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UNITED STATES

CHINA DIGITAL MEDIACORPORATION

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

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|         |                                                                                                                                                                                                                                                                      | Page             |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|         |                                                                                                                                                                                                                                                                      |             |
| PART      I  |                                                                                                                                                                                                                                                                      |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      1.  Financial Statements 3                                                                                                                                                                                                                            |             |
|         |                                                                                                                                                                                                                                                                      |             |
|         |        Condensed      Consolidated Balance Sheet - September 30, 2007(unaudited)                                                                                                                                                       | 4                |
|         |                                                                                                                                                                                                                                                                      |             |
|         |        Condensed      Consolidated Statements of Operations And ComprehensiveIncome                - Three Months and Nine Months Ended September 30, 2007 and 2006      (unaudited) | 5                |
|         |                                                                                                                                                                                                                                                                      |             |
|         |        Condensed      Consolidated Statements of Cash Flows                - Nine Months Ended September 30, 2007 and 2006(unaudited)                                                | 6                |
|         |                                                                                                                                                                                                                                                                      |             |
|         |        Notes      to Condensed Consolidated Financial Statements (unaudited)                                                                                                                                                           | 7 -      16 |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      2.  Management's Discussion and Analysis of Financial Condition      And  Results of Operations                                                                                                                                             | 17               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      3.  Controls  and  Procedures                                                                                                                                                                                                     | 20               |
|         |                                                                                                                                                                                                                                                                      |             |
| PART      II |                                                                                                                                                                                                                                                                      |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      1.  Legal  Proceedings                                                                                                                                                                                                                      | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      1A. Risk Factors                                                                                                                                                                                                                                                | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      2.  Unregistered Sales of Equity Securities and Use of      Proceeds                                                                                                                                                                                  | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      3.  Defaults Upon Senior Securities                                                                                                                                                                                                                   | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      4.  Submission of Matters to a Vote of Security      Holders                                                                                                                                                                                          | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      5.  Other Information                                                                                                                                                                                                                                 | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         | Item      6.  Exhibits and Reports                                                                                                                                                                                                                              | 21               |
|         |                                                                                                                                                                                                                                                                      |             |
|         |               Signatures                                                                                                                                                                                                          | 22               |

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CHINADIGITAL MEDIA CORPORATION AND SUBSIDIARIES

|                                                                                                                                                                                                      |   | (Restated) |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|
|                                                                                                                                                                                                      |   |       |       |
| ASSETS                                                                                                                                                                                                    |   |       |       |
|                                                                                                                                                                                                      |   |       |       |
| CURRENT      ASSETS                                                                                                                                                                                       |   |       |       |
| Cash      and cash equivalents                                                                                                                                                                            |   | $          | 406,679    |   |
| Accounts      receivable, net of allowances                                                                                                                                                               |   |       | 9,700,914  |   |
| Inventories,      net                                                                                                                                                                                     |   |       | 657,392    |   |
| Other      receivables and prepaid expenses                                                                                                                                                               |   |       | 995,689    |   |
| Value      added taxes recoverable                                                                                                                                                                        |   |       | 25,077     |   |
| Total      Current Assets                                                                                                                                                                                 |   |       | 11,785,751 |   |
|                                                                                                                                                                                                      |   |       |       |   |
| INTANGIBLE      ASSETS                                                                                                                                                                                    |   |       | 4,448,791  |   |
| INVESTMENTS      IN TELEVISION SERIES, NET                                                                                                                                                                |   |       | 641,969    |   |
| PROPERTY      AND EQUIPMENT, NET                                                                                                                                                                          |   |       | 10,613,748 |   |
| DEFERRED      TAX ASSET                                                                                                                                                                                   |   |       | 152,224    |   |
| OTHER      ASSETS                                                                                                                                                                                         |   |       | 902,990    |   |
| TOTAL      ASSETS                                                                                                                                                                                         |   | $          | 28,545,473 |   |
|                                                                                                                                                                                                      |   |       |       |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                                                 |   |       |       |   |
|                                                                                                                                                                                                      |   |       |       |   |
| CURRENT      LIABILITIES                                                                                                                                                                                  |   |       |       |   |
| Convertible      debentures                                                                                                                                                                               |   | $          | 1,796,851  |   |
| Accounts      payable                                                                                                                                                                                     |   |       | 4,743,823  |   |
| Other      payables and accrued liabilities                                                                                                                                                               |   |       | 1,623,746  |   |
| Due      to a director                                                                                                                                                                                    |   |       | 167,167    |   |
| Due      to related companies                                                                                                                                                                             |   |       | 376,947    |   |
| Business      tax payable                                                                                                                                                                                 |   |       | 112,152    |   |
| Income      tax payable                                                                                                                                                                                   |   |       | 2,333,558  |   |
| Other      tax payable                                                                                                                                                                                    |   |       | 9,940      |   |
| Total      Current Liabilities                                                                                                                                                                            |   |       | 11,164,184 |   |
|                                                                                                                                                                                                      |   |       |       |   |
| 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,      2007) |   |       | 1,875      |   |
| Common      stock ($0.001 par value, 500,000,000 shares authorized,           31,602,365 shares issued and outstanding as of September 30,      2007)                            |   |       | 31,602     |   |
| Common      stock to be issued ($0.001 par value, 10,000,000 shares)                                                                                                                                      |   |       | 10,000     |   |
| Additional      paid-in capital                                                                                                                                                                           |   |       | 14,562,806 |   |
| Deferred      stock compensation                                                                                                                                                                          |   |       | (37,100    | ) |
| Retained      earnings                                                                                                                                                                                    |   |       |       |   |
|    Unappropriated                                                                                                                                                                          |   |       | 1,352,923  |   |
|    Appropriated                                                                                                                                                                            |   |       | 1,521,999  |   |
| Accumulated      other comprehensive loss                                                                                                                                                                 |   |       | (62,816    | )  |
| Total      Stockholders' Equity                                                                                                                                                                           |   |       | 17,381,289 |   |
|                                                                                                                                                                                                      |   |       |       |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                     |   | $          | 28,545,473 |   |

