**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**





(Mark


One)


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





For
      the
      quarterly period ended: **September
      30, 2008**


OR


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


For
      the
      transition period from _______________ to ______________





Commission
      file number: **000-19644**





**CHINA
      BROADBAND, INC.**


(Exact
      name of small business issuer as specified in its charter)




**Nevada**
            
            **20-1778374**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)**1900
                Ninth Street, 3rd Floor**
              **Boulder,
                Colorado 80302**
            
            **(303)
                449-7733**(Address
                of principal
              executive
                offices)
            
            (Issuer’s
                telephone number)




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


Yes x No o




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


Yes o No x




As
      of
      November 18, 2008, the issuer had 50,500,398 shares of Common Stock issued
      and
      outstanding.





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a small reporting
      company:





Large
                accelerated filero
            Accelerated
                fileroNon-accelerated
                filero
            Smaller
                reporting companyx







**CHINA
      BROADBAND, INC.**




**September
      30, 2008 FORM 10-Q QUARTERLY REPORT**




**INDEX**




PagePART
                I - FINANCIAL INFORMATION
            F-1Item
                1.**-**Financial Statements.
            F-1Consolidated
                Balance Sheets as ofSeptember 30, 2008 (unaudited) and December 31, 2007
            F-1Consolidated
                Statements of Operations for theNine Months and Three MonthsEnded
                September 30, 2008 and 2007 (unaudited)
            F-2Consolidated
                Statements of Cash Flows for theNine Months Ended September 30, 2008 and 2007 (unaudited)
            F-3Notes
                to Unaudited Consolidated Financial Statements
            F-4Item
                2 - Management's Discussion and Analysis or Plan of
                Operation.
            1Item
                3 - Quantitative and Qualitative Disclosures About Market
                Risk.
            13Item
                4 - Controls and Procedures.
            13**PART
                II - OTHER INFORMATION**
            14Item
                1 - Legal Proceedings.
            14Item
                2 - Unregistered Sales of Equity Securities and Use of
                Proceeds.
            14Item
                3 - Defaults Upon Senior Securities.
            14Item
                4 - Submission of Matters to a Vote of Security Holders.
            14Item
                5 - Other Information.
            14Item
                6 - Exhibits.
            14








**Forward
      Looking Statements**





This
      Quarterly Report on Form 10-Q and other reports filed by China Broadband, Inc.
      (the “company” ,“we”, “us” or “our”) contains or may contain forward looking
      statements and information that are based upon beliefs of, and information
      currently available to, the management of the company as well as estimates
      and
      assumptions made by its management. When used in the filings, the words
“may”, “will”, “should”, “estimates”,  “anticipate”, “believe”,
“estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms
      and similar expressions as they relate to the company or its management,
      identify forward looking statements. Such statements reflect the current view
      of
      the company with respect to future events and are subject to risks,
      uncertainties, assumptions and other factors relating to the company. Such
      forward-looking statements include statements regarding, among other things:




·
            our
                ability to satisfy our obligations under our agreements with respect
                to
                our 2007 acquisition of the cable broadband business of Jinan Guangdian
                Jiahe Digital Television Co., Ltd. located in mainland People’s Republic
                of China (the “PRC” or “China”),




·
            our
                ability to satisfy our obligations under our agreements relating
                to the
                recent acquisition of Shandong Radio & Broadcasting Newspaper Group in
                the PRC, which include, among other things, our requirement to make
                additional payments if its performance goals are met,




·
            our
                anticipated needs for working capital and our difficulty in raising
                additional capital given the current credit crises and the current
                economic environment,




·
            a
                complex and changing regulatory environment in the PRC that limits
                our
                ability to pay dividends, currently permits only partial foreign
                ownership
                of certain PRC based businesses and that requires us to negotiate,
                acquire
                and maintain separate government licenses to operate each internet
                business that we would like to acquire (or any other business we
                would
                like to acquire in the PRC),




·
            our
                ability to obtain PRC government consent to introduce certain new
                services
                to existing or new customers,




·
            our
                ability to implement complex operating and revenue sharing arrangements
                that will enable us to consolidate our financial statements with
                our
                partially owned PRC based business or joint ventures, and to modify
                and
                adapt these business arrangements from time to time to satisfy United
                States accounting rules,




·
            our
                ability to enter into agreements with and to consummate acquisitions
                of
                businesses in the PRC in the Shandong region and
                elsewhere,




·
            socio-economic
                changes in the regions in the PRC that affect consumer internet
                subscriptions,




·
            the
                ability of the PRC government to terminate or elect to not renew
                any of
                our licenses for various reasons or to nationalize our industry,
                and




Although
      we believe that the expectations reflected in the forward looking statements
      are
      reasonable, we cannot guarantee future results, levels of activity,
      performance or achievements. Except as required by applicable law, including
      the
      securities laws of the United States, we do not intend to update any of the
      forward-looking statements to conform these statements to actual
      results.





**PART
      I - FINANCIAL INFORMATION**


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





**China
      Broadband, Inc. and Subsidiaries**


**CONSOLIDATED
      BALANCE SHEETS**





September 30,
            
            December 31,2008
            
            2007(Unaudited)**Assets**Current
                assets:Cash
            
            $
            5,131,815
            
            $
            472,670Marketable
                equity securities
            
            
            799,000
            
            
            -Accounts
                receivable
            
            
            30,663
            
            
            136,655Inventory
            
            
            881,973
            
            
            642,313Prepaid
                expenses
            
            
            5,252
            
            
            14,781Other
                current assets
            
            
            49,713
            
            
            73,947Total
                current assets
            
            
            6,898,416
            
            
            1,340,366Property
                and equipment, net
            
            
            9,807,915
            
            
            10,333,105Intangible
                assets
            
            
            2,996,708
            
            
            1,981,307Other
                assets
            
            
            1,092,195
            
            
            -Total
                assets
            
            $
            20,795,234
            
            $
            13,654,778**Liabilities
                and Shareholders' Equity**Current
                liabilities:Accounts
                payable
            
            $
            1,035,519
            
            $
            835,257Accrued
                expenses
            
            
            573,004
            
            
            554,073Deferred
                revenue
            
            
            1,351,137
            
            
            1,252,313Payable
                to Jinan Parent
            
            
            3,548,932
            
            
            3,308,443Other
                current liabilities
            
            
            26,732
            
            
            25,905Total
                current liabilities
            
            
            6,535,324
            
            
            5,975,991Convertible
                notes payable
            
            
            4,539,277
            
            
            -Deferred
                tax liability
            
            
            347,373
            
            
            366,672Total
                liabilities
            
            
            11,421,974
            
            
            6,342,663Minority
                interest in operating subsidiaries
            
            
            5,968,322
            
            
            4,879,802Common
                shares to be issued
            
            
            -
            
            
            410,053Commitments
                and contingenciesShareholders'
                equity:Preferred
                stock $.001 par value; 5,000,000 shares authorized, no shares issued
                and
                outstanding
            
            
            -
            
            
            -Common
                stock $.001 par value; 95,000,000 shares authorized, 50,500,398 and
                50,048,000 issued and outstanding
            
            
            50,501
            
            
            50,048Additional
                paid-in capital
            
            
            13,271,969
            
            
            10,485,874Accumulated
                deficit
            
            
            (9,333,390
            )
            
            (8,845,426
            )Accumulated
                other comprehensive income (loss)
            
            
            (584,142
            )
            
            331,764Total
                shareholders' equity
            
            
            3,404,938
            
            
            2,022,260Total
                liabilities and shareholders' equity
            
            $
            20,795,234
            
            $
            13,654,778





See
      notes
      to consolidated financial statements.


F-1





**China
      Broadband, Inc. and Subsidiaries**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


( **Unaudited** )





Three Months Ended
            
            Nine Months EndedSeptember
              30,
            
            September
              30,
            
            September
              30,
            
            September
              30,2008
            
            2007
            
            2008
            
            2007Revenue
            
            $
            1,880,806
            
            $
            1,051,883
            
            $
            3,937,439
            
            $
            1,769,938Cost
                of revenue
            
            
            949,299
            
            
            606,880
            
            
            1,845,354
            
            
            1,007,252Gross
                profit
            
            
            931,507
            
            
            445,003
            
            
            2,092,085
            
            
            762,686Selling,
                general and administrative expenses
            
            
            582,085
            
            
            275,020
            
            
            1,393,999
            
            
            700,581Professional
                Fees
            
            
            141,785
            
            
            123,031
            
            
            447,201
            
            
            496,396Depreciation
                and amortization
            
            
            768,951
            
            
            555,522
            
            
            2,210,481
            
            
            1,076,551Loss
                from operations
            
            
            (561,314
            )
            
            (508,570
            )
            
            (1,959,596
            )
            
            (1,510,842
            )Interest
                and other income (expense):Settlement
                gain
            
            
            -
            
            
            -
            
            
            1,300,692
            
            
            -Interest
                expense
            
            
            (89,333
            )
            
            (123
            )
            
            (256,776
            )
            
            (4,534
            )Interest
                income
            
            
            16,300
            
            
            4,726
            
            
            35,426
            
            
            9,912Gain
                on sale of securities
            
            
            -
            
            
            -
            
            
            17,498
            
            
            -Other
            
            
            349
            
            
            (158,057
            )
            
            (12,779
            )
            
            (158,057
            )Loss
                before minority interest
            
            
            (633,998
            )
            
            (662,024
            )
            
            (875,535
            )
            
            (1,663,521
            )Minority
                interest loss in operating subsidiaries
            
            
            80,734
            
            
            122,766
            
            
            368,272
            
            
            272,598Loss
                before income taxes
            
            
            (553,264
            )
            
            (539,258
            )
            
            (507,263
            )
            
            (1,390,923
            )Income
                tax benefit
            
            
            (6,433
            )
            
            -
            
            
            (19,299
            )
            
            -Net
                Loss
            
            $
            (546,831
            )
            $
            (539,258
            )
            $
            (487,964
            )
            $
            (1,390,923
            )Net
                loss per share:Basic
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.03
            )Diluted
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.03
            )Weighted
                average shares outstandingBasic
            
            
            50,416,266
            
            
            50,058,960
            
            
            50,262,731
            
            
            45,314,464Diluted
            
            
            50,416,266
            
            
            50,058,960
            
            
            50,262,731
            
            
            45,314,464





See
      notes
      to consolidated financial statements .


