----

----

| Nevada                                                              |   | 13-3422912                             |
|---------------------------------------------------------------------|--------|----------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (IRS      Employer Identification No.) |

----

----

|                                                                                                               |                                                                                                                                                                                       | Page             |
|--------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                               |                                                                                                                                                                                       |             |
| PART      I                                                                                                        |                                                                                                                                                                                       |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      1.  Financial Statements                                                                       |                                                                                                                                                                                       |
|                                                                                                               |                                                                                                                                                                                       |             |
|                                                                                                               | Condensed      Consolidated Balance Sheet       -  June 30, 2007 (unaudited)                                                                                                | 4                |
|                                                                                                               |                                                                                                                                                                                       |             |
|                                                                                                               | Condensed      Consolidated  Statements of Operations And Comprehensive      Income       -  Six Months and Three Months Ended June 30, 2007 and 2006      (unaudited) | 5                |
|                                                                                                               |                                                                                                                                                                                       |             |
|                                                                                                               | Condensed      Consolidated Statements of Cash Flows       -  Six Months Ended June 30, 2007 and 2006      (unaudited)                                                      | 6                |
|                                                                                                               |                                                                                                                                                                                       |             |
|                                                                                                               | Notes      to Condensed Consolidated Financial Statements (unaudited)                                                                                                                      | 7 -      13 |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      2.  Management's Discussion and Analysis of Financial Condition      And Results of Operations | 14                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      3.  Controls and Procedures                                                                    | 17                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| PART      II                                                                                                       |                                                                                                                                                                                       |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      1.  Legal  Proceedings                                                               | 17                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      2.  Unregistered Sales of Equity Securities and Use of      Proceeds                           | 18                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      3.  Defaults Upon Senior Securities                                                            | 18                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      4.  Submission of Matters to a Vote of Security      Holder                                    | 18                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      5.  Other Information                                                                          | 18                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
| Item      6.  Exhibits and Reports                                                                       | 18                                                                                                                                                                                         |
|                                                                                                               |                                                                                                                                                                                       |             |
|                                                                                                               | Signature                                                                                                                                                                                  | 18               |

----

| ASSETS                                                                                                                                                                                                                                                          |   |   |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
|                                                                                                                                                                                                                                                            |   |   |       |
| CURRENT      ASSETS                                                                                                                                                                                                                                             |   |   |       |
|             Cash and cash equivalents                                                                                                                                                                                             |   | $      | 390,115    |   |
|             Accounts receivable, net of allowances                                                                                                                                                                                |   |   | 9,509,860  |   |
|             Inventories, net                                                                                                                                                                                                      |   |   | 406,454    |   |
|             Other receivables and prepaid expenses                                                                                                                                                                                |   |   | 448,681    |   |
| Total      Current Assets                                                                                                                                                                                                                                       |   |   | 10,755,110 |   |
|                                                                                                                                                                                                                                                            |   |   |       |   |
|             Intangible assets                                                                                                                                                                                                     |   |   | 4,317,572  |   |
|             Investments in television series, net                                                                                                                                                                                 |   |   | 633,717    |   |
|             Investments in affiliates                                                                                                                                                                                             |   |   | 157,520    |   |
|             Property and equipment, net                                                                                                                                                                                           |   |   | 11,309,249 |   |
|             Deferred tax asset                                                                                                                                                                                                         |   |   | 196,576    |   |
|             Other assets                                                                                                                                                                                                          |   |   | 912,461    |   |
| TOTAL      ASSETS                                                                                                                                                                                                                                               |   | $      | 28,282,205 |   |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                       |   |   |       |   |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| CURRENT      LIABILITIES                                                                                                                                                                                                                                        |   |   |       |   |
|             Convertible debentures                                                                                                                                                                                                |   | $      | 1,280,184  |   |
|             Accounts payable                                                                                                                                                                                                      |   |   | 4,495,082  |   |
|             Other payables and accrued liabilities                                                                                                                                                                                |   |   | 1,110,919  |   |
|             Due to a director                                                                                                                                                                                                     |   |   | 33,178     |   |
|             Due to related companies                                                                                                                                                                                              |   |   | 736,258    |   |
|             Business tax payable                                                                                                                                                                                                  |   |   | 128,187    |   |
|             Value added taxes payable                                                                                                                                                                                             |   |   | 22,369     |   |
|             Income tax payable                                                                                                                                                                                                    |   |   | 2,263,206  |   |
|             Other tax payable                                                                                                                                                                                                     |   |   | 23,099     |   |
| Total      Current Liabilities                                                                                                                                                                                                                                  |   |   | 10,092,482 |   |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| COMMITMENTS      AND CONTINGENCIES                                                                                                                                                                                                                              |   |   | --         |   |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| MINORITY      INTERESTS                                                                                                                                                                                                                                         |   |   | (70,713    | ) |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| STOCKHOLDERS'      EQUITY                                                                                                                                                                                                                                       |   |   |       |   |
|             Series A convertible preferred stock ($0.001 par value, 40,000,000 shares      authorized,               1,875,000 shares issued and outstanding as of June 30,    2007) |   |   | 1,875      |   |
|             Common stock ($0.001 par value, 500,000,000 sharesauthorized,               31,602,365 shares issued and outstanding as of June 30,    2007)                             |   |   | 31,602     |   |
|             Common stock to be issued ($0.001 par value, 10,000,000      shares)                                                                                                                                                  |   |   | 10,000     |   |
|             Additional paid-in capital                                                                                                                                                                                            |   |   | 14,562,806 |   |
|             Deferred stock compensation                                                                                                                                                                                           |   |   | (53,000    | ) |
|             Retained earnings                                                                                                                                                                                                     |   |   |       |   |
|                Unappropriated                                                                                                                                                                                      |   |   | 2,091,790  |   |
|                Appropriated                                                                                                                                                                                        |   |   | 1,521,999  |   |
|             Accumulated other comprehensive loss                                                                                                                                                                                  |   |   | 93,364     |   |
|          Total Stockholders' Equity                                                                                                                                                                                                              |   |   | 18,260,436 |   |
|                                                                                                                                                                                                                                                            |   |   |       |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                 |   | $      | 28,282,205 |   |

