**U.S.
          Securities and Exchange Commission**
 **Washington,
          D.C. 20549**
  
  **FORM
          10-QSB**
  
 
 **[X]
          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT**
 OF
          1934
          for the quarterly period ended September 30, 2005
 
 **[
          ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE**
 ACT
          OF
          1934 for the transition period from _______ to _______
 
 **CHINA
          DIGITAL MEDIA CORPORATION**
 **(Exact
          name of small business issuer as specified in its charter)**
 
 **HAIRMAX
          INTERNATIONAL CORP.**
 **(Former
          name of registrant)**
 **Nevada**
                  **13-3422912****(State
                      or other jurisdiction of**
                  **(IRS
                      Employer Identification No.)****incorporation
                      or organization)**
 **2505-06,
          25/F, Stelux House, 698 Prince Edward Road E. Kowloon, Hong
          Kong**
 **(Address
          of principal executive offices)**
 
 **(011)
          852-2390-8600**
 **(Issuer's
          telephone number)**
 
 Check
            whether the issuer (1) filed all reports required to be filed by Section
            13 or
            15(d) of the Exchange Act during the past 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 [ ]
 
 Number
            of
            shares of common stock outstanding as of September 30, 2005: 30,087,468
 
 Number
            of
            shares of preferred stock outstanding as of September 30, 2005:
            1,875,000
  
 
  **INDEX
                      TO FORM 10-QSB**Page
                      No.**PART
                      I**Item
                      1.    Financial
                      Statements (Unaudited)
                  3Condensed Consolidated Balance Sheet- September
                      30, 2005 (unaudited)
                  3Condensed Consolidated Statements of
                      Operations- Three Months and Nine months Ended September
                      30, 2005
                      and
                      2004 (unaudited)
                  4Condensed Consolidated Statements of Cash
                      Flows- Nine
                      Months Ended September 30, 2005 and 2004 (unaudited)
                  5Notes to Condensed Consolidated Financial Statements
                      (unaudited)
                  6-9Item
                      2.    Management's Discussion and
                      Analysis of Financial Condition And
                      Results of Operations
                  10-12Item
                      3.    Quantitative and Qualitative Disclosures
                      About Market Risk
                  13Item
                      4.    Controls and
                      Procedures
                  13**PART
                      II**Item
                      1.    Legal Proceedings
                  15Item
                      2.    Changes in
                      Securities
                  15Item
                      3.    Defaults Upon Senior
                      Securities
                  16Item
                      4.    Submission of Matters to a Vote of
                      Security Holders
                  16Item
                      5.    Other Information
                  16Item 6.   
Exhibits
                    and Reports on Form
                    8-K




2
 *Index*




**ITEM1.**




CHINA
                    DIGITAL MEDIA CORPORATION AND SUBSIDIARIESCONDENSED
                    CONSOLIDATED BALANCE SHEETAT
                    SEPTEMBER 30 , 2005(UNAUDITED)**ASSETS****CURRENT
                    ASSETS**Cash
                    and cash equivalents
                
                
                
                
                $
                849,726Accounts
                    receivable, net of allowances
                
                
                
                
                
                3,531,952Inventories
                
                
                
                
                
                679,610Other
                    receivables and prepaid expenses
                
                
                
                
                
                202,659Deposits
                    paid to a supplier
                
                
                
                
                
                107,349Total
                    Current Assets
                
                
                
                
                
                5,371,296**OTHER
                    ASSETS**Property
                    and equipment, net
                
                
                
                
                
                8,945,144Goodwill
                
                
                
                
                
                392,521Investments
                
                
                
                
                
                850,938Total
                    Other Assets
                
                
                
                
                
                10,188,603**TOTAL
                    ASSETS**
                
                
                
                
                $
                15,559,899**LIABILITIES
                    AND STOCKHOLDERS' EQUITY****CURRENT
                    LIABILITIES**Accounts
                    payable
                
                
                
                
                $
                4,675,818Other
                    payables and accrued liabilities
                
                
                
                
                
                186,044Advertising
                    revenue received in advance
                
                
                
                
                
                126,039Due
                    to a related company
                
                
                
                
                
                173,551Due
                    to a stockholder
                
                
                
                
                
                66,425Value
                    added taxes payable
                
                
                
                
                
                47,354Income
                    tax payable
                
                
                
                
                
                317,197Total
                    Current Liabilities
                
                
                
                
                
                5,592,428**COMMITMENTS
                    AND CONTINGENCIES****STOCKHOLDERS'
                    EQUITY**Common
                    stock ($.001 par value, 100,000,000 shares authorized,30,087,468
                    shares issued and outstanding at September 30, 2005)
                
                
                
                
                
                30,088Series
                    A convertible preferred stock ($.001 par value, 40,000,000 shares
                    authorized,1,875,000
                    shares issued and outstanding at September 30, 2005)
                
                
                
                
                
                1,875Series
                    B 2% convertible preferred stock ($.001 par value, 1,000 shares
                    authorized,-0-
                    share issued and outstanding at September 30, 2005)
                
                
                
                
                
                -Additional
                    paid in capital
                
                
                
                
                
                3,657,887Retained
                    earnings
                
                
                
                
                
                6,253,308Accumulated
                    comprehensive income
                
                
                
                
                
                3,902Total
                    Stockholders' Equity
                
                
                
                
                
                9,947,060**MINORITY
                    INTEREST**
                
                
                
                
                
                20,411**TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY**
                
                
                
                
                $
                15,559,899






3
 *Index*




CHINA
                  DIGITAL MEDIA CORPORATION AND SUBSIDIARIESCONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONSAND
                  COMPREHENSIVE INCOMEFOR
                  THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND
                  2004(UNAUDITED)For
                  the three months ended
              
              For
                  the nine months endedSeptember
                  30,
              
              September
                  30,2005
              
              2004
              
              2005
              
              2004**NET
                  SALES**Revenues
                  from digitalization of television signals,television
                  advertising sales andsoftware
                  development
              
              
              
              
              $
              2,170,918
              
              
              776,445
              
              $
              3,870,460
              
              $
              1,653,223Government
                  grant
              
              
              
              
              
              314,569
              
              
              302,371
              
              
              919,310
              
              
              907,1122,485,487
              
              
              1,078,816
              
              
              4,789,770
              
              
              2,560,335**COST
                  OF SALES**
              
              
              
              
              
              (465,860
              )
              
              (330,885
              )
              
              (666,524
              )
              
              (616,636
              )**GROSS
                  PROFIT**
              
              
              
              
              
              2,019,627
              
              
              747,931
              
              
              4,123,246
              
              
              1,943,699**OPERATING
                  EXPENSES**Selling,
                  general and administrative expenses
              
              
              
              
              
              314,535
              
              
              45,153
              
              
              720,388
              
              
              291,803Depreciation
                  and amortization
              
              
              
              
              
              353,461
              
              
              126,972
              
              
              907,672
              
              
              193,315Total
                  Operating Expenses
              
              
              
              
              
              667,996
              
              
              172,125
              
              
              1,628,060
              
              
              485,118**INCOME
                  FROM OPERATIONS**
              
              
              
              
              
              1,351,631
              
              
              575,806
              
              
              2,495,186
              
              
              1,458,581**OTHER
                  INCOME (EXPENSES)**Interest
                  income, net
              
              
              
              
              
              268,142
              
              
              514
              
              
              268,091
              
              
              993Volume
                  discounts earned
              
              
              
              
              
              1,826,868
              
              
              -
              
              
              1,826,868
              
              
              -Interest
                  expenses
              
              
              
              
              
              (5,554
              )
              
              -
              
              
              (5,554
              )
              