F-2


**China
      Broadband, Inc. and Subsidiaries**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(Unaudited)**





Nine Months EndedSeptember 30,
            
            September 30,2008
            
            2007Cash flows from operating
                activities:Net
                loss
            
            $
            (487,964
            )
            $
            (1,390,923
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Stock
                compensation expense
            
            
            218,137
            
            
            208,699Gain
                on settlement agreement
            
            
            (1,300,692
            )
            
            -Gain
                on sale of marketable equity securities
            
            
            (17,498
            )
            
            -Depreciation
                and amortization
            
            
            2,210,481
            
            
            1,076,551Minority
                interest
            
            
            (368,272
            )
            
            (272,598
            )Deferred
                income tax (benefit)
            
            
            (19,299
            )
            
            -Change
                in assets and liabilities, net of effects of Jinan Broadband and
                Shandong
                Newspaper acquisitions:Accounts
                receivable
            
            
            105,992
            
            
            397,587Inventory
            
            
            (239,660
            )
            
            428,816Prepaid
                expenses and other assets
            
            
            33,763
            
            
            (83,396
            )Accounts
                payable and accrued expenses
            
            
            431,247
            
            
            84,422Deferred
                revenue
            
            
            98,824
            
            
            252,351Other
            
            
            (359,632
            )
            
            (5,440
            )Net
                cash provided by operating activities
            
            
            305,427
            
            
            696,069Cash
                flows from investing activities:Proceeds
                from sale of marketable equity securities
            
            
            339,998
            
            
            -Acquisition
                of property and equipment
            
            
            (1,450,363
            )
            
            (1,613,352
            )Net
                cash used in investing activities
            
            
            (1,110,365
            )
            
            (1,613,352
            )Cash
                flows from financing activities:Proceeds
                from issuance of convertible notes payable
            
            
            4,850,000
            
            
            -Proceeds
                from private placement offering
            
            
            -
            
            
            4,000,000Issuance
                costs associated with private placement and convertible
                notes
            
            
            (104,500
            )
            
            (420,500
            )Payable
                to Jinan Parent
            
            
            240,489
            
            
            (1,247,865
            )Net
                cash provided by financing activities
            
            
            4,985,989
            
            
            2,331,635Effect
                of exchange rates changes on cash
            
            
            478,094
            
            
            164,437Net
                increase in cash
            
            
            4,659,145
            
            
            1,578,789Cash
                at beginning of period
            
            
            472,670
            
            
            103,170Cash
                at end of period
            
            $
            5,131,815
            
            $
            1,681,959Supplemental
                Cash Flow Information:Cash
                paid for interest
            
            $
            -
            
            $
            10,490Notes
                payable converted to common stock
            
            $
            -
            
            $
            325,000Shares
                issued as a penalty for non-registration of 7% Convertible
                Notes
            
            $
            422,178
            
            $
            -Shares
                issued in lieu of cash for interest expense for January 2008 Convertible
                Notes
            
            $
            183,598
            
            $
            -Acquisition
                of Shandong Newspaper:Fair
                value of assets acquired
            
            $
            364,198
            
            $
            -Liabilities
                assumed
            
            $
            -
            
            $
            -Consideration
                paid:Cash
                paid
            
            $
            1,311,113
            
            $
            -Cash
                amount owed
            
            $
            145,679
            
            $
            -Minority
                interest
            
            $
            1,456,792
            
            $
            -Acquisition
                of Jinan Broadband:Fair
                value of assets acquired
            
            $
            -
            
            $
            11,497,317Liabilities
                assumed
            
            $
            -
            
            $
            2,188,360Consideration
                paid:Cash
                paid
            
            $
            -
            
            $
            2,572,125Cash
                amount owed
            
            $
            -
            
            $
            3,055,000Minority
                interest
            
            $
            -
            
            $
            5,319,524Convertible
                Note IssuanceProceeds
                received from issuance of Convertible Notes
            
            $
            4,850,000
            
            $
            -Debt
                issuance costs converted to Convertible Notes
            
            $
            121,250
            
            $
            -Debt
                issuance costs not converted to Convertible Notes
            
            $
            226,835
            
            $
            -





See
      notes
      to consolidated financial statements .


F-3


**China
      Broadband, Inc. and Subsidiaries**




**Notes
      to Unaudited Consolidated Financial Statements**




**1.**  **Basis
      of Presentation**




China
      Broadband, Inc., a Nevada corporation and its subsidiaries (“China Broadband”,
“we,” “us,” or “the Company”) owns and operates, through its indirect
      subsidiaries in the People’s Republic of China (“PRC” or “China”), a cable
      broadband business based in the Jinan region of China and, effective as of
      July
      1, 2008 a television programming guide publication business joint venture in
      the
      Shandong Province of China (see Note 3 below). The principal activities of
      the
      Company are to provide cable and wireless broadband services, principally
      internet services, Internet Protocol Point wholesale services, related network
      equipment rental and sales, and fiber network construction and maintenance
      through its Jinan Broadband subsidiary. In addition, beginning July 2008 and
      as
      a result of our recently acquired Shandong Newspaper subsidiary, we provide
      a
      print based media and television programming guide business. See Note 3 below.
      The Company operates in the media segment.





The
      unaudited consolidated financial statements included herein have been prepared
      by the Company, without audit, pursuant to the rules and regulations of the
      Securities and Exchange Commission. These unaudited consolidated financial
      statements should be read in conjunction with the financial statements and
      the
      notes thereto included in the Company's latest Annual Report on Form 10-KSB,
      as
      amended. The accompanying consolidated balance sheet as of December 31, 2007
      has
      been derived from the audited balance sheet as of that date included in the
      Form
      10-KSB, as amended. In the opinion of management, this financial information
      reflects all adjustments necessary to present fairly the results for the interim
      periods. The results of operations for the three and nine months ended September
      30, 2008 are not necessarily indicative of the results to be expected for the
      year ending December 31, 2008 or any other subsequent period.





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect certain reported amounts and disclosures.
      Accordingly, actual results could differ from those estimates.





These
      unaudited financial statements have been prepared assuming that the Company
      will
      continue as a going concern and, accordingly, do not include any adjustments
      that might result from the outcome of this uncertainty.  The Company’s
      independent registered public accounting firm’s report on the financial
      statements included in the Company’s Annual Report on Form 10-KSB for the year
      ended December 31, 2007, contained an explanatory paragraph regarding the
      Company’s ability to continue as a going concern.





**2.**   **Settlement
      Agreement and Convertible Note and Warrant Financing**





On
      January 11, 2008, the Company entered into a Settlement Agreement (the
“Settlement Agreement”) by and among the Company and its subsidiaries, Stephen
      P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I. Lev,
      Wellfleet Partners, Inc., Yue Pu, Clive Ng, Chardan Capital Markets, LLC
      (“Chardan Capital”), Jaguar Acquisition Corporation (“Jaguar”), and China
      Cablecom Holdings, Ltd (“Cablecom Holdings”), pursuant to which the parties
      released certain potential claims against one another, as more fully set forth
      in this Note 2 below.





Simultaneously,
      the Company consummated a private convertible note and warrant financing with
      gross proceeds of $4,850,000 (the “January 2008 Financing”), through Chardan
      Capital acting as Placement Agent and appointed three additional directors
      to
      the Company. The following is a summary only of the material terms of the
      Settlement Agreement, Employment Agreement Amendments and the January 2008
      Financing related agreements (including the note purchase agreement, the form
      of
      notes and form of warrants) which were filed as exhibits to our Current Report
      on Form 8-K dated January 11, 2008.




F-4




**Settlement
      Agreement**




The
      Settlement Agreement was negotiated by the Company, its advisors and management
      and certain shareholders, for purposes of facilitating the Company’s business
      plan and expediting and facilitating the Company’s financing activities and
      avoiding disputes between management and certain investors and consultants
      concerning possible claims that such investors suggested might be brought
      against these principals for their activities in forming and operating China
      Cablecom and its entry into a merger with a subsidiary of Jaguar as being
      violative of their employment agreements with the Company. The Settlement
      Agreement provided, subject to the terms thereof, for general mutual releases
      of
      all executives and management and their affiliated entities and also provided
      for the modification of employment agreements of both, Mr. Clive Ng, our
      Chairman and Mr. Yue Pu, our Vice Chairman and former Chief Financial Officer.
      The Settlement Agreement also called for the transfer of certain securities
      by
      Mr. Ng to the Company and to certain of the Company’s shareholders and
      consultants, as elaborated further herein in exchange for releases in favor
      of
      the Company and management and their affiliates.





Among
      other provisions, pursuant to the Settlement Agreement:




·
            Clive
                Ng transferred 390,000 shares of common stock of Cablecom Holdings
                (the
                “Cablecom Holdings Shares”) to the Company. The Cablecom Holdings Shares
                were transferred by Mr. Ng on an “as is basis”, except that such shares
                would have the same lock-up restrictions, registration or other rights,
                privileges or benefits as Mr. Ng has for all other shares to be issued
                to
                him by Cablecom Holdings. The 390,000 Cablecom Holdings Shares were
                issued
                to the Company in April 2008 upon satisfaction of certain conditions
                in
                the Settlement Agreement, including, receipt of releases from certain
                parties listed therein and the shares have been registered for re-sale
                by
                Cablecom Holdings, subject to a lock up agreement. 50,000 Cablecom
                Holdings Shares were sold in June 2008 for gross proceeds of approximately
                $340,000.




·
            The
                Company and each of Messrs. Ng and Pu, have agreed to modifications
                to the
                employment agreements of such persons (the “Employment Agreement
                Amendments”), reducing their time commitments to the Company and its
                subsidiary and providing that once replacement executive officers
                have
                been hired (and in the case of Mr. Ng, assuming Mr. Pu continues
                in his
                role as chief financial officer, eliminating his executive duties
                and he
                will only continue as the Chairman and a director of the Company),
                requiring in the case of Mr. Ng that he be subject to an ongoing
                obligation to offer acquisition candidates in the stand-alone, independent
                broadband business to China Broadband in the future (and recognizing
                that
                acquisition candidates involving acting as a joint venture provider
                of
                integrated cable television services in the People’s Republic of China and
                related activities, but which does not include the provision of
                Stand-Alone Broadband Services are the business of China Cablecom)
                and
                allowing them to continue to be involved with certain other activities
                and
                to continue in their executive capacities with Cablecom Holdings
                or its
                successor. In addition, Mr. Ng waived his right to receive all accrued
                salary previously owed to him through January 11, 2008.




·
            Mr.
                Ng assigned 7,017,814 shares of Common Stock owned beneficially by
                him to
                the investors (other than Chardan Capital which did not receive shares
                from Mr. Ng) in the private January 2008 Financing as described below,
                thereby facilitating the January 2008 Financing while avoiding additional
                dilution to the Company’s current stock and warrant
                holders.




·
            Mr.
                Ng transferred to certain private investors who acquired shares directly
                from him in July of 2007, an aggregate of 566,790 shares of Common
                Stock
                owned beneficially by him, in exchange for releases from such
                persons.




·
            Chardan
                Capital, a party to the Settlement Agreement, completed the January
                2008
                Financing as placement agent, concurrently upon execution by all
                related
                parties of the Settlement
                Agreement.




·
            Mr.
                David Zale, Mr. Jonas Grossman and Mr. James Cassano were appointed
                as
                directors joining Messrs. Yue Pu and Clive Ng on the
                board.




F-5




·
            The
                Company agreed to extend the expiration dates of 4,000,000 warrants
                to
                purchase our common stock at an exercise price of $2.00 per share,
                issued
                to certain private placement investors (“Investor Warrants”) in the
                Company’s private placement of common stock and warrants in 2007, from
                March of 2009, through January 11, 2013, upon receipt of releases
                from
                holders of the Investor Warrants. All releases were obtained as of
                May 2,
                2008, resulting in the modification of all of the Investor Warrants.




·
            The
                Company has offered to BCGU, LLC, WestPark Capital, Inc., Maxim Financial
                Corporation, who were issued 500,000, 640,000 and 3,974,800 warrants
                exercisable at $.60 per share in January of 2007, respectively, the
                right,
                at their discretion, to extend the exercisability period of their
                respective warrants through January 11, 2013 or, in the alternative,
                the
                right to receive a scrip right to execute the unexercised portion
                of their
                warrants, at any time between the time of expiration date of their
                unexercised warrants and continuing through January 11, 2013.