----

CHINA DIGITAL MEDIA CORPORATION ANDSUBSIDIARIES

|                                                                               | For      the three months ended |       |   | For      the six months ended |   |
|------------------------------------------------------------------------------------|---------------------------------|------------|--------|-------------------------------|--------|
|                                                                               | June      30,                   |       |   | June      30,                 |   |
|                                                                               | 2007                            |       |   | 2006                          |   |   | 2007 |   |   | 2006 |   |
|                                                                               |  (Restated)                |       |   | (Restated)                    |   |   |  (Restated) |   |   | (Restated) |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |
| NET      SALES                                                                     |                            |       |   |                          |   |   |   |   |   |   |   |
| Revenue      from digitalization of television signals                             | $                               | 1,357,890  |   |                          | $      | 2,151,935 |   |   | $ | 2,757,703 |   |   | $ | 3,607,306 |   |
| Revenue      from television advertising                                           |                            | 372,257    |   |                          |   | 1,994,673 |   |   |   | 845,206 |   |   |   | 3,726,706 |   |
| Revenue      from software development                                             |                            | 12,760     |   |                          |   | 10,372 |   |   |   | 22,020 |   |   |   | 33,223 |   |
| Revenue      from investments in television series                                 |                            | --         |   |                          |   | 391 |   |   |   | -- |   |   |   | 175,020 |   |
| Government      grant received                                                     |                            | 333,316    |   |                          |   | 313,233 |   |   |   | 656,556 |   |   |   | 625,070 |   |
|                                                                               |                            | 2,076,223  |   |                          |   | 4,470,604 |   |   |   | 4,281,485 |   |   |   | 8,167,325 |   |
| COST      OF SALES                                                                 |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of Sales - digitalization of television signals                          |                            | (155,919   | )      |                          |   | (353,585 | ) |   |   | (348,379 | ) |   |   | (569,052 | ) |
| Depreciation      - digitalization of television signals                           |                            | (755,993   | )      |                          |   | (575,563 | ) |   |   | (1,471,899 | ) |   |   | (1,050,286 | ) |
| Cost      of Sales - television advertising                                        |                            | (251,784   | )      |                          |   | (1,654,625 | ) |   |   | (791,409 | ) |   |   | (3,251,618 | ) |
| Cost      of Sales - software development                                          |                            | --         |   |                          |   | (43 | ) |   |   | -- |   |   |   | (43 | ) |
| Cost      of Sales - investment in television series                               |                            | --         |   |                          |   | (303 | ) |   |   | -- |   |   |   | (119,390 | ) |
| GROSS      PROFIT                                                                  |                            | 912,527    |   |                          |   | 1,886,485 |   |   |   | 1,669,798 |   |   |   | 3,176,936 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                            |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                  |                            | (746,085   | )      |                          |   | (652,092 | ) |   |   | (1,518,674 | ) |   |   | (1,203,941 | ) |
| Depreciation      and amortization                                                 |                            | (30,705    | )      |                          |   | (26,929 | ) |   |   | (59,697 | ) |   |   | (49,918 | ) |
