----

----

UnitedStates

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

----

CHINA DIGITAL MEDIA CORPORATION

|                                                                                                          |                                                                                                                                         | Page      No.    |
|---------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                          |                                                                                                                                         |             |
| PART      I                                                                                                   |                                                                                                                                         |
|                                                                                                          |                                                                                                                                         |             |
| Item      1. Financial Statements                                                                             |                                                                                                                                         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Condensed      Consolidated Balance Sheet-      September 30, 2009 (unaudited)                                                               | 3                |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Condensed      Consolidated Statements of Operations And ComprehensiveIncome-      Nine months Ended September 30, 2009 and 2008 (unaudited) | 4                |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Condensed      Consolidated Statements of Cash Flows-      Nine months Ended September 30, 2009 and 2008 (unaudited)                         | 5                |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Notes      to Condensed Consolidated Financial Statements (unaudited)                                                                        |  6      - 7 |
|                                                                                                          |                                                                                                                                         |             |
| Item      2. Management's Discussion and Analysis of Financial Condition And Results      of Operations  | 8                                                                                                                                            |
| Item      3. Quantitative and Qualitative      Disclosures about Market Risk                             |                       10                                     |
| Item      4. Controls and Procedures                                                                          | 10                                                                                                                                           |
|                                                                                                          |                                                                                                                                         |             |
| PART      II                                                                                                  |                                                                                                                                         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Item      1. Legal Proceedings                                                                                                               |  11         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Item      2. Unregistered Sales of Equity Securities and Use of    Proceeds                                                                  |  11         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Item      3. Defaults Upon Senior Securities                                                                                                 |  11         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Item      4. Submission of Matters to a Vote of Security Holders                                                                             |  11         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Item      5. Other Information                                                                                                               |  11         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Item      6. Exhibits                                                                                                                        |  11         |
|                                                                                                          |                                                                                                                                         |             |
|                                                                                                          | Signatures                                                                                                                                   |  12         |

