UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 (Mark
One)
 
 x
              ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the fiscal year ended September 30, 2008
 
 o
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For the
transition period from ___________ to ___________
  Commission
File No. 033-33263
 
 ASIA
PREMIUM TELEVISION GROUP, INC.
 (Name of
small business issuer in its charter)
  Nevada
              62-1407521(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer Identification No.)Suite
      602, 2 North Tuanjiehu Street, ChaoYang District,
                Beijing,
      P.R. China 100026
                (Address
      of principal executive offices)
                (Zip
      Code)
  86-10-6582-7900
 (Registrant’s
telephone number, including area code)
  Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class registered:
              Name
      of each exchange on which registered:None
              NoneSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, par value  $0.001
                (Title
      of class)
  Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.       
Yes     Nox
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes     No x
  Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes   x   
No  o
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference Part III of this Form 10-K or
any amendment to this Form 10-K.   x
   Table of Contents
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer
              o
              
              Accelerated
      filer
              oNon-accelerated
      filer
                (Do
      not check if a smaller reporting company)
              o
              
              Smaller
      reporting company
              x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o  No x
 
 The
aggregate market value of the registrant’s voting common stock held by
non-affiliates as of September 30, 2008 based upon the closing price
reported for such date on the OTC Bulletin Board, was
US$12,910,107.
 
 As of
September 30, 2008, the registrant had 6,487,491 shares of its common stock
outstanding.
 
 Documents Incorporated by
Reference: None.
    Table of Contents
  
 ASIA
PREMIUM TELEVISION GROUP, INC.
 TABLE OF CONTENTS
 PART IITEM 1.
              
              Business
              
              1ITEM 1A.
              
              Risk Factors
              
              5ITEM 1B.
              
              Unresolved Staff
      Comments
              
              8ITEM 2.
              
              Properties
              
              9ITEM 3.
              
              Legal
      Proceedings
              
              9ITEM 4.
              
              Submission of Matters to a Vote of
      Security Holders
              
              9PART IIITEM 5.
              
              Market for Registrant’s Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities
              
              9ITEM 6.
              
              Selected Financial
      Data
              
              12ITEM 7.
              
              Management’s Discussion
      and Analysis of Financial Condition and Results of
      Operation
              
              12ITEM 7A.
              
              Quantitative and Qualitative
      Disclosures About Market Risk
              
              16ITEM 8.
              
              Financial Statements and
      Supplementary Data
              
              16ITEM 9.
              
              Changes in and Disagreements with
      Accountants on Accounting and Financial
    Disclosure
              
              17ITEM 9A.
              
              Controls and
      Procedures
              
              17ITEM 9B.
              
              Other
      Information
              
              17PART IIIITEM 10.
              
              Directors, Executive Officers and
      Corporate GovernanceITEM 11.
              
              Executive
      Compensation
              
              18ITEM 12.
              
              Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters
              
              19ITEM 13.
              
              Certain Relationships and Related
      Transactions, and Director Independence
              
              21ITEM 14.
              
              Principal Accounting Fees and
      Services
              
              21ITEM 15.
              
              Exhibits, Financial Statement
      Schedules
              
              2222SIGNATURESEX-21.1 LIST OF
      SUBSIDIARIESEX-31.1
      CERTIFICATION OF CEO PURSUANT TO SEC 302EX-31.2
      CERTIFICATION OF FINANCE CONTROLLEREX-32.1
      CERTIFICATION OF CEO PURSUANT TO SEC 906EX-32.2
      CERTIFICATION OF Finance
      Controller
   Table of Contents
  
 FORWARD-LOOKING
STATEMENTS NOTICE
 
 This
Annual Report on Form 10-K contains “forward-looking statements” within the
meaning of Section 27A of the U. S. Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the U.S. Securities Exchange Act of
1934, as amended(the “Exchange Act”). Such statements relate to, among other
things, our future plans of operations, business strategy, operating results and
financial position and are often, though not always, indicated by words or
phrases such as “anticipate,” “estimate,” “plan,” “project,” “outlook,”
“continuing,” “ongoing,” “expect,” “believe,” “intend,” and similar words or
phrases. These forward-looking statements include statements other than
historical information or statements of current condition, but instead represent
only our belief regarding future events, many of which by their nature are
inherently uncertain and outside of our control. Important factors that could
cause actual results to differ materially from forward-looking statements
include, but are not limited to, those described in the section titled “Risk
Factors” appearing elsewhere in this Annual Report, as well as the
following:
 
 •
              
              changes
      in the advertising and marketing services markets in
  China;•
              
              our
      ability to attract and retain customers;•
              
              the
      financial condition of our customers;•
              
              unexpected
      changes in our margins and certain cost or expense items as a percentage
      of our net revenues;•
              
              our
      ability to execute key strategies;•
              
              actions
      by our competitors;•
              
              our
      ability to retain and attract key employees;•
              
              risks
      associated with assumptions we make in connection with our critical
      accounting estimates;•
              
              potential
      adverse accounting related developments;•
              
              developments
      or change in the regulatory and legal environment for advertising and
      marketing service companies in China; and•
              
              other
      matters discussed in this Annual Report
  generally.
  Consequently,
readers of this Annual Report should not rely upon these forward-looking
statements as predictions of future events. New risk factors emerge from time to
time and it is not possible for our management to predict all risk factors, nor
can we access the impact of all factors on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. We undertake
no obligation to update or revise any forward-looking statement in this Annual
Report to reflect any new events or any change in conditions or circumstances.
All of the forward-looking statements in this Annual Report are expressly
qualified by these cautionary statements.
   Table of Contents
    PART
I
 
 ITEM 1.  BUSINESS
 
 History
 
 Asia
Premium Television Group, Inc., together with its subsidiaries (“ATVG,” the
“Company,” “we,” “us,” or “our”) was originally incorporated in the state of
Nevada on September 21, 1989 under the name Fulton Ventures, Inc. On
July 18, 1990, we changed our name to Triad Warranty Corporation, Inc., and
on May 22, 2000, we changed our name to GTM Holdings, Inc. From 1993
through May 2001, we did not engage in any business
operations.
 