| Total      Operating Expenses                                                      |                            | (776,790   | )      |                          |   | (679,021 | ) |   |   | (1,578,371 | ) |   |   | (1,253,859 | ) |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      FROM OPERATION                                                         |                            | 135,736    |   |                          |   | 1,207,464 |   |   |   | 91,427 |   |   |   | 1,923,077 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSES)                                                       |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Equity      in loss of affiliates                                                  |                            | (28,680    | )      |                          |   | (1,402 | ) |   |   | (34,830 | ) |   |   | (1,402 | ) |
| Interest      income                                                               |                            | 627        |   |                          |   | 8,266 |   |   |   | 1,100 |   |   |   | 25,518 |   |
| Other      income                                                                  |                            | 14,441     |   |                          |   | 174 |   |   |   | 23,268 |   |   |   | 78,121 |   |
| Amortization      of convertible debt discount                                     |                            | (516,666)  |   |                          |   | -- |   |   |   | (1,033,332 | ) |   |   | -- |   |
| Interest      expenses                                                             |                            | (31,518    | )      |                          |   | -- |   |   |   | (63,028 | ) |   |   | -- |   |
| Interest      paid to related companies and directors                              |                            | (3,014     | )      |                          |   | (4,657 | ) |   |   | (5,744 | ) |   |   | (6,434 | ) |
| Other      expenses                                                                |                            | (27,252    | )      |                          |   | -- |   |   |   | (31,316 | ) |   |   | -- |   |
| Total      Other (Expenses) Income , net                                           |                            | (592,062   | )      |                          |   | 2,381 |   |   |   | (1,143,882 | ) |   |   | 95,803 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| NET      (LOSS) INCOME BEFORE TAXES AND MINORITY INTERESTS                         |                            | (456,326)  |   |                          |   | 1,209,845 |   |   |   | (1,052,455 | ) |   |   | 2,018,880 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                                            |                            | (54,511    | )      |                          |   | (382,608 | ) |   |   | (46,794 | ) |   |   | (696,102 | ) |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Minority      interests                                                            |                            | (16,964    | )      |                          |   | 14,193 |   |   |   | 66,810 |   |   |   | 19,920 |   |
| NET      (LOSS) INCOME                                                             | $                               | (527,801   | )      |                          | $      | 841,430 |   |   | $ | (1,032,439) |   |   | $ | 1,342,698 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      COMPREHENSIVE GAIN (LOSS)                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation gain                                             |                            | 26,035     |   |                          |   | (42,940 | ) |   |   | 118,579 |   |   |   | 360 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      (LOSS) INCOME                                                   | $                               | (501,766)  |   |                          | $      | 798,490 |   |   | $ | (913,860) |   |   | $ | 1,343,058 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Net      income per share-basic - two classes method                               | $                               | -0.01      |   |                          | $      | -0.03 |   |   | $ | -0.02 |   |   | $ | -0.04 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Net      income per share - diluted                                                | $                               | 0.00       |   |                          | $      | -0.02 |   |   | $ | 0.00 |   |   | $ | -0.03 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding during the period -    basic    |                            | 36,010,967 |   |                          |   | 31,700,698 |   |   |   | 33,806,666 |   |   |   | 31,332,747 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Number      of preferred shares outstanding during the period                      |                            | 1,875,000  |   |                          |   | 1,875,000 |   |   |   | 1,875,000 |   |   |   | 1,875,000 |   |
|                                                                               |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding during the period-      diluted |                            | 52,274,849 |   |                          |   | 41,075,698 |   |   |   | 50,070,548 |   |   |   | 40,707,747 |   |