----

|                                                                               |   | For      the three months Ended |       |    | For      the nine months Ended |   |
|------------------------------------------------------------------------------------|--------|---------------------------------|------------|---------|--------------------------------|--------|
|                                                                               |   | September      30,              |       |    | September      30,             |   |
|                                                                               |   | 2007                            |       |    | 2006                           |   |   | 2007 |   |   | 2006 |   |
|                                                                               |   | (Restated)                      |       |    | (Restated)                     |   |   | (Restated) |   |   | (Restated) |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |
| NET      SALES                                                                     |   |                            |       |    |                           |   |   |   |   |   |   |   |
| Revenue      from digitalization of television signals                             |   | $                               | 1,361,511  |    |                           | $      | 1,906,869 |   |   | $ | 4,119,214 |   |   | $ | 5,514,175 |   |
| Revenue      from television advertising                                           |   |                            | 33,493     |    |                           |   | 1,862,009 |   |   |   | 330,791 |   |   |   | 5,470,873 |   |
| Revenue      from software development                                             |   |                            | 168        |    |                           |   | 8,284 |   |   |   | 22,188 |   |   |   | 41,507 |   |
| Revenue      from investments in television series                                 |   |                            | -          |    |                           |   | 90,510 |   |   |   | - |   |   |   | 265,530 |   |
| Government      grant received                                                     |   |                            | 320,546    |    |                           |   | 323,252 |   |   |   | 977,102 |   |   |   | 948,322 |   |
|                                                                               |   |                            | 1,715,718  |    |                           |   | 4,190,924 |   |   |   | 5,449,295 |   |   |   | 12,240,407 |   |
| COST      OF SALES                                                                 |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
|    Cost      of Sales - digitalization of television signals        |   |                            | (189,612   | )       |                           |   | (339,197 | ) |   |   | (537,990 | ) |   |   | (908,249 | ) |
|    Depreciation      - digitalization of television signals         |   |                            | (817,728   | )       |                           |   | (674,141 | ) |   |   | (2,289,627 | ) |   |   | (1,724,427 | ) |
|    Cost      of Sales - television advertising                      |   |                            | 2,433      |    |                           |   | (1,889,649 | ) |   |   | (307,394 | ) |   |   | (4,791,220 | ) |
|    Cost      of Sales - software development                        |   |                            | -          |    |                           |   | (11 | ) |   |   | - |   |   |   | (54 | ) |
|    Cost      of Sales - investment in television series             |   |                            | -          |    |                           |   | (61,552 | ) |   |   | - |   |   |   | (180,942 | ) |
| GROSS      PROFIT                                                                  |   |                            | 710,811    |    |                           |   | 1,226,374 |   |   |   | 2,314,284 |   |   |   | 4,635,515 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                            |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                  |   |                            | (1,279,662 | )       |                           |   | (618,924 | ) |   |   | (2,539,668 | ) |   |   | (1,709,230 | ) |
| Depreciation      and amortization                                                 |   |                            | (24,679    | )       |                           |   | 282,159 |   |   |   | (72,775 | ) |   |   | (89,213 | ) |
| Total      Operating Expenses                                                      |   |                            | (1,304,341 | )       |                           |   | (336,765 | ) |   |   | (2,612,443 | ) |   |   | (1,798,443 | ) |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| (LOSS)      INCOME FROM OPERATION                                                  |   |                            | (593,530   | )       |                           |   | 889,609 |   |   |   | (298,159 | ) |   |   | 2,837,072 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSES)                                                       |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
|          Equity loss of affiliates                                  |   |                            | --         |    |                           |   |  -- |   |   |   | (22,396 | )  |   |   |  -- |   |
| Interest      income                                                               |   |                            | 796        |    |                           |   | 267 |   |   |   | 1,666 |   |   |   | 25,631 |   |