 In
June 2001, we acquired American Overseas Investment Co., Ltd. (“AOI”), a
company incorporated in Macau, a special administrative region (“SAR”) of the
People’s Republic of China (“PRC” or “China”). With our acquisition of AOI, we
began to focus our business on acquiring and developing companies with the goal
of building a broad network of media, marketing and advertising companies in
Greater China. On September 19, 2002, we changed our name to Asia Premium
Television Group, Inc. to more accurately reflect our business.
 
 In
December 2002, our subsidiary Asia Premium Television Group, Inc.
(“ASTV-BVI”), a company organized under the laws of the British Virgin Islands,
was formed.
 
 In
July 2004, we completed the acquisition of 100% of Beijing Asia Hongzhi
Advertising(“BAHA”) (formerly known as Shandong Hongzhi Advertising Company,
Ltd.), a company organized under the laws of China, and its wholly-owned
subsidiaries Shandong Hongzhi Communications and Career Advertising Co.,
Ltd.  (“SHCCA”), a company established under the laws of China in
April 2003, and Tibet Asia Culture Media Co., Ltd. (“TACM”), a company
established under the laws of China in April 2004.
 
 In
July 2004, we also completed the acquisition of 100% of Beijing Hongzhi
Century Advertising (“BHCA”) (formerly known as Beijing Youngfu Century
Advertising Consultancy Company, Ltd.), a company organized under the laws of
China.
 
 In
April 2005, Beijing Asia Qiangshi Media Advertising Co., Ltd. (“BAQM”) was
organized under the laws of China as a wholly-owned subsidiary of
BAHA.
 
 In
September 2005, we sold our interests in our subsidiaries AOI and ASTV-BVI
to a third party.
 
 In
April 2006, Tibet Hongzhi Advertising Co., Ltd.(“THZA”) was
organized under the laws of China as a wholly-owned subsidiary of
BHCA.
 
 In
July 2006, we sold 95% of our interests in our subsidiaries BAQM to a third
party and 5% to a shareholder.
 
 In
March 2007, we carried out a reverse-split, where 1,000 shares of Common
Stock, either issued and outstanding or held by the Company as treasury stock,
immediately prior to the record date was reclassified and changed into one
fully-paid and non-assessable share of Common Stock.
 
 In
July 2007, the Company acquired 100% of Sun New Media Transaction Service
Ltd. (“SNMTS”), a company incorporated in Hong Kong, and its wholly owned
subsidiary China Focus Channel Development Co., Ltd (“CFCD”), a company
incorporated in People’s Republic of China, from NextMart Inc. (OTB: NXMR) with
a net book value of $0 at a price of $1.
 
 On
November 27, 2007, we filed a Form 8-K announcing that we intend to change
our company’s name to P Phone Inc. to reflect our new business segment in the
Chinese mobile phone space, specializing in top-up account payments and other
value-added services. We are currently completing the legal steps necessary to
complete the change in the name of our company, including obtaining the approval
of our shareholders and board of directors, and amending our constitutive
documents. Our original intention on filing this Form 8-K was to complete all
steps required to effect the name change in January 2008. While we are
actively working to accomplish this goal, our current expectation is that the
name change will be completed sometime prior to March 31,
2009.
 
 On
January 3, 2008, in order to divest from our traditional advertising business
and focus on our new mobile phone-based marketing and advertising business, we
entered into a sale and purchase agreement with Fanya Advertising Company Ltd.
("Fanya") to sell BAHA and its wholly-owned Chinese subsidiaries Shandong
Hongzhi Communications and Career Advertising Co., Ltd. (“SHCCA”) and Tibet Asia
Culture Media Co., Ltd. (“TACM,” collectively referred to as "BAHA Group"). The
agreement provides for the sale of the BAHA Group for an aggregate cash
consideration of $4.8 million, which compensation was agreed upon based on
BAHA's audited financial statements as of and for the year ended September 30,
2007. We completed this divestment on January 10, 2008. Operating results of
BAHA subsequent to September 30, 2008 have not been consolidated with our
operating results as the agreement state that the operating would not belong to
the Company.
 
  -1-
 Table of Contents
  On
January 3, 2008, the Company entered into a shares purchase agreement (the
"Shares Purchase Agreement") with the China Mobile and Communications
Association ("CMCA") and its wholly-controlled affiliate, Union Max Enterprises,
Ltd. ("Union Max"), to obtain the right to operate as a Provincial Class One
Full Service Operator in Jiangxi Province, the PRC. As the Company's
key business partner based in Beijing, CMCA is China's leading association of
telecommunications and telecommunication-related companies. Pursuant to the
Shares Purchase Agreement, the Company has also acquired a 70% stock ownership
interest in Jiangxi Hongcheng Tengyi Telecommunication Company, Ltd ("Jiangxi
Hongcheng"), a local reseller of mobile minutes in Jiangxi Province. We
completed this acquisition on March 28, 2008.
 
 Material
Developments
 
 On
June 19, 2007, Jiang Qiang transferred his shares to Hershop.com Ltd.
(BVI) and Global Women Multi-Media Co., Ltd. (BVI) and no longer owns
shares of the company. In connection with the transfer of the shares, two of our
directors, Jiang Qiang and Miao Bulin, resigned from the board of directors at a
board meeting held on June 19, 2007. At the same meeting, Hershop.com Ltd.
(BVI) and Global Women Multi-Media Co., Ltd. (BVI) appointed Xing Jing and
Yu Huiyang as members of the board of directors, and the board appointed Douglas
Toth as an independent director.
 
 In
July 2007, we purchased Sun New Media Transaction Services Limited and its
subsidiary, China Focus Channel Development Co., Ltd , from NextMart Inc. (OTB:
NXMR) for consideration of $1.00.
 
 On
September 9, 2007, the Company entered into an agreement with Tidetime,
Inc. (“Tidetime”) pursuant to which the Company exercised its right, under the
Registration Rights Agreement entered into by the parties in 2001, to force the
conversion of $916,000 of the aggregate $4.0 million principal amount of
convertible notes (the “Convertible Notes”) held by Tidetime, into
596,765 shares of the Company’s common stock.
 
