**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:
              **June
                  30, 2008**ORo
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934**For
                  the transition period from _______________ to ______________Commission
                  file number:
              **000-19644**
 
 **CHINA
        BROADBAND, INC.**
 (Exact
        name of small business issuer as specified in its charter)
  **Nevada**
              
              **20-1778374**(State or other jurisdiction of
                incorporation or organization)
              
              (I.R.S. Employer
                Identification No.)**1900 Ninth Street, 3rd Floor**
                **Boulder, Colorado 80302**
              
              **(303) 449-7733**(Address of principal
                executive offices)
              
              (Issuer’s telephone number)
  Indicate by
        check mark whether the registrant: (1) has filed all reports required to be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
        during the preceding 12 months (or for such shorter period that the registrant
        was required to file such reports), and (2) has been subject to such filing
        requirements for the past 90 days.
 Yes x No o
 Indicate
        by check mark whether the registrant is a shell company (as defined in
        Rule 12b-2 of the Exchange
        Act).
 Yes o No x
 As
        of
        August 12, 2008, the issuer had 50,415,341 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.**
  **JUNE
        30, 2008 FORM 10-Q QUARTERLY REPORT**
  **INDEX**
  PagePART
                  I - FINANCIAL INFORMATION
              F-1Item
                  1.**-**Financial Statements.
              F-1Consolidated
                  Balance Sheets as ofJune
                  30, 2008 (unaudited) and December 31, 2007
              F-1Consolidated
                  Statements of Operations for theSix
                  Months and Three MonthsEndedJune
                  30, 2008 and 2007 (unaudited)
              F-2Consolidated
                  Statements of Cash Flows for theSix
                  Months Ended June 30, 2008 and 2007 (unaudited)
              F-3Notes
                    to Unaudited Consolidated Financial Statements
              F-4Item
                  2 - Management's Discussion and Analysis or Plan of
                  Operation.
              1-12Item
                  3 - Quantitative and Qualitative Disclosures About Market
                  Risk.
              13Item
                  4 - Controls and Procedures.
              13-14**PART
                  II - OTHER INFORMATION**
              15Item
                  1 - Legal Proceedings.
              15Item
                  2 - Unregistered Sales of Equity Securities and Use of
                  Proceeds.
              15Item
                  3 - Defaults Upon Senior Securities.
              15Item
                  4 - Submission of Matters to a Vote of Security Holders.
              15Item
                  5 - Other Information.
              15Item
                  6 - Exhibits.
              15
  
  **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 Jian Guangdian
                  Jiahe Digital Television Co., Ltd. located in mainland People’s Republic
                  of China (the “PRC” or “China”),
  ·
              our
                  ability to complete our payments relating to the recent acquisition
                  of
                  Shandong Radio & Broadcasting Newspaper Group in the PRC if its
                  performance goals are met,
  ·
              a
                  complex and changing regulatory environment in the PRC that limits
                  our
                  ability to pay dividends, currently permits only partial foreign
                  ownership
                  of certain PRC based businesses and that requires us to negotiate,
                  acquire
                  and maintain separate government licenses to operate each internet
                  business that we would like to acquire (or any other business we
                  would
                  like to acquire in the PRC),
  ·
              our
                  ability to obtain 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
  ·
              our
                  anticipated needs for working
                  capital.
  Although
        we believe that the expectations reflected in the forward looking statements
        are
        reasonable, we cannot guarantee future results, levels of activity,
        performance or achievements. Except as required by applicable law, including
        the
        securities laws of the United States, we do not intend to update any of the
        forward-looking statements to conform these statements to actual
        results.
  
  **PART
        I - FINANCIAL INFORMATION**
 **Item
        1.** **Financial
        Statements**
 
 **China
        Broadband, Inc. and Subsidiaries**
 **CONSOLIDATED
        BALANCE SHEETS**
 
 June
                  30,
              
              December
                  31,2008
              
              2007(Unaudited)**Assets**Current
                  assets:Cash
              
              $
              4,061,482
              
              $
              472,670Marketable
                  equity securities, available for sale, at fair value
              
              
              2,363,000
              
              
              -Accounts
                  receivable
              
              
              82,370
              
              
              136,655Inventory
              
              
              748,613
              
              
              642,313Prepaid
                  expenses
              
              
              1,721
              
              
              14,781Other
                  current assets
              
              
              98,415
              
              
              73,947Total
                  current assets
              
              
              7,355,601
              
              
              1,340,366Property
                  and equipment, net
              
              
              10,101,108
              
              
              10,333,105Intangible
                  asset
              
              
              1,929,845
              
              
              1,981,307Other
                  assets
              
              
              1,859,448
              
              
              -Total
                  assets
              
              $
              21,246,002
              
              $
              13,654,778**Liabilities
                  and Shareholders' Equity**Current
                  liabilities:Accounts
                  payable
              
              $
              861,942
              
              $
              835,257Accrued
                  expenses
              
              
              636,704
              
              
              554,073Deferred
                  revenue
              
              
              1,362,923
              
              
              1,252,313Payable
                  to Jinan Parent
              
              
              3,540,307
              
              
              3,308,443Other
                  current liabilities
              
              
              25,156
              
              
              25,905Total
                  current liabilities
              
              
              6,427,032
              
              
              5,975,991Convertible
                  notes payable
              
              
              4,513,850
              
              
              -Deferred
                  tax liability
              
              
              353,806
              
              
              366,672Total
                  liabilities
              
              
              11,294,688
              
              
              6,342,663Minority
                  interest in Jinan Broadband
              
              
              4,592,266
              
              
              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, 50,331,213
                  and
                  50,048,000 issued and outstanding
              
              
              50,331
              
              
              50,048Additional
                  paid-in capital
              
              
              13,145,252
              
              
              10,485,874Accumulated
                  deficit
              
              
              (8,786,559
              )
              
              (8,845,426
              )Accumulated
                  other comprehensive income
              
              
              950,024
              
              
              331,764Total
                  shareholders' equity
              
              
              5,359,048
              
              
              2,022,260Total
                  liabilities and shareholders' equity
              
              $
              21,246,002
              
              $
              13,654,778
 
 See
        notes
        to consolidated financial statements.
  F-1
 
 **China
        Broadband, Inc. and Subsidiaries**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 ( **Unaudited** )
 