The
      following table provides the components of the net gain the Company recognized
      as a result of the Settlement Agreement during the nine months ended September
      30, 2008 which is recorded in “Interest and other income (expense)” in the
      accompanying Statement of Operations:





Fair
                value of Cablecom Holdings Shares
            
            $
            2,515,500Waiver
                of accrued compensation
            
            
            212,054Warrant
                extensions
            
            
            (1,426,862
            )Net
                Gain
            
            $
            1,300,692




**Simultaneous
      Closing of $4,971,250 Convertible Note and Warrant Financing, issuance of Shares
      and Warrants; January 2008 Financing**





On
      January 11, 2008, simultaneously with the entry into the Settlement Agreement,
      we entered into and consummated a subscription agreement (the “Subscription
      Agreement”) with ten accredited investors (inclusive of Chardan Capital) with
      respect to the issuance of an aggregate of $4,971,250 principal amount of
      convertible notes (“Notes”) due January 11, 2013, and Class A Warrants to
      purchase an aggregate of 6,628,333 shares of common stock of the Company at
      $.60
      per share expiring on June 11, 2013 (the “January 2008 Financing”).





The
      gross
      proceeds of the offering were $4,850,000. Chardan Capital applied its 2.5%
      cash
      commission ($121,250) towards a subscription for Notes and Class A Warrants
      resulting in the issuance of an aggregate of $4,971,250 principal amount of
      Notes. Interest on the Notes compounds monthly at the annual rate of five
      percent (5%) with the maturity date on January 11, 2013, if not paid earlier.
      Each holder of a Note can convert all or any portion of the then aggregate
      outstanding principal amount of the Note, together with interest, into shares
      of
      Common Stock at a conversion price of $0.75 per share (6,628,333 shares as
      of
      the issuance date). The Notes have “full ratchet” anti dilution protection for
      the first three years, pursuant to which the conversion price of the Notes
      will
      be adjusted downward in the event of the issuance by the Company of common
      stock
      or rights to acquire common stock at prices below $.75 per share (or below
      such
      other conversion price of the Notes as is then in effect) to such lower price.
      Thereafter and until repaid, the Notes provide only for weighted average
      anti-dilution price protection adjustment. In addition, the Notes are subject
      to
      certain customary anti-dilution protections for stock splits, combinations
      or
      similar transactions of the Company.





During
      the nine months ended September 30, 2008, the Company incurred $184,000 in
      interest expense related to these Notes. With the consent of the Note holders,
      in May 2008 the Company issued 75,614 shares to the Note holders in lieu of
      cash
      of approximately $56,000 for interest accrued through March 31, 2008. In July
      2008 the Company issued an additional 84,128 shares to the Note holders in
      lieu
      of cash of approximately $64,000 for interest accrued through June 30, 2008
      and
      on September 30, 2008 the Company issued an additional 85,057 shares to the
      Note
      holders in lieu of cash of approximately $64,000 for interest accrued through
      September 30, 2008.




F-6




***Placement
      Agent Fee to Chardan Capital Markets, LLC***





In
      connection with their engagement as a placement agent, Chardan Capital has
      been
      compensated a $10,000 due diligence fee and reimbursement of legal and other
      expenses, and a cash placement agent fee of $121,250 (based on 2.5% of
      $4,850,000 of principal amount of Notes issued to other investors), which fee
      has, pursuant to the terms of their engagement agreement, been applied to their
      investment in a $121,250 Note and 161,667 Class A Warrants at the same terms
      as
      all other investors in the offering and whose value is included and discount
      applied in the same manner as the Class A Warrants. In addition, Chardan Capital
      was compensated warrants to acquire 1,131,667 shares of the Company’s common
      stock at an exercise price of $.50 per share exercisable commencing January
      11,
      2008 and expiring on June 11, 2013 (the “Broker Warrants”). The Broker Warrants
      are identical to the Class A Warrants in all other material respects. The
      Company recognized the fair value of the Broker Warrants of $226,835 as debt
      issuance costs and is amortizing such value over the five year life of the
      Convertible Notes.





***Assignment
      By Clive Ng of Shares to Investors***





To
      incentivize the investors in the January 2008 Financing and facilitate such
      financing, and as contemplated under the terms of the Settlement Agreement,
      Mr.
      Clive Ng, our Chairman and Majority Shareholder, assigned an aggregate of
      7,017,814 shares of Common Stock beneficially owned by him to the January 2008
      Financing investors (other than Chardan Capital), at a nominal purchase price
      of
      $.01 per share.





***Release
      of Lock - Up Agreements***





Prior
      to
      the assignment of the above shares to the January 2008 Financing investors,
      the
      Company, 88 Holdings, Inc., China Broadband Partners, Ltd., BCGU, LLC, MVR
      Investments, LLC, Stephen P. Cherner and WestPark Capital, Inc. were each
      shareholder parties to a Lock-Up Agreement dated as of January 23, 2007 (the
      “Lock-Up Agreement”). The Lock-Up Agreement provided that each such shareholder
      shall only be permitted to sell 5% of the shares originally issued to them
      as
      scheduled in the Lock-Up Agreement, during any 30 day period and, that the
      Company’s management may review the lock up provisions and increase the number
      of shares that may be sold provided that, among other conditions, such
      modification is made *pari
      pasu* among
      all
      shareholders subject to the Lock-Up Agreement based on their share ownership.
      As
      a condition subsequent to the January 2008 Financing requested by Chardan
      Capital, and to remove any contractual restrictions relating to the 7,017,084
      shares of Common Stock assigned by Mr. Ng to the Note investors to facilitate
      the financing, the Company and each of the shareholder parties to the Lock-Up
      Agreement agreed to the termination of this Lock-Up Agreement for all parties
      effective as of January 13, 2008.





**Appointment
      of Additional Members to Board of Directors**





Simultaneously
      with the closing of the January 2008 Financing, and entry into the Settlement
      Agreement, Messrs. David Zale, James Cassano and Jonas Grossman were appointed
      as directors of the Company, joining Messrs. Clive Ng and Yue Pu. Prior to
      the
      appointment of Messrs. Zale, Cassano and Grossman, such persons had no
      affiliations or business relationship with the Company, except that Mr. Grossman
      was and continues to be, a partner and officer of Chardan Capital.





**3.**  **Shandong
      Newspaper Cooperation Agreement**




On
      March
      7, 2008, through our indirect WFOE subsidiary in the PRC, we entered into a
      Cooperation Agreement (the "Shandong Newspaper Cooperation Agreement") by and
      among, Shandong Broadcast & TV Weekly Press and Modern Movie & TV
      Biweekly Press, each PRC companies (collectively "Shandong Newspaper"). The
      Shandong Newspaper Cooperation Agreement provided for, among other terms, the
      creation of a joint venture entity in the PRC, Shandong Lushi Media Co., Ltd.
      ("Shandong Media") that would acquire and operate Shandong Newspaper's
      television program guide, newspaper and magazine publishing business in the
      Shandong region of the PRC (the "Shandong Newspaper Business") which businesses
      were previously owned and operated by the Shandong Newspaper entities pursuant
      to exclusive licenses.




F-7




Under
      the
      terms of the Shandong Newspaper Cooperation Agreement and related transaction
      documents, the Shandong Newspaper entities mentioned above will contribute
      their
      entire Shandong Newspaper businesses and transfer certain employees, to Shandong
      Media in exchange for a 50% ownership interest in Shandong Media, with the
      other
      50% of Shandong Media to be owned by our PRC based operating subsidiary. In
      exchange therefore, the Cooperation Agreement provides for total initial
      consideration by us of approximately $1.4 million (based on prevailing exchange
      rates at the time for 10 million RMB) of which we contributed $1.3 million
      to
      date and will contribute an additional $100,000 to Shandong Media as working
      and
      acquisition capital. The Shandong Newspaper entities contributed approximately
      $92,000 of property and equipment, $44,000 of other tangible assets and will
      contribute an additional $229,000 of cash. This resulted in an intangible asset
      of approximately $1,092,000 which is recorded as “Intangible assets” in the
      accompanying September 30, 2008 balance sheet.




In
      addition to the initial purchase price of $1.4 million, the Shandong Newspaper
      Cooperation Agreement provides for additional consideration of between 5 million
      RMB and 20 million RMB (approximately $732,000 and $3,000,000 based on current
      exchange rates), to be paid as a capital contribution to Shandong Media in
      the
      event that certain performance thresholds are met, for a total purchase price
      of
      between $2.1 and $4.4 million based on current exchange rates.




Specifically,
      in the event that audited annual net profits during the first fiscal year (i.e.
      calendar 2009) after closing of the transaction relating to the Shandong
      Newspaper Cooperation Agreement:




·
            equals
                or exceeds 16 million RMB, then we will be required to contribute
                an
                additional 20 million RMB (or, approximately $3,000,000 presuming
                current
                exchange rates are in effect at such time) to the Shandong Media
                joint
                venture;




·
            equals
                or exceeds 4 million RMB but less than 16 million RMB, then we will
                be
                required to contribute 125% of such net profits to the Shandong Media
                joint venture, and




·
            is
                less then 4 million RMB, then we will be required to contribute only
                an
                additional 5 million RMB (approximately US $732,000 presuming current
                exchange rates are in effect at such time).




The
      Shandong Newspaper Cooperation Agreement resulted in the creation of a Variable
      Interest Entity (“VIE”) as
      defined under Financial Accounting Standards Board (“FASB”) Interpretation No.
      46R, Consolidation of Variable Interest Entities (“FIN-46R”). The intended
      result of the contractual arrangements is that, as of September 30, 2008 the
      economic risks and benefits of the Shandong Newspaper Business operations are
      being primarily borne by the Company. The Company has contributed more capital
      to date and may be required to make further capital contributions if Shandong
      Newspaper meets certain performance targets. The contractual arrangements in
      addition to the service agreements the Company has with the Shandong Newspaper
      parent companies, provide under the relevant principles of United States
      Generally Accepted Accounting Principles (“US GAAP”) for the consolidation of
      the results of operations of Shandong Newspaper, with 50% of the Shandong
      Newspaper net income included in the accompanying financial statements of the
      Company.




***Additional
      Terms of Shandong Newspaper Cooperation Agreement***




The
      Shandong Newspaper Cooperation Agreement also provides that these businesses
      will be operated primarily by employees contracted to Shandong Media through
      secondment by the respective Shandong Newspaper entities.




In
      addition, the Shandong Newspaper entities entered into an Exclusive Advertising
      Agency Agreement and an Exclusive Consulting Services Agreement with Shandong
      Media which require that the Shandong Newspaper entities shall appoint Shandong
      Media as its exclusive advertising agent and provider of technical and
      management support for a fee.




F-8




The
      Company closed this transaction during the second quarter of 2008 with it
      becoming effective upon the creation of the joint venture entity subsequently
      created and becoming operational in July 2008. The results of the Shandong
      Newspaper Business have been consolidated with the Company’s consolidated
      financial statements as of July 1, 2008.