 On
September 10, 2007, Hershop, Inc. (“Hershop”) and an investment group
consisting of Professional Offshore Opportunity Fund Ltd., Professional Traders
Fund, LLC and First Mirage, Inc. (the “Investment Group”) entered into an
agreement with Tidetime to purchase all of Tidetime’s equity and debt in the
Company for $372,000. This equity and debt included 243,234 common shares of the
Company previously owned by Tidetime, the 596,765 shares of the Company
Timetime received in the mandatory conversion set forth above, and the balance
of the Convertible Notes not previously converted. In addition, upon the
completion of these transactions, Hershop and the Investment Group agreed with
the Company to cancel all of the acquired Convertible Notes with an aggregate
principal amount totaling $3,084,000.
 
 Of the
Company’s shares acquired, Hershop and the Investment Group received 440,000 and
400,000 shares, respectively. Professional Traders Fund, LLC, Professional
Offshore Opportunity Fund Ltd., and First Mirage Inc. are not affiliated with
either Hershop or the Company.
 
 The
Company entered into a stock purchase agreement dated July 22, 2007 with
certain investors (the “Investors”). Under this stock purchase agreement, the
Company agreed to issue additional shares to the Investors if the Company issued
more than 500,000 shares when some or all of the Convertible Notes are
converted. Since the Company issued 596,765 shares of common stock to
Tidetime, the Company issued 25,729 new shares to the Investors to maintain the
Investors’ percentage of ownership in the Company.
 
 On
November 23 2007, we entered into an agreement with the China Mobile and
Communications Association (“CMCA”) to acquire 100% of the P Phone Project (“P”
in “P Phone” stands for personalization  and  payment ),
held by CMCA. Under the terms of agreement, ATVG acquired from CMCA 100% of the
rights to the P Phone Project for an aggregate consideration of USD $2.8
million. The consideration is satisfied through the issuance of 700,000 shares
of ATVG common stock (the “Consideration Shares”) valued at $4 per
share.
 
 On
January 3, 2008, the Company entered into a shares purchase agreement (the
"Shares Purchase Agreement") with the China Mobile and Communications
Association ("CMCA") and its wholly-controlled affiliate, Union Max Enterprises,
Ltd. ("Union Max"), to obtain the right to operate as a Provincial Class One
Full Service Operator in Jiangxi Province, the People's Republic of
China. As the Company's key business partner based in Beijing, CMCA is
China's leading association of telecommunications and telecommunication-related
companies. Pursuant to the Shares Purchase Agreement, the Company has also
acquired a 70% stock ownership interest in Jiangxi Hongcheng Tengyi
Telecommunication Company, Ltd ("Jiangxi Hongcheng"), a local reseller of mobile
minutes in Jiangxi Province. Pursuant to the Shares Purchase Agreement, the
Company will pay the aggregate consideration of US$6 million by issuing 300,000
shares of the Company's common stock at the price of US$5 per share and a
lump-sum cash payment of US$4.5 million.
  
 -2-
 Table of Contents
   On
January 8, 2008, the Company entered into an asset transfer agreement (the
"Asset Transfer Agreement") with Will Sincere Investment Holdings Limited
("WSIH") to acquire the right to use certain software technologies as follows:
(1) flash electronic publishing technology; (2) virtual reality network
application technology; (3) DJVU document scanning, searching and storage
technology; and (4) mobile search technology. To fulfill the payment obligation
of RMB2,000,000 pursuant to the Asset Transfer Agreement, the Company will issue
66,700 shares of the Company's common stock at the price of US$4.00 per
share.
 
 On
January 17, 2008, the Company entered into an agreement with the Globstream
Technology, Inc. to acquire technology for the development of its P Phone
personal media services. According to the terms of agreement, the Company will
acquire exclusive, permanent global rights to Globstream's content delivery
software (in all areas except for financial or business-related content) for a
consideration of US$960,000. The consideration is to be satisfied through the
issuance of 240,000 new shares of the Company valued at US$4 per
share.
 
 On May
16, 2008, we entered into an agreement with Her Village, Ltd. (“Her Village”),
China’s leading producer and distributor of women’s-interest media content, to
acquire PIMIE. The total consideration to be paid for the acquisition is US$0.9
million which will be satisfied through the issuance of 300,000 shares of the
Company’s common stock.
 
 In
connection with the acquisition of PIMIE, on May 16, 2008, the Company entered
into a Consulting Service Agreement with Morgen Evan Redrock (“MER”), a
Beijing-based advisory firm (the “Consulting Agreement). Under this Consulting
Agreement, MER will provide consulting services related to P
Phone.  The Company shall pay US$150,000 to MER as compensation for
its services under the Consulting Agreement to be satisfied by the issuance of
50,000 shares of the Company’s common stock valued at $3 per
share..
 
 On May
22, 2008, the Company entered into a share purchase agreement with CEC Unet Plc.
pursuant to which the Company will issue 385,000 shares of ATVG common stock
valued at US$2.00 per share.
 
 On July
4, 2008, we entered into a definitive Stock Purchase Agreement with Her Village
Limited (the “Investor”) for the sale of 1,000,000 shares of Common Stock for a
total purchase price of $1,000,000 (the “Stock Purchase Agreement). Pursuant to
the Stock Purchase Agreement, we issued warrants to the Investor for the option
to purchase 1,000,000 shares of Common Stock with an exercise price of $1.00 per
share and an expiration date of 18 months from the date of issuance. As part of
the Agreement and at no extra cost of the Company, the Investor agreed to grant
to the Company access to a series of marketing assets.  In connection
with the private placement and as part of the Stock Purchase Agreement, we also
entered into a Registration Rights Agreement.
  Nature of
Business
 
 We
operate one business segment providing advertising, media and marketing
solutions to product manufacturers, service providers and other clients located
in China. Our comprehensive products and services range from consumer research
and brand management to advertisement production, media planning, public
relations and direct marketing services. We deliver a comprehensive range of
solutions that we believe simplify, improve and maximize the effectiveness of
multiple phases of our customers’ marketing campaigns, from the inception of an
advertising concept, through design, production and targeted distribution, and
ultimately to the measurement of advertising effectiveness. Our customers may
employ anyone of the services we provide individually or on a combined basis to
meet their specific needs.
 