| Other      income                                                                  |   |                            | 40,773     |    |                           |   | 1,899 |   |   |   | 63,831 |   |   |   | 80,020 |   |
| Amortization      of convertible debt discount                                     |   |                            | (516,666   | )       |                           |   | -- |   |   |   | (1,549,998 | ) |   |   | -- |   |
| Interest      expenses                                                             |   |                            | (32,087    | )       |                           |   | (4,948 | ) |   |   | (95,115 | ) |   |   | (4,948 | ) |
| Interest      paid to related companies and directors                              |   |                            | (4,293     | )       |                           |   | (4,045 | ) |   |   | (10,037 | ) |   |   | (10,479 | ) |
| Other      expenses                                                                |   |                            | 2,411      |    |                           |   | - |   |   |   | (28,905 | ) |   |   | -- |   |
| Total      Other (Expenses) Income, net                                            |   |                            | (509,066)  |    |                           |   | (6,827 | ) |   |   | (1,640,954 | ) |   |   | 90,224 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| NET      (LOSS) INCOME BEFORE TAXES                                           |   |                            | (1,102,596 | )       |                           |   | 882,782 |   |   |   | (1,939,113 | ) |   |   | 2,927,296 |   |
|     Income      tax expense                                    |   |                            | (82,334    | )       |                           |   | (191,386 | ) |   |   | (129,128 | ) |   |   | (887,488 | ) |
| NET      (LOSS) INCOME FROM CONTINUING OPERATIONS                                  |   |                            | (1,184,930 | )       |                           |   | 691,396 |   |   |   | (2,068,241 | ) |   |   | 2,039,808 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| DISCONTINUED      OPERATIONS                                                       |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Equity      (loss) gain of affiliates                                              |   |                            | (2,104     | )  |                           |   | 253 |   |   |   | (14,538 | )  |   |   | (1,149 | ) |
| Loss      from subsidiary                                                          |   |                            | -          |    |                           |   | (41,376 | ) |   |   | - |   |   |   | (45,688 | ) |
| Gain      on disposal of subsidiary                                                |   |                            | 362,109    |    |                           |   | - |   |   |   | 225,415 |   |   |   | - |   |
| Gain on      disposal of affiliate                                            |   |                            | 86,059     |    |                           |   | - |   |   |   | 86,059 |   |   |   | - |   |
| INCOME      (LOSS) FROM DISCONTINUED OPERATIONS                                    |   |                            | 446,064    |    |                           |   | (41,123 | ) |   |   | 296,936 |   |   |   | (46,837 | ) |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| NET      (LOSS) INCOME                                                             |   | $                               | (738,866   | )       |                           | $      | 650,273 |   |   | $ | (1,771,305 | ) |   | $ | 1,992,971 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      COMPREHENSIVE LOSS                                                      |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation loss                                             |   |                            | (156,180   | )  |                           |   | (48,723 | ) |   |   | (37,601 | )  |   |   | (48,363 | ) |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE      (LOSS) INCOME                                                   |   | $                               | (895,046   | )       |                           | $      | 601,550 |   |   | $ | (1,808,906 | ) |   | $ | 1,944,608 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net      income per share-basic - two classes method                               |   | $                               | -0.01      |    |                           | $      | 0.02 |   |   | $ | -0.04 |   |   | $ | 0.06 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net      income per share-diluted                                                  |   | $                               | 0.00       |    |                           | $      | 0.02 |   |   | $ | 0.00 |   |   | $ | 0.05 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding during the period -    basic    |   |                            | 41,602,365 |    |                           |   | 31,748,365 |   |   |   | 36,405,232 |   |   |   | 31,471,286 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Number      of preferred shares outstanding during the period                      |   |                            | 1,875,000  |    |                           |   | 1,875,000 |   |   |   | 1,875,000 |   |   |   | 1,875,000 |   |
|                                                                               |   |                            |       |    |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of shares outstanding during the period-      diluted |   |                            | 57,866,247 |    |                           |   | 41,220,139 |   |   |   | 52,669,114 |   |   |   | 40,878,544 |   |