 Three Months Ended
              
              Six Months EndedJune 30,
              
              June 30,
              
              June 30,
              
              June 30,2008
              
              2007
              
              2008
              
              2007Revenue
              
              $
              1,053,367
              
              $
              718,055
              
              $
              2,056,633
              
              $
              718,055Cost
                  of revenue
              
              
              543,857
              
              
              400,372
              
              
              896,055
              
              
              400,372Gross
                  profit
              
              
              509,510
              
              
              317,683
              
              
              1,160,578
              
              
              317,683Selling,
                  general and administrative expenses
              
              
              310,808
              
              
              260,857
              
              
              811,914
              
              
              425,561Professional
                  Fees
              
              
              168,163
              
              
              233,365
              
              
              305,416
              
              
              373,365Depreciation
                  and amortization
              
              
              694,075
              
              
              521,029
              
              
              1,441,530
              
              
              521,029Loss
                  from operations
              
              
              (663,536
              )
              
              (697,568
              )
              
              (1,398,282
              )
              
              (1,002,272
              )Interest
                  and other income (expense):Settlement
                  gain
              
              
              1,300,692
              
              
              -
              
              
              1,300,692
              
              
              -Interest
                  expense
              
              
              (64,049
              )
              
              (135
              )
              
              (120,183
              )
              
              (4,362
              )Interest
                  income
              
              
              3,535
              
              
              5,137
              
              
              19,126
              
              
              5,137Gain
                  on sale of securities
              
              
              17,498
              
              
              -
              
              
              17,498
              
              
              -Other
              
              
              (24,463
              )
              
              -
              
              
              (60,388
              )
              
              -Income
                  (loss) before minority interest
              
              
              569,677
              
              
              (692,566
              )
              
              (241,537
              )
              
              (1,001,497
              )Minority
                  interest loss in Jinan Broadband
              
              
              119,476
              
              
              149,832
              
              
              287,538
              
              
              149,832Income
                  (loss) before income taxes
              
              
              689,153
              
              
              (542,734
              )
              
              46,001
              
              
              (851,665
              )Income
                  tax benefit
              
              
              (6,433
              )
              
              -
              
              
              (12,866
              )
              
              -Net
                  income (loss)
              
              $
              695,586
              
              $
              (542,734
              )
              $
              58,867
              
              $
              (851,665
              )Net
                  income (loss) per share:Basic
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.02
              )Diluted
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.02
              )Weighted
                  average shares outstandingBasic
              
              
              50,297,145
              
              
              49,694,044
              
              
              50,185,120
              
              
              42,902,897Diluted
              
              
              60,635,811
              
              
              49,694,044
              
              
              63,114,715
              
              
              42,902,897
 
 See
        notes
        to consolidated financial statements .
  F-2
  **China
        Broadband, Inc. and Subsidiaries**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 
 Six Months EndedJune 30,
              
              June 30,2008
              
              2007Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              58,867
              
              $
              (851,665
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Stock
                  compensation expense
              
              
              91,250
              
              
              50,748Gain
                  on settlement agreement
              
              
              (1,300,692
              )
              
              -Gain
                  on sale of marketable equity securities
              
              
              (17,498
              )
              
              -Depreciation
                  and amortization
              
              
              1,441,530
              
              
              521,029Minority
                  interest
              
              
              (287,536
              )
              
              (149,832
              )Deferred
                  income tax (benefit)
              
              
              (12,866
              )
              
              -Change
                  in assets and liabilities, net of effects of Jinan Broadband
                  acquisition:Accounts
                  receivable
              
              
              54,285
              
              
              (111,764
              )Inventory
              
              
              (106,300
              )
              
              (167,419
              )Prepaid
                  expenses and other assets
              
              
              (11,408
              )
              
              (101,328
              )Accounts
                  payable and accrued expenses
              
              
              321,370
              
              
              (195,909
              )Deferred
                  revenue
              
              
              110,610
              
              
              168,147Other
              
              
              46,512
              
              
              33,309Net
                  cash provided by (used in) operating activities
              
              
              388,124
              
              
              (804,684
              )Cash
                  flows from investing activities:Investment
                  in Jinan Broadband
              
              
              -
              
              
              -Investment
                  deposit in Shandong Newspaper
              
              
              (1,449,248
              )
              
              -Proceeds
                  from sale of marketable equity securities
              
              
              339,998
              
              
              -Acquisition
                  of property and equipment
              
              
              (1,115,686
              )
              
              (175,611
              )Net
                  cash used in investing activities
              
              
              (2,224,936
              )
              
              (175,611
              )Cash
                  flows from financing activities:Proceeds
                  from issuance of convertible notes payable
              
              
              4,850,000
              
              
              -Proceeds
                  from issuance of common stock
              
              
              -
              
              
              -Proceeds
                  from private placement offering
              
              
              -
              
              
              4,000,000Issuance
                  costs associated with private placement and convertible
                  notes
              
              
              (104,500
              )
              
              (420,500
              )Payable
                  to Jinan Parent
              
              
              231,864
              
              
              (651,470
              )Net
                  cash provided by financing activities
              
              
              4,977,364
              
              
              2,928,030Effect
                  of exchange rates changes on cash
              
              
              448,260
              
              
              128,734Net
                  increase in cash
              
              
              3,588,812
              
              
              2,076,469Cash
                  at beginning of period
              
              
              472,670
              
              
              103,170Cash
                  at end of period
              
              $
              4,061,482
              
              $
              2,179,639Supplemental
                  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
              
              $
              56,711
              
              $
              -Acquisition
                  of Jinan Broadband:Fair
                  value of assets acquired
              
              $
              -
              
              $
              11,497,317Liabilities
                  assumed
              
              $
              -
              
              $
              2,186,360Consideration
                  paid:Cash
                  paid
              
              $
              -
              
              $
              2,572,125Cash
                  amount owed
              
              $
              -
              
              $
              3,055,000Minority
                  interest
              
              $
              -
              
              $
              5,319,524
 
 See
        notes
        to consolidated financial statements .
  F-3
  **China
        Broadband, Inc. and Subsidiaries**
  **Notes
        to Unaudited Consolidated Financial Statements**
 
 **1.**  **Basis
        of Presentation**
  China
        Broadband, Inc., a Nevada corporation and its subsidiaries (“China Broadband”,
“we,” “us,” or “the Company”) owns and operates, through its indirect subsidiary
        in the People’s Republic of China (“PRC” or “China”), a cable broadband business
        based in the Jinan region of China and, effective as of August 1, 2008 (after
        the end of the quarter covered by this report), a television programming
        guide
        publication business joint venture in the Shandong Province of China (see
        Note 3
        below). Through June 30, 2008, 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. In addition, during
        this
        period, the Company, through a PRC based subsidiary joint venture, acquired
        a
        Shandong based print media and television programming guide business as provided
        in Note 3 below.
 
 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/A.
        The accompanying consolidated balance sheet as of December 31, 2007 has been
        derived from the audited balance as of that date included in the Form 10-KSB/A.
        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 six months ended June 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.
 