 We begin
to provide our P-Phone-branded (or Kuai Yi Chong in Chinese) mobile services in
April 2008 with the support of China Mobile (Jiangxi) and CMCA/Union Max. The
Company’s mobile services currently primarily consist of resale of China Mobile
minutes, and also include debit-card based payments over mobile phones, mobile
media and content services, and other mobile-based marketing solutions in the
future.
 
 Our broad
range of service offerings can be categorized generally into the following
groups:
 
 Advertising, Media, and Marketing
Business:
 
 Media consulting services.
Our media consulting services consist of developing targeted, effective
marketing strategies to enable our customers to reach their marketing and
advertising objectives.We begin by analyzing a customer’s product or service and conducting
consumer and market research to develop an understanding of its competitiveness
in the marketplace. We then identify the target audience for a particular
product or service and the most effective channels to reach the targeted
audience. Based on this information, we develop and present a marketing and
advertising strategy to customers for approval.
  -3-
 Table of Contents
   Advertisement production
services. Based on the marketing and advertising strategies we have
developed for our customers, or according to our customers’ own requirements, we
develop and create advertising designs and concepts, and produce advertising
materials which can take the form of film, video, print, or electronic
media.
 
 Advertising agent services.
We prepare media buying and publishing plans for our customers. Once a plan is
approved, we negotiate and purchase advertising space or air time from
broadcasting media to communicate our customers’ advertising materials to their
targeted audience.
 
 Evaluation services.After
our services are rendered, we provide our customers with third-party reports
concerning the publication or broadcasting of their adverting materials that
confirm and summarize the services provided by our customers. We discuss with
our customers any necessary adjustments in connection with our services to
maximize the effectiveness of our customers’ advertising.
 
 P Phone Business:
 
 Minute top-up services.We
provide a minute-top-up service for cell-phone customers. Customers can buy
minutes on the fly using their debit card and a bank account.
 
 Debit card payment services.
We provide a method for customers to purchase merchandise on-the-spot at stores
and other locations using their P Phone which is linked to their debit card. In
December 2008, our board had a resolution that we terminated the top-up services
and focus on higher margin business.
 
 P Phone branded debit card
sales. We plan to partner with financial institutions to sell P Phone
branded debit cards linked to a pre-existing bank account. Customers will
receive a discount on P Phone services when using the card and can use it in the
same manner as their original debit card.
 
 Personal Media Service. For
paying P Phone customers, the fee-for-service will allow for value-added media,
games, and other entertainment items to be delivered to the phone.
 
 Targeted marketing and advertising
services. Based partially on personal data gathered through the Personal
Media Service, we will provide targeted advertising services to our P Phone
users on behalf of enterprise clients. These advertising services will be
delivered in four manners: (1) keyword advertisements for internet searches
from P Phone users; (2) payment-for-placement in directory listings of
stores, restaurants, and other services; (3) SMS coupons delivered to the
handset; and (4) multimedia advertisements. Payment for these services will
be received in a combination of payment-per-views (“CPM”) and payment-per-action
(“CPA”) mechanisms.
 
 Specialized SIM card and smart film
sales.Sales of these items, which enable the above services, are another
source of revenue for the P Phone business.
 
 Customers
 
 We
believe that we have excellent working relationships with our customers. Some of
our major clients have been using our services for more than two years, and we
continue to add new customers to our customer base.
 
 Competition
 
 The
advertising and marketing industry in China is highly competitive. The principal
methods of competition in our business are pricing, quality, flexibility,
customer targeting capabilities, breadth of service, timeliness of delivery,
customer service and other value-added services. There are many advertising
agencies in China which represent customers in both local and international
capacities. Our major competitors include Saatchi & Saatchi,
McCann-Erickson, Shanghai Leo Burnett, Beijing Dentsu, Beijing Weilai
Advertising, Guangdong Advertising, Shanghai Advertising, Shanghai Lowe &
Partners, Shanghai Hakuhodo, and Beijing Dayu Weiye Advertising.
 
 We
believe we have the ability to compete effectively in this highly competitive
industry. We have been operating in the advertising and marketing sector in
China for more than ten years and are committed to continually enhancing our
business to satisfy the needs of our clients and to grow our revenues. Our
advertising and marketing team includes media veterans with international
advertising experience as well as experienced professionals with knowledge and
insight in the local Chinese market. We believe that our integrated team enables
us to provide effective and high quality advertising services that meet
international standards and practices, and also cater to the preferences and
needs of the local market.
   -4-
 Table of Contents
  Our P
Phone segment will face competition from a wide-range of companies engaged in
various activities. Our P Phone business segment, including on-the-fly payment
services, specialized SIM card sales, Personal Media Service, targeted
advertising services will compete with other mobile value-added
providers.
 
 Intellectual
Property
 
 We do not
own any patents, trademarks or licenses. We view our company’s name and the
reputation associated with our name as an important asset, but has not
registered our company’s name as a trademark.
 
 Employees
 
 As of
December 31, 2008, we had 32 full-time employees in China. The Company and
each employee have entered into a one-year labor contracts that is subject to
annual renewal.
 
 ITEM 1A. RISK
FACTORS
 
 We are
subject to a variety of possible risks that could adversely impact our revenues,
results of operations or financial condition. Some of these risks relate to the
industry in which we operate, while others are particular to us. The following
factors set out potential risks we have identified that could adversely affect
us.
 
 The Company is
entering into a new P Phone mobile phone-based marketing and advertising
business; however there can be no assurances that it will be successful in
developing this business.
 
 We intend
to enter into a mobile phone-based marketing and advertising business. We intend
to change our name to P Phone Inc. to reflect our focus on developing this
business as a key source of future growth. We may encounter difficulties in
developing or managing this new business, as the company’s strategy and
operating model for the new business have not yet been finalized. The success of
our new business will depend in part on our ability to form alliances with new
partners that are necessary to conduct this business. However, we may not be
able to identify these partners or form alliances with them on acceptable terms,
or at all. Further, this business has challenges that may be different than
those faced by the company’s traditional businesses. There is a possibility that
we have insufficient expertise to engage in such activities profitably or
without incurring significant amounts of development expenses or risk.
Additionally, in developing this business, our resources may be diverted away
from our traditional business, which may adversely affect our results of
operations.
 