----

Table of Contents

ITEM 1. FINANCIALSTATEMENTS

| CHINA      DIGITAL MEDIA CORPORATION AND SUBSIDIARIES                               |
|-------------------------------------------------------------------------------------|
| CONDENSED      CONSOLIDATED BALANCE SHEETS                                          |
|                                                                                |   |   |   |   |   |   |
| ASSETS                                                                              |   |   |   |   |   |   |
|                                                                                |   | September      30, 2009 |   |   | December      31, 2008 |   |
|                                                                                |   | (Unaudited) |   |   | (Audited) |   |
| CURRENT      ASSETS                                                                 |   |   |   |   |   |   |
| Cash      and cash equivalents                                                      |   | $ | 733,710 |   |   | $ | 436,062 |   |
| Security      deposit                                                               |   |   | 284,888 |   |   |   | - |   |
| Accounts      receivable, net of allowances                                         |   |   | 2,416,708 |   |   |   | 1,078,228 |   |
| Inventories,      net                                                               |   |   | 759,311 |   |   |   | 1,247,781 |   |
| Other      receivables and prepaid expenses                                         |   |   | 509,899 |   |   |   | 194,386 |   |
| Due      from a related company                                                     |   |   | 280,018 |   |   |   | - |   |
| Value      added taxes recoverable                                                  |   |   | 461,682 |   |   |   | 52,820 |   |
| Total      Current Assets                                                           |   |   | 5,446,216 |   |   |   | 3,009,277 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| ACCOUNTS      RECEIVABLE, long term portion, net of allowances                      |   |   | 410,586 |   |   |   | - |   |
| INTANGIBLE      ASSETS, NET of impairment of $3,996,595                             |   |   | 324,330 |   |   |   | 324,329 |   |
| PROPERTY      AND EQUIPMENT, NET                                                    |   |   | 15,261,545 |   |   |   | 14,202,241 |   |
| TOTAL      ASSETS                                                                   |   | $ | 21,442,677 |   |   | $ | 17,535,847 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS'      EQUITY                                           |   |   |   |   |   |   |   |   |
| CURRENT      LIABILITIES                                                            |   |   |   |   |   |   |   |   |
| Convertible      debentures, net of discount                                        |   | $ | 2,465,000 |   |   | $ | 950,000 |   |
| Bills      payable                                                                  |   |   | 949,626 |   |   |   | - |   |
| Accounts      payable                                                               |   |   | 5,692,335 |   |   |   | 5,178,216 |   |
| Other      payables and accrued liabilities                                         |   |   | 1,439,272 |   |   |   | 923,980 |   |
| Due      to directors                                                               |   |   | 285,829 |   |   |   | 285,642 |   |
| Due      to a stockholder                                                           |   |   | 9,270 |   |   |   | 396,331 |   |
| Due      to related companies                                                       |   |   | 497,764 |   |   |   | 454,555 |   |
| Business      and other tax payable                                                 |   |   | 21,472 |   |   |   | 23,099 |   |
| Income      tax payable                                                             |   |   | 1,752,536 |   |   |   | 2,603,012 |   |
| Total      Current Liabilities                                                      |   |   | 13,113,104 |   |   |   | 10,814,835 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| LONG      TERM LIABILITIES                                                          |   |   |   |   |   |   |   |   |
| Convertible      debentures, net of discount                                        |   |   | 500,000 |   |   |   | 2,015,000 |   |
| Accounts      payable                                                               |   |   | 1,647,916 |   |   |   | 333,632 |   |
| Total      Long Term Liabilities                                                    |   |   | 2,147,916 |   |   |   | 2,348,632 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                                  |   |   | - |   |   |   | - |   |
|                                                                                |   |   |   |   |   |   |   |   |
| MINORITY      INTERESTS                                                             |   |   | - |   |   |   | - |   |
|                                                                                |   |   |   |   |   |   |   |   |
| 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                 |   |   |   |   |   |   |   |   |
| September      30, 2009 and December 31, 2008)                                      |   |   | 1,875 |   |   |   | 1,875 |   |
| Common      stock ($0.001 par value, 500,000,000 shares authorized,                 |   |   |   |   |   |   |   |   |
| 42,706,363      shares issued and outstanding as of September 30, 2009              |   |   |   |   |   |
|  and      December 31, 2008)                                                   |   |   | 42,706 |   |   |   | 42,706 |   |
| Additional      paid-in capital                                                     |   |   | 14,984,021 |   |   |   | 14,984,021 |   |
| Retained      earnings                                                              |   |   |   |   |   |   |   |   |
|    Unappropriated                                                    |   |   | (12,327,010 | ) |   |   | (14,346,279 | ) |
|    Appropriated                                                      |   |   | 1,521,997 |   |   |   | 1,521,997 |   |
| Accumulated      other comprehensive income                                         |   |   | 1,958,068 |   |   |   | 2,168,060 |   |
| Total      Stockholders' Equity                                                     |   |   | 6,181,657 |   |   |   | 4,372,380 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                     |   | $ | 21,442,677 |   |   | $ | 17,535,847 |   |
|                                                                                |   |   |   |   |   |   |   |   |

The accompanying notes are an integral part of these consolidatedfinancial statements.