 **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.
 
 **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.
  F-4
 
 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.
  ·
              The
                  Company and each of Messrs. Ng and Pu, have agreed to modifications
                  to the
                  employment agreements of such persons (the “Employment Agreement
                  Amendments”), reducing their time commitments to the Company and its
                  subsidiary and providing that once replacement executive officers
                  have
                  been hired (and in the case of Mr. Ng, assuming Mr. Pu continues
                  in his
                  role as chief financial officer, eliminating his executive duties
                  and he
                  will only continue as the Chairman and a director of China Broadband
                  and
                  the Company), requiring in the case of Mr. Ng that he be subject
                  to an
                  ongoing obligation to offer acquisition candidates in the stand-alone,
                  independent broadband business to China Broadband in the future
                  (and
                  recognizing that acquisition candidates involving acting as a joint
                  venture provider of integrated cable television services in the
                  People’s
                  Republic of China and related activities, but which does not include
                  the
                  provision of Stand-Alone Broadband Services are the business of
                  China
                  Cablecom) and allowing them to continue to be involved with certain
                  other
                  activities and to continue in their executive capacities with Cablecom
                  Holdings or its successor. In addition, Mr. Ng 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, our placement agent for the January 2008 Financing and
                  a party to
                  the Settlement Agreement, completed the January 2008 Financing
                  concurrently upon execution by all related parties of the Settlement
                  Agreement.
  ·
              Mr.
                  David Zale, Mr. Jonas Grossman and Mr. James Cassano were appointed
                  as
                  directors joining Messrs. Yue Pu and Clive Ng on the
                  board.
  ·
              The
                  Company agreed to extend the expiration dates of 4,000,000 warrants
                  to
                  purchase 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.
  F-5
   ·
              The
                  Company has offered to BCGU, LLC, WestPark Capital, Inc., Maxim
                  Financial
                  Corporation, who were issued 500,000, 640,000 and 3,974,800 warrants
                  exercisable at $.60 per share in January of 2007, respectively,
                  the right,
                  at their discretion, to extend the exercisability period of their
                  respective warrants through January 11, 2013 or, in the alternative,
                  the
                  right to receive a scrip right to execute the unexercised portion
                  of their
                  warrants, at any time between the time of expiration date of their
                  unexercised warrants and continuing through January 11, 2013.
  The
        following table provides the details of the net gain the Company recognized
        as a
        result of the Settlement Agreement during the quarter ended June 30, 2008
        which
        is recorded in “Interest and other income (expense)” in the accompanying
        Statement of Operations:
 
 Receipt
                  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 three months and six months ended June 30, 2008, the Company incurred
        approximately $64,000 and $120,000, respectively, in interest expense related
        to
        these Notes. Accrued interest on the Notes of approximately $64,000 at June
        30,
        2008 is included in accrued expenses in the consolidated balance sheet. 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.
  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 2.5% based on the total amount
        sold
        to investors, or $121,250 based on $4,850,000 of principal amount of Notes
        issued to other investors, which fee has, pursuant to the terms of their
        engagement agreement, been applied their investment in a $121,250 Note and
        161,667 Class A Warrants at the same terms as all other investors in the
        offering and whose value is included and discount applied in the same manner
        as
        the Class A Warrants. In addition, Chardan Capital was compensated warrants
        to
        acquire 1,131,667 shares of the Company’s common stock at an exercise price of
        $.50 per share exercisable commencing January 11, 2008 and expiring on June
        11,
        2013 (the “Broker Warrants”). The Broker Warrants are identical to the Class A
        Warrants in all other material respects. The Company 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 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 from of approximately $1.4 million (based on prevailing exchange
        rates at the time for 10 million RMB) which would be contributed to Shandong
        Media as working and acquisition capital. The Company has paid approximately
        $1,400,000 towards the initial consideration which is classified within “Other
        Assets” in the consolidated balance sheet as of June 30, 2008.
  In
        addition to the initial purchase price of $1.4 million, the Shandong Newspaper
        Cooperation Agreement provides for additional consideration of between 5
        million
        RMB and 20 million RMB (approximately $757,757 and $3,000,000 based on current
        exchange rates), to be paid as a capital contribution to Shandong Media in
        the
        event that certain performance thresholds are met during the first 12 months
        of
        operations after closing the transaction for a total purchase price of between
        $2.2 Million and $4.5 based on current exchange rates.
  Specifically,
        in the event that audited annual net profits during the first year after
        closing
        of the transaction relating to the Shandong Newspaper Cooperation Agreement:
  ·
              equals
                  or exceeds 16 million RMB, then we will be required to contribute
                  an
                  additional 20 million RMB (or, approximately $3,000,000 presuming
                  current
                  exchange rates are in effect at such time) to the Shandong Media
                  joint
                  venture;
  ·
              equals
                  or exceeds 4 million RMB but less than 16 million RMB, then we
                  will be
                  required to contribute 125% of such net profits to the Shandong
                  Media
                  joint venture, and
  ·
              is
                  less then 4 million RMB, then we will be required to contribute
                  only an
                  additional 5 million RMB (approximately US $757,575 presuming current
                  exchange rates are in effect at such time).
  ***Additional
        Terms of Shandong Newspaper Cooperation Agreement***
  The
        Shandong Newspaper Cooperation Agreement also provides that these businesses
        will be operated primarily by employees contracted to Shandong Media through
        secondment by the respective Shandong Newspaper entities.
  In
        addition, the Shandong Newspaper entities entered into an Exclusive Advertising
        Agency Agreement and an Exclusive Consulting Services Agreement with Shandong
        Media which require that the Shandong Newspaper entities shall appoint Shandong
        Media as its exclusive advertising agent and provider of technical and
        management support for a fee.
 
 The
        Company closed this transaction during the second quarter of 2008 with it
        becoming effective upon the creation of the joint venture entity which entity
        was created in August 2008. The results of the Shandong Newspaper Business
        will
        be consolidated with the Company’s consolidated financial statements as of
        August 1, 2008.
 
 **4.**    **Convertible
        Notes**
 
 On
        January 11, 2008, as described in Note 2 above, the Company entered into
        and
        consummated the Subscription Agreement with ten accredited investors with
        respect to the issuance of an aggregate of $4,971,250 principal amount of
        Notes
        due January 11, 2013, and Class A Warrants to purchase an aggregate of 6,628,333
        shares of common stock of the Company at $.60 per share expiring on June
        11,
        2013. During the three and six months ended June 30, 2008 the Company incurred
        $64,000 and $120,000, 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 in May 2008, with the consent
        of
        the Note holders, 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. No assurance can be made that these holders will be willing to accept
        stock in lieu of cash payments for interest in future payments.
  F-8
 
 **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 June 30, 2008 the Company recorded and unrealized
        gain of $170,000 in accumulated other comprehensive income as a component
        of
        shareholders’ equity on the balance sheet related 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. 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 June 30, 2008, no write down was required to
        record
        other than temporary impairment of securities.
 