 Our advertising
and market services segment operates in a highly competitive
industry.
 
 The
advertising and marketing services industry in China is highly competitive. We
face competition from other Chinese and international advertising agencies and
providers of creative or media services, several of which may have greater
financial, sales, marketing and other resources than we do. A client’s
perception of the quality of our creative work, as well as the reputations of
the Company and our competitors are important factors in determining our
competitive position. In addition, we face competitions from larger agencies
which may have greater ability to serve advertising clients on a broad
geographic basis. Because an agency’s principal asset is its people, there are
relatively low barriers to entry into our business. If we are unable to compete
effectively against existing or future competitors, our financial condition and
results of operations may be adversely affected.
 
 Demand for our
services may decrease due to a decline in our clients’ or an industry’s
financial condition or due to an economic downturn in the Chinese
economy.
 
 We cannot
assure you that the demand for our services will continue at current levels. Our
clients’ demands for our services may change based on their needs and financial
condition. In addition, our business is dependent upon the economy and business
environment in China in general. The growth of the Chinese economy has been
uneven across geographic regions and industry sectors. When economic down turns
affect particular clients or industry groups, demand for advertising and
marketing services provided to these clients or industry groups is often
adversely affected. There can be no assurance that economic conditions or the
level of demand for our services will improve or that they will not deteriorate.
If there is a period of economic downturn or stagnation, our business, financial
condition and results of operations may be adversely affected.
 
 We will depend on
a few key partners for our P Phone business to compete effectively in the mobile
market.
 
 We will
depend on a few key partners to enable us to provide our P Phone service, namely
the China Mobile and Communications Association and its member companies. If for
some reason our partnerships were to experience difficulties, or if our partners
choose to terminate our relationship with them, it would be extremely difficult
if not impossible to operate or expand our P Phone business. Finally, our
business is in some ways competitive with businesses operated by China Mobile
and Communications Association and its member companies could choose to start
mobile value-added services competitive to ours, which could create challenges
for us to continue to partner with them successfully.
   -5-
 Table of Contents
 
 Mobile phone
customers may not adopt our payment services or use our branded debit
cards.
 
 Our P
Phone payment services will be new to the Chinese market, and will require a
debit card and bank account to operate. Debit cards and bank accounts are not as
common in China as they are in more developed markets. Customers who do not have
these cards and/or accounts will be unable to use our service, which could limit
our ability to grow this business. In addition, customers may choose to pay cash
for their mobile minutes instead of using our top-up services or choose to
continue to pay cash for items instead of using our payment services, each of
which could limit our growth.
 
 Our technology
systems are subject to breakdown.
 
 As is
true with any technology based system in China, our business is subject to
hacking, power outages, natural disasters, and other calamities which would
significantly hamper our ability to operate the systems necessary to keep the P
Phone payment system running.
 
 Customers may
drop our services on account of our targeted advertising.
 
 We
anticipate that our P Phone customers will receive increased advertising on
their phone as a result of using the P Phone (versus competitive cell-phone
services). If customers do not like this advertising, they may choose to drop
the P Phone value-added service. If a significant proportion of our customers
make this decision, we may not be able to realize our targeted
revenues.
 
 Our cash flows
may be insufficient to fund our operations or future business
expansion.
 
 We
believe that our existing cash and cash equivalents and anticipated cash flows
from operations will be sufficient to meet our operational needs for the
foreseeable future. However, our capital requirements depend on numerous
factors, including the rate of market acceptance of our services and our ability
to maintain and expand our customer base, among others. The timing and amount of
our capital requirements cannot be accurately predicted. There can be no
assurance that our operations will generate sufficient cash flows or that we
will be able to obtain sufficient financing on a timely basis or at all or on
terms acceptable to us. Any inability to raise funds as needed may prevent us
from implementing future business plans.
 
 We rely on key
management personnel.
 
 Our
success will depend, in part, on the efforts of our executive officers and other
key employees. The market for qualified personnel is competitive and our future
success will depend upon, among other factors, our ability to attract and retain
these key personnel. The loss of the services of any of our key management
personnel or the failure to attract and retain employees could have a material
adverse effect on our results of operations and financial condition due to the
resulting disruptions in the leadership and continuity of our business
relationships.
 
 Her Village
Limited, Hershop.com Limited, Global Women Multi-Media Ltd., and Yang Lan own a
large percentage of our outstanding common shares and may have the ability to
influence matters requiring shareholder approval.
 
 As of
December 31, 2008, Her Village Limited, Hershop.com Limited, Global Women
Multi-Media Ltd., and Yang Lan collectively owned 30.25% of our outstanding
common shares. They are related parties, and if they chose to act in concert
with respect to these shares, could have significant influence over shareholder
actions and may have the ability to control our company and to direct our
affairs, including:
 
 •
              
              composition
      of our board of directors, and, through it, our direction and policies,
      including the appointment and removal of officers;•
              
              mergers
      or other business combinations and opportunities involving
    us;•
              
              further
      issuance of capital stock or other securities by us;•
              
              our
      financing activities;•
              
              payment
      of dividends; and•
              
              approval
      of our business plans and general business
  development.
  There can
be no assurance that our controlling shareholders will exercise their control in
our best interests.
 
  -6-
 Table of Contents
   China’s legal
system is characterized by uncertainty that could negatively impact our business
and results of operations.
 
 While we
are incorporated in the State of Nevada, United States, substantially all of our
operations are in China. As such, we are subject to and rely on Chinese law in
our daily operations. The Chinese legal system is a civil law system based on
written statutes. Unlike common law systems, it is a system in which decided
legal cases have little value as precedent. Beginning in 1979, the PRC
government promulgated a comprehensive system of laws and regulations governing
economic matters, which has had the overall effect of significantly enhancing
the protections afforded to foreign invested enterprises in China. However,
these laws, regulations and legal requirements are relatively new and are
evolving rapidly, and their interpretation and enforcement involve
uncertainties. These uncertainties could limit the legal protections available
to foreign investors. In addition, enforcement of existing laws, or contracts
based on existing law, may be uncertain and sporadic. Furthermore,
interpretation of statutes and regulations may be subject to new government
policies reflecting domestic political changes.
 