----

|                                                                                 |   | 2007       |       |    | 2006       |   |
|--------------------------------------------------------------------------------------|--------|------------|------------|---------|------------|--------|
|                                                                                 |   | (Restated) |       |    | (Restated) |   |
|                                                                                 |   |       |       |    |       |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                            |   |       |       |    |       |   |
|          Net (loss) income                                            |   | $          | (1,771,305 | )       |       | $      | 1,992,971 |   |
| Adjusted      to reconcile net income to cash provided by operating      activities: |   |       |       |    |       |   |   |   |
| Equity      loss of affiliate                                                        |   |       | 36,934     |    |       |   | 1,149 |   |
| Amortization      - cost of sales                                                    |   |       | -          |    |       |   | 160,892 |   |
| Depreciation-cost      of sales                                                      |   |       | 2,289,627  |    |       |   | 1,724,427 |   |
| Depreciation      and amortization                                                   |   |       | 72,775     |    |       |   | 98,101 |   |
| Provision      for doubtful debts                                                    |   |       | 977,972    |    |       |   | - |   |
| Gain      on disposal of interest in subsidiary                                      |   |       | (255,415   | )       |       |   | - |   |
| Gain on      disposal of affiliate                                              |   |       | (86,059    | )  |       |   | - |   |
| Stock      issued for services                                                       |   |       | -          |    |       |   | 128,500 |   |
| Amortization      on stock compensation                                              |   |       | 47,700     |    |       |   | - |   |
| Amortization      of convertible debt discount                                       |   |       | 1,549,998  |    |       |   | - |   |
| Minority      interests                                                              |   |       | -          |    |       |   | (63,322 | ) |
| Changes      in operating assets and liabilities:                                    |   |       |       |    |       |   |   |   |
| (Increase)      decrease in:                                                         |   |       |       |    |       |   |   |   |
|   Accounts      receivable                                                 |   |       | (890,135   | )       |       |   | (5,165,390 | ) |
|   Other      receivables and prepaid expenses                              |   |       | (650,165   | )       |       |   | (705,200 | ) |
|   Inventories                                                              |   |       | (181,911   | )       |       |   | (102,984 | ) |
|   Deferred      tax asset                                                  |   |       | (152,224   | )       |       |   | - |   |
|   Other      assets                                                        |   |       | 156,504    |    |       |   | - |   |
| Increase      (decrease) in:                                                         |   |       |       |    |       |   |   |   |
|   Due      to a related company                                            |   |       | -          |    |       |   | (125,602 | ) |
|   Accounts      payable                                                    |   |       | (1,147,515 | )       |       |   | 3,462,529 |   |
|   Other      payables and accrued liabilities                              |   |       | (161,599   | )       |       |   | 996,543 |   |
|   Business      tax payable                                                |   |       | (153,503   | )       |       |   | - |   |
|   Value      added taxes payable                                           |   |       | 38,133     |    |       |   | (7,690 | ) |
|   Income      tax payable                                                  |   |       | 378,758    |    |       |   | 936,224 |   |
|   Other      tax payable                                                   |   |       | (23,937    | )       |       |   | - |   |
| Net      cash provided by operating activities                                       |   |       | 74,633     |    |       |   | 3,331,148 |   |
|                                                                                 |   |       |       |    |       |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                            |   |       |       |    |       |   |   |   |
| Net      cash inflow from business combination (Note 2)                              |   |       | 61         |    |       |   | - |   |
| Disposal      (acquisition) of affiliates                                            |   |       | 265,924    |    |       |   | (323,128 | ) |
| Investment      in affiliate                                                         |   |       | 360,684    |    |       |   | - |   |
| Disposal      of subsidiary (Note 5)                                                 |   |       | 87,333     |    |       |   | - |   |
| Purchase      of property and equipment                                              |   |       | (1,470,751 | )       |       |   | (5,590,817 | ) |
| Net      cash used in investing activities                                           |   |       | (756,749   | )       |       |   | (5,913,945 | ) |
|                                                                                 |   |       |       |    |       |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                            |   |       |       |    |       |   |   |   |
| Due      to related companies                                                        |   |       | (3,539     | )       |       |   | - |   |
| Proceeds      from stock issuance in private placement                               |   |       | -          |    |       |   | 387,500 |   |
| Proceeds      from convertible debentures                                            |   |       | -          |    |       |   | 1,100,000 |   |
| Minority      interests                                                              |   |       | 92,918     |    |       |   | 122,514 |   |
| Due      to a stockholder                                                            |   |       | 779,101    |    |       |   |  - |   |
| Due      to a director                                                               |   |       | 82,511     |    |       |   | 84,472 |   |
| Net      cash provided by financing activities                                       |   |       | 950,991    |    |       |   | 1,694,486 |   |
|                                                                                 |   |       |       |    |       |   |   |   |
| EFFECT      OF EXCHANGE RATE ON CASH                                                 |   |       | (264,787   | )  |       |   | 14,662 |   |
|                                                                                 |   |       |       |    |       |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                            |   |       | 4,088      |    |       |   | (873,649 | ) |
|                                                                                 |   |       |       |    |       |   |   |   |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                |   |       | 402,591    |    |       |   | 1,124,912 |   |
|                                                                                 |   |       |       |    |       |   |   |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                      |   | $          | 406,679    |    |       | $      | 251,263 |   |
|                                                                                 |   |       |       |    |       |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                               |   |       |       |    |       |   |   |   |
| Cash      paid for interest                                                          |   | $          | -          |    |       | $      | - |   |
| Cash      paid for income tax                                                        |   | $          | -          |    |       | $      | - |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

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

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

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

| (D) | Recent      Accounting Pronouncements |
|-----|---------------------------------------|