 **Assets
        measured at fair value on a recurring basis**
 
 On
        January 1, 2008, the Company adopted Statement of Financial Accounting
        Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS
        157 provides a single definition of fair value and a common framework for
        measuring fair value as well as new disclosure requirements for fair value
        measurements used in financial statements. Under SFAS 157, fair value is
        determined based upon the exit price that would be received by a company
        to sell
        an asset or paid a company to transfer a liability in an orderly transaction
        between market participants, exclusive of any transaction costs. Fair value
        measurements are determined by either the principal market or the most
        advantageous market. The principal market is the market with the greatest
        level
        of activity and volume for the asset or liability. Absent a principal market
        to
        measure fair value, the Company has used the most advantageous market, which
        is
        the market where the Company would receive the highest selling price for
        the
        asset or pay the lowest price to settle the liability, after considering
        transaction costs. However, when using the most advantageous market,
        transactions costs are only considered to determine which market is the most
        advantageous and these costs are then excluded when applying a fair value
        measurement. The adoption of SFAS 157 did not have a material effect on the
        Company’s financial position, results of operations or cash flows.
  SFAS
        157
        creates a three-level hierarchy to prioritize the inputs used in the valuation
        techniques to derive fair values. The basis for fair value measurements for
        each
        level within the hierarchy is described below, with Level 1 having the highest
        priority and Level 3 having the lowest.
  Level
        1:
        Quoted prices in active markets for identical assets or
        liabilities.
  Level
        2:
        Quoted prices for similar assets or liabilities in active markets; quoted
        prices
        for identical or similar instruments in markets that are not active; and
        model-derived valuations in which all significant inputs are observable in
        active markets.
  Level
        3:
        Valuations derived from valuation techniques in which one or more significant
        inputs are unobservable.
  F-9
 
 Following
        are the major categories of assets measured at fair value on a recurring
        basis
        during the six months ended June 30, 2008 using quoted prices in active markets
        for identical assets (Level 1); significant other observable inputs (Level
        2);
        and significant unobservable inputs (Level 3):
 
 **Level
                  1**
              
              **Level
                  2**
              
              **Level 3**
              
              **Total**Cash
                  equivalents
              
              $
              4,061,482
              
              $
              -
              
              $
              -
              
              $
              4,061,482Marketable
                  equity securities
              
              
              2,363,000
              
              
              -
              
              
              -
              
              
              2,363,000$
              6,424,482
              
              $
              -
              
              $
              -
              
              $
              6,424,482
  The
        Company’s investments in cash equivalents consist of short-term (less than 90
        days) investments in checking, savings and bank money market funds and are
        priced at fair value and actively traded, thus recorded in Level 1
        above.
  The
        Company’s investments in short-term marketable equity securities are exposed to
        price fluctuations. The fair value measurements for short-term marketable
        equity
        securities are based upon the quoted price in active markets multiplied by
        the
        number of shares owned exclusive of any transaction costs and without any
        adjustments to reflect discounts that may be applied to selling a large block
        of
        the securities at one time. The Company does not believe that the changes
        in
        fair value of these assets will materially differ from the amount that could
        be
        realized upon settlement or that the changes in fair value will have a material
        effect on the Company’s results of operations or financial position. However,
        the ultimate amount that could be realized upon sale or settlement is dependent
        on several factors including external market conditions, the terms and
        conditions of a sale agreement, the counterparty to a sale agreement, the
        investment’s liquidity in capital markets and the length of time to liquidate an
        equity investment.
 
 **6.**    **Net
        Income (Loss) Per Share**
 
 Basic
        net
        income (loss) per share has been computed by dividing the net income (loss)
        by
        the weighted average number of common shares outstanding. Diluted net income
        (loss) per share has been computed by dividing the net income (loss) by the
        weighted average number of common shares outstanding assuming exercise of
        dilutive warrants, options and convertible notes, 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.
 
 The
        following table sets forth the computation of basic earnings per
        share:
  Three Months Ended
              
              Six Months EndedJune 30,
              
              June 30,
              
              June 30,
              
              June 30,2008
              
              2007
              
              2008
              
              2007Numerator:Net
                  income (loss)
              
              $
              695,586
              
              $
              (542,734
              )
              $
              58,867
              
              $
              (851,665
              )Denominator:Weighted
                  average commonshares
                  outstanding
              
              
              50,297,145
              
              
              49,694,044
              
              
              50,185,120
              
              
              42,902,897Basic
                  earnings (loss) per share
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.02
              )
  F-10
 
 The
        following table sets forth the computation of diluted earnings per
        share:
 
 Three Months Ended
              
              Six Months EndedJune 30,
              
              June 30,
              
              June 30,
              
              June 30,2008
              
              2007
              
              2008
              
              2007Numerator:Net
                  income (loss)
              
              $
              695,586
              
              $
              (542,734
              )
              $
              58,867
              
              $
              (851,665
              )Add:
                  Convertible Note Interest
              
              
              63,673
              
              
              -
              
              
              119,807
              
              
              -$
              759,259
              
              $
              (542,734
              )
              $
              178,674
              
              $
              (851,665
              )Denominator:Weighted
                  average common shares outstanding - Basic
              
              
              50,297,145
              
              
              49,694,044
              
              
              50,185,120
              
              
              42,902,897Incremental
                  shares from assumed conversion of stock options, warrants and convertible
                  note
              
              
              10,338,666
              
              
              -
              
              
              12,929,595
              
              
              -Weighted
                  average common shares outstanding - Diluted
              
              
              60,635,811
              
              
              49,694,044
              
              
              63,114,715
              
              
              42,902,897Diluted
                  earnings (loss) per share
              
              $
              0.01
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.02
              )
 
 The
        computation of diluted earnings (loss) per share for the three and six months
        ended June 30, 2008 excluded the 4,000,000 warrants issued in the 2007 Private
        Placement as their inclusion would have been antidilutive.
  **7.**   **Accumulated
        Other Comprehensive Income**
 
 Comprehensive
        income (loss) for the three and six months ended June 30, 2008 and 2007 is
        as
        follows:
  **Three Months Ended June 30,****2008**
              
              **2007****(Unaudited)**
              
              **(Unaudited)**Net
                  income (loss)
              
              $
              695,586
              
              $
              (542,734
              )Other
                  comprehensive income:Unrealized
                  gain on marketable equity securities
              