----

Table of Contents

|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
|-----------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|--------|
|                                                      |   | For      the three months ended                                                                                                                   |    |                                                                                                                                              | For      the nine months ended |   |
|                                                      |   | September      30                                                                                                                                 |    |                                                                                                                                              | September      30              |   |
|                                                      |   | 2009                                                                                                                                              |    | 2008                                                                                                                                              |                           |   | 2009                                                                                                                                              |   | 2008                                                                                                        |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| NET      SALES                                            |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| Revenue      from digitalization of television signals    |   | $           2,560,278                                                                      |  $ |            1,698,059                                                                       |                           |   |  $          6,367,291                                                                      |   |   $         4,960,035                                |   |
| Revenue      from television advertising                  |   |                94,984                                                  |    |               143,430                                                       |                           |   |               239,287                                                       |   |               288,354                 |   |
| Revenue      from software development                    |   |                33,621                                                  |    |                       78            |                           |   |                33,621                                                  |   |                18,735            |   |
|                                                      |   |            2,688,883                                                                       |    |            1,841,567                                                                       |                           |   |            6,640,199                                                                       |   |            5,267,124                                 |   |
| COST      OF SALES                                        |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| Cost      of Sales - digitalization of television signals |   |              (531,531)                                                           |    |              (198,422)                                                           |                           |   |           (1,025,858)                                                                           |   |              (574,946)                     |   |
| Depreciation      - digitalization of television signals  |   |           (1,156,772)                                                                           |    |           (1,061,699)                                                                           |                           |   |           (3,433,479)                                                                           |   |           (2,864,892)                                     |   |
| Cost      of Sales - television advertising               |   |              (125,186)                                                           |    |               (83,685)                                                      |                           |   |              (203,852)                                                           |   |              (185,694)                     |   |
|                                                      |   |           (1,813,489)                                                                           |    |           (1,343,806)                                                                           |                           |   |           (4,663,189)                                                                           |   |           (3,625,532)                                     |   |
| GROSS      PROFIT                                         |   |               875,394                                                       |    |               497,761                                                       |                           |   |            1,977,010                                                                       |   |            1,641,592                                 |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| OPERATING      EXPENSES                                   |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| Selling,      general and administrative expenses         |   |              (777,031)                                                           |    |              (708,698)                                                           |                           |   |           (1,962,391)                                                                           |   |           (1,907,198)                                     |   |
| Provision      for doubtful debts                         |   |                         - |    |           (6,351,225)                                                                           |                           |   |                         - |   |           (6,351,225)                                     |   |
| Amortization      of convertible debt discount            |   |                         - |    |                         - |                           |   |                         - |   |              (752,369)                     |   |
| Depreciation      and amortization                        |   |               (19,394)                                                      |    |               (18,619)                                                      |                           |   |               (62,309)                                                      |   |               (61,486)                |   |
| Total      Operating Expenses                             |   |              (796,425)                                                           |    |           (7,078,542)                                                                           |                           |   |           (2,024,700)                                                                           |   |           (9,072,278)                                     |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| GAIN      (LOSS) FROM OPERATION                           |   |                78,969                                                  |    |           (6,580,781)                                                                           |                           |   |               (47,690)                                                      |   |           (7,430,686)                                     |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| OTHER      INCOME (EXPENSES)                              |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| Interest      income                                      |   |                     477                       |    |                     297                       |                           |   |                  1,401                                       |   |                  2,242 |   |
| Other      income                                         |   |               985,582                                                       |    |               129,814                                                       |                           |   |            1,268,100                                                                       |   |               210,319                 |   |
| Interest      expenses                                    |   |               (89,649)                                                      |    |              (132,030)                                                           |                           |   |              (254,344)                                                           |   |              (241,741)                     |   |
| Interest      paid to related companies and directors     |   |                 (5,676)                                           |    |                 (6,537)                                           |                           |   |               (17,438)                                                      |   |               (23,105)                |   |
| Other      expenses                                       |   |                    (500)                           |    |                 (1,191)                                           |                           |   |                 (2,225)                                           |   |               (43,781)                |   |
| Total      Other Income (Expenses) , net                  |   |               890,234                                                       |    |                 (9,647)                                           |                           |   |               995,494                                                       |   |               (96,066)                |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| NET      GAIN (LOSS) BEFORE TAXES                         |   |               969,203                                                       |    |           (6,590,428)                                                                           |                           |   |               947,804                                                       |   |           (7,526,752)                                     |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| Income      tax income (expense)                          |   |            1,118,824                                                                       |    |               (19,737)                                                      |                           |   |            1,071,466                                                                       |   |               392,570                 |   |
| NET      GAIN (LOSS)                                      |   |            2,088,027                                                                       |    |           (6,610,165)                                                                           |                           |   |            2,019,270                                                                       |   |           (7,134,182)                                     |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| OTHER      COMPREHENSIVE INCOME                           |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| Foreign      currency translation (loss) gain        |   |              (224,626)                                                           |    |              (112,800)                                                           |                           |   | (209,992)                                                                                                                                         |   |               816,098                 |   |
|                                                      |   |                                                                                                                                              |    |                                                                                                                                              |                           |   |                                                                                                                                              |   |                                                                                                        |   |
| COMPREHENSIVE      GAIN (LOSS)                            |   | 1,863,401                                                                                                                                         | $       | (6,722,965)                                                                                                                                       |                           |   |        $              1,809,278                                                                      |   | $            (6,318,084)                                                      |   |