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

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

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

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

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

| Current      assets                                   |   | $      | 520,779 |   |
|-------------------------------------------------------|--------|--------|---------|--------|
| Non-current      assets                               |   |   | 225,746 |   |
| Total      Assets                                     |   | $      | 746,525 |   |
|                                                  |   |   |    |   |
| Current      liabilities                              |   | $      | 379,454 |   |
| Stockholders’      equity                       |   |   | 367,071 |   |
| Total      Liabilities and Stockholders’ Equity |   | $      | 746,525 |   |
|                                                  |   |   |    |   |
| Revenues                                              |   | $      | -       |   |
| Gross      Profit                                     |   | $      | -       |   |
| Net      loss                                         |   | $      | 29,669  |   |

| Company      share at 49%        |   | $ | 14,538 |   |
|----------------------------------|--------|---|--------|--------|
| Equity      in loss of affiliate |   | $ | 14,538 |   |

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

| Fixed      Assets                               |   | $      | 628,560  |   |
|-------------------------------------------------|--------|--------|----------|--------|
| Cash      and bank balance                      |   |   | 97,186   |   |
| Accounts      receivable                        |   |   | 38,927   |   |
| Other      receivables                          |   |   | 85,898   |   |
| Prepaid      expenses                           |   |   | 216,080  |   |
| Due      to Stockholders                        |   |   | (779,101 | )      |
| Accounts      payable                           |   |   | (77,440  | )      |
| Other      payables                             |   |   | (128,361 | )      |
| Accrued      liabilities                        |   |   | (35,607  | )      |
| Deposit      received                           |   |   | (48,922  | )      |
| Minority      interest                          |   |   | (68,116  | )      |
|                                            |   |   | (70,896  | )      |
| Gain      on disposal of interest in subsidiary |   |   | 373,185  |   |
| Consideration                                   |   |   | 302,289  |   |
|                                            |   |   |     |   |
| Satisfied      by:                              |   |   |     |   |
| Cash      consideration received                |   |   | 184,519  |   |
|                                            |   |   |     |   |
| Net      cash inflow arising on disposal        |   |   |     |   |
|                                            |   |   |     |   |
| Cash      consideration received                |   |   | 184,519  |   |
| Cash      and bank balance disposed of          |   |   | (97,186  | )      |
|                                            |   |   | 87,333   |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

|                                     |   | Digitalization      of Television Signal |       |   | Television      Advertising |   |      | Software      Development |   |   | Investments      in Television Series |   |   | Other  |      |   | Total  |   |
|------------------------------------------|--------|------------------------------------------|------------|--------|-----------------------------|--------|-----------|---------------------------|--------|--------|---------------------------------------|--------|--------|--------|-----------|--------|--------|--------|
|                                     |   |                                     |       |   |                        |   |      |                      |   |   |                                  |   |   |   |      |   |   |   |
| 2007      (Restated)                     |   |                                     |       |   |                        |   |      |                      |   |   |                                  |   |   |   |      |   |   |   |
|  Revenues                           |   | $                                        | 5,096,316  |   |                        | $      | 330,791   |                      |   | $      | 22,188                                |   |   | $      | -         |   |   | $      | - |   |   | $ | 5,449,295 |   |
|  Gross      profit                  |   |                                     | 2,268,699  |   |                        |   | 23,397    |                      |   |   | 22,188                                |   |   |   | -         |   |   |   | - |   |   |   | 2,314,284 |   |
|  Net      Income (Loss)             |   |                                     | 934,754    |   |                        |   | (512,663  | )                         |   |   | (144,672                              | )      |   |   | (101,358  | )      |   |   | (1,947,367 | ) |   |   | (1,771,305 | ) |
|  Total      assets                  |   |                                     | 21,135,031 |   |                        |   | 265,417   |                      |   |   | 1,453,152                             |   |   |   | 954,703   |   |   |   | 4,737,170 |   |   |   | 28,545,473 |   |
|  Capital      expenditure           |   |                                     | 1,402,139  |   |                        |   | (584,613  | )                         |   |   | 17,376                                |   |   |   | 390       |   |   |   | 7,600 |   |   |   | 842,892 |   |
|  Depreciation      and amortization |   |                                     | 2,320,525  |   |                        |   | -         |                      |   |   | 6,151                                 |   |   |   | 28,373    |   |   |   | 7,353 |   |   |   | 2,362,402 |   |
|                                     |   |                                     |       |   |                        |   |      |                      |   |   |                                  |   |   |   |      |   |   |   |   |   |   |   |   |   |
| 2006      (Restated)                     |   |                                     |       |   |                        |   |      |                      |   |   |                                  |   |   |   |      |   |   |   |   |   |   |   |   |   |
|  Revenues                           |   | $                                        | 6,462,497  |   |                        | $      | 5,470,873 |                      |   | $      | 41,507                                |   |   | $      | 265,530   |   |   | $      | - |   |   | $ | 12,240,407 |   |
|  Gross      profit                  |   |                                     | 3,629,594  |   |                        |   | 581,826   |                      |   |   | 339,507                               |   |   |   | 84,588    |   |   |   | - |   |   |   | 4,635,515 |   |
|  Net      Income                    |   |                                     | 2,094,083  |   |                        |   | 137,843   |                      |   |   | (105,829                              | )      |   |   | 83,094    |   |   |   | (216,220 | ) |   |   | 1,992,971 |   |
|  Total      assets                  |   |                                     | 18,950,123 |   |                        |   | 4,420,163 |                      |   |   | 52,965                                |   |   |   | 1,100,684 |   |   |   | 862,555 |   |   |   | 25,386,490 |   |
|  Capital      expenditure           |   |                                     | 5,061,156  |   |                        |   | 416,272   |                      |   |   | 3,507                                 |   |   |   | 104,137   |   |   |   | 5,745 |   |   |   | 5,590,817 |   |
|  Depreciation      and amortization |   |                                     | 1,919,918  |   |                        |   | 20,166    |                      |   |   | 9,730                                 |   |   |   | 27,532    |   |   |   | 6,074 |   |   |   | 1,983,420 |   |