**4.**    **Convertible
      Notes**





As
      described in Note 2 above, on January 11, 2008 the Company entered into and
      consummated the Subscription Agreement with ten accredited investors with
      respect to the issuance of an aggregate of $4,971,250 principal amount of Notes
      due January 11, 2013, and Class A Warrants to purchase an aggregate of 6,628,333
      shares of common stock of the Company at $.60 per share expiring on June 11,
      2013. During the three and nine months ended September 30, 2008 the Company
      incurred $64,000 and $184,000, respectively, in interest expense related to
      these Notes. Based on a predetermined presumed value of $.75 per share as set
      forth in the Subscription Agreement and related documents during the nine months
      ended September 30, 2008, with the consent of the Note holders, the Company
      issued 244,799 shares to the Note holders in lieu of cash of approximately
      $184,000 for interest accrued through September 30, 2008. No assurance can
      be
      made that these holders will be willing to accept stock in lieu of cash payments
      for interest in future payments.





**5.**  **Marketable
      Equity Securities**




The
      Company holds investments in certain “available-for-sale” marketable equity
      securities all of which consist of the Cablecom Holdings Shares.
      Available-for-sale securities are carried at estimated fair value, based on
      available information. As of September 30, 2008 the Company recorded an
      unrealized loss of $1,564,000 in accumulated other comprehensive income (loss)
      as a component of shareholders’ equity on the balance sheet related to its
      available for sale marketable equity securities.




During
      June 2008, the Company sold 50,000 Cablecom Holdings Shares for gross proceeds
      of approximately $340,000 leaving the Company with 340,000 Cablecom Holdings
      Shares. As a result of this sale, the Company recognized a gain from the sale
      of
      these securities of approximately $18,000.





The
      Company periodically reviews available for sale securities for impairment that
      is other than temporary. At September 30, 2008, no write down was required
      to
      record other than temporary impairment of securities.





**6.**    **Net
      Loss Per Share**





Basic
      and
      Diluted net loss per share have been computed by dividing the net loss by the
      weighted average number of common shares outstanding. The assumed exercise
      of
      dilutive warrants, less the number of treasury shares assumed to be purchased
      from the proceeds of such exercises using the average market price of the
      Company’s common stock during each respective period, have been excluded from
      the calculation of diluted net loss per share as their effect would be
      antidilutive.


F-9




**7.** **Accumulated
        Other Comprehensive Loss**





Comprehensive
      loss for the three and nine months ended September 30, 2008 and 2007 is as
      follows:




**Three Months Ended September 30,****2008**
            
            **2007****(Unaudited)**
            
            **(Unaudited)**Net
                loss
            
            $
            (546,831
            )
            $
            (539,258
            )Other
                comprehensive income (loss):Unrealized
                loss on marketable equity securities
            
            
            (1,564,000
            )
            
            -Currency
                translation adjustment
            
            
            29,834
            
            
            35,703Comprehensive
                loss
            
            $
            (2,080,997
            )
            $
            (503,555
            )





**Nine Months Ended September 30,****2008**
            
            **2007****(Unaudited)**
            
            **(Unaudited)**Net
                loss
            
            $
            (487,964
            )
            $
            (1,390,923
            )Other
                comprehensive income (loss):Unrealized
                loss on marketable equity securities
            
            
            (1,394,000
            )
            
            -Currency
                translation adjustment
            
            
            478,094
            
            
            185,231Comprehensive
                loss
            
            $
            (1,403,870
            )
            $
            (1,205,692
            )





Changes
      in the components of Accumulated Other Comprehensive Income are attributable
      to
      the currency translation adjustment from the Renminbi to the US dollar and
      the
      unrealized loss on marketable equity securities. For the nine months ended
      September 30, 2008, the changes in Accumulated Other Comprehensive Loss are
      as
      follows:





**Accumulated Other****Comprehensive****Income (Loss)**BALANCE, December 31, 2007
            
            $
            331,764Change
                for the nine months ended September 30, 2008
            
            
            (915,906
            )BALANCE,
                September 30, 2008
            
            $
            (584,142
            )





**8.** **Stock
        Based Compensation**





The
      following table provides the details of the total stock based compensation
      during the nine months ended September 30, 2008 and 2007:





2008
            
            2007Stock
                issued for consulting services
            
            $
            -
            
            $
            208,699Stock
                option amortization
            
            
            8,216
            
            
            -Warrant
                amortization
            
            
            14,198
            
            
            -Stock
                issued in lieu of interest
            
            
            183,598
            
            
            -Stock
                issued as non registration penalty
            
            
            12,125
            
            
            -$
            218,137
            
            $
            208,699


F-10





The
      Company accounts for its stock option awards pursuant to the provisions of
      SFAS
      123(R) and recorded a charge of $0 and $8,216 during the three months and nine
      months ended September 30, 2008, respectively, in connection with the issuance
      of stock options to employees. During 2007 no options were outstanding and
      company incurred no charges during the three and nine months ended September
      30,
      2007.





The
      fair
      value of each option award is estimated on the date of grant using the
      Black-Scholes option valuation model. The Company recognizes the fair value
      of
      each option as compensation expense ratably using the straight-line attribution
      method over the service period, which is generally the vesting period. The
      Black-Scholes model incorporates the following assumptions:




·
            Expected
                volatility - the Company estimates the volatility of common stock
                at the
                date of grant using historical
                volatility.




·
            Expected
                term - the Company estimates the expected term of options granted
                based on
                a combination of vesting schedules, term of the option and historical
                experience.




·
            Risk-free
                interest rate - the Company estimates the risk-free interest rate
                using
                the U.S. Treasury yield curve for periods equal to the expected term
                of
                the options in effect at the time of
                grant.




·
            Dividends
                - the Company uses an expected dividend yield of zero. The Company
                intends
                to retain any earnings to fund future operations and, therefore,
                does not
                anticipate paying any cash dividends in the foreseeable
                future.





The
      following table outlines the variables used in the Black-Scholes option-pricing
      model.




**2008**Risk
                free interest rate
            
            
            3.53
            %Volatility
            
            
            188.76
            %Dividend
                yield
            
            
            -
            %Expected
                option life
            
            
            4
                years





As
      of
      September 30, 2008, the Company had total unrecognized compensation expense
      related to options granted to employees of $24,648, which will be recognized
      over a remaining average period of 3.50 years.




Effective
      as of the March 13, 2008, the board of directors of the company approved the
      China Broadband, Inc. 2008 Stock Incentive Plan (the “Plan”), pursuant to which
      options or other similar securities may be granted. Qualified or Non-qualified
      Options to purchase up to 2,500,000 shares of the Company’s common stock may be
      issued under the Plan. The Plan may also be administered by an independent
      committee of the board of directors. 100,000 options have been issued under
      the
      plan.


F-11




A
      summary
      of option activity under the Plan as of September 30, 2008, and changes during
      the period then ended, is presented below:





**Shares**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Weighted Average**
              **Remaining**
              **Contractual Term**Options
                outstanding at January 1, 2008
            
            
            -
            
            $
            -
            
            
            -Options
                granted
            
            
            100,000
            
            
            1.00
            
            
            9.75Options
                exercised
            
            
            -
            
            
            -
            
            
            -Options
                terminated and expired
            
            
            -
            
            
            -
            
            
            -Options
                outstanding at September 30, 2008
            
            
            100,000
            
            $
            1.00
            
            
            9.75Options
                exercisable at September 30, 2008
            
            
            25,000
            
            $
            1.00
            
            
            9.75





In
      connection with the Company’s Share Exchange, capital raising efforts in 2007
      and the Company’s January 2008 Financing of Convertible Notes and Class A
      Warrants described in Note 1 above, the Company has issued warrants to investors
      and service providers to purchase shares of the Company at a fixed exercise
      price and for a specified period of time. The following table outlines the
      warrants outstanding as of September 30, 2008:





**Number of****Warrants**
            
            **Exercise**
            
            **Expiration****Name**
            
            **Issued**
            
            **Price**
            
            **Date**Maxim Financial Corporation
            
            
            3,974,800
            
            $
            0.60
            
            
            1/11/2013WestPark
                Capital, Inc.
            
            
            640,000
            
            $
            0.60
            
            
            1/11/2013BCGU
                LLC
            
            
            500,000
            
            $
            0.60
            
            
            1/11/20132007
                Private Placement Investor Warrants
            
            
            4,000,000
            
            $
            2.00
            
            
            1/11/2013January
                2008 Financing Class A Warrants
            
            
            6,628,333
            
            $
            0.60
            
            
            1/11/2013Chardan
                Capital Broker Warrants
            
            
            1,131,667
            
            $
            0.50
            
            
            6/11/2013Other
                Warrants
            
            
            67,500
            
            $
            0.60
            
            
            3/13/201316,942,300





On
      January 11, 2008, as part of the Settlement Agreement described above, the
      Company agreed to extend the expiration date of the Maxim Financial Corporation,
      WestPark Capital, BCGU and the 2007 Private Placement Investor warrants issued
      in 2007 until January 11, 2013. As described in Note 2 the Company recorded
      an
      expense of $1,426,862 during the nine months ended September 30, 2008 as a
      result of the extension of these warrants.





On
      January 11, 2008 the Company issued warrants in connection with the January
      2008
      Financing of Notes and Class A Warrants to ten accredited investors and Chardan
      Capital as broker. The Company recorded the value of the Class A Warrants of
      $504,661 as a discount to the Notes issued therewith and is amortizing this
      discount over the five year life of the Notes.


F-12





On
      January 11, 2008 the Company issued the 1,131,667 Broker Warrants expiring
      June
      11, 2013 (see Note 1 above) in connection with the January 2008 Financing to
      Chardan Capital as broker. The Company is recognizing the value of the Broker
      Warrants of $226,835 as debt issuance costs and in expensing the value over
      the
      five year life of the Convertible Notes.





Pursuant
      to an agreement entered into in April 2007, the Company also issued warrants
      to
      a consultant for services provided on March 13, 2008, exercisable at $.60 per
      share. The Company incurred an expense of $14,198 during the nine months ended
      September 30, 2008 related to the issuance of these warrants and had total
      unrecognized compensation expense related to these warrants of $7,099, which
      will be recognized in April 2009.





**9.** **Intangible
        Asset**





In
      July
      2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 142,
“Goodwill and Other Intangible Assets” (“SFAS No. 142”). SFAS No. 142 requires
      that goodwill and intangible assets with indefinite useful lives no longer
      be
      amortized, but instead be tested for impairment at least annually. This
      pronouncement also requires that intangible assets with estimable useful lives
      be amortized over their respective estimated useful lives and reviewed for
      impairment in accordance with SFAS No. 144, “Accounting for the Impairment or
      Disposal of Long-Lived Assets.”





In
      accordance with SFAS No. 142, goodwill is allocated to reporting units, which
      are either the operating segment or one reporting level below the operating
      segment. We have determined that our reporting unit for purposes of applying
      the
      provisions of SFAS No. 142 is our operating subsidiary Jinan Broadband.





On
      an
      annual basis, we test goodwill and other indefinite life intangible assets
      for
      impairment. To determine the fair value of these intangible assets, there are
      many assumptions and estimates used that directly impact the results of the
      testing. In making these assumptions and estimates, we will use set criteria
      that are reviewed and approved by various levels of management, and we will
      estimate the fair value of our reporting units by using discounted cash flow
      analyses.