----

|                                                                                                          | 2007       |        |    | 2006       |   |
|---------------------------------------------------------------------------------------------------------------|------------|-------------|---------|------------|--------|
|                                                                                                          | (Restated) |        |    | (Restated) |   |
|                                                                                                          |       |        |    |       |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                                     |       |        |    |       |   |
| Net      (loss) income                                                                                        | $          | (1,032,439) |    |       | $      | 1,342,698 |   |
|                                                                                                          |       |        |    |       |   |   |   |
| Adjusted      to reconcile net income to cash provided by operating      activities:                          |       |        |    |       |   |   |   |
| Equity      in loss of affiliate                                                                              |       | 34,830      |    |       |   | 1,402 |   |
| Amortization      - cost of sales                                                                             |       | --          |    |       |   | 108,244 |   |
| Depreciation-cost      of sales                                                                               |       | 1,471,899   |    |       |   | 1,050,286 |   |
| Depreciation      and amortization                                                                            |       | 59,697      |    |       |   | 49,918 |   |
| Provision      for doubtful debts                                                                             |       | 363,509     |    |       |   | -- |   |
| Stock      issued for services                                                                                |       | --          |    |       |   | 60,200 |   |
| Amortization      on stock compensation                                                                       |       | 31,800      |    |       |   | -- |   |
| Amortization      of convertible debt discount                                                                |       | 1,033,332   |    |       |   | -- |   |
| Minority      interests                                                                                       |       | (66,810     | )       |       |   | (19,920 | ) |
| Changes      in operating assets and liabilities                                                              |       |        |    |       |   |   |   |
| (Increase)      decrease in:                                                                                  |       |        |    |       |   |   |   |
|   Accounts      receivable                                                                          |       | (45,691     | )       |       |   | (2,991,892 | ) |
|   Other      receivables and prepaid expenses                                                       |       | 62,589      |    |       |   | (360,527 | ) |
|   Inventories                                                                                       |       | 69,027      |    |       |   | (739,279 | ) |
|        Deferred tax asset                                                                                |       | (196,576    | )  |       |   | -- |   |
|   Other      assets                                                                                 |       | 147,033     |    |       |   | (89,744 | ) |
| Increase      (decrease) in:                                                                                  |       |        |    |       |   |   |   |
|   Due      to a stockholder                                                                         |       | --          |    |       |   | 71,238 |   |
|   Due      to a related company                                                                     |       | --          |    |       |   | 20,332 |   |
|   Accounts      payable                                                                             |       | (1,473,696  | )       |       |   | 4,514,200 |   |
|   Other      payables and accrued liabilities                                                       |       | 751,084     |    |       |   | 2,340 |   |
|   Business      tax payable                                                                         |       | (137,468    | )       |       |   | -- |   |
|   Value      added taxes payable                                                                    |       | 63,210      |    |       |   | 62,020 |   |
|   Income      tax payable                                                                           |       | 308,406     |    |       |   | 723,105 |   |
|   Other      tax payable                                                                            |       | 11,591      |    |       |   | -- |   |
|                Net cash used in provided by operating activities |       | (46,840     | )  |       |   | 3,804,621 |   |
|                                                                                                          |       |        |    |       |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                                     |       |        |    |       |   |   |   |
| Net      cash inflow from business combination (see Note 2)                                                   |       | 61          |    |       |   | -- |   |
| Investments      in affiliates                                                                                |       | 195,633     |    |       |   | (179,350 | ) |
| Purchase      of property and equipment                                                                       |       | (579,394    | )       |       |   | (4,858,352 | ) |
|                Net cash used in investing activities             |       | (383,700    | )       |       |   | (5,037,702 | ) |
|                                                                                                          |       |        |    |       |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                                     |       |        |    |       |   |   |   |
| Due      to related companies                                                                                 |       | 355,772     |    |       |   | 128,684 |   |
| Proceeds      from stock issuance in private placement                                                        |       | --          |    |       |   | 387,500 |   |
| Minority      interests                                                                                       |       | 24,802      |    |       |   | 122,514 |   |
| Due      to directors                                                                                         |       | (51,478     | )       |       |   | -- |   |
|                Net cash provided by financing activities         |       | 329,096     |    |       |   | 638,698 |   |
|                                                                                                          |       |        |    |       |   |   |   |
| EFFECT      OF EXCHANGE RATE ON CASH                                                                          |       | 88,968      |    |       |   | (57,063 | ) |
|                                                                                                          |       |        |    |       |   |   |   |
| NET      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                     |       | (12,476     | )       |       |   | (651,446 | ) |
|                                                                                                          |       |        |    |       |   |   |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                         |       | 402,591     |    |       |   | 1,123,912 |   |
|                                                                                                          |       |        |    |       |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                                               | $          | 390,115     |    |       | $      | 472,466 |   |
|                                                                                                          |       |        |    |       |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION                                                         |       |        |    |       |   |   |   |
|              Cash paid for interest                                        | $          | --          |    |       | $      | -- |   |
|              Cash paid for income tax                                      | $          | --          |    |       | $      | -- |   |