              -Minority
                  interest
              
              
              
              
              
              36
              
              
              -
              
              
              36
              
              
              -Total
                  Other (Expenses) Income
              
              
              
              
              
              2,089,492
              
              
              514
              
              
              2,089,441
              
              
              993**NET
                  INCOME**
              
              
              
              
              $
              3,441,123
              
              $
              576,320
              
              $
              4,584,627
              
              $
              1,459,574**OTHER
                  COMPREHENSIVE INCOME**Foreign
                  currency translation gain
              
              
              
              
              
              3,902
              
              
              -
              
              
              3,902
              
              
              -**COMPREHENSIVE
                  INCOME**
              
              
              
              
              $
              3,445,025
              
              $
              576,320
              
              $
              4,588,529
              
              $
              1,459,574Net
                  income per share - basic
              
              
              
              
              $
              0.11
              
              $
              N/A
              
              $
              0.17
              
              $
              N/ANet
                  income per share - fully diluted
              
              
              
              
              $
              0.01
              
              $
              N/A
              
              $
              0.01
              
              $
              N/AWeighted
                  average shares outstanding - basic
              
              
              
              
              
              30,087,468
              
              
              N/A
              
              
              27,572,851
              
              
              N/AWeighted
                  average shares outstanding - fully diluted
              
              
              
              
              
              405,087,468
              
              
              N/A
              
              
              403,683,962
              
              
              N/A






4
 *Index*


CHINA
                  DIGITAL MEDIA CORPORATION AND SUBSIDIARIESCONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWSFOR
                  THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004(UNAUDITED)Nine
                  months ended
              
              Nine
                  months endedSeptember
                30,
                  2005
              
              September
                30,
                  2004**CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  income
              
              $
              4,584,627
              
              $
              1,459,574Adjusted
                  to reconcile net income to cash providedby
                  operating activities:Depreciation
              
              
              907,672
              
              
              196,651Interest
                  expense
              
              
              5,554
              
              
              -Changes
                  in operating assets and liabilitiesIncrease
                  in accounts receivable
              
              
              (3,216,071
              )
              
              (854,740
              )Decrease
                  (increase) in inventories
              
              
              (51,083
              )
              
              (599,175
              )Increase
                  in other receivable and prepaid expenses
              
              
              (2,704,175
              )
              
              (1,012,761
              )Increase
                  in deposits paid to a supplier
              
              
              (107,349
              )
              
              -Decrease
                  in due from directors - net
              
              
              36,022
              
              
              52,918Increase
                  in accounts payable
              
              
              (64,819
              )
              
              3,567,937Increase
                  in other payables and accrued liabilities
              
              
              2,554,605
              
              
              225,763Increase
                  in advertising revenue received in advance
              
              
              126,039
              
              
              -Increase
                  in due to a related company
              
              
              293,241
              
              
              -Increase
                  in due to a stockholder
              
              
              384,908
              
              
              782,751Increase
                  in value added tax payables
              
              
              21,450
              
              
              18,423Increase
                  in income tax payables
              
              
              -
              
              
              4,626Net
                  cash provided by operating activities
              
              
              2,770,621
              
              
              3,841,967**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Purchases
                  of property and equipment
              
              
              (4,268,264
              )
              
              (3,761,082
              )Investments
              
              
              (200,221
              )
              
              -Net
                  cash used in investing activities
              
              
              (4,468,485
              )
              
              (3,761,082
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from issuance of common stock
              
              
              2,387,662
              
              
              -Net
                  cash provided by financing activities
              
              
              2,387,662
              
              
              -**NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              
              689,798
              
              
              80,885**CASH
                  AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
              
              
              159,928
              
              
              2,074**CASH
                  AND CASH EQUIVALENTS AT END OF PERIOD**
              
              $
              849,726
              
              $
              82,959






5
 *Index*




**CHINA
      DIGITAL MEDIA CORPORATION & SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**SEPTEMBER
      30, 2005 (UNAUDITED)**








**NOTE
      1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES**





(A)
      Basis
      of Presentation





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and pursuant to
      the
      rules and regulations of the Securities and Exchange Commission. Accordingly,
      they do not include all of the information and footnotes required by generally
      accepted accounting principles for complete financial statements.





In
      the
      opinion of management, the unaudited condensed consolidated financial statements
      contain all adjustments consisting only of normal recurring accruals considered
      necessary to present fairly the Company's consolidated financial position at
      September 30, 2005, the consolidated results of operations for the three and
      nine months ended September 30, 2005 and 2004, and consolidated cash flows
      for
      the nine months ended September 30, 2005 and 2004. The consolidated results
      for
      the three and nine months ended September 30, 2005 are not necessarily
      indicative of the results to be expected for the entire fiscal year ending
      December 31, 2005. These consolidated financial statement should be read in
      conjunction with the consolidated financial statements and notes for the year
      ended December 31, 2004 appearing in the Company's annual report on Form 10-KSB
      as filed with the Securities and Exchange Commission.





(B)
            Principles
                of Consolidation





The
      accompanying condensed consolidated financial statements include the financial
      statements of China Digital Media Corporation (“CDMC”) and its wholly owned
      subsidiaries, China Digimedia Holding Limited (“CDHL”) and Arcotect (Guangzhou)
      Technology Limited (“AGTL”) for all periods presented; Guangdong M-Rider Media
      Company (“M-Rider”) since its acquisition on August 25, 2005 and 90% variable
      interest entity (“VIE”), Guangdong HuaGuang DigiMedia Culture Development
      Limited (“HuaGuang”) since the effective date of the agreement on August 31,
      2005 (collectively, the Company). The minority interest represents the minority
      shareholders’ proportionate share of risks of HuaGuang.





All
      significant inter-company balances and transactions have been eliminated on
      consolidation.





(C)
            Management's
                Use of Estimates





The
      preparation of condensed consolidated financial statements in conformity with
      accounting principles generally accepted in the United States requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosures of contingent assets and liabilities
      at
      the date of condensed consolidated financial statements and the reported amounts
      of revenues and expenses during the reporting period. Actual results could
      differ from those estimates.





6
 *Index*




(D)
      Revenue Recognition





The
      Company generates three revenue streams: digitalization of television
      operations, television advertising sales and software development.





Digitalization
      of television operations





The
      Company entered into an agreement with Nanhai Network Company to assist
      the conversion of television signals from analog into digital by providing
      set-top-boxes (“STB”) and smart cards to the subscribers in Nanhai City on a
      loan basis. The Company is entitled to a portion of fees payable by the existing
      subscribers under a subscription agreement between the subscribers and the
      Nanhai Network Company. R evenue
      is
      recognized on a straight line basis in accordance with the terms of the
      subscription agreement. The Company also charges installation fees and sells
      STB
      and smart cards to new subscribers. Revenue arising from these services is
      recognized when the subscriber is invoiced for the STB and smart cards upon
      the
      completion of installation works.





The
      local
      government of Nanhai City also approved a grant of $1,209,482 each year for
      five
      years to finance the purchase of STB and smart cards for sale and loan to
      subscribers. The grant is recognized as revenue on receipt from the local
      government.





Television
      advertising sales





The
      Company acts as advertising agent for certain television channels by selling
      advertising time spaces and television program backdrops to customers. The
      Company's advertising services revenue is derived from billings that are earned
      when the advertising is placed. Deferred revenues are recognized as a liability
      when billings are received in advance of the date when revenues are
      earned.





Software
      development





The
      Company provides various information technology professional services to
      customers based on a negotiated fixed-price time and materials contracts. The
      Company recognizes services-based revenue from all of the contracts when the
      service has been performed, the customer has approved the completion of services
      and an invoice has been issued and collectibility is reasonably assured.





