derivative instruments and embedded derivative instruments in accordance with the accounting standard for Accounting for Derivative Instruments and Hedging Activities, as amended.  The amended standard requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure these instruments at fair value.  Fair value is estimated using the Black-Scholes Pricing model.  We also follow accounting standards for the Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in, a Company’s Own Stock, which requires freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability.  Under these provisions a contract designated as an asset or a liability must be carried at fair value, with any changes in fair value recorded in the results of operations.  A contract designated as an equity instrument can be included in equity, with no fair value adjustments required.  The asset/liability derivatives are valued on a quarterly basis using the Black-Scholes Pricing model.  Significant assumptions used in the valuation included exercise dates, fair value for our common stock, volatility of our common stock and a proxy-free interest rate.  Gains (losses) on warrants are included in “Changes in fair value of warrant liabilities in our consolidated statement of operations”. |
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|   | · | Foreign Currency Translation.  The businesses of our operating subsidiaries are currently conducted in and from China in Renminbi.    The Company makes no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all.  The Chinese government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade.  The Company uses the U.S. dollar as its reporting and 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.  Financial information is translated into U.S. dollars at prevailing or current rates respectively, except for revenues and expenses which are translated at average current rates during the reporting period.  Exchange gains and losses resulting from retained profits are reported as a separate component of stockholders’ equity. |
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|   | ● | deny holders of our common stock cumulative voting rights in the election of directors, meaning that stockholders owning a majority of our outstanding shares of common stock will be able to elect all of our directors; |
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|   | ● | require any stockholder wishing to properly bring a matter before a meeting of stockholders to comply with specified procedural and advance notice requirements; and |
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|   | ● | allow any vacancy on the board of directors, however the vacancy occurs, to be filled by the directors. |
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| Exhibit No. |   | Description                                                                      |
|-------------|--------|----------------------------------------------------------------------------------|
|        |   |                                                                             |
| 4.1         |   | Certificate of Correction, dated November 22, 2010.                              |
| 31.1        |   | Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302. |
| 31.2        |   | Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302. |
| 32.1        |   | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.     |
| 32.2        |   | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.     |

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SIGNATURES

|   | CHINA BROADBAND, INC |
|--------|----------------------|

|   |      |                                                                      |
|--------|-----------|---------------------------------------------------------------------------|
|   | By:  | /s/ Shane McMahon                                                         |
|   |      | Name: Shane McMahon                                                       |
|   |      | Title: Chairman and Chief Executive Officer (Principal Executive Officer) |

|   |      |                                                                                                              |
|--------|-----------|-------------------------------------------------------------------------------------------------------------------|
|   | By:  |  /s/ Marc Urbach                                                                                             |
|   |      | Name: Marc Urbach                                                                                       |
|   |      | Title: President and Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer)  |

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| Exhibit No. |   | Description                                                                      |
|-------------|--------|----------------------------------------------------------------------------------|
|        |   |                                                                             |
| 4.1         |   | Certificate of Correction, dated November 22, 2010.                              |
| 31.1        |   | Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302. |
| 31.2        |   | Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302. |
| 32.1        |   | Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.     |
| 32.2        |   | Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.     |

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