----

| (B)   | Principles      of Consolidation |
|-----------------|----------------------------------|

| (C)   | Revenue      Recognition |
|-----------------|--------------------------|

----

----

| Cash      and cash equivalent                                       |   | $      | 61         |   |
|---------------------------------------------------------------------|--------|--------|------------|--------|
| Other      receivables and prepaid expenses                         |   |   | 323,452    |   |
|           Total current assets                  |   |   | 323,513    |   |
|                                                                |   |   |       |   |
| Property      and equipment                                         |   |   | 701        |   |
| Capitalized      software development cost                          |   |   | 592,756    |   |
|           Total assets                          |   |   | 916,970    |   |
|                                                                |   |   |       |   |
| Accounts      payable and accruals liabilities                      |   |   | (1,106,823 | )      |
| Net      liabilities acquired                                       |   |   | (189,853   | )      |
| Minority      interest                                              |   |   | (2,559     | )      |
| Share      of pre-acquisition losses prior to becoming a subsidiary |   |   | 27,361     |   |
|                                                                |   | $      | (165,051   | )      |
| Consideration      for acquisition                                  |   |   | 3,760,000  |   |
| Goodwill                                                            |   | $      | 3,925,051  |   |

| Cash      and cash equivalents acquired |   | $ | 61 |   |
|-----------------------------------------|--------|---|----|--------|
| Net      cash inflow                    |   | $ | 61 |   |

| Revenue                                                           |   | $ | 4,281,485 |   |
|-------------------------------------------------------------------|--------|---|-----------|--------|
| Net      loss                                                     |   | $ | (105,563  | )      |
| Net      loss per share  -  basic and diluted |   | $ | 0.00      |   |

| Current      assets                                   |   | $      | 521,911 |   |
|-------------------------------------------------------|--------|--------|---------|--------|
| Non-current      assets                               |   |   | 226,844 |   |
| Total      Assets                                     |   | $      | 748,755 |   |
|                                                  |   |   |    |   |
| Current      liabilities                              |   | $      | 374,237 |   |
| Stockholders’      equity                       |   |   | 374,518 |   |
| Total      Liabilities and Stockholders’ Equity |   | $      | 748,755 |   |
|                                                  |   |   |    |   |
| Revenues                                              |   | $      | --      |   |
| Gross      Profit                                     |   | $      | --      |   |
| Net      loss                                         |   | $      | 16,768  |   |

| Company      share at 49%        |   | $ | 8,216 |   |
|----------------------------------|--------|---|-------|--------|
| Equity      in loss of affiliate |   | $ | 8,216 |   |