As
      of
      September 30, 2008 we had no goodwill and our intangible assets relate to the
      excess purchase price associated with the service agreement resulting from
      our
      Jinan Broadband and Shandong Newspaper acquisitions. At September 30, 2008
      the
      company has recorded intangible assets of approximately $2,997,000 of which
      $1,904,000 relates to our acquisition of Jinan Broadband and $1,093,000 relates
      to our acquisition of Shandong Newspaper. In accordance with SFAS No. 142,
      the
      Company is amortizing the Jinan service agreement over the 20 year term of
      the
      agreement, resulting in a recorded amortization expense of approximately $26,000
      and $77,000 during the three and nine months ended September 30, 2008,
      respectively. As of September 30, 2008, the company has not finalized its
      determination of the fair value of its recent acquisition of Shandong Newspaper
      and therefore has not recorded any amortization regarding this acquisition
      during the three months ended September 30, 2008.





**10.** **Income
        Taxes**





In
      June
      2006, the FASB issued Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes - an Interpretation of FASB Statement No.
      109* (FIN
      48). FIN 48 is intended to clarify the accounting for uncertainty in income
      taxes recognized in a company’s financial statements and prescribes the
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. FIN 48 also provides guidance on de-recognition, classification,
      interest and penalties, accounting in interim periods, disclosure and
      transition.





Under
      FIN
      48, evaluation of a tax position is a two-step process. The first step is to
      determine whether it is more-likely-than-not that a tax position will be
      sustained upon examination, including the resolution of any related appeals
      or
      litigation based on the technical merits of that position. The second step
      is to
      measure a tax position that meets the more-likely-than-not threshold to
      determine the amount of benefit to be recognized in the financial statements.
      A
      tax position is measured at the largest amount of benefit that is greater than
      50% likely of being realized upon ultimate settlement.


F-13





Tax
      positions that previously failed to meet the more-likely-than-not recognition
      threshold should be recognized in the first subsequent period in which the
      threshold is met. Previously recognized tax positions that no longer meet the
      more-likely-than-not criteria should be de-recognized in the first subsequent
      financial reporting period in which the threshold is no longer met.





The
      adoption of FIN 48 during the year ended December 31, 2007 did not have a
      material effect on the Company’s financial position





The
      Company is subject to a 5% business tax on the business income of our Jinan
      Broadband subsidiary.





Deferred
      taxes are recognized for the future tax consequences attributable to temporary
      differences between the carrying amounts of assets and liabilities for financial
      statement purposes and income tax purposes using enacted rates expected to
      be in
      effect when such amounts are realized or settled. The effect on deferred taxes
      of a change in tax rates is recognized in income in the period that includes
      the
      enactment date.





**[** ***Continued
      on Following Page*** **]**


F-14


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




The
      following discussion and analysis should be read in conjunction with our
      unaudited financial statements and related notes included in this report and
      the
“Forward Looking Statements” in the beginning of this report and the “Risk
      Factors” set forth in our Annual Report on Form 10-KSB for the year ended
      December 31, 2007 and our Current Reports on Form 8-K filed with the SEC, each
      as amended. The statements contained in this report that are not historic in
      nature, particularly those that utilize terminology such as “may,” “will,”
“should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or
      comparable terminology are forward-looking statements based on current
      expectations and assumptions. These statements are based on current information
      available to management.




Various
      risks and uncertainties could cause actual results to differ materially from
      those expressed in forward-looking statements. Factors that could cause actual
      results to differ from expectations include, but are not limited to, those
      set
      forth under the sections “Forward Looking Statements” in the forepart of this
      report and “Risk Factors” set forth in our Annual Report on Form 10-KSB, as
      amended, for the year ended December 31, 2007 and our Current Reports on Form
      8-K, all of which should be read together.




**Background**




We
      own
      and operate, through our indirect subsidiaries in the People’s Republic of China
      (“PRC”), a cable broadband business based in the Jinan region of China and a
      television programming guide publication business joint venture in the Shandong
      Province of China (see below and Note 3 to Financial Statements above). Our
      principal activity is providing cable and wireless broadband and print based
      media and television programming guide services. We operate in the media
      segment. All references to dollar amounts herein which relate to operations
      or
      revenues from the PRC are converted to reflect RMB exchange rates to the US
      dollar.





**Settlement
      Agreement**





On
      January 11, 2008, the Company entered into a Settlement Agreement (the
“Settlement Agreement”) by and among the Company and its subsidiaries, Stephen
      P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I. Lev,
      Wellfleet Partners, Inc., Yue Pu, Clive Ng, Chardan Capital Markets, LLC
      (“Chardan Capital”), Jaguar Acquisition Corporation (“Jaguar”), and China
      Cablecom Holdings, Ltd (“Cablecom Holdings”), pursuant to which the parties
      released certain potential claims against one another, as more fully set forth
      in our financial statements in this report. .





The
      following table provides the details of the net gain the Company recognized
      as a
      result of the Settlement Agreement during the nine months ended September 30,
      2008 which is recorded in “Interest and other income (expense)” in the
      accompanying Statement of Operations:





Fair
                value of Cablecom Holdings Shares
            
            $
            2,515,500Waiver
                of accrued compensation
            
            
            212,054Warrant
                extensions
            
            
            (1,426,862
            )Net
                Gain
            
            $
            1,300,692


1





*Issuance
      of Share in Lieu of Cash Interest Payments on Convertible Notes*





On
      January 11, 2008, simultaneously with the entry into the Settlement Agreement,
      we entered into and consummated a subscription agreement (the “Subscription
      Agreement”) with ten accredited investors (inclusive of Chardan Capital) with
      respect to the issuance of an aggregate of $4,971,250 principal amount of
      convertible notes (“Notes”) due January 11, 2013, and Class A Warrants to
      purchase an aggregate of 6,628,333 shares of common stock of the Company at
      $.60
      per share expiring on June 11, 2013 (the “January 2008 Financing”).





During
      the three months and nine months ended September 30, 2008, the Company incurred
      approximately $64,000 and $184,000, respectively, in interest expense related
      to
      the $4,971,250 of Convertible Promissory Notes Issued January 11, 2008 (the
      “Notes”). The Notes provided that interest thereon could be paid by issuance of
      shares of Common Stock at a value of 1 share for each $.75 of interest being
      paid. With the consent of the Note holders, during the nine months ended
      September 30, 2008 the Company issued 244,799 shares to the Note holders in
      lieu
      of cash of approximately $184,000 for interest accrued through September 30,
      2008.




**Results
      of Operations**





The
      following table presents the increases (decreases) in each major statement
      of
      operations category for the three months and nine months ended September 30,
      2008 as compared to the three months and nine months ended September 30, 2007,
      respectively. The following discussion of “Results of Operations” references
      these increases (decreases).





Increase (Decrease) in
              Consolidated
            
            Increase (Decrease) in
              ConsolidatedStatements of Operations
              Categories
            
            Statements of Operations
              CategoriesFor the Three Months Ended
            
            For the Nine Months EndedSeptember 30, 2008 vs. 2007
            
            September 30, 2008 vs. 2007Amount ($)
            
            %
            
            Amount ($)
            
            %Revenue
            
            $
            828,923
            
            
            79
            %
            $
            2,167,501
            
            
            122
            %Cost
                of revenue
            
            
            342,419
            
            
            56
            %
            
            838,102
            
            
            83
            %Gross
                profit
            
            
            486,504
            
            
            109
            %
            
            1,329,399
            
            
            174
            %Selling,
                general and administrative
            
            
            307,065
            
            
            112
            %
            
            693,418
            
            
            99
            %Professional
                fees
            
            
            18,754
            
            
            15
            %
            
            (49,195
            )
            
            -10
            %Depreciation
                and amortization
            
            
            213,429
            
            
            38
            %
            
            1,133,930
            
            
            105
            %Loss
                from operations
            
            
            (52,744
            )
            
            10
            %
            
            (448,754
            )
            
            30
            %Interest
                and other income (expense), net
            
            
            80,770
            
            
            -53
            %
            
            1,236,740
            
            
            -810
            %Income
                before minority interest
            
            
            28,026
            
            
            -4
            %
            
            787,986
            
            
            -47
            %Minority
                interest loss in operating subsidiaries
            
            
            (42,032
            )
            
            -34
            %
            
            95,674
            
            
            35
            %Income
                (loss) before income taxes
            
            
            (14,006
            )
            
            3
            %
            
            883,660
            
            
            -64
            %Income
                tax benefit
            
            
            (6,433
            )
            
            -
            
            
            (19,299
            )
            
            -Net
                income (loss)
            
            $
            (7,573
            )
            
            1
            %
            $
            902,959
            
            
            -65
            %


2




The
      Company was a development stage company with no business operations during
      the
      first three months 2007. Effective January 23, 2007 we acquired China Broadband,
      Ltd. (“China Broadband Cayman”) and its operations which was already a party to
      a Cooperation Agreement to acquire PRC based Jinan Broadband. Effective April
      1,
      2007, China Broadband Cayman and our WFOE completed the acquisition of the
      Jinan
      Broadband subsidiary.




During
      the first three months of 2007 Jinan Broadband did not operate as its own
      separate entity and constituted assets within a business division that was
      separated out immediately prior to our acquisition. Accordingly, Jinan Broadband
      results for the first three months of 2007 are not included for comparative
      purposes as management believes that they are not meaningful.




During
      2007 and the first six months of 2008 Shandong Newspaper did not operate as
      its
      own separate entity and constituted assets within a business division that
      was
      separated out immediately prior to our acquisition of it. Accordingly, Shandong
      Newspaper results for 2007 and the first six months of 2008 are not included
      for
      comparative purposes as management believes that they are not
      meaningful.




Our
      revenues are principally based on the number of paying cable broadband internet
      customers in the Shandong province of China and the number of subscribers to
      our
      print media and television programming guide services. As of September 30,
      2008 Jinan Broadband had approximately 59,000 active paying subscribers for
      its
      services in this region as compared to 58,000 and 45,000 at December 31, 2007
      and 2006, respectively. The increase is a result of internal growth by Jinan
      Broadband after we acquired it. As of September 30, 2008 our Shandong Newspaper
      business had a readership base of approximately 240,000 people.




Our
      gross
      revenues are dependent on several factors:




·
            the
                amount that we are permitted to charge for cable broadband internet
                services in the regions we operate
                in,


·
            the
                number of subscribers we have in each
                region,


·
            advertising
                revenues, and


·
            other
                revenues from other permitted value added services that we
                perform.





We
      intend
      to develop our business by growing internally to increase the subscribers for
      our services in the regions we operate, acquiring other complimentary media
      assets in the region and by acquiring licenses to operate the cable broadband
      business in other regions.





Our
      cost
      of revenue consists primarily of the costs of products or services sold to
      customers and personnel and other direct costs associated with providing
      technical services. In the future, we may expand or alter our pricing structures
      and policies. These changes would negatively reduce our gross margins. We may
      also offer cross promotional discounts with other assets that we acquire in
      order to grow overall company revenue to draw attention to our other product
      offerings. In addition to pricing strategy, our gross margins will fluctuate
      based on other factors, including:


3





·
            the
                cost of our products, including the extent of purchase volume discounts
                we
                are able to obtain from our
                suppliers;


·
            promotions
                or special offers that we offer to attract new customers;
                and


·
            the
                mix of products within each brand category that our customers
                purchase.




