----

----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB**

**September 30, 2007**

**CHINA      DIGITAL MEDIA      CORPORATION**

**HAIRMAX      INTERNATIONAL CORP.**

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

**2505-06,      25/F, Stelux House, 698 Prince Edward Road E. Kowloon, Hong      Kong**

**(011)      852 - 2390 - 8600**

**  Yes**
**x**

**No      **
**x**

**41,602,365**

**        1,875,000**

----

**CHINA      DIGITAL MEDIA CORPORATION**

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

----

**PART      I**

**ITEM      1. FINANCIAL STATEMENTS**

**CHINA      DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

| **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                                                                                                                                                                                                             |   | $      | 3,100,000  |   |
| 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**                                                                                                                                                                                                      |   |   | 12,467,333 |   |
|                                                                                                                                                                                                                                              |   |   |       |   |
| **COMMITMENTS                AND CONTINGENCIES**                                                                                                                                                                                                  |   |   | --         |   |
|                                                                                                                                                                                                                                              |   |   |       |   |
| **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                                                                                                                                                                                                         |   |   | 9,413,917  |   |
| Deferred                stock compensation                                                                                                                                                                                                        |   |   | (37,100    | ) |
| Retained                earnings                                                                                                                                                                                                                  |   |   |       |   |
|    Unappropriated                                                                                                                                                                                                                  |   |   | 5,198,663  |   |
|    Appropriated                                                                                                                                                                                                                    |   |   | 1,521,999  |   |
| Accumulated                other comprehensive loss                                                                                                                                                                                               |   |   | (62,816    | )  |
| **Total                Stockholders' Equity**                                                                                                                                                                                                     |   |   | 16,078,140 |   |
|                                                                                                                                                                                                                                              |   |   |       |   |
| **TOTAL                LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                               |   | $      | 28,545,473 |   |

**The      accompanying notes are an integral part of these consolidated financial      statements.**

----

**CHINA      DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

|                                                                                                   |   | **For                the three months Ended** |         |    | **For                the nine months Ended** |       |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------------|---------|----------------------------------------------|------------|
|                                                                                                   |   | **September                30,**              |         |    | **September                30,**             |       |
|                                                                                                   |   | **2007**                                      |         |    | 2006                                         |       |   | **2007** |   |   | **2006** |   |
|                                                                                                   |   |                                          |         |    | **(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 |   |
| 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                                                     |   |                                          | 7,600        |    |                                         |       | (6,827 | ) |   |   | (90,956 | ) |   |   | 90,224 |   |
|                                                                                                   |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| **NET                (LOSS) INCOME BEFORE TAXES**                                                 |   | ** **                                    | **(585,930** | **)**   |                                         | ** ** | **882,782** |   |   | ** ** | **(389,115** | **)** |   | ** ** | **2,927,296** |   |
|                                                                                                   |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| Income                tax expense                                                                      |   |                                          | (82,334      | )       |                                         |       | (191,386 | ) |   |   | (129,128 | ) |   |   | (887,488 | ) |
|                                                                                                   |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| NET                (LOSS) INCOME FROM CONTINUING OPERATIONS                                            |   |                                          | (668,264     | )       |                                         |       | 691,396 |   |   |   | (518,243 | ) |   |   | 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**                                                                   |   | **$**                                         | **(222,200** | **)**   |                                         | **$**      | **650,273** |   |   | **$** | **(221,307** | **)** |   | **$** | **1,992,971** |   |
|                                                                                                   |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| **OTHER                COMPREHENSIVE LOSS**                                                            |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| Foreign                currency translation loss                                                       |   |                                          | (156,180     | )  |                                         |       | (48,723 | ) |   |   | (37,601 | )  |   |   | (48,363 | ) |
|                                                                                                   |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| **COMPREHENSIVE                (LOSS) INCOME**                                                         |   | $                                             | (378,380     | )       |                                         | $          | 601,550 |   |   | $ | (258,908 | ) |   | $ | 1,944,608 |   |
|                                                                                                   |   |                                          |         |    |                                         |       |   |   |   |   |   |   |   |   |   |   |
| **Net                income per share-basic - two classes method**                                     |   | $                                             | 0.00         |    |                                         | $          | 0.02 |   |   | $ | 0.00 |   |   | $ | 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 |   |