----

| Company      share at 20%        |   | $ | 26,614 |   |
|----------------------------------|--------|---|--------|--------|
| Equity      in loss of affiliate |   | $ | 26,614 |   |

|                               |   | Digitalization     |       |   |        |   |      |        |   |   | Investments        |   |   |   |    |   |   |   |
|------------------------------------|--------|--------------------|------------|--------|-------------|--------|-----------|-------------|--------|--------|--------------------|--------|--------|--------|---------|--------|--------|--------|
|                               |   | of      Television |       |   | Television  |   |      | Software    |   |   | in      Television |   |   |   |    |   |   |   |
|                               |   | Signals            |       |   | Advertising |   |      | Development |   |   | Series             |   |   | Other  |    |   | Total  |   |
| 2007(Restated)                     |   |               |       |   |        |   |      |        |   |   |               |   |   |   |    |   |   |   |
| Revenues                           |   | $                  | 3,414,259  |   |        | $      | 845,206   |        |   | $      | 22,020             |   |   | $      | --      |   |   | $      | -- |   |   | $ | 4,281,485 |   |
| Gross      profit                  |   |               | 1,593,981  |   |        |   | 53,797    |        |   |   | 22,020             |   |   |   | --      |   |   |   | -- |   |   |   | 1,669,798 |   |
| Net      Income                    |   |               | 822,393    |   |        |   | (258,193  | )           |   |   | (92,420            | )      |   |   | (4,479  | )      |   |   | (1,499,740 | ) |   |   | (1,032,439 | )  |
| Total      assets                  |   |               | 19,648,932 |   |        |   | 2,517,673 |        |   |   | 802,744            |   |   |   | 685,277 |   |   |   | 4,431,003 |   |   |   | 28,085,629 |   |
| Capital      expenditure           |   |               | 650,568    |   |        |   | 82,839    |        |   |   | 8,190              |   |   |   | --      |   |   |   | 3,549 |   |   |   | 745,146 |   |
| Depreciation      and amortization |   |               | 1,492,365  |   |        |   | 11,601    |        |   |   | 3,856              |   |   |   | 19,061  |   |   |   | 4,713 |   |   |   | 1,531,596 |   |
|                               |   |               |       |   |        |   |      |        |   |   |               |   |   |   |    |   |   |   |   |   |   |   |   |   |
| 2006      (Restated)               |   |               |       |   |        |   |      |        |   |   |               |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenues                           |   | $                  | 4,232,376  |   |        | $      | 3,726,706 |        |   | $      | 33,223             |   |   | $      | 175,020 |   |   | $      | -- |   |   | $ | 8,167,325 |   |
| Gross      profit                  |   |               | 2,613,038  |   |        |   | 475,088   |        |   |   | 33,180             |   |   |   | 55,630  |   |   |   | -- |   |   |   | 3,176,936 |   |
| Net      Income                    |   |               | 1,466,541  |   |        |   | 77,606    |        |   |   | (140,601           | )      |   |   | 66,345  |   |   |   | (127,193 | ) |   |   | 1,342,698 |   |
| Total      assets                  |   |               | 18,746,860 |   |        |   | 3,537,762 |        |   |   | 68,235             |   |   |   | 929,611 |   |   |   | 553,016 |   |   |   | 23,835,484 |   |
| Capital      expenditure           |   |               | 4,843,604  |   |        |   | 12,679    |        |   |   | 2,069              |   |   |   | --      |   |   |   | -- |   |   |   | 4,858,352 |   |
| Depreciation      and amortization |   |               | 1,171,910  |   |        |   | 8,120     |        |   |   | 6,371              |   |   |   | 18,147  |   |   |   | 3,900 |   |   |   | 1,208,448 |   |

| ·   | 31,602,365      shares of common stock; |
|--------------------|-----------------------------------------|

| ·   | 1,875,000      shares of preferred stock; |
|--------------------|-------------------------------------------|

| ·   | 6,888,882      shares of common stock to be issued upon conversion of convertible      debenture; |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | warrants      to purchase 6,888,882 shares of common stock at an exercise price of $0.80      per share, expire in November 2012; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | warrants      to purchase 6,888,882 shares of common stock at an exercise price of $1.20      per share, expire in November 2012; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | warrants      to purchase 3,444,441 shares of common stock at an exercise price of $2.25      per share, expire in November 2012;and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 10,000,000      shares of common stock to be issued for the acquisition of      Maxcomm. |
|--------------------|------------------------------------------------------------------------------------------|