Our
      selling, general and administrative expenses consist of personnel costs
      including taxes and benefits, rent and utilities, contract labor, insurance,
      marketing, telecommunication and Internet costs, and other administrative
      expenses. We expect selling, general and administrative expenses to increase
      as
      we grow our business ***.***




***Three
      Months Ended September 30, 2008*** **** ***Compared
      to the Three Months Ended September 30, 2007***





*Revenues*





Revenue
      for the three months ended September 30, 2008 was approximately $1,881,000
      as
      compared to approximately $1,052,000 for the three months ended September 30,
      2007 and increase of approximately $829,000 or 79%. The increase in revenue
      is
      primarily attributable to our acquisition of Shandong Newspaper which provided
      us with approximately $720,000 of revenue during the period. In addition, the
      number of paying subscribers for our Jinan Broadband business increased during
      the three months ended September 30, 2008 as compared to the number of paying
      subscribers during the three months ended September 30, 2007. Revenue consisted
      of sales to our PRC based Internet consumers, cable modem consumers, business
      customers, print media customers and other internet, cable, television and
      programming guide services. We expect that our revenues will increase as we
      continue to grow our business.





*Gross
      Profit*





Gross
      profit for the three months ended September 30, 2008 was approximately $932,000
      as compared to $445,000 for the three months ended September 30, 2007, an
      increase of approximately $487,000 or 109%. Gross profit as a percentage of
      revenue was 49.5% for the three months ended September 30, 2008 as compared
      to
      42.3% for the three months ended September 30, 2007.





*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the three months ended September 30,
      2008 increased approximately $307,000 to $582,000 as compared to $275,000 for
      the three months ended September 30, 2007. The significant components of
      selling, general and administrative expenses during the 2008 period included
      salaries (including salaries to US personnel) and personnel costs of
      approximately $311,000 and rent expense of approximately $46,000. During the
      2007 period the significant components of selling general and administrative
      expenses included salaries and personnel costs of approximately $130,000. We
      expect that our selling, general and administrative expenses will increase
      as we
      continue to grow our business by adding new subscribers.





*Professional
      Fees*





Professional
      fees for the three months ended September 30, 2008 increased by approximately
      $19,000 to $142,000 as compared to $123,000 for the three months ended September
      30, 2008. Professional fees during the 2008 period included legal costs of
      approximately $35,000, accounting fees of approximately $82,000 and consultant
      costs of approximately $25,000. Professional fees during the 2007 period
      included legal costs of approximately $41,000, accounting fees of approximately
      $49,000 and consultant costs of approximately $33,000. We expect our costs
      for
      professional services to remain significant.


4





*Depreciation
      and Amortization*





Depreciation
      and amortization expense for the three months ended September 30, 2008 was
      approximately $769,000 as compared to $556,000 for the three months ended
      September 30, 2007. Depreciation and amortization expense during the 2008 period
      includes depreciation expense of $720,000 on our property, plant and equipment,
      $26,000 of amortization expense related to our service contract and $23,000
      related to the amortization of debt issuance costs associated with the
      Convertible Note . Depreciation expense during the 2007 period primarily relates
      to the depreciation expense of $556,000 on our property, plant and equipment
      in
      the PRC.





*Interest
      and Other Income (Expense)*





We
      recorded net interest expense of approximately $73,000, in interest and other
      income (expense) during the three months ended September 30, 2008. This amount
      consisted primarily of interest expense related to the 5% Convertible Notes
      issued on January 11, 2008 in the amount of $64,000 and $25,000 of amortization
      expense related to the quarterly amortization of the Class A Warrant discount
      applied to the Convertible Notes. These amounts were partially offset by $16,000
      of interest income earned on our cash balances. During the three months ended
      September 30, 2007 we recorded a net loss amount of approximately $153,000.
      This
      amount consisted primarily of the expense related to our requirement to issue
      new shares in the amount of $158,000, as a result of our not registering the
      1,300,000 shares issued upon the conversion of our 7% Convertible Promissory
      Notes in the time frame required. This amount was partially offset by interest
      income earned on our cash balances.





We
      expect
      to continue to incur interest expenses in connection with our issuance of our
      $4,971,250 principal amount of Notes issued in January 2008, which compounds
      monthly at the annual rate of five percent (5%) with the maturity date on
      January 11, 2013.





*Minority
      Interest*





49%
      of
      the operating loss of our Jinan Broadband subsidiary is allocated to Jinan
      Parent and 50% of the operating loss of our Shandong Newspaper subsidiary is
      allocated to the our Shandong Newspaper joint venture partner. During the three
      months ended September 30, 2008 and 2007, $81,000 and $123,000, respectively,
      of
      our operating losses were allocated to these entities.





*Income
      Tax Benefit*





Our
      income tax benefit was $6,000 and $0, respectively, for the three months ended
      September 30, 2008 and 2007.




***Nine
      Months Ended September 30, 2008*** **** ***Compared
      to the Nine Months Ended September 30, 2007***





*Revenues*





Revenue
      for the nine months ended September 30, 2008 was approximately $3,937,000 as
      compared to approximately $1,770,000 for the nine months ended September 30,
      2007 an increase of approximately $2,168,000 or 122%. The increase in revenue
      is
      attributable to (i) our acquisition of Shandong Newspaper that provided us
      with
      approximately $720,000 of revenue during the period; (ii) the inclusion of
      our
      Jinan Broadband’s operations for a full nine months in the 2008 period as
      compared to only six months of operations in the 2007 period; and (iii) the
      increased number of paying subscribers during the nine months ended September
      30, 2008 as compared to the nine months ended September 30, 2007. Revenue
      consisted of sales to our PRC based Internet consumers, cable modem consumers,
      business customers, print media customers and other internet, cable, television
      and programming guide services. We expect that our revenues will increase as
      we
      continue to grow our business.


5





*Gross
      Profit*





Gross
      profit for the nine months ended September 30, 2008 was approximately $2,092,000
      as compared to $763,000 for the nine months ended September 30, 2007, an
      increase of approximately $1,329,000 or 174%, which increase was due primarily
      to the Shandong Newspaper acquiisition. Gross profit as a percentage of revenue
      was 53.1% for the nine months ended September 30, 2008 as compared to 43.1%
      for
      the nine months ended September 30, 2007.





*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the nine months ended September 30,
      2008
      increased approximately $693,000 to $1,394,000 as compared to $701,000 for
      the
      nine months ended September 30, 2007. The increase is primarily attributable
      our
      acquisition of Shandong Newspaper during the period and to our inclusion of
      operations at Jinan Broadband for a full nine months in the 2008 period as
      compared to only six months of operations in the 2007 period. The significant
      components of selling, general and administrative expenses during the 2008
      period included salaries and personnel costs of approximately $803,000, network
      connection costs of $93,000 and rent expense of approximately $58,000. During
      the 2007 period the significant components of selling general and administrative
      expenses included salaries and personnel costs of approximately $277,000,
      network connection costs of $40,000, rent expense of $36,000 and travel expense
      of $100,000. We expect that our selling, general and administrative expenses
      will increase as we continue to grow our business.





*Professional
      Fees*





Professional
      fees for the nine months ended September 30, 2008 decreased by approximately
      $49,000 to $447,000 as compared to $496,000 for the nine months ended September
      30, 2008. Professional fees during the 2008 period included legal costs of
      approximately $161,000, accounting fees of approximately $197,000 and consultant
      costs of approximately $75,000. Professional fees during the 2007 period
      included legal costs of approximately $114,000, accounting fees of approximately
      $193,000 and consultant costs of approximately $189,000. The increased
      professional fees in the 2007 period related to the professional costs
      associated with the share exchange and the acquisition of Jinan Broadband.
      We
      expect our costs for professional services to remain significant.





*Depreciation
      and Amortization*





Depreciation
      and amortization expense for the nine months ended September 30, 2008 was
      approximately $2,210,000 as compared to $1,077,000 for the nine months ended
      September 30, 2007. The increase is primarily attributable our acquisition
      of
      Shandong Newspaper during the period and to our inclusion of operations at
      Jinan
      Broadband for a full nine months in the 2008 period as compared to only six
      months of operations in the 2007 period. Depreciation and amortization expense
      during the 2008 period includes depreciation expense of $2,068,000 on our
      property, plant and equipment, $77,000 of amortization expense related to our
      service contract and $66,000 related to the amortization of debt issuance costs
      associated with the Convertible Note . Depreciation expense during the 2007
      period primarily relates to the depreciation expense of $1,077,000 on our
      property, plant and equipment.





*Interest
      and Other Income (Expense)*





We
      recorded a net income amount of approximately $1,084,000, in interest and other
      income (expense) during the nine months ended September 30, 2008. This amount
      consisted primarily of the net gain on the Settlement Agreement in the amount
      of
      approximately $1,301,000, the gain on the sale of marketable equity securities
      in the amount of $17,000, interest expense related to the 5% Convertible Notes
      issued on January 11, 2008 in the amount of $184,000, the expense related to
      our
      requirement to issue new shares in the amount of $12,000, as a result of our
      not
      registering the 1,300,000 shares issued upon the conversion of our 7%
      Convertible Promissory Notes issued by China Broadband Cayman in 2006 and
      assumed by the Company upon the purchase of China Broadband Cayman in the time
      frame required and $72,000 of amortization expense related to the quarterly
      amortization of the Class A Warrant discount applied to the Convertible Notes.
      These amounts were partially offset by $35,000 of interest income earned on
      our
      cash balances.


6





During
      the nine months ended September 30, 2007 we recorded a net loss amount of
      approximately $153,000 in interest and other income (expense), net which
      consisted of the expense related to our requirement to issue new shares in
      the
      amount of $158,000, as a result of our not registering the 1,300,000 shares
      issued upon the conversion of our 7% Convertible Promissory Notes in the time
      frame required, partially offset by $5,000 in interest income earned on our
      cash
      balances.





We
      expect
      to continue to incur interest expenses in connection with our issuance of our
      $4,971,250 principal amount of Notes issued in January 2008, which compounds
      monthly at the annual rate of five percent (5%) with the maturity date on
      January 11, 2013.





*Minority
      Interest*





49%
      of
      the operating loss of our Jinan Broadband subsidiary is allocated to Jinan
      Parent and 50% of the operating loss of our Shandong Newspaper subsidiary is
      allocated to the our Shandong Newspaper joint venture partner. During the nine
      months ended September 30, 2008 and 2007 $368,000 and $273,000, respectively,
      of
      our operating losses were allocated to these entities.





*Income
      Tax Benefit*





Our
      income tax benefit was $19,000 and $0, respectively, for the nine months ended
      September 30, 2008 and 2007.





**Liquidity
      and Capital Resources**





As
      of
      September 30, 2008 we had $5,132,000 of cash on hand and working capital of
      $363,000. As of September 30, 2008, we had total current liabilities of
      $6,535,000.