 Our
activities in China are subject to administrative review and approval by the
State Administration of Industry and Commerce of the PRC government. Because of
the changes occurring in China’s legal and regulatory structure, we may not be
able to secure or renew the requisite governmental approvals for our activities.
Failure to obtain or maintain the requisite governmental approvals for any of
our activities could adversely affect our business and results of
operations.
 
 Any recurrence of
severe acute respiratory syndrome, or SARS, or another widespread public health
problem, could negatively impact our business and results of
operations.
 
 A renewed
outbreak of SARS or another widespread public health problem in China, where
substantially all of our revenue is derived and where our operations are
located, could have a negative effect on our operations. Our operations may be
impacted by a number of health-related factors, including the
following:
 
 •
              
              quarantines
      or closures of some of our offices which would severely disrupt our
      operations;•
              
              the
      sickness or death of our key officers and employees;
and•
              
              a
      general slowdown in the Chinese
economy.
 
 Any of
the foregoing events or other unforeseen consequences of public health problems
could adversely affect our business and results of operations.
 
 Changes in
China’s political and economic policies could negatively impact our
business.
 
 As
substantially all of our business operations are conducted in China, our results
of operations, financial condition and prospects are subject in a significant
degree to the economic, political and legal developments in China. Although we
believe that the economic reform and the macroeconomic measures adopted by the
PRC government have had a positive effect on the economic development of China,
we cannot predict the future direction of these economic reforms or the effects
these measures may have on our business, financial position or results of
operations. In addition, the Chinese economy differs from the economies of most
countries belonging to the Organization for Economic Cooperation and
Development, or OECD. These differences include:
 
 •
              
              economic
      structure;•
              
              level
      of government involvement in the economy;•
              
              level
      of development;•
              
              level
      of capital reinvestment;•
              
              control
      of foreign exchange;•
              
              telecommunications
      laws, including those related to mobile phones;•
              
              methods
      of allocating resources; and•
              
              balance
      of payments position.
 
  -7-
 Table of Contents
  As a
result of these differences, our business may not develop in the same way or at
the same rate as might be expected if the Chinese economy were similar to those
of the OECD member countries.
 
 Rapidly
developing Chinese tax laws could negatively affect our
businesses.
 
 On
March 16 2007, the Chinese government produced a new set of revised tax
laws. In these tax laws, income tax for companies of our type was reduced from
33% to 25%, resulting in a corresponding increase in net income for our company.
However, given China’s rapidly changing tax laws and the difference between
national tax policy and local tax policy, we could and likely will be exposed to
other fluctuations in income associated with these taxes, including but not
limited to business taxes, VAT, income taxes, and other taxes.
 
 Restrictions on
foreign currency exchange may limit our ability to receive and use our revenues
effectively.
 
 Any
future restrictions on currency exchange may limit our ability to use revenues
generated in Renminbi to make payments in U.S. dollars or other foreign
currencies. Although the Chinese government introduced regulations in 1996 to
allow greater convertibility of the Renminbi for current account transactions,
significant restrictions still remain, including primarily the restriction that
foreign invested enterprises may only buy, sell and/or remit foreign currencies
at those banks authorized to conduct foreign exchange business after providing
valid commercial documents. In addition, remittance of foreign currencies abroad
and conversion of Renminbi for capital account items, including direct
investment and loans, is subject to governmental approval in China, and
companies are required to open and maintain separate foreign exchange accounts
for capital account items. We cannot be certain that the Chinese regulatory
authorities will not impose more stringent restrictions on the convertibility of
the Renminbi, especially with respect to foreign exchange
transactions.
 
 Fluctuations in
the value of the Renminbi could negatively impact our results of
operations.
 
 Our
revenues, operating expenses and substantially all of our assets and liabilities
are denominated in Renminbi. Our reporting currency is the U.S dollar. As a
result, we are exposed to foreign exchange risk, and our results of operations
may be negatively impacted by fluctuations in the exchange rate between the U.S.
dollar and Renminbi. A significant depreciation in the Renminbi against the U.S.
dollar will cause a decrease in our net profits, if any, or increases in net
losses we may suffer.
 
 The value
of the Renminbi is subject to changes in China’s governmental policies and to
international economic and political developments. Since January 1, 1994,
the PRC government has used a unitary managed floating rate system. Under this
system, the People’s Bank of China, or PBOC, publishes a daily base exchange
rate with reference primarily to the supply and demand of Renminbi against the
U.S. dollar and other foreign currencies in the market during the previous day.
Authorized banks and financial institutions are allowed to quote, buy and sell
rates for Renminbi within a specified band around the central bank’s daily
exchange rate. On July 21, 2005, PBOC announced an adjustment of the
exchange rate of the U.S. dollar to Renminbi from 1:8.27 to 1:8.11 and modified
the system by which the exchange rates are determined.
 
 The
Renminbi is no longer linked to the U.S. currency but rather to a basket of
currencies with a 0.3% margin of fluctuation. However, there remains
international pressure on the Chinese government to adopt an even more flexible
currency policy. As of December 31, 2008, the exchange rate was 6.8346 RMB to
1.00 U.S. Dollar. The exchange rate of Renminbi is subject to changes in China’s
government policies which are, to a large extent, dependent on the economic and
political development both internationally and locally and the demand and supply
of Renminbi in the domestic market. There can be no assurance that such exchange
rate will continue to remain stable in the future amongst the volatility of
currencies, globalization and the unstable economies in recent
years.
 
 Your ability to
bring an action against us or against our directors and officers, or to enforce
a judgment against us or them, may be limited because we conduct substantially
all of our operations in China and all of our directors and officers reside
outside of the United States.
 
 We
conduct substantially all of our operations in China. All of our directors and
officers reside, and substantially all of the assets of those persons are
located, outside the United States. As a result, it may be difficult for you to
bring an action against us or against these individuals in the United States in
the event that you believe that your rights have been infringed under the
securities laws or otherwise. Even if you are successful in bringing an action
of this kind, the laws of China may render you unable to enforce a judgment
against our assets or the assets of our directors and officers.
 