**The      accompanying notes are an integral part of these consolidated financial      statements.**

----

**CHINA      DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

|                                                                                                         |   | **2007**   |         |    | **2006**       |       |
|--------------------------------------------------------------------------------------------------------------|--------|------------|--------------|---------|----------------|------------|
|                                                                                                         |   |       |         |    | **(Restated)** |       |
|                                                                                                         |   |       |         |    |           |       |
| **CASH                  FLOWS FROM OPERATING ACTIVITIES**                                                    |   |       |         |    |           |       |
|                      Net (loss) income                                                        |   | $          | (221,307     | )       |           | $          | 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       |    |           |       | - |   |
| 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                                                                    |   | $          | -            |    |           | $          | - |   |

**The      accompanying notes are an integral part of these consolidated financial      statements.**

----

**CHINA      DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS**

**AS      OF SEPTEMBER 30, 2007 (UNAUDITED)**

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

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

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

----

**CHINA        DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**AS        OF SEPTEMBER 30, 2007 (UNAUDITED)**

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

**NOTE      2 – BUSINESS COMBINATION**

----

**CHINA        DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**AS        OF SEPTEMBER 30, 2007 (UNAUDITED)**

| 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      |   |

**NOTE      3 – BUSINESS DISPOSAL**

**NOTE      4 - INVESTMENT IN AFFILIATES**

----

**CHINA        DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**AS        OF SEPTEMBER 30, 2007 (UNAUDITED)**

| 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 |   |

**NOTE      5 - DISPOSAL OF SUBSIDIARY**

| 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   |   |

----

**CHINA      DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**AS        OF SEPTEMBER 30, 2007 (UNAUDITED)**

**NOTE      6 - SEGMENT INFORMATION**

|                                                   |   | **Digitalization                of Television Signal** |       |   | **Television                Advertising** |   |      | **Software                Development** |   |   | **Investments                in Television Series** |   |   | **Other** |      |   | **Total** |   |
|--------------------------------------------------------|--------|--------------------------------------------------------|------------|--------|-------------------------------------------|--------|-----------|-----------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|-----------|-----------|--------|-----------|--------|
|                                                   |   |                                                   |       |   |                                      |   |      |                                    |   |   |                                                |   |   |      |      |   |      |   |
| **2007**                                               |   |                                                   |       |   |                                      |   |      |                                    |   |   |                                                |   |   |      |      |   |      |   |
| ** 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  | )      |      |   | (397,368 | ) |   |   | (221,307 | ) |
| ** 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 |   |

**NOTE      7 – EARNINGS PER SHARE**

| -   | 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. |
|---------------|--------------------------------------------------------------------------------------------------------------|

----

**CHINA          DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**AS          OF SEPTEMBER 30, 2007 (UNAUDITED)**

|                                                                                                      |   | **2007** |       |   | **2006**   |   |
|-----------------------------------------------------------------------------------------------------------|--------|----------|------------|--------|------------|--------|
|                                                                                                      |   |     |       |   | (Restated) |   |
| **Earnings**                                                                                              |   |     |       |   |       |   |
| Net                (Loss)/Income                                                                          |   |     | (221,307   | )      |       |   | 1,992,971 |   |
|                                                                                                      |   |     |       |   |       |   |   |   |
| **Basic                - 2 classes method**                                                               |   |     |       |   |       |   |   |   |
| (Loss)                / Income available to common stockholders                                           |   |     | (221,307   | )      |       |   | 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                                                    |   |     | 0.00       |   |       |   | 0.06 |   |
| Basic                earnings per share - Preferred Stock                                                 |   |     | 0.00       |   |       |   | 0.06 |   |
| Basic                earnings per share - CD                                                              |   |     | 0.00       |   |       |   | 0.00 |   |
|                                                                                                      |   |     |       |   |       |   |   |   |
| **Diluted**                                                                                               |   |     |       |   |       |   |   |   |
| (Loss)                / Income available to common stockholders                                           |   |     | (221,307   | )      |       |   | 1,992,971 |   |
| (Loss)                / Income available to common stockholders & assumed CD                converted |   |     | (128,562   | )      |       |   | 0.00 |   |
|                                                                                                      |   |     |       |   |       |   |   |   |
| **Diluted                weighted-average common stock outstanding**                                      |   |     | 52,669,114 |   |       |   | 40,878,544 |   |
|                                                                                                      |   |     |       |   |       |   |   |   |
| **Diluted                earnings per share**                                                             |   |     | 0.00       |   |       |   | 0.05 |   |