Volume
      Discounts





Income
      from volume discounts are recognized upon receipt from the vendors.




(E)
      Income per Share





Basic
      income per share is computed by dividing income available to common shareholders
      by the weighted average number of common shares outstanding during the periods.
      Diluted net income per share is computed similar to basic income per share
      except that the denominator is increased to include the number of additional
      common shares that would have been outstanding if the potential common shares
      had been issued and if the additional common shares were dilutive. The only
      potentially dilutive securities for the nine months ended September 30, 2005
      and
      2004 were the 1,875,000 convertible preferred shares outstanding at September
      30, 2005.




7
 *Index*





(F)
            Goodwill





In
      accordance with SFAS No. 141, the Company allocates the purchase price of its
      acquisitions to the tangible assets acquired based on their estimated fair
      values. The excess purchase price over those fair values is recorded as
      goodwill. The fair value assigned to intangible assets acquired is based on
      valuations negotiated at arms-length between the Company and the seller of
      the
      acquired assets. In accordance with SFAS No. 142 and 144, goodwill arising
      on
      consolidation is not amortized, but will be reviewed periodically for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      may not be recoverable. For purposes of evaluating the recoverability of the
      carrying amount of goodwill, when undiscounted future cash flows will not be
      sufficient to recover the asset’s carrying amount, the asset is written down to
      its fair value.




(G)
      Foreign Currency Translation





The
      functional currency of CDHL is Hong Kong Dollars and those of AGTL, M-Rider
      and
      HuaGuang are the Chinese Renminbi (“RMB”). However, the Company reports in
      United States Dollars. Transactions denominated in Hong Kong Dollars and RMB
      are
      translated into United States dollars using year end exchange rates as to assets
      and liabilities and average exchange rates as to revenues and expenses. Capital
      accounts are translated at their historical exchange rates when the capital
      transaction occurred. Net gains and losses resulting from foreign exchange
      translations are included in the condensed consolidated statements of operations
      and stockholder’s equity as other comprehensive income (loss). The translation
      gain recorded for the nine months ended September 30, 2005 and 2004 was $3,902
      and $0 respectively.





(F)
            Other
                Comprehensive Income





The
      foreign currency translation gain or loss resulting from translation of the
      financial statements expressed in Hong Kong Dollars or RMB to the United States
      Dollars is reported as other comprehensive income (loss) in the statements
      of
      operations and stockholders’ equity.








**NOTE
      2 - BUSINESS COMBINATION**





On
      July
      12, 2005, pursuant to a Share Transfer Agreement (“ST Agreement”), CDMC acquired
      all of the issued and outstanding capital of M-Rider, a PRC company engaged
      in
      the design, production and distribution of advertisements through television.
      Under the terms of the ST Agreement, CDMC purchased all of the issued and
      outstanding capital of M-Rider for a total consideration of $1,047,559; $132,927
      payable in cash and $914,632 payable by the issue of shares of the Company’s
      common stock. The ST Agreement became effective on August 25, 2005 when approval
      from the PRC Government of the acquisition was obtained. On the effective date,
      CDMC paid the cash consideration of $132,927 and the shares of the Company’s
      common stock having a value of $62,141 were issued to the stockholders of
      M-Rider, such value of shares were based on the average closing price of the
      Company’s common stock for the ten trading days preceding the effective date.
      The balance of $852,491 in value of the Company’s shares of common stock is
      payable one year from the effective date on the condition that the net operating
      cash flow of M-Rider on that day is not less than $1,129,512. If the net
      operating cash flow is less than this amount, the number of shares to be issued
      will be reduced proportionately.




8
 *Index*




The
      preliminary allocation of the net assets acquired is as follows:





Cash
                and cash equivalents
            
            $
            210,718Accounts
                receivable
            
            
            129,343Other
                receivables and prepaid expenses
            
            
            197,877Total
                Current Assets
            
            
            537,938Property
                and equipment, net
            
            
            56,137Goodwill
            
            
            392,521Total
                Assets
            
            
            986,596Less:
                Accounts payable and accrued liabilities
            
            
            (791,528
            )Net
                Assets Acquired
            
            
            195,068




The
      acquisition of M-Rider was accounted for as a purchase under SFAS No. 141,
      Business Combinations. Accordingly, the operating results of M-Rider have been
      included in the consolidated statements of operation and comprehensive income
      after the effective acquisition date of August 31, 2005.





The
      following table reflects the unaudited pro forma combined results of operations
      for the three and nine months ended September 30, 2005 and 2004, assuming the
      acquisition had occurred at the beginning of 2004.





For
                the three
            
            For
                the three
            
            For
                the nine
            
            
            
            For
                the ninemonths
                ended
            
            months
                ended
            
            months
                ended
            
            
            
            months
                endedSeptember
                30, 2005
            
            September
                30, 2004
            
            September
                30, 2005
            
            
            
            September
                30, 2004Revenues
            $
            3,059,642
            $
            1,078,816
            $
            5,418,564
            
            
            $
            2,560,335Net
                income
            $
            2,738,082
            $
            576,320
            $
            3,777,655
            
            
            $
            1,459,574Net
                income per share-
                basic
            $
            0.09
            $
            N/A
            $
            0.14
            
            
            $
            N/A-
                diluted
            $
            0.01
            $
            N/A
            $
            0.01
            
            
            $
            N/A






9
 *Index*





**NOTE
      3 - CONSOLIDATION OF VARIABLE INTEREST ENTITY**





On
      June
      15, 2005 CDMC entered into a Strategic Alliance Agreement (“the Agreement”) with
      HuaGuang in which CDMC will become the exclusive service provider to HuaGuang’s
      business development and operations for ten years. HuaGuang is engaged in the
      businesses of creating television programs for sale and the selling of
      commercial advertising to customers in the PRC.





The
      Agreement which became effective on August 31, 2005 upon the completion of
      a due
      diligence on HuaGuang and the subsequent issue of shares of the Company’s common
      stock to the value of $183,000 based on the average closing price for the ten
      trading days preceding the date of issue. In addition, CDMC is required to
      provide financial support and/or guarantees to HuaGuang for an amount not
      exceeding US$1.2 million during the term of the Agreement in return for 90%
      of
      the gross profit or bear 90% of the gross loss of HuaGuang.





In
      September 2005, CDMC consolidated HuaGuang, a VIE under the requirements of
      FASB
      Interpretation No. 46 (R ), Consolidation of Variable Interest Entities, an
      interpretation of ARB No. 51 (“FIN 46”).







**NOTE
      4 - INVESTMENTS**





The
      Company's investments represent investments in the production of two television
      series. These investments, for which the Company does not have the ability
      to
      exercise significant influence, are accounted for under the cost method of
      accounting. Distributions of profit, if any, are included in income when
      declared. The Company periodically evaluates the carrying value of its
      investments and, as of September 30, 2005, these investments were recorded
      at
      the lower of cost or estimated net realizable value.