----

Table of Contents

|                                                                               |   |   |       |   |   |   |
|------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                               |   | 2009   |       |   | 2008   |   |
|                                                                               |   |   |       |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                          |   |   |       |   |   |   |
| Total      net gain (loss)                                                         |   |   | 2,019,269  |   |   |   | (7,134,182 | ) |
| Adjusted      to reconcile net loss to cash provided by operating      activities: |   |   |       |   |   |   |   |   |
| Depreciation-cost      of sales                                                    |   |   | 3,433,479  |   |   |   | 2,864,892 |   |
| Depreciation      and amortization                                                 |   |   | 62,309     |   |   |   | 61,486 |   |
| Provision      for doubtful debts                                                  |   |   | (964,236   | )      |   |   | 6,351,225 |   |
| Amortization      of convertible debt discount                                     |   |   | -          |   |   |   | 752,369 |   |
| Amortization      on stock compensation                                            |   |   | -          |   |   |   | 21,200 |   |
| Changes      in operating assets and liabilities                                   |   |   |       |   |   |   |   |   |
| (Increase)      decrease in:                                                       |   |   |       |   |   |   |   |   |
|   Accounts      receivable                                               |   |   | (784,830   | )      |   |   | (443,724 | ) |
|   Other      receivables and prepaid expenses                            |   |   | (724,375   | )      |   |   | 254,089 |   |
| Due      from a related company                                                    |   |   | (280,018   | )      |   |   | - |   |
|   Inventories                                                            |   |   | 488,470    |   |   |   | (579,963 | ) |
|   Deferred      tax asset                                                |   |   | -          |   |   |   | 123,982 |   |
|   Other      assets                                                      |   |   | -          |   |   |   | 124,471 |   |
| Increase      (decrease) in:                                                       |   |   |       |   |   |   |   |   |
|   Accounts      payable                                                  |   |   | 1,828,403  |   |   |   | 193,937 |   |
|   Other      payables and accrued liabilities                            |   |   | 515,292    |   |   |   | 517,201 |   |
|   Business      tax payable                                              |   |   | (1,627     | )      |   |   | (135,972 | ) |
|   Value      added taxes payable                                         |   |   | -          |   |   |   | 45,530 |   |
|   Income      tax payable                                                |   |   | (850,476   | )      |   |   | (389,999 | ) |
|                                                                          |   |   |       |   |   |   |   |   |
| Net      cash provided by operating activities                                     |   |   | 4,741,660  |   |   |   | 2,626,542 |   |
|                                                                               |   |   |       |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                          |   |   |       |   |   |   |   |   |
| Purchase      of property and equipment                                            |   |   | (4,562,317 | )      |   |   | (2,706,013 | ) |
| Net      cash used in investing activities                                         |   |   | (4,562,317 | )      |   |   | (2,706,013 | ) |
|                                                                               |   |   |       |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                          |   |   |       |   |   |   |   |   |
| Due      to related companies                                                      |   |   | 43,209     |   |   |   | 20,306 |   |
| Proceeds      from bills payable                                                   |   |   | 949,626    |   |   |   | - |   |
| Due      to a stockholder                                                          |   |   | (387,061   | )      |   |   | 10,710 |   |
| Due      to directors                                                              |   |   | 187        |   |   |   | 44,394 |   |
| Net      cash provided by financing activities                                     |   |   | 605,961    |   |   |   | 75,410 |   |
|                                                                               |   |   |       |   |   |   |   |   |
| EFFECT      OF EXCHANGE RATE ON CASH                                               |   |   | (202,768   | )      |   |   | (158,754 | ) |
|                                                                               |   |   |       |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          |   |   | 582,536    |   |   |   | (162,815 | ) |
|                                                                               |   |   |       |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                              |   |   | 436,062    |   |   |   | 334,410 |   |
|                                                                               |   |   |       |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                    |   | $      | 1,018,598  |   |   | $      | 171,595 |   |
|                                                                               |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION                              |   |   |       |   |   |   |   |   |
| Cash      paid for interest                                                        |   | $      | 247,650    |   |   | $      | - |   |
| Cash      paid for income tax                                                      |   | $      | -          |   |   | $      | - |   |
|                                                                               |   |   |       |   |   |   |   |   |

----

Table of Contents

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

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

| (D)  Property      and Equipment |
|--------------------------------------------|

| (F)  Recent      Accounting Pronouncements |
|------------------------------------------------------|