**NOTE      8 - COMMITMENTS AND CONTINGENCIES**

----

**CHINA        DIGITAL MEDIA CORPORATION AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL        STATEMENTS**

**AS        OF SEPTEMBER 30, 2007 (UNAUDITED)**

**NOTE      9 - COMMON STOCK**

**NOTE      10 – CONVERTIBLE DEBENTURE**

**NOTE      11 – RELATED PARTY TRANSACTIONS**

**NOTE      12 - RECLASSIFICATIONS**

**NOTE      13 - RESTATEMENT OF FINANCIAL STATEMENTS**

|                                                          |   | **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** |   |

----

****CHINA        DIGITAL MEDIA CORPORATION AND SUBSIDIARIES****

**NOTES          TO CONDENSED CONSOLIDATED FINANCIAL          STATEMENTS**

**AS          OF SEPTEMBER 30, 2007 (UNAUDITED)**

|                                                                                                       |   | **Three                months ended****September                30, 2006** |       |   | **Nine                months ended****September                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 | ) |   |   | (7,604,893 | ) |
|                                                                                                       |   |                                                                       |       |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |
| GROSS                PROFIT                                                                                |   |                                                                       | 311,508    |   |                                                                      |   | 1,226,374 |   |   |   | 4,443,444 |   |   |   | 4,635,514 |   |
|                                                                                                       |   |                                                                       |       |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |
| OPERATING                EXPENSES                                                                          |   |                                                                       | 568,261    |   |                                                                      |   | (336,765 | ) |   |   | (1,783,338 | ) |   |   | (1,798,442 | ) |
|                                                                                                       |   |                                                                       |       |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |
| 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 | ) |   |   | (46,847 | ) |   |   | (46,847 | ) |
|  NET                INCOME                                                                            |   | $                                                                          | 591,339    |   |                                                                      | $      | 650,272 |   |   | $ | 1,822,053 |   |   | $ | 1,992,961 |   |
|                                                                                                       |   |                                                                       |       |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |
|  Foreign                currency translation gain (loss)                                              |   |                                                                       | (48,723    | )      |                                                                      |   | (48,723 | ) |   |   | (48,363 | ) |   |   | (48,363 | ) |
|                                                                                                       |   |                                                                       |       |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |
|  COMPREHENSIVE                INCOME                                                                  |   |                                                                       | 542,616    |   |                                                                      |   | 601,549 |   |   |   | 1,773,690 |   |   |   | 1,944,598 |   |
|                                                                                                       |   |                                                                       |       |   |                                                                      |   |   |   |   |   |   |   |   |   |   |   |
|  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 |   |

----

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

**Overview**

| -   | 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. |
|---------------|-----------------------------------------------|

----

**RESULTS      OF OPERATIONS**

*Statements      of Operations Items:*

**Sales**

----

**Gross      Profit**

**Expenses**

**Income      (Loss) from Discontinued Operation**

**Net      Income**

*Balance      Sheet Items:*

**Current      Assets**

**Intangible      Assets**

**Property      and Equipment, Net**

**Other      Asset**

**Current      Liabilities**

**Liquidity      and Capital Resources**

----

**Foreign      Currency Translation Risk**

**ITEM      3. CONTROLS AND      PROCEDURES**

**Evaluation      of Disclosure Controls and      Procedures**

**Changes      in Internal Control**

**PART      II. OTHER INFORMATION**

**Item      1. Legal Proceedings**

----

**Item      1A. Risk Factors**

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

**Item      3. Defaults Upon Senior Securities**

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

**Item      5.  Other      Information**

**Item      6. Exhibits**

| **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 |

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**SIGNATURES**

**CHINA      DIGITAL MEDIA CORPORATION**

| *Date:                November 19, 2007* | **/s/                Ng Chi Shing**    |
|------------------------------------------|----------------------------------------|
|                                     | Ng                Chi Shing            |
|                                     | Chief                Executive Officer |
|                                     |                                   |
|                                     |                                   |
| *Date:                November 19, 2007* | **/s/                Ng Chi Shing**    |
|                                     | Ng                Chi Shing            |
|                                     | Chief                Financial Officer |

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