**NOTE
      5 - SEGMENT INFORMATION**





The
      Company operates in three major reportable segments, digitalization of
      television signals, television advertising sales and software development.
      The
      accounting policies of the segments are the same as described in the summary
      of
      significant accounting policies. The Company evaluates segment performance
      based
      on income from operations. All inter-company transactions between segments
      have
      been eliminated. As a result, the components of operating income for one segment
      may not be comparable to another segment. The following is a summary of our
      segment information for the nine months ended September 30, 2005 and
      2004:









**Digitalization**
            
            **Television****Television**
            
            **Advertising**
            
            **Software****Operations**
            
            **Sales**
            
            **Development**
            
            **Other**
            
            **Total****2005****Revenues**
            **$**
            4,403,692
            **$**
            354,927
            **$**
            7,894
            **$**
            23,258
            **$**
            4,789,770**Gross
                profit**
            
            3,982,074
            
            110,391
            
            7,523
            
            23,258
            
            4,123,246**Total
                assets**
            
            13,056,124
            
            1,017,880
            
            95,724
            
            1,390,171
            
            15,559,899**Capital
                expenditure**
            
            4,392,036
            
            60,690
            
            5,398
            
            10,361
            
            4,468,485**Depreciation
                and amortization**
            
            894,554
            
            438
            
            8,569
            
            4,111
            
            907,672**2004****Revenues**
            **$**
            2,464,237
            **$**
            0
            **$**
            41,800
            **$**
            54,298
            **$**
            2,560,335**Gross
                profit**
            
            1,849,691
            
            0
            
            39,710
            
            54,298
            
            1,943,699**Total
                assets**
            
            4,968,133
            
            0
            
            121,119
            
            75,622
            
            5,164,874**Capital
                expenditure**
            
            3,716,324
            
            0
            
            27,697
            
            17,061
            
            3,761,082**Depreciation
                and amortization**
            
            189,945
            
            0
            
            3,370
            
            0
            
            193,315




10
 *Index*





**NOTE
      6 - COMMITMENTS AND CONTINGENCIES**





Employee
      benefits





Our
      full
      time employees in China are entitled to employee benefits including medical
      care, welfare subsidies, unemployment insurance and pension benefits through
      a
      Chinese government mandated multi-employer defined contribution plan. The
      Company is required to accrue for those benefits based on certain percentages
      of
      the employees’ salaries and make contributions to the plans out of the amounts
      accrued for medical and pension benefits. The total provision and contributions
      made for such employee benefits was $22,720  and
      $8,113 for the  nine
      months ended September 30, 2005 and 2004, respectively. The Chinese government
      is responsible for the medical benefits and the pension liability to be paid
      to
      these employees.





The
      Company also operates a Mandatory Provident Fund plan (“the plan”) which is
      available to all employees in Hong Kong. Both of the Company and the employees
      are required to contribute 5% (subject to an aggregate amount of $4,000) per
      month of the employees’ relevant income. The Company’s contributions are 100%
      vested in the employees as soon as they are paid to the plan. Contributions
      to
      the plan are expensed as they become payable in accordance with the rules of
      the
      plan and amounted to $13,097 and $10,000 for the nine months ended September
      30,
      2005 and 2004, respectively. The assets of the plan are held separately from
      those of the Company and are managed by independent professional fund
      managers.





Operating
      leases commitments





The
      Company leases office space from third parties under four operating leases
      which
      expire on May 31, 2006, August 6, 2006, December 31, 2005 and November 28,
      2005
      at total monthly rental of $6,721. The Company also leases spaces for staff
      quarters from third parties under six operating leases which expire from May
      1,
      2005 to March 16, 2006 with total monthly rental of $797. Accordingly, for
      the
      nine months ended September 30, 2005 and 2004, the Company recognized rental
      expense for these spaces in the amount of $ 30,475 and $19,993
      respectively.





Capital
      commitments




According
      to the amended Articles of Association of AGTL, CDHL has to fulfill registered
      capital contributions of $5 million within two years from July 16, 2004. As
      of
      September 30, 2005, the Company has fulfilled $3,167,722 of the registered
      capital requirement and has registered capital commitments of $1,832,278.







**NOTE
      7 - COMMON STOCK**





On
      January 18, 2005, the Company issued 20,000,000 shares of restricted common
      stock, which was converted from 100,000 shares of preferred stock at a ratio
      of
      200:1, to the President and Chief Executive Officer of the Company pursuant
      to
      the Plan of Exchange dated December 28, 2004. On May 5, 2005, the Company issued
      1,500,000 shares of restricted common stock to the President and Chief Executive
      Officer of the Company pursuant to the same Plan of Exchange. These shares
      were
      issued in exchange for all of the shares of capital stock of CDHL f/k/a Arcotect
      Digital Technology Limited, pursuant to the exchange thereto.





In
      addition, the Company issued 105 shares of common stock to various parties
      during the nine months ended September 30, 2005 due to the rounding up of common
      shares on account of the 1:100 reverse stock split that was effective on January
      10, 2005. The Company also issued 6,586,500 common shares to six creditors
      during the nine months ended September 30, 2005. These shares were issued under
      Regulation E with an aggregate consideration of $2,290,025 in debt principal
      in
      the form of 9% ninety-day promissory notes on February 7, 2005. On May 1, 2005,
      we extended these notes for an additional two months in return for an increase
      of three percentage points in the annual percentage interest rate under the
      notes. The notes were extended again on July 1, 2005 for an additional three
      months. As of September 30, 2005, all principal plus interest of these notes
      had
      been fully paid.




11
 *Index*




On
      June
      28, 2005, the Company issued 7,500 shares of our restricted common stock to
      a
      consultant for services retained. The shares were valued at the market on the
      date of issuance, or $4.30 per share, yielding an aggregate market value of
      $32,250. This expense is included in our accompanying financial
      statements.





During
      the nine months ended September 30, 2005, we did not issue preferred stock.





On
      October 13, 2005, the Company filed a Certificate of Amendment to the
      Certificate of Designation of our Series A Convertible Preferred Stock with
      the
      Secretary of State of Nevada, which amendment decreases the Conversion Ratio
      of
      the Series A Convertible Preferred Stock from two hundred (200) shares of fully
      paid and nonassessable shares of Common Stock for each share of Series A
      Convertible Preferred Stock to five (5) shares of fully paid and nonassessable
      shares of Common Stock for each share of Series A Convertible Preferred Stock.
      The new Conversion Ratio is set forth in Section 3(a) of the Certificate of
      Designation..





The
      Company anticipates that the decrease in the Conversion Ratio of the Series
      A
      Convertible Preferred Stock may make the capital structure more attractive
      to
      potential equity investors. Prior to the amendment, the Chairman and Chief
      Executive Officer of the Company owned approximately 98% of the total combined
      voting power. After the amendment, he will own securities with 32,625,000 votes
      out of a total combined voting power of 39,462,468 votes, which represents
      82.6%
      of the total combined voting power.






**NOTE
      8 -****RELATED
      PARTY TRANSACTIONS**





In
      2005,
      a stockholder and a related company loaned the Company $66,425 and $173,551
      respectively as short-term unsecured loan. The loans bear interest of 6%
      interest per annum.






**NOTE
      9 -** **SUBSEQUENT
      EVENT**





On
      October 14, 2005, the Company issued 29,158 shares of the Company’s common stock
      to the stockholders of M-Rider upon completion of the ST Agreement signed with
      M-Rider (Note 2) and issued 83,042 shares of the Company’s common stock to the
      designated person of HuaGuang’s stockholders upon completion of the Agreement
      signed with HuaGuang (Note 3).





On
      October 13, 2005, the Company filed a Certificate of Amendment to the
      Certificate of Designation of our Series A Convertible Preferred Stock with
      the
      Secretary of State of Nevada, which amendment decreases the Conversion Ratio
      of
      the Series A Convertible Preferred Stock from two hundred (200) shares of fully
      paid and nonassessable shares of Common Stock for each share of Series A
      Convertible Preferred Stock to five (5) shares of fully paid and nonassessable
      shares of Common Stock for each share of Series A Convertible Preferred Stock.
      The new Conversion Ratio is set forth in Section 3(a) of the Certificate of
      Designation..