----

|                                                                                |   | 2007       |       |   | 2006       |   |
|-------------------------------------------------------------------------------------|--------|------------|------------|--------|------------|--------|
|                                                                                |   | (Restated) |       |   | (Restated) |   |
| Earnings                                                                            |   |       |       |   |       |   |
| Net      (loss) income                                                              |   |       | (1,032,439 | )      |       |   | 1,342,698 |   |
|                                                                                |   |       |       |   |       |   |   |   |
| Basic      - 2 classes method                                                       |   |       |       |   |       |   |   |   |
| (Loss)      income available to common stockholders                                 |   |       | (1,032,439 | )      |       |   | 1,342,698 |   |
|                                                                                |   |       |       |   |       |   |   |   |
| Weighted-average      common stock outstanding                                      |   |       | 33,806,666 |   |       |   | 31,332,747 |   |
| Number      of preferred stock                                                      |   |       | 1,875,000  |   |       |   | 1,875,000 |   |
| Weighted-average      common stock outstanding - assume CD converted                |   |       | 6,888,882  |   |       |   | 0 |   |
|                                                                                |   |       |       |   |       |   |   |   |
| Basic      earnings per share - Common Stock                                        |   |       | -0.02      |   |       |   | 0.04 |   |
| Basic      earnings per share - Preferred Stock                                     |   |       | -0.02      |   |       |   | 0.04 |   |
| Basic      earnings per share - CD                                                  |   |       | -0.02      |   |       |   | 0.00 |   |
|                                                                                |   |       |       |   |       |   |   |   |
| Diluted                                                                             |   |       |       |   |       |   |   |   |
| (Loss)      income available to common stockholders                                 |   |       | (1,032,439 | )      |       |   | 1,342,698 |   |
| (Loss)      income available to common stockholders & assumed CD      converted |   |       | (970,948   | )      |       |   | 1,342,698 |   |
|                                                                                |   |       |       |   |       |   |   |   |
| Diluted      weighted-average common stock outstanding                              |   |       | 50,070,548 |   |       |   | 40,707,747 |   |
| Diluted      earnings per share                                                     |   |       | 0.00       |   |       |   | 0.03 |   |

----

|                                            |   | June      30, 2007       |       |
|-------------------------------------------------|--------|--------------------------|------------|
|                                            |   | Previously      reported |       |   | Restated |   |
|                                            |   |                     |       |   |   |   |
| TOTAL      ASSETS                               |   |                     | 28,282,205 |   |   |   | 28,282,205 |   |
|                                            |   |                     |       |   |   |   |   |   |
| CURRENT      LIABILITIES                        |   |                     |       |   |   |   |   |   |
| Convertible      debentures, net of discount    |   |                     | 3,100,000  |   |   |   | 1,280,184 |   |
| Other      current liabilities                  |   |                     | 9,367,333  |   |   |   | 9,367,333 |   |
|                                            |   | $                        | 12,467,333 |   |   |   | 10,647,517 |   |
|                                            |   |                     |       |   |   |   |   |   |
| MINORITY      INTERESTS                         |   |                     | (70,713)   |   |   |   | (70,713) |   |
|                                            |   |                     |       |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY                       |   |                     |       |   |   |   |   |   |
|  Series      A convertible preferred stock |   |                     | 1,875      |   |   |   | 1,875 |   |
|  Common      stock                         |   |                     | 31,602     |   |   |   | 31,602 |   |
| Common      stock to be issued                  |   |                     | 10,000     |   |   |   | 10,000 |   |
|  Additional      paid-in capital           |   |                     | 9,413,917  |   |   |   | 14,562,806 |   |
|  Deferred      stock compensation          |   |                     | (53,000    | ) |   |   | (53,000 | ) |
|  Retained      earnings                    |   |                     | 6,942,862  |   |   |   | 3,613,789 |   |
|  Accumulated      other comprehensive loss |   |                     | 93,364     |   |   |   | 93,364 |   |
| Total      Stockholders' Equity                 |   |                     | 16,440,620 |   |   |   | 18,260,436 |   |
|                                            |   |                     |       |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY |   | $                        | 28,282,205 |   |   | $ | 28,282,205 |   |