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

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

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

| -   | warrants      to purchase 7,333,323 shares of common stock at an exercise price of $0.80      per share, expire in November 2012; |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------|

| -   | warrants      to purchase 7,333,323 shares of common stock at an exercise price of $1.20      per share, expire in November 2012; |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------|

| -   | warrants      to purchase 3,666,662 shares of common stock at an exercise price of $2.25      per share, expire in November 2012; |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------|

| -   | warrants      to purchase 100,000 shares of common stock at an exercise price of $1.50      per share, expire in July 2011; and |
|---------------|---------------------------------------------------------------------------------------------------------------------------------|

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

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

|                                                                                  |   | 2007       |       |   | 2006       |   |
|---------------------------------------------------------------------------------------|--------|------------|------------|--------|------------|--------|
|                                                                                  |   | (Restated) |       |   | (Restated) |   |
| Earnings                                                                              |   |       |       |   |       |   |
| Net      (Loss)/Income                                                                |   |       | (1,771,305 | )      |       |   | 1,992,971 |   |
|                                                                                  |   |       |       |   |       |   |   |   |
| Basic      - 2 classes method                                                         |   |       |       |   |       |   |   |   |
| (Loss)      / Income available to common stockholders                                 |   |       | (1,771,305 | )      |       |   | 1,992,971 |   |
|                                                                                  |   |       |       |   |       |   |   |   |
| Weighted-average      common stock outstanding                                        |   |       | 36,405,232 |   |       |   | 31,471,286 |   |
| Number      of preferred stock                                                        |   |       | 1,875,000  |   |       |   | 1,875,000 |   |
| Weighted-average      common stock outstanding - assume CD converted                  |   |       | 6,888,882  |   |       |   | 0 |   |
|                                                                                  |   |       |       |   |       |   |   |   |
| Basic      earnings per share - Common Stock                                          |   |       | -0.04      |   |       |   | 0.06 |   |
| Basic      earnings per share - Preferred Stock                                       |   |       | -0.04      |   |       |   | 0.06 |   |
| Basic      earnings per share - CD                                                    |   |       | -0.04      |   |       |   | 0.00 |   |
|                                                                                  |   |       |       |   |       |   |   |   |
| Diluted                                                                               |   |       |       |   |       |   |   |   |
| (Loss)      / Income available to common stockholders                                 |   |       | (1,771,305 | )      |       |   | 1,992,971 |   |
| (Loss)      / Income available to common stockholders & assumed CD      converted |   |       | (128,562   | )      |       |   | 1,992,971 |   |
|                                                                                  |   |       |       |   |       |   |   |   |
| Diluted      weighted-average common stock outstanding                                |   |       | 52,669,114 |   |       |   | 40,878,544 |   |
|                                                                                  |   |       |       |   |       |   |   |   |
| Diluted      earnings per share                                                       |   |       | 0.00       |   |       |   | 0.05 |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

|                                            |   | September      30, 2006  |       |
|-------------------------------------------------|--------|--------------------------|------------|
|                                            |   | Previously      reported |       |   | Restated |   |
|                                            |   |                     |       |   |   |   |
| CURRENT      ASSETS                             |   |                     | 11,831,309 |   |   |   | 11,825,373 |   |
|                                            |   |                     |       |   |   |   |   |   |
| PROPERTY      AND EQUIPMENT, NET                |   |                     | 13,358,246 |   |   |   | 12,236,394 |   |
| OTHER      ASSETS                               |   |                     | 1,324,723  |   |   |   | 1,324,723 |   |
| TOTAL      ASSETS                               |   | $                        | 26,514,278 |   |   | $ | 25,386,490 |   |
|                                            |   |                     |       |   |   |   |   |   |
| LIABILITIES                                     |   |                     | 12,988,368 |   |   |   | 12,616,198 |   |
|                                            |   |                     |       |   |   |   |   |   |
| MINORITY      INTERESTS                         |   |                     | 87,249     |   |   |   | 87,249 |   |
|                                            |   |                     |       |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY                       |   |                     |       |   |   |   |   |   |
|  Series      A convertible preferred stock |   |                     | 1,875      |   |   |   | 1,875 |   |
|  Common      stock                         |   |                     | 31,757     |   |   |   | 31,757 |   |
|  Additional      paid-in capital           |   |                     | 5,939,862  |   |   |   | 5,939,862 |   |
|  Deferred      stock compensation          |   |                     | (1,333     | ) |   |   | (1,333 | ) |
|  Retained      earnings                    |   |                     | 7,553,569  |   |   |   | 6,797,951 |   |
|  Accumulated      other comprehensive loss |   |                     | (87,069    | ) |   |   | (87,069 | ) |
| Total      Stockholders' Equity                 |   |                     | 13,438,661 |   |   |   | 12,683,043 |   |
|                                            |   |                     |       |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY |   | $                        | 26,514,278 |   |   | $ | 25,386,490 |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