The
      Company anticipates that the decrease in the Conversion Ratio of the Series
      A
      Convertible Preferred Stock may make the capital structure more attractive
      to
      potential equity investors. Prior to the amendment, the Chairman and Chief
      Executive Officer owned approximately 98% of the total combined voting power.
      After the amendment, he will own securities with 32,625,000 votes out of a
      total
      combined voting power of 39,462,468 votes, which represents 82.6% of the total
      combined voting power.





12
 *Index*





**NOTE
      10 - LITIGATION**





As
      previously reported, a Complaint, dated March 3, 2005, in the matter of RM
      Coral
      Palm Plaza, Ltd., a Florida limited partnership, Plaintiff, vs. Hairmax of
      Florida, Inc. f/k/a National Beauty Corporation, a Florida corporation, and
      Hairmax International, Inc., f/k/a National Beauty Corporation, a Nevada
      corporation, Defendants, was filed in the Circuit Court of the Seventeenth
      Judicial Circuit in and for Broward County, Florida. The Complaint arose out
      of
      an alleged breach of lease by defendants Hairmax of Florida, Inc. and Hairmax
      International, Inc., with respect to its operation of a hair salon located
      at
      2031 North University Drive, Coral Springs, Florida 33071.





On
      April
      15, 2005, the parties entered into a Settlement Agreement that provided that
      the
      litigation would be dismissed with prejudice in exchange for the payment by
      the
      Defendants of an aggregate amount equal to $15,000. It was agreed that payment
      would be made in an amount equal to $10,000 upon execution of the Settlement
      Agreement, with the remaining $5,000 being paid in two installments by September
      5, 2005.





On
      May
      24, 2005, a Complaint was filed against us, among others, in the United States
      District Court for the Southern District of New York, in a matter captioned
      as
“Ziegler, Ziegler & Associates LLP and Scott Ziegler, Plaintiffs, v. China
      Digital Media Corporation and John Does 1-10, Defendants.” In the Complaint, the
      Plaintiffs allege, among other things, that we and John Does 1-10 used Plaintiff
      Scott Zeigler’s e-mail address and Plaintiff Ziegler, Ziegler & Associates,
      LLP’s internet domain name to distribute promotional information about us over
      the internet. The Plaintiffs seek a several types of relief, including damages
      in an amount not less than $1,250,000. The file number of the civil action
      is 05
      CV 4960.





The
      Company contested the allegations of the Plaintiffs and has retained counsel
      admitted to practice in the U.S. District Court for the Southern District of
      New
      York to vigorously defend the action. The Company did not hire a stock promoter
      or a spammer to distribute promotional e-mails, and the emails themselves
      recited that they were paid for by one of our shareholders, and not by the
      Company or an affiliate.






**ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





We
      are
      hereby providing cautionary statements identifying important factors that could
      cause our actual results to differ materially from those projected in forward
      looking statements made in this quarterly report on Form 10-QSB. Any statements
      that express, or involve discussions as to, expectations, beliefs, plans,
      objectives, assumptions or future events or performance (often, but not always,
      through the use of words or phrases such as "likely will result," "are expected
      to," "will continue," "is anticipated," "estimated," "intends," "plans" and
      "projection") are not historical facts and may be forward-looking statements
      and
      involve estimates and uncertainties which could cause actual results to differ
      materially from those expressed in the forward-looking statements.





We
      caution that the factors described herein could cause actual results to differ
      materially from those expressed in any forward-looking statements and that
      the
      investors should not place undue reliance on any such forward-looking
      statements. Further, any forward-looking statement speaks only as of the date
      on
      which such statement is made, and we undertake no obligation to update any
      forward-looking statement to reflect events or circumstances after the date
      on
      which such statement is made or to reflect the occurrence of unanticipated
      events or circumstances. Consequently, no forward-looking statement can be
      guaranteed.





New
      factors emerge from time to time, and it is not possible for us to predict
      all
      such factors. Further, we cannot assess the impact of each such factor on our
      results of operations or the extent to which any factor, or combination of
      factors, may cause actual results to differ materially from those contained
      in
      any forward-looking statements.




13
 *Index*





**Overview**





China
      Digital Media Corporation was formerly known as HairMax International, Inc.
      (“Hairmax”), a Nevada corporation. It was incorporated in Nevada in 1987.
      Arcotect Digital Technology Limited, a corporation organized under the laws
      of
      the Hong Kong SAR of the Peoples’ Republic of China, consummated a reverse
      merger with Hairmax in March, 2005, and Hairmax subsequently changed its name
      to
      China Digital Media Corporation, which is our corporate name. With the
      termination of the original businesses of Hairmax, all of China Digital Media
      Corporation’s businesses are now located mainly in China. Arcotect Digital
      Technology Limited has changed its name to China Digimedia Holdings Limited
      (“CDHL”), and is a wholly-owned subsidiary of our company.




Our
      business plan is to develop our operations so that they become one of the
      fastest growing companies in the China broadcasting media and Cable TV industry.
      We have made substantial progress in reaching our goals to date. After the
      reverse merger, we have strengthened our management teams and committed
      ourselves to cover three areas of the media industry. These three areas are:
      Cable TV operations and Digital broadcasting technology development; TV Channel
      management and advertising sales; and TV program production and investment.
      To
      accomplish our growth objectives, we plan to utilize investment, mergers,
      acquisitions and alliance partnerships. In view of the rapid growth and
      potential opportunities of China's media industry, we will continue to invest
      our resources into our target media markets across China while looking for
      potential distribution partners in the United States and other
      countries.




Cable
      TV operations and digital broadcast technology development




CDHL
      and
      the China operating subsidiary Arcotect (Guangzhou) Technology Limited (“AGTL”)
      are the sole contractors and operators of digital television services in Nanhai,
      a city in the Guangdong province. The city of Nanhai has approximately 400,000
      paying Cable TV subscribers which it plans to migrate the television
      broadcasting system from analog to digital. Thus far, we have migrated more
      than
      120,000 subscribers from analog television to digital television by installing
      a
      digital STB into subscribers’ premises. As at the end of the third quarter of
      September 30, 2005, Nanhai Network Company offered 38 basic TV channels. By
      contrast, we offer 92 TV channels which are organized into various packages;
      including “World Movie”, “Life & Leisure”, “World Sports”, “News Channel”,
“Drama Channel”, ”Family Channel”, etc. Since the Nanhai Government is
      undergoing a consolidation to regroup its 17 towns into eight towns and
      municipalities, the migration process in these towns was initially re-scheduled.
      Since the consolidation has been completed in the third quarter, our migration
      schedule was back on track from effective August, 2005. We expect that
      subscription of additional TV packages will be increased accordingly. We
      currently employ approximately 190 people to support the existing
      operations.





In
      May
      2005, we launched the Sunshine e-Government services. Sunshine e-Government
      is
      the first information service provided by the newly built Digital TV Data
      Broadcasting Platform for Nanhai Digital Television services. With a simple
      click using a remote control of the digital STB provided by AGTL, TV watchers
      can access to various kinds of government information including:


--
      Government structure and policy


--
      Social
      affairs and communications


--
      Public
      announcement and government-to-citizen procedures




Sunshine
      e-Government is one of the services provided through our TV data broadcasting
      platform under our Nanhai investment agreement with the government. We
      anticipate that commercial services could be launched after the general
      acceptance of the Sunshine e-Government service. The company is currently
      researching adding new features to current and future STB, which would provide
      more features for providing more applications to the subscribers. Partnerships
      with several vendors are being negotiated for developing services under our
      TV
      data broadcasting platform.