              
              170,000
              
              
              -Currency
                  translation adjustment
              
              
              313,022
              
              
              149,528Comprehensive
                  income (loss)
              
              $
              1,178,608
              
              $
              (393,206
              )
 
 
 **Six Months Ended June 30,****2008**
              
              **2007****(Unaudited)**
              
              **(Unaudited)**Net income
                  (loss)
              
              $
              58,867
              
              $
              (851,665
              )Other
                  comprehensive income:Unrealized
                  gain on marketable equity securities
              
              
              170,000
              
              
              -Currency
                  translation adjustment
              
              
              448,260
              
              
              149,528Comprehensive
                  income (loss)
              
              $
              677,127
              
              $
              (702,137
              )
  F-11
  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 gain on marketable equity securities. For the six months ended
        June
        30, 2008, the changes in Accumulated Other Comprehensive Income (Loss) are
        as
        follows:
 
 **Accumulated Other****Comprehensive****Income (Loss)**BALANCE,
                  December 31, 2007
              
              $
              331,764Change
                  for the six months ended June 30, 2008, net of taxes
              
              
              618,260BALANCE,
                  June 30, 2008
              
              $
              950,024
 
 **8.**   **Stock
        Based Compensation**
 
 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
        six
        months ended June 30, 2008, respectively, in connection with the issuance
        of
        stock options to employees.
 
 The
        fair
        value of each option award is estimated on the date of grant using the
        Black-Scholes option valuation model. The Company recognizes the fair value
        of
        each option as compensation expense ratably using the straight-line attribution
        method over the service period, which is generally the vesting period. The
        Black-Scholes model incorporates the following assumptions:
  ·
              Expected
                  volatility - the Company estimates the volatility of common stock
                  at the
                  date of grant using historical
                  volatility.
  ·
              Expected
                  term - the Company estimates the expected term of options granted
                  based on
                  a combination of vesting schedules, term of the option and historical
                  experience.
  ·
              Risk-free
                  interest rate - the Company estimates the risk-free interest rate
                  using
                  the U.S. Treasury yield curve for periods equal to the expected
                  term of
                  the options in effect at the time of
                  grant.
  ·
              Dividends
                  - the Company uses an expected dividend yield of zero. The Company
                  intends
                  to retain any earnings to fund future operations and, therefore,
                  does not
                  anticipate paying any cash dividends in the foreseeable
                  future.
 
 The
        following table outlines the variables used in the Black-Scholes option-pricing
        model.
  **2008**Risk
                  free interest rate
              
              
              3.53
              %Volatility
              
              
              188.76
              %Dividend
                  yield
              
              
              -
              %Expected
                  option life
              
              
              4
                  years
 
 As
        of
        June 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 3.75 years.
  F-12
  Effective
        as of the March 13, 2008, the board of directors of the company approved
        the
        China Broadband, Inc. 2008 Stock Incentive Plan (the “Plan”), pursuant to which
        options or other similar securities may be granted. Qualified or Non-qualified
        Options to purchase up to 2,500,000 shares of the Company’s common stock may be
        issued under the Plan. The Plan may also be administered by an independent
        committee of the board of directors. 100,000 options have been issued under
        the
        plan.
 
 A
        summary
        of option activity under the Plan as of June 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 June 30, 2008
              
              
              100,000
              
              $
              1.00
              
              
              9.75Options
                  exercisable at June 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 June 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 quarter ended June 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-13
 
 On
        January 11, 2008 the Company issued Broker Warrants expiring June 11, 2013
        (see
        Note 1 above) in connection with the January 2008 Financing of Notes and
        Class A
        Warrants to Chardan Capital as broker. The Company is recognizing the value
        of
        the Broker Warrants of $226,835 as debt issuance costs and in expensing the
        value over the five year life of the Convertible Notes.
 
 Pursuant
        to an agreement entered into in April 2007, the Company also issued warrants
        to
        a consultant for services provided on March 13, 2008, exercisable at $.60
        per
        share. The Company incurred an expense of $14,198 during the six months ended
        June 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.
 
 The
        following table provides the details of the total stock based compensation
        during the six months ended June 30, 2008:
 
 Stock
                  option expense
              
              $
              8,216Warrant
                  expense
              
              
              14,198Stock
                  issued in lieu of interest
              
              
              56,711Stock
                  issued as non registration penalty
              
              
              12,125Total
                  stock compensation expense
              
              $
              91,250
 
 **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
        June 30, 2008 our only intangible asset relates to the purchase price associated
        with the service agreement resulting from our Jinan Broadband subsidiary
        acquisition. In accordance with SFAS No. 142, the Company is amortizing this
        service agreement over the 20 year term of this agreement, resulting in a
        recorded amortization expense of approximately $26,000 and $51,000 during
        the
        three and six months ended June 30, 2008, respectively.
 
 **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.
  F-14
 
 Under
        FIN
        48, evaluation of a tax position is a two-step process. The first step is
        to
        determine whether it is more-likely-than-not that a tax position will be
        sustained upon examination, including the resolution of any related appeals
        or
        litigation based on the technical merits of that position. The second step
        is to
        measure a tax position that meets the more-likely-than-not threshold to
        determine the amount of benefit to be recognized in the financial statements.
        A
        tax position is measured at the largest amount of benefit that is greater
        than
        50% likely of being realized upon ultimate settlement.
 
 Tax
        positions that previously failed to meet the more-likely-than-not recognition
        threshold should be recognized in the first subsequent period in which the
        threshold is met. Previously recognized tax positions that no longer meet
        the
        more-likely-than-not criteria should be de-recognized in the first subsequent
        financial reporting period in which the threshold is no longer met.
 
 The
        adoption of FIN 48 during the year ended December 31, 2007 did not have a
        material effect on the Company’s financial position
 
 The
        Company is subject to a 5% business tax on the business income of our Jinan
        Broadband subsidiary.
 
 Deferred
        taxes are recognized for the future tax consequences attributable to temporary
        differences between the carrying amounts of assets and liabilities for financial
        statement purposes and income tax purposes using enacted rates expected to
        be in
        effect when such amounts are realized or settled. The effect on deferred
        taxes
        of a change in tax rates is recognized in income in the period that includes
        the
        enactment date.
 
 *[RL
        NOTE- if there is any change in the way we are accounting for things this
        quarter, for example, how we now amortize prepaids that should be indicated
        and
        the result of the same should be indicated. Even if we do not have a material
        change in the numbers, since this is a material change in our methodologies,
        it
        could be material and should be noted separately. Same with any other changes
        that we may have been implementing as a result of the SEC
        LETTERS]*
  F-15


**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 for the
      year ended December 31, 2007 and our Current Reports on Form 8-K, all of which
      should be read together.