|                                                                                 |   | Three      months endedSeptember      30, 2006 |       |   | Nine      months endedSeptember      30, 2006 |   |
|--------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|--------|-----------------------------------------------|--------|
|                                                                                 |   | Previously      reported                       |       |   | Restated                                      |   |   | Previously      reported |   |   | Restated |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |
| NET      SALES                                                                       |   | $                                              | 4,269,045  |   |                                          | $      | 4,190,924 |   |   | $ | 12,318,528 |   |   | $ | 12,240,407 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| COST      OF SALES                                                                   |   |                                           | (3,957,537 | )      |                                          |   | (2,964,550 | ) |   |   | (7,875,084 | ) |   |   | (7,604,892 | ) |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| GROSS      PROFIT                                                                    |   |                                           | 311,508    |   |                                          |   | 1,226,374 |   |   |   | 4,443,444 |   |   |   | 4,635,515 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                              |   |                                           | 568,261    |   |                                          |   | (336,765 | ) |   |   | (1,783,338 | ) |   |   | (1,798,443 | ) |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      FROM OPERATION                                                           |   |                                           | 879,769    |   |                                          |   | 889,609 |   |   |   | 2,660,106 |   |   |   | 2,837,072 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSES)                                                         |   |                                           | (84,948    | )      |                                          |   | (6,827 | ) |   |   | 12,103 |   |   |   | 90,224 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  NET      INCOME BEFORE TAXES AND DISCONTINUED OPERATION                        |   |                                           | 794,821    |   |                                          |   | 882,782 |   |   |   | 2,672,209 |   |   |   | 2,927,296 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Income      tax expense                                                        |   |                                           | (162,358   | )      |                                          |   | (191,386 | ) |   |   | (803,309 | ) |   |   | (887,488 | ) |
|   Loss      from discontinued operations                                   |   |                                           | (41,124    | )      |                                          |   | (41,124 | ) |   |   | (46,837 | ) |   |   | (46,837 | ) |
|  NET      INCOME                                                                |   | $                                              | 591,339    |   |                                          | $      | 650,272 |   |   | $ | 1,822,063 |   |   | $ | 1,992,971 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Foreign      currency translation gain (loss)                                  |   |                                           | (48,723    | )      |                                          |   | (48,723 | ) |   |   | (48,363 | ) |   |   | (48,363 | ) |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  COMPREHENSIVE      INCOME                                                      |   |                                           | 542,616    |   |                                          |   | 601,549 |   |   |   | 1,773,690 |   |   |   | 1,944,608 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Net      income per share-basic - two classes method                           |   | $                                              | 0.02       |   |                                          | $      | 0.02 |   |   | $ | 0.05 |   |   | $ | 0.06 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Net      income per share-diluted                                              |   | $                                              | 0.01       |   |                                          | $      | 0.02 |   |   | $ | 0.04 |   |   | $ | 0.05 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Weighted      average number of shares outstanding during the year -    basic  |   |                                           | 31,748,365 |   |                                          |   | 31,748,365 |   |   |   | 31,471,286 |   |   |   | 31,471,286 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Number      of preferred shares outstanding during the year                    |   |                                           | 1,875,000  |   |                                          |   | 1,875,000 |   |   |   | 1,875,000 |   |   |   | 1,875,000 |   |
|                                                                                 |   |                                           |       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Weighted      average number of shares outstanding during the year-    diluted |   |                                           | 41,220,139 |   |                                          |   | 41,220,139 |   |   |   | 40,878,544 |   |   |   | 40,878,544 |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