14
 *Index*




Having
      switched 120,000 of Nanhai’s roughly 400,000 subscribers since early 2004, we
      have been able to achieve a 20% penetration rate with new pay-TV packages and
      additional set-top-box subscriptions. The different pay-TV packages are priced
      from $15 to $74 per year. We have also launched one of the first IP-based STBs
      to allow Internet-based services and one of the first trials of HDTV broadcasts
      in China. The success of our model, in contrast to some less successful models
      adopted by other cities, has led to discussions with other cities seeking to
      replicate this migration exercise. However, at this point in time, we have
      not
      entered into any contracts to provide digital cable television services to
      other
      cities in China.




TV
      channel management and advertising sales .




In
      September 2005, we had completed the acquisition of Guangdong M-Rider Media
      Company (“M-Rider”), expanding into TV channel management and advertising sales.
      M-Rider is the exclusive advertising wholesaler for four TV channels - three
      for
      provincial television stations and a channel for city level television stations.
      The company pays a fixed fee and is responsible for selling advertising space,
      providing a portion of television contents, and is involved in activities that
      help build the audience.





While
      M-Rider pays a fixed fee for the advertising exclusivity, there is considerable
      upside margin potential as the rates it charges increase. This model also has
      the potential to be applied to other TV stations markets in other cities as
      well
      as in other provinces.





TV
      program production and investment




With
      a
      growing subscriber base, we intend to capitalize on our distribution platform
      through the production of original programming. Our plan is to develop a
      long-term presence in television content production. However, we understand
      that
      content production is a relatively high risk venture, and that selling TV drama
      content is very competitive business and that it takes time to develop a good
      operating history. Accordingly, we have chosen to gain experience by investing
      in this market through a strategic partner. We have started by making a minority
      investment in two TV series through our partner, Guangdong Runshi Movie &
      Music Production Co., Ltd. The two series, The Story of a Small Town, with
      24
      episodes, and XiGuan Affairs, with 40 episodes, are expected to generate
      revenues next year. Because of the strong position of our partner in the market,
      there is a reasonable probability of a positive return on investment in the
      two
      series, and we intend to invest in more series on a minority basis and grow
      our
      presence in this market slowly over time..





Because
      of our forthcoming investment projects, we have appointed Mr. Tung ZhiYong
      as
      Consultant to advise on program production and acquisition. Mr. Tung was a
      Vice
      President of Guangdong Television Station before retired in 2004. In his over
      40
      years’ experience in the industry, he has produced more than 1,000 episodes of
      television programs, movies and series under his supervision and directorship
      as
      well as having won several national television awards in China. We will continue
      to appoint more qualified consultants to assist in our investments, broadcasting
      operations and programs production.





15
 *Index*




At
      present, some of our targeted businesses are subject to certain restrictions
      in
      the PRC. In order to enable us to invest in certain media sectors such as TV
      advertising and contents production before related regulations and policies
      are
      opened up to foreign investors, we have strategically partnered with a Chinese
      registered company, Guangdong HuaGuang DigiMedia Culture Development Limited
      (“HuaGuang”), formerly known as Guangdong Pukonyi Culture Development Limited,
      to hold investments in programs production and advertising operations on our
      behalf. In this way, we are not the direct owner of the programming and
      advertising operations. We anticipate that this arrangement will be continued
      until the relaxation of broadcasting policy in China. Before transferring the
      entire equity interest in HuaGuang to us according to our Alliance Agreement
      with HuaGuang, we have obtained control and manage the operations of HuaGuang
      and receive 90% of its gross profit through various level of agreements signed
      between our subsidiaries in China and HuaGuang. For business and management
      purposes, Mr. Chen Lu, director of business development of CDGT, now holds
      90%
      of HuaGuang. Our Board of Directors feels comfortable with this arrangement.
      We
      have been advised by our Chinese counsel that these arrangements are necessary
      because we, a Nevada corporation, are considered a foreign company for the
      purposes of Chinese foreign investment laws.




**RESULTS
      OF OPERATIONS**





Other
      Comprehensive Income





We
      had
      other comprehensive income, for the nine months ended September 30, 2005 of
      $3,902. The gain is principally attributable to the approximately 2%
      appreciation of RMB against the Dollar.




**Net
      Income**





We
      had
      net income of $3,445,025 and $4,584,627, or $0.11 and $0.17 per common share
      for
      the three months and nine months periods ended September 30, 2005, respectively,
      compared to the net income of $576,320 and $1,459,574 for the same periods
      ended
      September 30, 2004, respectively. The increase in net income was primarily
      due
      to an increase in subscription revenues from commercial and new TV subscribers
      and a discount received for the purchase of STB from our vendor. Because of
      our
      acquisition of M-Rider in August 25, 2005, we have a new source of revenue
      from
      advertising. Total net income therefore had increased accordingly.




Minority
      Interest





Minority
      interest in the profits and losses of one of our consolidated variable interest
      represents the minority shareholders’ share of the profits or losses in such
      variable interest. For the nine months ended September 30, 2005, we recognized
      and recorded minority share in our profit of $36.




Other
      Income





We
      had
      other net income for the nine months ended September 30, 2005 of $2,089,441
      as
      compared to other net income of $993 for the same period in 2004. The increase
      is mainly attributable to the volume discount received from our STBs vendor
      of
      $1,826,868.




16
 *Index*




**Earnings
      before interest, tax, depreciation and amortization
      (“EBITDA”)**





EBITDA
      for the three months and nine months ended September 30, 2005 was $1,705,092
      and
      $3,402,858, respectively. The increase of $1,002,314, or 143%, from $702,778
      for
      the three months ended September 30, 2004 was due primarily to the increase
      in
      total revenue and gross profit margin.





**Sales**





Revenues
      increased by $1,406,671or 130% from $1,078,816 for the three months ended
      September 30, 2004 to $2,485,487 for the same period ended September 30, 2005.
      For nine months ended September 30, 2005, we recorded total revenues of
      $4,789,770, compared to total revenues of $2,560,335 for the same period ended
      September 30, 2004. Due to new arrangements with Nanhai Network Company for
      the
      classification of revenue for commercial and new subscribers on TV subscriptions
      and discount received for the purchase of STB from a vendor, we had recorded
      additional revenue for the 3 rd quarter.
      Together with the increase in the number of TV subscribers, sales of Pay-TV
      and
      the increase of commercial accounts, total revenues for Digital TV Operations
      had a satisfactory result for the three months ended September 30 2005 as
      compared to the comparable period in 2004. Advertising revenue was our new
      income source upon our acquisition of M-Rider. As we completed the acquisition
      process by the end of August 2005, we only recorded one month result from
      M-Rider into our consolidated result for the quarter. However, one month sale
      from M-Rider already represents approximately 7.4% of our total revenues. The
      board anticipated that this segment of revenue would continue to grow and form
      an important part of our business in the coming years.





Gross
      profit margins increased from 69% during the three months ended September 30,
      2004 to 81% during the three months ended September 30, 2005. The increase
      was
      mainly attributable to the classification of TV subscription revenues of
      commercial and new accounts together with advertising income.





**Expenses**





Selling,
      general, administrative and depreciation and amortization expenses for the
      three
      months ended September 30, 2005 increased by $495,871 or 288% to $667,996 in
      comparison with the three month period ended September 30, 2004. Selling,
      general, administrative and depreciation and amortization expenses were
      $1,628,060 for the nine months ended September 30, 2005, increased by
      $1,142,942, compared to the same period ended September 30, 2004. Selling,
      general and administrative expenses increased by $269,382 for the three months
      ended September 30, 2005 over the same period last year due to increase in
      business activities to support increased revenue, appointment of additional
      personnel for the development of new value-added business and the negotiation
      of
      new business in TV drama production and the operation of newly acquired
      subsidiary. Depreciation and amortization increased by $226,489 for the three
      months ended September 30, 2005 due to the increase in the total number of
      STB
      for the migration of analog TV into digital TV project in Nanhai. We anticipate
      depreciation and amortization expenses will continue to increase until the
      whole
      of 400,000 existing TV subscribers are digitalized and the STBs are fully
      depreciated.