 ITEM
1B.UNRESOLVED SEC
COMMENTS
 
 This Item
is not applicable to the Company because we are not an accelerated filer, a
large accelerated filer or a well-known seasoned issuer, as those terms are
defined in the rules of the Securities and Exchange
Commission.






-8-
 Table of Contents


ITEM 2.PROPERTIES
 
 The
Company has entered into one building lease for its offices in Beijing and one
building lease for its office in Jiang Xi Province. The Beijing facility lease
became effective on October 1, 2008 and will expire on October 1, 2009 and
is renewable on an annual basis. The Jiang Xi Province facility lease became
effective on January 1, 2008 and will expire on December 31, 2009. We believe
our current facilities are adequate for the purposes for which they are
currently used and are well maintained. See Note 7 to our audited consolidated
financial statements included in this Annual Report for a further discussion of
our lease commitments.
 
 ITEM 3.LEGAL PROCEEDINGS.
 
 We are
not involved in any current, and are not aware of any pending, legal proceedings
involving our company or our officers and directors which may have any material
impact on our results of operations or financial position.
 
 ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF
SECURITYHOLDERS.
 
 There
were no matters submitted to a vote of security holders during the period from
October 1, 2007 to September 30, 2008.
 
 PART
II
 
 ITEM 5. MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 
 Market
Information
 
 As of
December 31, 2008, our common stock was quoted on the Over the Counter Bulletin
Board under the symbol “ATVG” and we had approximately 103 shareholders holding
6,487,491 shares of common stock.
 
 The
following quotations, as provided by the National Quotation Bureau, represent
prices between dealers and do not include retail mark up, markdown or
commission. In addition, these quotations do not represent actual
transactions.
   -9-
 Table of Contents
  
 DATE
              
              CLOSING
      BID
              
              CLOSING
      ASKHIGH
              
              LOW
              
              HIGH
              
              LOW(in
      US$)2007First
      Quarter
              
              
              7
              
              
              
              2.5
              
              
              
              9
              
              
              
              3Second
      Quarter
              
              
              1.1
              
              
              
              1.1
              
              
              
              4
              
              
              
              4Third
      Quarter
              
              
              4.75
              
              
              
              1.01
              
              
              
              9.8
              
              
              
              2.9Fourth
      Quarter
              
              
              4
              
              
              
              1.31
              
              
              
              11
              
              
              
              52008First
      Quarter
              
              
              6
              
              
              
              3
              
              
              
              6
              
              
              
              3Second
      Quarter
              
              
              4
              
              
              
              2.75
              
              
              
              4
              
              
              
              2.75Third
      Quarter
              
              
              3
              
              
              
              1.99
              
              
              
              3
              
              
              
              1.99Fourth
      Quarter
              
              
              1.99
              
              
              
              0.25
              
              
              
              1.99
              
              
              
              0.25
 
 Dividends
 
 We have
not paid, nor declared, any dividends since our inception and do not intend to
declare any such dividends in the foreseeable future. Our ability to pay
dividends is subject to limitations imposed by Nevada law. Under Nevada law,
dividends may be paid to the extent that a corporation’s assets exceed its
liabilities and it is able to pay its debts as they become due in the usual
course of business.
 
 Securities Authorized for Issuance
under Equity Compensation Plans.
 
 In 2001,
we adopted a stock plan (the “2001 Stock Plan”). Under the terms and conditions
of the 2001 Stock Plan, our board of directors is empowered to grant stock
options to our employees, consultants, officers and directors of the Company.
Additionally, our board of directors has the power to determine, at the time of
granting any such options, the vesting provisions and whether the options will
be qualified as Incentive Stock Options under Section 422 of the Internal
Revenue Code (Section 422 provides certain tax advantages to the employee
recipients). The 2001 Stock Plan was approved by our shareholders on
September 15, 2001. The total number of shares of common stock available
under the 2001 Stock Plan may not exceed 2,000. As of September 30, 2008,
no options had been granted under the 2001 Stock Plan.
 
 Sales of Unregistered
Securities
 
 On
August 9, 2005, we issued 1,629 shares of our common stock to one of our
shareholders in connection with the settlement and repayment of a loan from the
shareholder in the amount of $30,000 and other amounts owed by us to the
shareholder. The market price of our common stock was $35 per share as of the
date of the issuance of these shares to the shareholder. These shares were
issued without registration in reliance upon the exemption from the registration
requirements of the Securities Act afforded by Section 4(2) of the
Securities Act.
 
 On
September 9, 2007, the Company entered into an agreement with Tidetime,
Inc. (“Tidetime”) pursuant to which the Company exercised its right granted in
the Registration Rights Agreement between the parties in 2001, to force the
conversion of $916,000 out of the aggregate $4.0 million principal amount
of convertible notes (the “Convertible Notes”) held by Tidetime, into 596,765
shares of the Company’s common stock.
 
 On
September 10, 2007, Hershop, Inc. (“Hershop”) and an investment group
consisting of Professional Offshore Opportunity Fund Ltd., Professional Traders
Fund, LLC and First Mirage, Inc. (the “Investment Group”) entered into an
agreement with Tidetime to purchase all of Tidetime’s equity and debt in the
Company for $372,000. This equity and debt included 243,234 common shares of the
Company previously owned by Tidetime, 596,765 shares of the Company that
Timetime received in the mandatory conversion set forth in paragraph (a), and
the balance of the Convertible Notes not previously converted. In addition, upon
the completion of these transactions, Hershop and the Investment Group agreed
with the Company to cancel all of the acquired Convertible Notes with an
aggregate principal amount totaling $3,084,000.
 
  -10-
 Table of Contents
   Of the
Company’s shares acquired, Hershop, and the Investment Group received 440,000
and 400,000 shares, respectively. Professional Traders Fund, LLC, Professional
Offshore Opportunity Fund Ltd., and First Mirage Inc. are not affiliated with
either Hershop or the Company.
 
 The
Company entered into a stock purchase agreement dated July 22, 2007 with
certain investors (the “Investors”). Under this stock purchase agreement, the
Company agreed to issue additional shares to the Investors if the Company issued
more than 500,000 shares when some or all of the Convertible Notes are
converted. Since the Company issued 596,765 shares of common stock to Tidetime,
the Company is required to issue 25,729 more shares to the Investors to maintain
the Investors’ percentage of ownership in the Company.
 