**Background**




We
      own
      and operate, through our indirect subsidiary in the People’s Republic of China
      (“PRC”), a cable broadband business based in the Jinan region of China and,
      effective August 1, 2008, acquired a television programming guide publication
      business joint venture in the Shandong Province of China (see below and Note
      3
      to Financial Statements above). Currently, our principal activity is providing
      cable and wireless broadband services, principally internet services, Internet
      Protocol Point wholesale services, related network equipment rental and sales,
      and fiber network construction and maintenance. We operate in a single
      segment.





**Settlement
      Agreement**





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 quarter ended June 30, 2008 which
      is recorded in “Interest and other income (expense)” in the accompanying
      Statement of Operations:





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




*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”).


1





During
      the three months and six months ended June 30, 2008, the Company incurred
      approximately $64,000 and $120,000, 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. Accrued interest on the Notes of approximately $64,000 at June 30, 2008
      is
      included in accrued expenses in the consolidated balance sheet. 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.




**Results
      of Operations**





The
      following table presents the increases (decreases) in each major statement
      of
      operations category for the three months and six months ended June 30, 2008
      as
      compared to the three months and six months ended June 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 Six Months EndedJune 30, 2008 vs. 2007
              
              June 30, 2008 vs. 2007Amount
                  ($)
              
              %
              
              Amount
                  ($)
              
              %Revenue
              
              $
              335,312
              
              
              47
              %
              $
              1,338,578
              
              
              186
              %Cost
                  of revenue
              
              
              143,485
              
              
              36
              %
              
              495,683
              
              
              124
              %Gross
                  profit
              
              
              191,827
              
              
              60
              %
              
              842,895
              
              
              265
              %Selling,
                  general and administrative
              
              
              30,123
              
              
              12
              %
              
              386,353
              
              
              91
              %Professional
                  fees
              
              
              (65,202
              )
              
              -28
              %
              
              (67,949
              )
              
              -18
              %Depreciation
                  and amortization
              
              
              192,874
              
              
              37
              %
              
              920,501
              
              
              177
              %Loss
                  from operations
              
              
              34,032
              
              
              -5
              %
              
              (396,010
              )
              
              40
              %Interest
                  and other income (expense), net
              
              
              1,228,211
              
              
              24554
              %
              
              1,155,970
              
              
              149157
              %Income
                  before minority interest
              
              
              1,262,243
              
              
              -182
              %
              
              759,960
              
              
              -76
              %Minority
                  interest loss in Jinan Broadband
              
              
              (30,356
              )
              
              -20
              %
              
              137,706
              
              
              92
              %Income
                  before income taxes
              
              
              1,231,887
              
              
              -227
              %
              
              897,666
              
              
              -105
              %Income
                  tax benefit
              
              
              (6,433
              )
              
              -
              
              
              (12,866
              )
              
              -Net
                  income
              
              $
              1,238,320
              
              
              -228
              %
              $
              910,532
              
              
              -107
              %




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.




Our
      revenues are principally based on the number of paying cable broadband internet
      customers in the Shandong province of China. As of June 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 increased efforts on internal growth
      by Jinan Broadband after our acquisition of them.




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:





·
            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 June 30, 2008*** **** ***Compared
      to the Three Months Ended June 30, 2007***





*Revenues*





Revenue
      for the three months ended June 30, 2008 was approximately $1,053,000 as
      compared to approximately $718,000 for the three months ended June 30, 2007
      and
      increase of approximately $335,000 or 47%. The increase in revenue is primarily
      attributable to the increased number of paying subscribers during the three
      months ended June 30, 2008 of 59,000 as compared to the 45,000 paying
      subscribers during the three months ended June 30, 2007. Revenue consisted
      of
      sales to our PRC based Internet consumers, cable modem consumers, business
      customers and other internet and cable services. We expect that our revenues
      will increase as we continue to grow our business and add new
      regions.


3




*Gross
      Profit*





Gross
      profit for the three months ended June 30, 2008 was approximately $510,000
      as
      compared to $318,000 for the three months ended June 30, 2007, an increase
      of
      approximately $192,000 or 60%. Gross profit as a percentage of revenue was
      48.4%
      for the three months ended June 30, 2008 as compared to 44.2% for the three
      months ended June 30, 2007.





*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the three months ended June 30, 2008
      increased approximately $30,000 to $291,000 as compared to $261,000 for the
      three months ended June 30, 2007. Selling, general and administrative expenses
      during the 2008 period included salaries and personnel costs of approximately
      $184,000 and insurance costs of approximately $22,000. During the 2007 period
      selling general and administrative expenses included salaries and personnel
      costs of approximately $103,000 and sales, marketing and promotional expenses
      of
      approximately $56,000. We expect that our selling, general and administrative
      expenses will increase as we continue to grow our business and add new
      regions.





*Professional
      Fees*





Professional
      fees for the three months ended June 30, 2008 decreased by approximately $65,000
      to $168,000 as compared to $233,000 for the three months ended June 30, 2008.
      Professional fees during the 2008 period included legal costs of approximately
      $89,000, accounting fees of approximately $63,000 and consultant costs of
      approximately $16,000. Professional fees during the 2007 period included legal
      costs of approximately $71,000, accounting fees of approximately $130,000 and
      consultant costs of approximately $33,000. The increased professional fees
      in
      the 2007 period related to the professional costs associated with the
      acquisition of Jinan Broadband. We expect our costs for professional services
      to
      remain significant as we continue to acquire new entities and implement our
      growth strategy as set forth.





*Depreciation
      and Amortization*





Depreciation
      and amortization expense for the three months ended June 30, 2008 was
      approximately $714,000 as compared to $521,000 for the three months ended June
      30, 2007. Depreciation and amortization expense during the 2008 period includes
      depreciation expense of $646,000 on the property, plant and equipment at our
      Jinan broadband subsidiary, $26,000 of amortization expense related to our
      service contract and $42,000 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 $521,000 on the
      property, plant and equipment at our Jinan broadband subsidiary.





*Interest
      and Other Income (Expense)*





We
      recorded a net income amount of approximately $1,233,000, in interest and other
      income (expense) during the three months ended June 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 $64,000 and $24,000 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 $3,000
      of interest income earned on our cash balances. During the three months ended
      June 30, 2007 we recorded a net income amount of approximately $5,000 on our
      cash balances, in interest and other income (expense), net.


4




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





*Minority
      Interest*





49%
      of
      the operating loss of our Jinan Broadband subsidiary is allocated to Jinan
      Parent. During the three months ended June 30, 2008 and 2007 $119,000 and
      $150,000, respectively, of our operating losses were allocated to Jinan Parent.