----

|                                                                                 |   | Three months endedJune 30, 2007 |       |   | Six months endedJune 30, 2007 |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------|------------|--------|-------------------------------|--------|
|                                                                                 |   | Previously reported             |       |   | Restated                      |   |   | Previously reported |   |   | Restated |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |
| NET      SALES                                                                       |   | $                               | 2,076,223  |   |                          | $      | 2,076,223 |   |   | $ | 4,281,485 |   |   | $ | 4,281,485 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| COST      OF SALES                                                                   |   |                            | 1,163,696  |   |                          |   | 1,163,696 |   |   |   | 2,611,687 |   |   |   | 2,611,687 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| GROSS      PROFIT                                                                    |   |                            | 912,527    |   |                          |   | 912,527 |   |   |   | 1,669,798 |   |   |   | 1,669,798 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                              |   |                            | (776,790)  |   |                          |   | (776,790) |   |   |   | (1,578,371) |   |   |   | (1,578,371) |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      FROM OPERATION                                                           |   |                            | 135,736    |   |                          |   | 135,736 |   |   |   | 91,427 |   |   |   | 91,427 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSES)                                                         |   |                            | (75,396)   |   |                          |   | (592,062) |   |   |   | (110,550) |   |   |   | (1,143,882) |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  NET      INCOME BEFORE TAXES AND MINORITY INTERESTS                            |   |                            | 60,340     |   |                          |   | (456,326) |   |   |   | (19,123) |   |   |   | (1,052,455) |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Income      tax expense                                                        |   |                            | (54,511)   |   |                          |   | (54,511) |   |   |   | (46,794) |   |   |   | (46,794) |   |
|   Minority      interests                                                  |   |                            | (16,964)   |   |                          |   | (16,964) |   |   |   | 66,810 |   |   |   | 66,810 |   |
|  NET      INCOME                                                                |   | $                               | (11,135)   |   |                          | $      | (527,801) |   |   | $ | 893 |   |   | $ | (1,032,439) |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Foreign      currency translation gain (loss)                                  |   |                            | 26,035     |   |                          |   | 26,035 |   |   |   | 118,579 |   |   |   | 118,579 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  COMPREHENSIVE      INCOME                                                      |   |                            | 14,900     |   |                          |   | (501,766) |   |   |   | 119,472 |   |   |   | (913,860) |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Net      income per share-basic - two classes method                           |   | $                               | 0.00       |   |                          | $      | -0.01 |   |   | $ | 0.00 |   |   | $ | -0.02 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Net      income per share-diluted                                              |   | $                               | 0.00       |   |                          | $      | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Weighted      average number of shares outstanding during the year -    basic  |   |                            | 36,010,967 |   |                          |   | 36,010,967 |   |   |   | 33,806,666 |   |   |   | 33,806,666 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Number      of preferred shares outstanding during the year                    |   |                            | 1,875,000  |   |                          |   | 1,875,000 |   |   |   | 1,875,000 |   |   |   | 1,875,000 |   |
|                                                                                 |   |                            |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
|  Weighted      average number of shares outstanding during the year-    diluted |   |                            | 52,274,849 |   |                          |   | 52,274,849 |   |   |   | 50,070,548 |   |   |   | 50,070,548 |   |

----

| ·   | Through      a subsidiary, Arcotect (Guangzhou) Limited (“AGL”), converting digital      cable television subscribers to digital television and providing various      value added and broadband services to the digital    subscribers; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Television      advertising sales; |
|--------------------|------------------------------------|

| ·   | Television      program production. |
|--------------------|-------------------------------------|

----

----

----

----

| Number |   | Description                                                                                                                                                                                        |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                               |
| 31.1   |   | Certification      of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities      Exchange Act of 1934, as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|   |   |                                                                                                                                                                                               |
| 31.2   |   | Certification      of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities      Exchange Act of 1934, as adopted pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002 |
|   |   |                                                                                                                                                                                               |
| 32     |   | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to 18      U.S.C. Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002       |

| Date:      May 6, 2008 |   | /s/      Ng Chi Shing        |
|------------------------|--------|------------------------------|
|                   |   | Ng      Chi Shing            |
|                   |   | Chief      Executive Officer |
|                   |   |                         |
|                   |   |                         |
| Date:      May 6, 2008 |   | /s/      Ng Chi Shing        |
|                   |   | Ng      Chi Shing            |
|                   |   | Chief      Financial Officer |

----