----

Table of Contents

|                                     |   | Digitalization     |       |   |        |   |    |        |   |   | Investments        |   |   |   |    |
|------------------------------------------|--------|--------------------|------------|--------|-------------|--------|---------|-------------|--------|--------|--------------------|--------|--------|--------|---------|
|                                     |   | of      Television |       |   | Television  |   |    | Software    |   |   | in      Television |   |   |   |    |
|                                     |   | Signals            |       |   | Advertising |   |    | Development |   |   | Series             |   |   | Total  |    |
| 2009                                     |   |               |       |   |        |   |    |        |   |   |               |   |   |   |    |
|  Revenues                           |   | $                  | 6,367,291  |   |        | $      | 239,287 |        |   | $      | 33,621             |   |   | $      | -       |   |   | $ | 6,640,199 |   |
|  Gross      profit                  |   |               | 1,907,954  |   |        |   | 35,435  |        |   |   | 33,621             |   |   |   | -       |   |   |   | 1,977,010 |   |
|  Net      income (loss)             |   |               | 2,773,396  |   |        |   | (54,862 | )           |   |   | (142,625           | )      |   |   | (10,285 | ) |   |   | 2,565,624 |   |
|  Total      assets                  |   |               | 18,800,158 |   |        |   | 984,207 |        |   |   | 1,553,554          |   |   |   | 104,758 |   |   |   | 21,442,677 |   |
|  Capital      expenditure           |   |               | 4,515,325  |   |        |   | 8,430   |        |   |   | 38,108             |   |   |   | 454     |   |   |   | 4,562,317 |   |
|  Depreciation      and amortization |   | $                  | 3,472,757  |   |        | $      | -       |        |   | $      | 22,748             |   |   | $      | 283     |   |   | $ | 3,495,788 |   |
|                                     |   |               |       |   |        |   |    |        |   |   |               |   |   |   |    |   |   |   |   |   |
| 2008                                     |   |               |       |   |        |   |    |        |   |   |               |   |   |   |    |   |   |   |   |   |
|  Revenues                           |   | $                  | 4,960,035  |   |        | $      | 288,354 |        |   | $      | 18,735             |   |   | $      | -       |   |   | $ | 5,267,124 |   |
|  Gross      profit                  |   |               | 1,520,196  |   |        |   | 102,661 |        |   |   | 18,735             |   |   |   | -       |   |   |   | 1,641,592 |   |
|  Net      (loss) Income             |   |               | (5,762,569 | )      |        |   | 28,554  |        |   |   | 64,511             |   |   |   | (14,922 | ) |   |   | (5,684,426 | ) |
|  Total      assets                  |   |               | 18,811,375 |   |        |   | 583,467 |        |   |   | 4,271,394          |   |   |   | 107,189 |   |   |   | 23,773,425 |   |
|  Capital      expenditure           |   |               | 2,416,927  |   |        |   | 12,429  |        |   |   | 154,316            |   |   |   | 122,341 |   |   |   | 2,706,013 |   |
|  Depreciation      and amortization |   | $                  | 2,903,993  |   |        | $      | -       |        |   | $      | 15,313             |   |   | $      | 7,072   |   |   | $ | 2,926,378 |   |

|                                                      |   |
|-----------------------------------------------------------|--------|
|                                                      |   | 2009 |   |   | 2008 |   |
|                                                      |   |   |   |   |   |   |
| Total      net income (loss) for reportable segments      |   | $ | 2,565,624 |   |   | $ | (5,684,426 | ) |
| Unallocated      amounts relating to corporate operations |   |   |   |   |   |   |   |   |
| Interest      expenses                                    |   |   | 239,889 |   |   |   | 240,473 |   |
| Amortization      of convertible debt discount            |   |   | - |   |   |   | 752,369 |   |
| Interest      paid to related companies and directors     |   |   | 17,438 |   |   |   | 23,105 |   |
| Administration      expenses                              |   |   | 233,246 |   |   |   | 365,685 |   |
| Professional      fees                                    |   |   | 53,555 |   |   |   | 51,382 |   |
| Others                                                    |   |   | 2,225 |   |   |   | 16,743 |   |
|                                                      |   |   |   |   |   |   |   |   |
| Total      net income (loss)                              |   | $ | 2,019,270 |   |   | $ | (7,134,182 | ) |
|                                                      |   |   |   |   |   |   |   |   |

| -   | 42,706,363      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; and |
| -   | warrants      to purchase 3,444,441 shares of common stock at an exercise price of $2.25      per share, expire in November 2012.     |
|          |                                                                                                                                  |   |   |   |   |