*Income
      Tax Benefit*





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




***Six
      Months Ended June 30, 2008*** **** ***Compared
      to the Six Months Ended June 30, 2007***





*Revenues*





Revenue
      for the six months ended June 30, 2008 was approximately $2,057,000 as compared
      to approximately $718,000 for the six months ended June 30, 2007 and increase
      of
      approximately $1,339,000 or 186%. The increase in revenue is primarily
      attributable to our having operations for a full six months in the 2008 period
      as compared to only three months of operations in the 2007 period as well as
      the
      increased number of paying subscribers during the six months ended June 30,
      2008
      of 59,000 as compared to the 45,000 paying subscribers during the six months
      ended June 30, 2007. Revenue consisted of sales to our PRC based Internet
      consumers, cable modem consumers, business customers and other internet and
      cable services. We expect that our revenues will increase as we continue to
      grow
      our business and add new regions.





*Gross
      Profit*





Gross
      profit for the six months ended June 30, 2008 was approximately $1,161,000
      as
      compared to $318,000 for the six months ended June 30, 2007, an increase of
      approximately $843,000 or 265%. Gross profit as a percentage of revenue was
      56.4% for the six months ended June 30, 2008 as compared to 44.2% for the six
      months ended June 30, 2007.





*Selling,
      General and Administrative Expenses*





Selling,
      general and administrative expenses for the six months ended June 30, 2008
      increased approximately $386,000 to $812,000 as compared to $426,000 for the
      six
      months ended June 30, 2007. The increase is primarily attributable to our having
      operations for a full six months in the 2008 period as compared to only three
      months of operations in the 2007 period. Selling, general and administrative
      expenses during the 2008 period included salaries and personnel costs of
      approximately $479,000, network connection costs of $93,000 and insurance costs
      of approximately $41,000. During the 2007 period selling general and
      administrative expenses included salaries and personnel costs of approximately
      $139,000, sales, marketing and promotional expenses of approximately $69,000
      and
      travel expense of $86,000. We expect that our selling, general and
      administrative expenses will increase as we continue to grow our business and
      add new regions.





*Professional
      Fees*





Professional
      fees for the six months ended June 30, 2008 decreased by approximately $68,000
      to $305,000 as compared to $373,000 for the six months ended June 30, 2008.
      Professional fees during the 2008 period included legal costs of approximately
      $126,000, accounting fees of approximately $115,000 and consultant costs of
      approximately $64,000. Professional fees during the 2007 period included legal
      costs of approximately $73,000, accounting fees of approximately $145,000 and
      consultant costs of approximately $156,000. 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 as we continue to acquire new
      entities and implement our growth strategy as set forth.


5




*Depreciation
      and Amortization*





Depreciation
      expense for the six months ended June 30, 2008 was approximately $1,442,000
      as
      compared to $521,000 for the six months ended June 30, 2007. The increase is
      primarily attributable to our having operations for a full six months in the
      2008 period as compared to only three months of operations in the 2007 period.
      Depreciation and amortization expense during the 2008 period includes
      depreciation expense of $1,348,000 on the property, plant and equipment at
      our
      Jinan broadband subsidiary, $51,000 of amortization expense related to our
      service contract and $42,000 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 $521,000 on the
      property, plant and equipment at our Jinan broadband subsidiary.





*Interest
      and Other Income (Expense)*





We
      recorded a net income amount of approximately $1,157,000, in interest and other
      income (expense) during the six months ended June 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 $120,000, 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 $47,000 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 $19,000 of interest income earned on
      our
      cash balances.





During
      the six months ended June 30, 2007 we recorded a net income amount of
      approximately $1,000 in interest and other income (expense), net which consisted
      of $5,000 in interest income earned on our cash balances offset by $4,000 of
      interest expense.





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





*Minority
      Interest*





49%
      of
      the operating loss of our Jinan Broadband subsidiary is allocated to Jinan
      Parent. During the six months ended June 30, 2008 and 2007 $287,000 and
      $150,000, respectively, of our operating losses were allocated to Jinan Parent.





*Income
      Tax Benefit*





Our
      income tax benefit was $13,000 and $0, respectively, for the six months ended
      June 30, 2008 and 2007.





**Liquidity
      and Capital Resources**





As
      of
      June 30, 2008 we had $4,061,000 of cash on hand and working capital of $929,000.
      As of June 30, 2008, we had total current liabilities of $6,427,000.





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 $1.2 million to fund the remaining portion
      of our required working capital contribution. During the three months ended
      June
      30, 2008, the Company incurred $64,000 in interest expense related to these
      notes which is included in accrued expenses in the consolidated balance sheet.
      With the consent of the Note holders, in May 2008, the Company issued an
      aggregate of 75,614 shares to the Note holders in lieu of cash of approximately
      $56,000 for the interest accrued as of 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. 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.


6





*Cash
      Flows*





Operating
      activities for six months ended June 30, 2008 and 2007, after
      adding back non-cash items (used) cash of approximately $(27,000) and
      $(430,000), respectively . During
      such period other changes in working capital provided (used) cash of
      approximately $415,000 and $(375,000) respectively, resulting in cash being
      provided by (used in) operating activities of $388,000 and $(805,000),
      respectively.





Investing
      activities for six months ended June 30, 2008 and 2007 used cash of $2,225,000
      and $176,000, respectively. The 2008 amounts consisted of additions to property
      and equipment in the amount of $1,116,000 and the down payment for the
      acquisition of Shandong Newspaper in the amount of $1,449,000 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 six months ended June 30, 2008 and 2007 provided cash of
      $4,977,000 and $2,928,000, 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 $232,000. 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 $651,000.





Our
      WOFE
      and our Jinan Broadband subsidiary, which is our only operating subsidiary
      as of
      June 30, 2008, 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 $448,000 and $129,000 during the six months ended June 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. 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.


7




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 August 2008 in a Joint Venture. Shandong Newspaper’s business
      includes three main magazines: Shandong Broadcast & TV Weekly (Newspaper),
      TV Weekly Magazine and Modern Movie Times Magazine (Bi-Weekly). We intend to
      invest our acquisition cost in this Joint Venture to increase sales and
      advertising revenues of its periodicals in order to become profitable, and
      to
      cross market with our other asset, Jinan Broadband. No assurance can be made
      that we will be able to raise capital if and as needed to implement this
      business plan or, if implemented, that it will be successful.





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





*Dividends*





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.