On
      January 11, 2008 we entered into and consummated a subscription agreement with
      ten accredited investors with respect to the issuance of an aggregate of
      $4,971,250 principal amount of Notes due January 11, 2013, and Class A Warrants
      to purchase an aggregate of 6,628,333 shares of common stock of the Company
      at
      $.60 per share expiring on June 11, 2013. In March 2008, we used approximately
      $3.2 million of these proceeds to fund our second payment for our purchase
      of
      Jinan Broadband. In addition, in March 2008 we used $300,000 to fund our down
      payment under the Shandong Newspaper Cooperation Agreement to Shandong Media
      and
      in April 2008 utilized an additional $1.1 million to fund the remaining portion
      of our required working capital contribution for the Shandong Newspaper
      business. During the nine months ended September 30, 2008, the Company incurred
      $184,000 in interest expense related to these notes. Based on a predetermined
      presumed value of $.75 per share as set forth in the Subscription Agreement
      and
      related documents during the nine months ended September 30, 2008, with the
      consent of the Note holders, the Company issued 244,799 shares to the Note
      holders in lieu of cash of approximately $$184,000 for interest accrued through
      September 30, 2008. In addition, in April 2008 we received the 390,000 Cablecom
      Holdings Shares that were part of the Settlement Agreement described above
      and
      recorded a gain of $2,515,000 upon receipt of the shares. In June 2008 the
      Company sold 50,000 of the Cablecom Holdings Shares on the open market and
      received gross proceeds of $340,000 and recorded a gain on the sale of
      approximately $17,000. As a result of a significant decline in the price of
      the
      Cablecom Holdings Shares, and our selling restrictions under a lock up agreement
      relating to these shares, we recorded an
      unrealized loss of approximately $1.5 million on these shares through other
      comprehensive income (loss) for the period ended September 30, 2008. Since
      September 30, 2008, the price of the Cablecom shares has further declined.
      The
      fair value of the Cablecom shares at November 18, 2008 approximates
      $420,000.




*Cash
      Flows*





Operating
      activities for the nine months ended September 30, 2008 and 2007, after
      adding back non-cash items provided (used) cash of approximately $235,000 and
      $(378,000), respectively . During
      such period other changes in working capital provided cash of approximately
      $71,000 and $1,074,000 respectively, resulting in cash being provided by
      operating activities of $305,000 and $696,000, respectively.


7





Investing
      activities for nine months ended September 30, 2008 and 2007 used cash of
      $1,110,000 and $1,613,000, respectively. The 2008 amounts consisted of additions
      to property and equipment in the amount of $1,450,000 partially offset by the
      proceeds from the sale of 50,000 Cablecom Holdings Shares in the amount of
      $340,000. The 2007 amount consisted solely of additions to property and
      equipment.




Financing
      activities for nine months ended September 30, 2008 and 2007 provided cash
      of
      $4,986,000 and $2,332,000, respectively. For 2008, this amount consisted of
      proceeds from the issuance of the convertible notes of $4,850,000 partially
      offset by $105,000 of payments related to issuance costs associated with the
      convertible notes and an increase in the payable to Jinan Parent in the amount
      of $240,000. For 2007, this amount included proceeds from the private placement
      of $4,000,000 partially offset by $421,000 of payments related to issuance
      costs
      associated with the private placement offering and a decrease in the payable
      to
      Jinan Parent in the amount of $14,248,000.





Our
      WOFE,
      Jinan Broadband and Shandong Newspaper subsidiaries are located in China. All
      of
      their operations are conducted in the local currency of the Chinese Yuan also
      known as Renminbi or RMB. The effect of exchange rates on cash between the
      Chinese Yuan and the United States dollar, provided cash of $478,000 and
      $164,000 during the nine months ended September 30, 2008 and 2007.





*Need
      for Additional Capital*





We
      have
      raised $4.85 million (net of cost of capital and expenses) in our January 2008
      Financing in order to fund our second payment for our purchase of Jinan
      Broadband, which payment was due in January of 2008, to acquire Shandong
      Newspaper and to cover the cost of interim operations. We made the second and
      last payment for Jinan Broadband in March of 2008 and incurred no penalty for
      making this payment in March.





In
      March
      2008 we used $300,000 to fund our down payment under the Shandong Newspaper
      Cooperation Agreement to Shandong Media and in April 2008 utilized an additional
      $1.1 million to fund the remaining portion of our required working capital
      contribution. Additional capital will be needed to make payments to Shandong
      Media in the event that certain revenue thresholds are met (See “Recent Events”
below). Pursuant to the Settlement Agreement, we received 390,000 shares of
      Cablecom Holdings Shares from Mr. Ng, in April 2008 of which 260,000 are subject
      to lock-up provisions that expire within the next 12 months. In June 2008 the
      Company sold 50,000 of the Cablecom Holdings Shares on the open market and
      received gross proceeds of $340,000. During the three months ended September
      30,
      2008 the value of the Cablecom Holding Shares decreased by approximately $1.5
      million, with further declines through the date of this report, resulting in
      a
      current value for these shares of approximately $420,000. The Cablecom Holding
      Shares may continue to fluctuate and may decline further and are subject to
      a
      lock up agreement. Management does not believe that the Company has sufficient
      capital to continue its growth and acquisition strategy without raising
      additional capital and/or liquidating more of the Cablecom Holdings Shares.





We
      intend
      to grow primarily through marketing to increase our subscriber base and through
      acquisitions of China based broadband, internet and cable businesses. Our
      strategy also includes the purchasing of other complimentary media assets in
      the
      same regions.





Our
      first
      purchase of this nature was the completion of our acquisition of Shandong
      Newspaper in a Joint Venture. Shandong Newspaper’s business includes three main
      magazines: Shandong Broadcast & TV Weekly (Newspaper), TV Weekly Magazine
      and Modern Movie Times Magazine (Bi-Weekly). We intend to invest our acquisition
      cost in this Joint Venture to increase sales and advertising revenues of its
      periodicals in order to become profitable, and to cross market with our other
      asset, Jinan Broadband. No assurance can be made that we will be able to raise
      capital if and as needed.


8







The
      amount and timing of our future capital requirements will depend upon many
      factors, including the number and size of opportunities available to us, the
      level of funding received by us, future private placements of our common stock,
      the level of funding obtained through other financing sources, and the timing
      of
      such funding. In the event we are unable to raise additional capital we will
      not
      be able to sustain any growth or continue to operate.





*Dividends*





PRC
      regulations prevent the payment of dividends absent compliance with certain
      rules and obtaining appropriate government consents, which we believe will
      not
      happen in the near future, if ever. Moreover, even if we are profitable we
      intend to retain any future earnings to finance the expansion of our business
      and any necessary capital expenditures, and for general corporate purposes.
      Accordingly, we do not expect to declare dividends in the foreseeable future.





*Financial
      Commitments*




The
      Company pays approximately $55,000 (400,000 RMB) annually for rent at its
      facilities in Jinan, China, renewable on an annual basis. In addition the
      Company pays approximately $40,000 (278,000 RMB) annually for rent for its
      Shandong Newspaper facility.





The
      Company utilizes approximately 1,000 square feet of space from Maxim Financial
      Corporation for its corporate headquarters for a monthly rental fee of $2,000.
      Maxim Financial Corporation provided consulting services to the Company during
      the years ended December 31, 2007 and 2006 has agreed to discharge all rental
      costs under the terms of its consulting agreement with the Company through
      December 2007. In addition, Maxim Financial Corporation has agreed to defer
      all
      monthly rental payments beginning January 2008 until the Company’s next capital
      raise subsequent to January 2008.





**Recent
      Events**





*Shandong
      Newspaper Cooperation Agreement*




On
      March
      7, 2008, through our indirect WFOE subsidiary in the PRC, we entered into a
      Cooperation Agreement (the "Shandong Newspaper Cooperation Agreement") by and
      among, Shandong Broadcast & TV Weekly Press and Modern Movie & TV
      Biweekly Press, each PRC companies (collectively "Shandong Newspaper"). The
      Shandong Newspaper Cooperation Agreement provided for, among other terms, the
      creation of a joint venture entity in the PRC, Shandong Lushi Media Co., Ltd.
      ("Shandong Media") that would acquire and operate Shandong Newspaper's
      television program guide, newspaper and magazine publishing business in the
      Shandong region of the PRC (the "Shandong Newspaper Business") which businesses
      were previously owned and operated by the Shandong Newspaper entities pursuant
      to exclusive licenses.




Under
      the
      terms of the Shandong Newspaper Cooperation Agreement and related transaction
      documents, the Shandong Newspaper entities mentioned above contributed their
      entire Shandong Newspaper businesses and transfered certain employees, to
      Shandong Media in exchange for a 50% ownership interest in Shandong Media,
      with
      the other 50% of Shandong Media to be owned by our PRC based operating
      subsidiary. In exchange therefore, pursuant to the Shandong Newspaper
      Cooperation Agreement provides we made an initial payment of approximately
      $1.4
      million (based on prevailing exchange rates at the time for 10 million RMB)
      which was contributed to Shandong Media as working and acquisition capital.




In
      addition to the initial purchase price of $1.4 million, the Shandong Newspaper
      Cooperation Agreement provides for additional consideration of between 5 million
      RMB and 20 million RMB (approximately $732,000 and $3,000,000 based on current
      exchange rates), to be paid as a capital contribution to Shandong Media in
      the
      event that certain performance thresholds are met during the first 12 months
      of
      operations after closing the transaction for a total purchase price of between
      $2.1 Million and $4.4 based on current exchange rates.




9




Specifically,
      in the event that audited annual net profits during the first year after closing
      of the transaction relating to the Shandong Newspaper Cooperation Agreement:




·
            equals
                or exceeds 16 million RMB, then we will be required to contribute
                an
                additional 20 million RMB (or, approximately $3,000,000 presuming
                current
                exchange rates are in effect at such time) to the Shandong Media
                joint
                venture;




·
            equals
                or exceeds 4 million RMB but less than 16 million RMB, then we will
                be
                required to contribute 125% of such net profits to the Shandong Media
                joint venture, and




·
            is
                less then 4 million RMB, then we will be required to contribute only
                an
                additional 5 million RMB (approximately US $732,000 presuming current
                exchange rates are in effect at such time).




***Additional
      Terms of Shandong Newspaper Cooperation Agreement***




The
      Shandong Newspaper Cooperation Agreement also provides that these businesses
      will be operated primarily by employees contracted to Shandong Media through
      secondment by the respective Shandong Newspaper entities.




In
      addition, the Shandong Newspaper entities entered into an Exclusive Advertising
      Agency Agreement and an Exclusive Consulting Services Agreement with Shandong
      Media which require that the Shandong Newspaper entities shall appoint Shandong
      Media as its exclusive advertising agent and provider of technical and
      management support for a fee.





The
      Company closed this transaction during the second quarter of 2008 with it
      becoming effective upon the creation of the joint venture entity which entity
      was created in July 2008. Accordingly, the results of the Shandong Newspaper
      Business have been consolidated with the Company’s consolidated financial
      statements as of July 1, 2008.





**Critical
      Accounting Policies**




Our
      discussion and analysis of financial condition and results of operations is
      based on our consolidated financial statements, which have been prepared in
      accordance with accounting principles generally accepted in the United States.
      The preparation of these financial statements and related disclosures in
      conformity with accounting principles generally accepted in the United States
      of
      America requires our management to make judgments, assumptions and estimates
      that affect the amounts reported in the consolidated financial statements and
      accompanying notes. Our management evaluates its estimates on an on-going basis
      based on historical experience and on various other assumptions it believes
      are
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. We acquired our Jinan Subsidiary
      effective April 1, 2007 and therefore our historical experience with operations
      in China is limited and may change in the future as we continue to operate
      our
      Jinan subsidiary. Actual results may differ from these estimates under different
      assumptions or conditions.