**Liquidity
      and Capital Resources**





On
      September 30, 2005, we had cash of $849,726 and a working capital deficit of
      $221,132. This compares with cash of $82,959 and a working capital deficit
      of
      $2,215,939 at December 31, 2004. The increase in cash and decrease in working
      capital deficit was mainly due to receivable collections from Nanhai Network
      Company, additional paid in capital for the Company and the reduction of
      accounts payable to vendors. Operating activities had a net generation of cash
      in the amount of $2,770,621 during the nine months ended September 30, 2005
      reflecting an excess of revenues over expenditure and increased depreciation
      as
      mentioned above.




17
 *Index*




Net
      cash
      used in investing activities for the nine months ended September 30, 2005 was
      $4,468,485 as compared with net cash used in investing activities of $3,761,082
      for the nine months ended September 30, 2004. The increase in net cash used
      in
      investing activities is due to an increase in purchases of STBs and investment
      in contents during the nine months ended September 30, 2005 compared to the
      comparable period in 2004.





Net
      cash
      provided by financing activities for the nine months ended September 30, 2005
      was $2,387,662. The net cash provided by financing activities is attributable
      to
      the injection of cash from shareholders.





We
      had
      started to receive cash from Nanhai Network Company according to schedule
      commencing from July of 2005. The Company's investment in STBs and smart cards
      remained the substantial accounts payable at September 30, 2005. Due to the
      acquisition and operation, additional cash is required. The board has considered
      bank loan or issuance of new shares for supportive funding. Process for such
      arrangement is in progress.







**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





We
      do not
      have any material risk with respect to changes in foreign commodities prices
      or
      interest rates. We do not believe that we have any other relevant market risk
      with respect to the categories intended to be discussed in this item of this
      report.





**Concentrations
      and Risks**





During
      2005 and 2004, 99% of the Company's assets were located in China and 100% of
      the
      Company's revenues were derived from customers in China.





The
      Company relied on one supplier for approximately 85% of its purchases in 2005
      for Nanhai digitalization of TV in the Nanhai project. As of September 30,
      2005,
      accounts payable to this supplier amounted to $3,494,737.





In
      2005
      and 2004, the Company did not derive revenue from any one customer for more
      than
      10% of its total revenue.







**ITEM
      4. CONTROLS AND PROCEDURES**





**Quarterly
      Evaluation of Controls**





As
      of the
      end of the period covered by this quarterly report on Form 10-QSB, we evaluated
      the effectiveness of the design and operation of (i) our disclosure controls
      and
      procedures ("Disclosure Controls"), and (ii) our internal control over financial
      reporting ("Internal Controls"). This evaluation ("Evaluation") was performed
      by
      our President and Chief Executive Officer, Daniel Ng ("CEO") and Lui Chi Keung,
      our Chief Financial Officer ("CFO"). In this section, we present the conclusions
      of our CEO and CFO based on and as of the date of the Evaluation, (i) with
      respect to the effectiveness of our Disclosure Controls, and (ii) with respect
      to any change in our Internal Controls that occurred during the most recent
      fiscal quarter that has materially affected, or is reasonably likely to
      materially affect our Internal Controls.





18
 *Index*




**CEO
      and CFO Certifications**





Attached
      to this annual report, as Exhibits 31.1 and 31.2, are certain certifications
      of
      the CEO and CFO, which are required in accordance with the Exchange Act and
      the
      Commission's rules implementing such section (the "Rule 13a-14(a)/15d-14(a)
      Certifications"). This section of the annual report contains the information
      concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a)
      Certifications. This information should be read in conjunction with the Rule
      13a-14(a)/15d-14(a) Certifications for a more complete understanding of the
      topic presented.





**Disclosure
      Controls and Internal Controls**





Disclosure
      Controls are procedures designed with the objective of ensuring that information
      required to be disclosed in our reports filed with the Commission under the
      Exchange Act, such as this annual report, is recorded, processed, summarized
      and
      reported within the time period specified in the Commission's rules and forms.
      Disclosure Controls are also designed with the objective of ensuring that
      material information relating to the Company is made known to the CEO and the
      CFO by others, particularly during the period in which the applicable report
      is
      being prepared. Internal Controls, on the other hand, are procedures which
      are
      designed with the objective of providing reasonable assurance that (i) our
      transactions are properly authorized, (ii) the Company's assets are safeguarded
      against unauthorized or improper use, and (iii) our transactions are properly
      recorded and reported, all to permit the preparation of complete and accurate
      financial statements in conformity with accounting principals generally accepted
      in the United States.





**Limitations
      on the Effectiveness of Controls**





Our
      management does not expect that our Disclosure Controls or our Internal Controls
      will prevent all error and all fraud. A control system, no matter how well
      developed and operated, can provide only reasonable, but not absolute assurance
      that the objectives of the control system are met. Further, the design of the
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control issues and instances so of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision -making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control. The design of a system
      of controls also is based in part upon certain assumptions about the likelihood
      of future events, and there can be no assurance that any design will succeed
      in
      achieving its stated objectives under all potential future conditions. Over
      time, control may become inadequate because of changes in conditions, or because
      the degree of compliance with the policies or procedures may deteriorate.
      Because of the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected.





**Scope
      of the Evaluation**





The
      CEO
      and CFO's evaluation of our Disclosure Controls and Internal Controls included
      a
      review of the controls' (i) objectives, (ii) design, (iii) implementation,
      and
      (iv) the effect of the controls on the information generated for use in this
      annual report. In the course of the Evaluation, the CEO and CFO sought to
      identify data errors, control problems, acts of fraud, and they sought to
      confirm that appropriate corrective action, including process improvements,
      was
      being undertaken. This type of evaluation is done on a quarterly basis so that
      the conclusions concerning the effectiveness of our controls can be reported
      in
      our quarterly reports on Form 10-QSB and annual reports on Form 10-KSB. The
      overall goals of these various evaluation activities are to monitor our
      Disclosure Controls and our Internal Controls, and to make modifications if
      and
      as necessary. Our external auditors also review Internal Controls in connection
      with their audit and review activities. Our intent in this regard is that the
      Disclosure Controls and the Internal Controls will be maintained as dynamic
      systems that change (including improvements and corrections) as conditions
      warrant.





19
 *Index*




Among
      other matters, we sought in our Evaluation to determine whether there were
      any
      significant deficiencies or material weaknesses in our Internal Controls, which
      are reasonably likely to adversely affect our ability to record, process,
      summarize and report financial information, or whether we had identified any
      acts of fraud, whether or not material, involving management or other employees
      who have a significant role in our Internal Controls. This information was
      important for both the Evaluation, generally, and because the Rule
      13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO
      disclose that information to our Board (audit committee), and to our independent
      auditors, and to report on related matters in this section of the annual report.
      In the professional auditing literature, "significant deficiencies" are referred
      to as "reportable conditions". These are control issues that could have
      significant adverse affect on the ability to record, process, summarize and
      report financial data in the financial statements. A "material weakness" is
      defined in the auditing literature as a particularly serious reportable
      condition where the internal control does not reduce, to a relatively low level,
      the risk that misstatement cause by error or fraud may occur in amounts that
      would be material in relation to the financial statements and not be detected
      within a timely period by employee in the normal course of performing their
      assigned functions. We also sought to deal with other controls matters in the
      Evaluation, and in each case, if a problem was identified; we considered what
      revisions, improvements and/or corrections to make in accordance with our
      ongoing procedures.