|                                                   |   |   |       |   |   |   |
|--------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                   |   | 2009   |       |   | 2008   |   |
|                                                   |   |   |       |   |   |   |
| Net      Gain (Loss)                                   |   | $      | 2,019,270  |   |   | $      | (7,134,182 | ) |
|                                                   |   |   |       |   |   |   |   |   |
| Basic - 2 classes method                               |   |   |       |   |   |   |   |   |
| Gain      (Loss) available to common stockholders      |   | $      | 2,019,270  |   |   | $      | (7,134,182 | ) |
|                                                   |   |   |       |   |   |   |   |   |
| Weighted-average      common stock outstanding         |   |   | 42,706,363 |   |   |   | 42,556,463 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Basic      earnings per share - Common Stock           |   |   | 0.05       |   |   |   | (0.17 | ) |
|                                                   |   |   |       |   |   |   |   |   |
| Diluted                                                |   |   |       |   |   |   |   |   |
| Gain      (loss) available to common stockholders      |   | $      | 2,019,270  |   |   | $      | (7,134,182 | ) |
|                                                   |   |   |       |   |   |   |   |   |
| Diluted      weighted-average common stock outstanding |   |   | 42,706,363 |   |   |   | 42,556,463 |   |
|                                                   |   |   |       |   |   |   |   |   |
| Diluted      earnings per share                        |   |   | 0.05       |   |   |   | (0.17 | ) |
|                                                   |   |   |       |   |   |   |   |   |
|                                                   |   |   |       |   |   |   |   |   |
|                                                   |   |   |       |   |   |   |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        | Sep      30,                      |      | Dec      31,                       |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|---------------------------------------------|--------|--------|-------------|-----------------------------------|-----------|------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        | 2009                              |      | 2008                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   | (Unaudited) |                              | (Audited) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        |                              |      |                               |
|  $2,150,000      Convertible Debentures, net of $135,000 conversions and unamortized      discount of $0 as of September 30, 2009 and December 31, 2008 at 13%      interest per annum for the first quarter and at 10% interest per annum due      each quarter end in 2009, 2010 and expired at June 30,    2010.                                                                                                                                                                                             |   |      |   |                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $      | 2,015,000 |   |  $  2,015,000                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        |                              |      |                               |
|   $500,000      Convertible Debentures, net of unamortized discount of $0 as      of September 30, 2009 and December 31, 2008 at 4% interest per annum      for the period of January 1 to May 17, 2008 due April 30, 2009, and 10%      interest per annum for the period of May 18 to December 31, 2008 due      October 31, 2009, and at 13% interest per annum for the year 2009 due at      the end of 2009, and at 14% interest per annum for the year 2010 due at      the end of 2010 upon expiry. |   |      |   |                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 500,000   |   |       500,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        |                              |      |                               |
|   $200,000      Convertible Debentures, net of unamortized discount of $0 as of September      30, 2009 and December 31, 2008 at 4% interest per annum due May 2008, in      default                                                                                                                                                                                                                                                                                                                            |   |      |   |                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 200,000   |   |       200,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        |                              |      |                               |
|   $150,000      Convertible Debentures, net of unamortized discount of $0 as of September      30, 2009 and December 31, 2008 at 4% interest per annum due May 2008, in      default                                                                                                                                                                                                                                                                                                                            |   |      |   |                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 150,000   |   |       150,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        |                              |      |                               |
|   $100,000      Convertible Debentures, net of unamortized discount of $0 as of September      30, 2009 and December 31, 2008 at 4% interest per annum due June 2008, in      default                                                                                                                                                                                                                                                                                                                           |   |      |   |                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 100,000   |   |       100,000 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   |        |                              |      |                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |      |   |                                        |   |   | $           |     2,965,000 |      | $    2,965,000 |

----

Table of Contents

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

----

Table of Contents

----

Table of Contents

----

Table of Contents

| EXHIBIT      NO |   | DESCRIPTION      OF EXHIBIT                                                                                                                                                                      |
|-----------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                                                             |
| 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     |

----

Table of Contents

|  Date:      November 13, 2009 /s/      Ng Chi ShingNg      Chi ShingChief      Executive Officer Date:      November 13, 2009 /s/      Ng Chi ShingNg ChiShingChief      Financial Officer |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|