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**





In
      late
      April 2008, the Company received the 390,000 Cablecom Holdings Shares from
      Clive
      Ng, in connection with the Settlement Agreement. In accordance with the terms
      of
      the Settlement Agreement, the Company was to receive the Cablecom Holdings
      Shares from Mr. Ng subject to any lock up or similar restriction applicable
      to
      Clive Ng. Accordingly, the Company entered into a lock up agreement with China
      Cablecom Holdings with respect to the Cablecom Holdings Shares, containing
      substantially similar lock up restrictions as in effect with Mr. Ng’s shares of
      China Cablecom Holdings, dated as of April 24, 2008 (the “Cablecom Lock Up
      Agreement”).


8




Pursuant
      to the Cablecom Lock Up Agreement, **** the
      Company has agreed that without the consent of China Cablecom Holdings, except
      as otherwise provided in the Lock Up Agreement (i) until the earlier
      of the date (the "Trade Commencement Date"), that (x) is six months after April
      9, 2008 , and (y) a registration statement with respect to such Shares, shall
      be
      declared effective by the Securities and Exchange Commission (which was declared
      effective on May 2, 2008), the Company shall not directly or indirectly offer,
      sell, contract to sell, gift, exchange, assign, pledge or otherwise encumber
      or
      dispose of the Shares (or enter into any transaction which is designed to,
      or
      might reasonably be expected to, result in the disposition, (whether by actual
      disposition or effective economic disposition due to cash settlement or
      otherwise), or any affiliate of the Company other than China Cablecom Holdings,
      or any person in privity with the Company or any affiliate of the Company,
      other
      than China Cablecom Holdings), directly or indirectly, including the
      establishment or increase in a put equivalent position or liquidation or
      decrease in a call equivalent position within the meaning of Section 16 of
      the
      Exchange Act and the rules and regulations of the SEC promulgated thereunder
      (each of the foregoing referred to as a "Disposition"); (ii) for a period of
      6
      months after the Trade Commencement Date, not to effect a Disposition of more
      than 331⁄3% of his Closing Shares and Escrow Shares, if any such Escrow Shares
      have been released as of such time and (iii) for a period of 12 months after
      the
      Trade Commencement Date not to effect a disposition of more than 662⁄3% of the
      Shares, if any such Escrow Shares have been released as of such time.





The
      foregoing is a summary only of the Lock Up Agreement. A registration statement
      with respect to the Cablecom Holdings Shares was declared effective on May
      2,
      2008, however, no assurance can be made that the registration statement will
      remain effective for any period of time, or that the shares will be liquid
      at
      favorable prices at times that the Company desires and is able to sell such
      shares.




*Warrant
      Extensions*




During
      the second quarter of 2008, and as a result of the receipt of releases from
      certain holders of warrants issued in the Company’s private placement of
      8,000,000 shares of common stock and 4,000,000 warrants exercisable at $2.00
      per
      share (the “Investor Warrants”) in 2007, as contemplated by the Settlement
      Agreement, the Company extended the expiration dates of all 4,000,000 Investor
      Warrants from March of 2009, through January 11, 2013.




*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.
      Accordingly, approximately $1,400,000 was recorded within “Other Assets” in the
      consolidated balance sheet as of June 30, 2008.


9




In
      addition to the initial purchase price of $1.4 million, the Shandong Newspaper
      Cooperation Agreement provides for additional consideration of between 5 million
      RMB and 20 million RMB (approximately $757,757 and $3,000,000 based on current
      exchange rates), to be paid as a capital contribution to Shandong Media in
      the
      event that certain performance thresholds are met during the first 12 months
      of
      operations after closing the transaction for a total purchase price of between
      $2.2 Million and $4.5 based on current exchange rates.




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




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




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




·
            is
                less then 4 million RMB, then we will be required to contribute only
                an
                additional 5 million RMB (approximately US $757,575 presuming current
                exchange rates are in effect at such time).




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




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




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





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




10




*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.




*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.


11




*Foreign
      Currency Translation*




The
      Company’s Jinan Broadband subsidiary business is 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.




**Recent
      Accounting Pronouncements**




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




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




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




In
      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.


12




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 August 7, 2008 was approximately 6.87 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
      August 7, 2008, the Company had not entered into any type of hedging or interest
      rate swap transaction.





**Item
      4. Controls and Procedures.**





*Evaluation
      of Disclosure Controls and Procedures*




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




*Changes
      in Internal Control Over Financial Reporting*





During
      the quarter ended June 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. 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.





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





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
      Securities Exchange Act of 1934, as amended. The Company’s internal control over
      financial reporting is designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with generally accepted accounting
      principles. The Company’s internal control over financial reporting includes
      those policies and procedures that:


13




(i)  pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the
      Company;





(ii)  provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the Company are
      being made only in accordance with authorization of Management; and





(iii)
      provide reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company’s assets that could
      have a material effect on the financial statements.





Because
      of inherent limitations, internal control over financial reporting may not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to risk that controls may become
      inadequate because of changes in conditions, or the degree of compliance may
      deteriorate.





Management
      assessed the effectiveness of the Company’s internal control over financial
      reporting as of June 30, 2008. In making this assessment, management used the
      criteria set forth by the Committee of Sponsoring Organization of the Treadway
      Commission (COSO) in Internal Control-Integrated Framework. Based on that
      assessment, Management has concluded that the Company’s internal control over
      financial reporting was effective as of June 30, 2008. Nonetheless, because
      of
      previous late filings during the 2007 year and because of our PRC operations,
      management has retained a PRC based consultant to assist with financial
      accounting processing and reporting. In addition, as a result of managements
      assessment that prepaid internet services should be amortized, management has
      set up internal controls to record and assess prepaid internet services on
      an
      ongoing basis as well as historically.





This
      Form
      10-Q does not include an attestation report of the Company's registered public
      accounting firm regarding internal control over financial reporting.
      Management's report was not subject to attestation by the company's registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange **** Commission
      that permit the Company to provide only management's report in this report.


14


**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 June 30, 2008 or thereafter other than has been disclosed in Current
      Reports on Form 8-K.





In
      May
      2008 the Company issued, an aggregate of 75,614 shares to the ten Note holders
      (all of whom are accredited investors) in lieu of interest through March 31,
      2008, plus late penalty fees. In July 2008, the Company issued an aggregate
      of
      85,333 shares to these ten Note holders, in lieu of cash interest of
      approximately $64,000 through June 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.




15





**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 June
      30,
      2008, to be signed on its behalf by the undersigned on August 19, 2008,
      thereunto duly authorized.





**CHINA
                BROADBAND, INC**By:
            /s/
                Marc UrbachName:
                Marc Urbach
              Title:
                President (Principal Executive Officer)By:
            /s/
                Yue PuName:
                Yue Pu
              Title:
                Vice Chairman (Principal Accounting Officer, Principal Financial
                Officer)





16