**Conclusions**





Based
      upon the Evaluation, our disclosure controls and procedures are designed to
      provide reasonable assurance of achieving our objectives. Our CEO and CFO have
      concluded that our disclosure controls and procedures are effective at that
      reasonable assurance level to ensure that material information relating to
      the
      Company is made known to management, including the CEO and CFO, particularly
      during the period when our periodic reports are being prepared, and that our
      Internal Controls are effective at that assurance level to provide reasonable
      assurance that our financial statements are fairly presented inconformity with
      accounting principals generally accepted in the United States. Additionally,
      there has been no change in our Internal Controls that occurred during our
      most
      recent fiscal quarter that has materially affected, or is reasonably likely
      to
      affect, our Internal Controls.







**PART
      II. OTHER INFORMATION**





**Item
      1. Legal Proceedings**





As
      previously reported, a Complaint, dated March 3, 2005, in the matter of RM
      Coral
      Palm Plaza, Ltd., a Florida limited partnership, Plaintiff, vs. Hairmax of
      Florida, Inc. f/k/a National Beauty Corporation, a Florida corporation, and
      Hairmax International, Inc., f/k/a National Beauty Corporation, a Nevada
      corporation, Defendants, was filed in the Circuit Court of the Seventeenth
      Judicial Circuit in and for Broward County, Florida. The Complaint arose out
      of
      an alleged breach of lease by defendants Hairmax of Florida, Inc. and Hairmax
      International, Inc., with respect to its operation of a hair salon located
      at
      2031 North University Drive, Coral Springs, Florida 33071.





On
      April
      15, 2005, the parties entered into a Settlement Agreement that provided that
      the
      litigation would be dismissed with prejudice in exchange for the payment by
      the
      Defendants of an aggregate amount equal to $15,000. It was agreed that payment
      would be made in an amount equal to $10,000 upon execution of the Settlement
      Agreement, with the remaining $5,000 being paid in two installments by September
      5, 2005.





On
      May
      24, 2005, a Complaint was filed against us, among others, in the United States
      District Court for the Southern District of New York, in a matter captioned
      as
“Ziegler, Ziegler & Associates LLP and Scott Ziegler, Plaintiffs, v. China
      Digital Media Corporation and John Does 1-10, Defendants.” In the Complaint, the
      Plaintiffs allege, among other things, that we and John Does 1-10 used Plaintiff
      Scott Zeigler’s e-mail address and Plaintiff Ziegler, Ziegler & Associates,
      LLP’s internet domain name to distribute promotional information about us over
      the internet. The Plaintiffs seek a several types of relief, including damages
      in an amount not less than $1,250,000. The file number of the civil action
      is 05
      CV 4960.





The
      Company contested the allegations of the Plaintiffs and has retained counsel
      admitted to practice in the U.S. District Court for the Southern District of
      New
      York to vigorously defend the action. The Company did not hire a stock promoter
      or a spammer to distribute promotional e-mails, and the emails themselves recite
      that they were paid for by a shareholder of our Company, and not by the Company
      or an affiliate..





20
 *Index*





**Item
      2. Changes in Securities**





On
      January 18, 2005, the Company issued 20,000,000 shares of our restricted common
      stock, which was converted from 100,000 shares of preferred stock at a ratio
      of
      200:1, to our President and Chief Executive Officer pursuant to the Plan of
      Exchange dated December 28, 2004. On May 5, 2005, the Company issued 1,500,000
      shares of our restricted common stock to our President and Chief Executive
      Officer pursuant to the same Plan of Exchange. These shares were issued in
      exchange for all of the shares of capital stock of Arcotect Digital Technology
      Limited pursuant to the exchange thereto.





In
      addition, the Company issued 105 shares of common stock to various parties
      during the six months ended June 30, 2005 due to our rounding up of common
      shares on account of the 1:100 reverse stock split which was effective on
      January 10, 2005. The Company also issued 6,586,500 common shares to six
      creditors during the six months ended June 30, 2005. These shares were issued
      under Regulation E with an aggregate consideration of $2,290,025 in debt
      principal in the form of 9% ninety-day promissory notes on February 7, 2005.
      The
      Company extended these notes for an additional two months in return for an
      increase of three percentage points in the annual percentage interest rate
      under
      the notes.




On
      October 13, 2005, the Company filed a Certificate of Amendment to the
      Certificate of Designation of our Series A Convertible Preferred Stock with
      the
      Secretary of State of Nevada, which amendment decreases the Conversion Ratio
      of
      the Series A Convertible Preferred Stock from two hundred (200) shares of fully
      paid and nonassessable shares of Common Stock for each share of Series A
      Convertible Preferred Stock to five (5) shares of fully paid and nonassessable
      shares of Common Stock for each share of Series A Convertible Preferred Stock.
      The new Conversion Ratio is set forth in Section 3(a) of the Certificate of
      Designation..





The
      Company anticipates that the decrease in the Conversion Ratio of the Series
      A
      Convertible Preferred Stock may make the capital structure more attractive
      to
      potential equity investors. Prior to the amendment, the Chairman and Chief
      Executive Officer owned approximately 98% of the total combined voting power.
      After the amendment, he will own securities with 32,625,000 votes out of a
      total
      combined voting power of 39,462,468 votes, which represents 82.6% of the total
      combined voting power.





**Item
      3. Defaults Upon Senior Securities**





None.





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





None.





**Item
      5. Other Information**





We
      report
      that Daniel Ng, our Chairman, acquired 1,750,000 shares of common stock,
      representing 5.8% of the 30,163,343 shares of common stock outstanding as of
      August 5, 2005, from Edward A. Roth, the former Chaiman of Hairmax
      International, Inc., pursuant to the terms of the Plan of Exchange, dated
      December 28, 2004. The certificate for these shares had been indorsed in blank
      with stock powers attached, and Mr. Ng finally exercised his right to acquire
      these shares on May 11, 2005.





**Item
      6. Exhibits and Reports on Form 8-K**





(a)  Exhibits
      are incorporated by reference.


(b)  On
      July
      5, 2005, we filed an 8-K to report the investment in television production
      called “Xiguan Affairs” through Pukonyi.


(c)  On
      July
      20, 2005, we filed an 8-K to report that China DigiMedia Holdings Limited,
      our
      Hong Kong subsidiary ("China DigiMedia"),  entered
      into a Shares Transfer Agreement with Mr. Wu and Mr. Huang, residents of
      mainland China and the sole shareholders of  Guangdong
      M-Rider Media Company Limited, a limited liability company organized and
      existing under the laws of the Peoples’  Republic
      of China (“Guangdong M-Rider”), pursuant to which China DigiMedia will acquire
      all of the issued and outstanding capital  shares
      of
      Guangdong M-Rider through an agent.


(d)  On
      July
      21, 2005, we filed an 8-K to report the changes in our certifying
      accountant.


(e)  On
      August
      10, 2005, we filed an 8-K regarding the extension of the terms of Promissory
      Notes dated May 1, 2005.


(f)  On
      November 1, 2005, we filed an 8-K regarding the decreases in the Conversion
      Ratio of the Series A Convertible Preferred Stock.





21
 *Index*




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.





**CHINA
      DIGITAL MEDIA CORPORATION**


(Registrant)




Date:
              November 4, 2005
            By:
            /s/ Lui
              Chi KeungLui
                Chi Keung
              Chief
                Financial Officer




Date:
              November 4, 2005
            By:
            /s/ Daniel
              NgDaniel
                Ng
              Chief
                Executive Officer







22