|                                            | September      30, 2007  |       |
|-------------------------------------------------|--------------------------|------------|
|                                            | Previously      reported |       |   | Restated |   |
|                                            |                     |       |   |   |   |
| TOTAL      ASSETS                               |                     | 28,545,473 |   |   |   | 28,545,473 |   |
|                                            |                     |       |   |   |   |   |   |
| CURRENT      LIABILITIES                        |                     |       |   |   |   |   |   |
| Convertible      debentures                     |                     | 3,100,000  |   |   |   | 1,796,851 |   |
| Other      current liabilities                  |                     | 9,367,333  |   |   |   | 9,367,333 |   |
|                                            | $                        | 12,467,333 |   |   |   | 11,164,184 |   |
|                                            |                     |       |   |   |   |   |   |
| MINORITY      INTERESTS                         |                     | --         |   |   |   | -- |   |
|                                            |                     |       |   |   |   |   |   |
| STOCKHOLDERS'      EQUITY                       |                     |       |   |   |   |   |   |
|  Series      A convertible preferred stock |                     | 1,875      |   |   |   | 1,875 |   |
|  Common      stock                         |                     | 31,602     |   |   |   | 31,602 |   |
| Common      stock to be issued                  |                     | 10,000     |   |   |   | 10,000 |   |
|  Additional      paid-in capital           |                     | 9,413,917  |   |   |   | 14,562,806 |   |
|  Deferred      stock compensation          |                     | (37,100    | ) |   |   | (37,100 | ) |
|  Retained      earnings                    |                     | 6,720,662  |   |   |   | 6,720,662 |   |
|  Accumulated      other comprehensive loss |                     | (62,816    | ) |   |   | (62,816 | ) |
| Total      Stockholders' Equity                 |                     | 16,078,140 |   |   |   | 17,381,289 |   |
|                                            |                     |       |   |   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY | $                        | 28,545,473 |   |   | $ | 28,545,473 |   |

----

NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS

|                                                                                  |   | Three      months endedSeptember      30, 2007 |        |   | Nine      months endedSeptember      30, 2007 |   |
|---------------------------------------------------------------------------------------|--------|------------------------------------------------|-------------|--------|-----------------------------------------------|--------|
|                                                                                  |   | Previously      reported                       |        |   | Restated                                      |   |   | Previously      reported |   |   | Restated |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |
| NET      SALES                                                                        |   | $                                              | 1,715,718   |   |                                          |   | 1,715,718 |   |   |   | 5,449,295 |   |   |   | 5,449,295 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| COST      OF SALES                                                                    |   |                                           | 1,004,907   |   |                                          |   | 1,004,907 |   |   |   | 3,135,011 |   |   |   | 3,135,011 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| GROSS      PROFIT                                                                     |   |                                           | 710,811     |   |                                          |   | 710,811 |   |   |   | 2,314,284 |   |   |   | 2,314,284 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                                               |   |                                           | (1,304,341) |   |                                          |   | (1,304,341) |   |   |   | (2,612,443) |   |   |   | (2,612,443) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| LOSS      FROM OPERATION                                                              |   |                                           | (593,530)   |   |                                          |   | (593,530) |   |   |   | (298,159) |   |   |   | (298,159) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      INCOME (EXPENSES)                                                          |   |                                           | 7,600       |   |                                          |   | (509,066) |   |   |   | (90,956) |   |   |   | (1,640,954) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS BEFORE TAXES                                                            |   |                                           | (585,930)   |   |                                          |   | (1,102,596) |   |   |   | (389,115) |   |   |   | (1,939,113) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Income      tax expense                                                         |   |                                           | (82,334)    |   |                                          |   | (82,334) |   |   |   | (129,128) |   |   |   | (129,128) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS FROM CONTINUING OPERATIONS                                              |   |                                           | (668,264)   |   |                                          |   | (1,184,930) |   |   |   | (518,243) |   |   |   | (2,068,241) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Income      from discontinued operations                                        |   |                                           | 446,064     |   |                                          |   | 446,064 |   |   |   | 296,936 |   |   |   | 296,936 |   |
|  NET      LOSS                                                                   |   | $                                              | (222,200)   |   |                                          |   | (738,866) |   |   |   | (221,307) |   |   |   | (1,771,305) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Foreign      currency translation loss                                          |   |                                           | (156,180)   |   |                                          |   | (156,180) |   |   |   | (37,601) |   |   |   | (37,601) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  COMPREHENSIVE      LOSS                                                         |   |                                           | (378,380)   |   |                                          |   | (895,046) |   |   |   | (258,908) |   |   |   | (1,808,906) |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Net      income per share-basic - two classes method                            |   | $                                              | 0.00        |   |                                          | $      | -0.01 |   |   | $ | 0.00 |   |   | $ | -0.04 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Net      income per share - diluted                                             |   | $                                              | 0.00        |   |                                          | $      | 0.00 |   |   | $ | 0.00 |   |   | $ | 0.00 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Weighted      average number of shares outstanding during the year -    basic   |   |                                           | 41,602,365  |   |                                          |   | 41,602,365 |   |   |   | 36,405,232 |   |   |   | 36,405,232 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Number      of preferred shares outstanding during the year                     |   |                                           | 1,875,000   |   |                                          |   | 1,875,000 |   |   |   | 1,875,000 |   |   |   | 1,875,000 |   |
|                                                                                  |   |                                           |        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
|  Weighted      average number of shares outstanding during the year -    diluted |   |                                           | 57,866,247  |   |                                          |   | 57,866,247 |   |   |   | 52,669,114 |   |   |   | 52,669,114 |   |

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

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

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

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ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls andProcedures

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Item 1. Legal Proceedings

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

Item 4. Submission of Matters to a Vote of SecurityHolders

| 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       |

----

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

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