We
      believe the following critical accounting policies affect our significant
      judgments and estimates used in the preparation of its financial statements.





*Revenue
      Recognition*




Revenue
      is recorded as services are provided to customers. The Company generally
      recognizes all revenues 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.
      The
      Company records 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.




10




*Accounts
      Receivable*




Accounts
      receivable are recorded at the invoiced amount after deduction of trade
      discounts, business tax and allowances. The Company considers accounts
      receivable to be fully collectible; accordingly, no allowance for doubtful
      accounts has been established. If accounts become uncollectible, they will
      be
      charged to statements of operations when that determination is made. Collections
      on accounts previously written off, if any, are included in other income as
      received.





*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.





*Property
      and Equipment*





Property
      and equipment are stated at cost less accumulated depreciation. Expenditures
      for
      major renewals and betterments, which extend the original estimated economic
      useful lives or applicable assets, are capitalized. Expenditures for normal
      repairs and maintenance are charged to expense as incurred. The costs and
      related accumulated depreciation of assets sold or retired are removed from
      the
      accounts, any gain or loss thereon is reflected in operations.





Depreciation
      is provided for on the straight line basis over the estimated useful lives
      of
      the respective assets over a period of five years.





*Intangible
      Assets*





We
      will
      perform indefinite life intangible asset impairment tests on an annual basis
      and
      between annual tests in certain circumstances. To determine the fair value
      of
      these intangible assets, there are many assumptions and estimates used that
      directly impact the results of the testing. In making these assumptions and
      estimates, the Company must make various assumptions regarding estimated future
      cash flows and other factors in determining the fair values of the respective
      assets. 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. If these estimates or their related
      assumptions change in the future, the Company may be required to record
      impairment charges for these assets in future periods. Any such resulting
      impairment charges could be material to the Company’s results of
      operations.





*Income
      taxes*





Deferred
      taxes are recognized for the future tax consequences attributable to temporary
      differences between the carrying amounts of assets and liabilities for financial
      statement purposes and income tax purposes using enacted rates expected to
      be in
      effect when such amounts are realized or settled. The effect on deferred taxes
      of a change in tax rates is recognized in income in the period that includes
      the
      enactment date.





*Foreign
      Currency Translation*




The
      businesses of the Company’s operating subsidiaries are currently conducted in
      and from China in Renminbi. In this report, all references to “Renminbi” and
“RMB” are to the legal currency of China and all references to U.S. dollars,
      dollars, $ and US$ are to the legal currency of the United States. 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.




11




**Recent
      Accounting Pronouncements**





In
      April 2008, the FASB issued FASB Staff Position FAS 142-3, “Determination
      of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). FSP FAS 142-3 amends
      the factors that should be considered in developing renewal or extension
      assumptions used to determine the useful life of a recognized intangible asset
      under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”),
      and requires additional disclosures. The objective of FSP FAS 142-3 is to
      improve the consistency between the useful life of a recognized intangible
      asset
      under SFAS 142 and the period of expected cash flows used to measure the fair
      value of the asset under SFAS No. 141 (R), “Business Combinations” (“SFAS
      141(R)”), and other accounting principles generally accepted in the United
      States of America. FSP FAS 142-3 applies to all intangible assets, whether
      acquired in a business combination or otherwise and shall be effective for
      financial statements issued for fiscal years beginning after December 15,
      2008, and interim periods within those fiscal years. The guidance for
      determining the useful life of intangible assets shall be applied prospectively
      to intangible assets acquired after the effective date. The disclosure
      requirements apply prospectively to all intangible assets recognized as of,
      and
      subsequent to, the effective date. Early adoption is prohibited. The Company
      does not expect the adoption of FSP FAS 142-3 to have a material impact on
      its
      consolidated financial statements.




In
      March
      2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
      and
      Hedging Activities ("SFAS 161"), which amends and expands the disclosure
      requirements of FASB Statement No. 133, Accounting for Derivative Instruments
      and Hedging Activities ("SFAS 133"), with the intent to provide users of
      financial statements with an enhanced understanding of: (a) how and why an
      entity uses derivative instruments; (b) how derivative instruments and related
      hedged items are accounted for under SFAS No. 133 and its related
      interpretations; and (c) how derivative instruments and related hedged items
      affect an entity’s financial position, financial performance and cash flows.
      SFAS 161 requires qualitative disclosures about objectives and strategies for
      using derivatives, quantitative disclosures about fair value amounts of and
      gains and losses on derivative instruments and disclosures about
      credit-risk-related contingent features in derivative instruments. This
      statement applies to all entities and all derivative instruments. SFAS 161
      is
      effective for financial statements issued for fiscal years and interim periods
      beginning after November 15, 2008. The Company has not yet determined the effect
      on our consolidated financial statements, if any, upon adoption of SFAS No.
      161.




In
      February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date
      of
      FASB Statement No. 157 ("FSP 157-2"), which delays the effective date of SFAS
      157 for nonfinancial assets and nonfinancial liabilities. Therefore, the Company
      has delayed application of SFAS 157 to its nonfinancial assets and nonfinancial
      liabilities, which include assets and liabilities acquired in connection with
      a
      business combination, goodwill, intangible assets and asset retirement
      obligations recognized in connection with final capping, closure and
      post-closure landfill obligations, until January 1, 2009. The Company is
      currently evaluating the impact of SFAS 157 for nonfinancial assets and
      liabilities on the Company's financial position and results of
      operations.




In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities. SFAS No. 159 permits companies to choose
      to
      measure many financial instruments and certain other items at fair value. SFAS
      No. 159 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007. The adoption of SFAS No. 159 did not have a material
      impact on our consolidated financial statements.




12




In
      December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and
      SFAS
      No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS
      No.
      141 (R) requires an acquirer to measure the identifiable assets acquired, the
      liabilities assumed and any noncontrolling interest in the acquiree at their
      fair values on the acquisition date, with goodwill being the excess value over
      the net identifiable assets acquired. SFAS No. 160 clarifies that a
      noncontrolling interest in a subsidiary should be reported as equity in the
      consolidated financial statements. The calculation of earnings per share will
      continue to be based on income amounts attributable to the parent. SFAS No.
      141
      (R) and SFAS No. 160 are effective for financial statements issued for fiscal
      years beginning after December 15, 2008. Early adoption is prohibited. The
      Company has not yet determined the effect on our consolidated financial
      statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No.
      160.




Management
      does not believe that any recently issued, but not yet effective, accounting
      standards, if currently adopted, would have a material effect on the
      accompanying financial statements.





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off balance sheet arrangements that are reasonably likely to have
      a
      current or future effect on our financial condition, revenues, results of
      operations, liquidity or capital expenditures.





**Item
      3.**  **Quantitative
      and Qualitative Disclosures About Market Risk**




All
      of
      our foreign operations are conducted in China and the Renminbi is the national
      currency in which its operations are conducted. We have not utilized any
      derivative financial instruments or any other financial instruments, nor do
      we
      utilize any derivative commodity instruments in its operations, nor any similar
      market sensitive instruments.




The
      exchange rate between the Renminbi and the U.S. dollar is subject to the PRC
      foreign currency conversion policies which may change at any time. The exchange
      rate at November 10, 2008 was approximately 6.83 Renminbi to 1 U.S. dollar,
      and
      the exchange rate is currently permitted to float within a very limited range.




We
      believe that the weakening US dollar currently exposes us to significant market
      risk. We currently raise capital in the US to fund our acquisitions and growth
      in China. If the US dollar continues to weaken against the Renminbi we may
      be
      required to raise additional capital not anticipated or we may not be able
      to
      continue to operate, make required payments for agreements entered into or
      fund
      new acquisitions.





The
      Company primarily invests its cash in checking, bank money market and savings
      accounts. As of
      November 11, 2008, the Company had not entered into any type of hedging or
      interest rate swap transaction.





**Item
      4T. Controls and Procedures.**





*Evaluation
      of Disclosure Controls and Procedures*




Management
      has reviewed the effectiveness of our "disclosure controls and procedures"
      (as
      defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e))
      as
      of the end of the period covered by this report and have concluded that the
      disclosure controls and procedures are effective to ensure that material
      information relating to the Company is recorded, processed, summarized, and
      reported in a timely manner.




*Changes
      in Internal Control Over Financial Reporting*





During
      the quarter ended September 30, 2008, the Company’s management determined that
      it is required to amortize revenues from prepaid subscribers in our Jinan
      Broadband internet business, and accordingly implemented internal controls
      to
      record invoicing of prepaid internet services. Because of the foregoing and
      because of certain late periodic report filings in 2007, management has retained
      a PRC based consultant to assist with financial accounting processing and
      reporting. In addition, management has set up internal controls to record and
      assess prepaid internet services on an ongoing basis as well as historically.
      Other than the foregoing, there have been no changes in the Company's internal
      control over financial reporting during the last quarterly period covered by
      this report that have materially affected, or are reasonably likely to
      materially affect, the Company's internal control over financial reporting.


13


**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings.**




None.





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





The
      Company has not made any sales of unregistered Securities during the quarter
      ended September 30, 2008 or thereafter other than has been disclosed in Current
      Reports on Form 8-K.





In
      July
      2008 the Company issued an additional 84,128 shares to the Note holders in
      lieu
      of cash of approximately $64,000 for interest accrued through June 30, 2008
      and
      on September 30, 2008 the Company issued an additional 85,057 shares to the
      Note
      holders in lieu of cash of approximately $64,000 for interest accrued through
      September 30, 2008. The Company believes that this issuance was exempt from
      the
      registration requirements of the Securities Act of 1933, as amended pursuant
      to
      Section 4(2) as this issuance of restricted shares was only made to certain
      accredited investors and not pursuant to an offering or other public
      distribution.




**Item
      3. Defaults Upon Senior Securities.**




None.




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





None.





**Item
      5. Other Information.**





None.





**Item
      6. Exhibits.**





31.1
            
            Certification
                by Principal Executive Officer pursuant to Sarbanes Oxley Section
                302.*31.1
            
            Certification
                by Principal Accounting Officer pursuant to Sarbanes Oxley Section
                302.*32.1
            
            Certification
                by Principal Executive Officer and Principal Accounting Officer pursuant
                to 18 U.S.C. Section 1350.*32.2
            
            Certification
                by Principal Accounting Officer pursuant to 18 U.S.C. Section
                1350.*





*
      Filed
      herewith.


14





**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant
      has duly caused this Quarterly Report on Form 10-Q for the period ended
      September 30, 2008, to be signed on its behalf by the undersigned on November
      18, 2008, thereunto duly authorized.





**CHINA
                BROADBAND, INC**By:
            /s/
                Marc UrbachName:
                Marc UrbachTitle:
                President (Principal Executive
              Officer)By:
            /s/
                Yue PuName:
                Yue PuTitle:
                Vice Chairman (PrincipalAccounting
                Officer, PrincipalFinancial
              Officer)




15