 On
November 23 2007, we entered into an agreement with the China Mobile and
Communications Association (“CMCA”) to acquire 100% of the P Phone Project (“P”
in “P Phone” stands for personalization  and  payment ),
held by CMCA. Under the terms of agreement, ATVG acquired from CMCA 100% of the
rights to the P Phone Project for an aggregate consideration of USD $2.8
million. The consideration is satisfied through the issuance of 700,000 shares
of ATVG common stock (the “Consideration Shares”) valued at $4 per
share.
 
 On
January 3, 2008, the Company entered into a shares purchase agreement (the
"Shares Purchase Agreement") with the China Mobile and Communications
Association ("CMCA") and its wholly-controlled affiliate, Union Max Enterprises,
Ltd. ("Union Max"), to obtain the right to operate as a Provincial Class One
Full Service Operator in Jiangxi Province, the People's Republic of
China. As the Company's key business partner based in Beijing, CMCA is
China's leading association of telecommunications and telecommunication-related
companies. Pursuant to the Shares Purchase Agreement, the Company has also
acquired a 70% stock ownership interest in Jiangxi Hongcheng Tengyi
Telecommunication Company, Ltd ("Jiangxi Hongcheng"), a local reseller of mobile
minutes in Jiangxi Province. Pursuant to the Shares Purchase Agreement, the
Company will pay the aggregate consideration of US$6 million by issuing 300,000
shares of the Company's common stock at the price of US$5 per share and a
lump-sum cash payment of US$4.5 million.
  On
January 8, 2008, the Company entered into an asset transfer agreement (the
"Asset Transfer Agreement") with Will Sincere Investment Holdings Limited
("WSIH") to acquire the right to use certain software technologies as follows:
(1) flash electronic publishing technology; (2) virtual reality network
application technology; (3) DJVU document scanning, searching and storage
technology; and (4) mobile search technology. To fulfill the payment obligation
of RMB2,000,000 pursuant to the Asset Transfer Agreement, the Company will issue
66,700 shares of the Company's common stock at the price of US$4.00 per
share.
 
 On
January 17, 2008, the Company entered into an agreement with the Globstream
Technology, Inc. to acquire technology for the development of its P Phone
personal media services. According to the terms of agreement, the Company will
acquire exclusive, permanent global rights to Globstream's content delivery
software (in all areas except for financial or business-related content) for a
consideration of US$960,000. The consideration is to be satisfied through the
issuance of 240,000 new shares of  the Company valued at US$4 per
share.
 
 On May
16, 2008, we entered into an agreement with Her Village, Ltd. (“Her Village”),
China’s leading producer and distributor of women’s-interest media content, to
acquire PIMIE.  The total consideration to be paid for the acquisition
is US$0.9 million which will be satisfied through the issuance of 300,000 shares
of the Company’s common stock valued at $3 per share.
 
 In
connection with the acquisition of PIMIE, on May 16, 2008, the Company entered
into a Consulting Service Agreement with Morgen Evan Redrock (“MER”), a
Beijing-based advisory firm (the “Consulting Agreement). Under this Consulting
Agreement, MER will provide consulting services related to P
Phone.  The Company paid $150,000 MER as compensation for its services
under the Consulting Agreement to be satisfied by the issuance of 50,000 shares
of the Company’s common stock valued.
 
 On May
22, 2008, the Company entered into a share purchase agreement with CEC Unet Plc.
pursuant to which the Company will issue 385,000 shares of ATVG common stock
valued at US$2.00 per share.
 
 On July
4, 2008, we entered into a definitive Stock Purchase Agreement with Her Village
Limited (the “Investor”) for the sale of 1,000,000 shares of Common Stock for a
total purchase price of $1,000,000 (the “Stock Purchase Agreement). Pursuant to
the Stock Purchase Agreement, we issued warrants to the Investor for the option
to purchase 1,000,000 shares of Common Stock with an exercise price of $1.00 per
share and an expiration date of 18 months from the date of issuance. As part of
the Agreement and at no extra cost of the Company, the Investor agreed to grant
to the Company access to a series of marketing assets. In connection with the
private placement and as part of the Stock Purchase Agreement, we also entered
into a Registration Rights Agreement.
   -11-
 Table of Contents
  
 Repurchase of Equity
Securities
 
 We did
not repurchase any securities within the transition period ended
September 30, 2008.
 
 ITEM 6. SELECTED FINANCIAL DATA
 
 Not
applicable.
 
 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
 Except
for the historical information, the following discussion contains
forward-looking statements that are subject to risks and uncertainties, and
which speak only as of the date of this annual report.  No one should
place strong or undue reliance on any forward looking statements.  The
Company’s actual results or actions may differ materially from these
forward-looking statements for many reasons, including the risks described in
Item 1A and elsewhere in this annual report.  This Item should be read
in conjunction with the financial statements and related notes and with the
understanding that the Company’s actual future results may be materially
different from what is currently expected or projected by the
Company.
 
 OVERVIEW
 
 We were
organized under the laws of the State of Nevada on September 21, 1989. We
went through various name changes prior to September 2002 when the name was
changed to Asia Premium Television Group, Inc. We were originally formed to
purchase, merge with or acquire any business or assets which management believes
has potential for being profitable.
 
 We
entered into a stock for stock acquisition with Beijing Asia Hongzhi Advertising
Co., Ltd. (“BAHA”)
during March 2003, which was finalized on July 9, 2004, in a
transaction that has been accounted for as a recapitalization of BAHA in a
manner similar to a reverse purchase. There was no adjustment to the carrying
values of the acquired assets or liabilities. Operations prior to July 2004
are those of BAHA. The parent is the continuing entity for legal purposes; BAHA
is the continuing entity for accounting purposes.
 
 On
January 3, 2008, in order to divest from our traditional advertising business
and focus on our new mobile phone-based marketing and advertising business, we
entered into a sale and purchase agreement with Fanya Advertising Company Ltd.
("Fanya") to sell BAHA
and its wholly-owned Chinese subsidiaries Shandong Hongzhi Communications and
Career Advertising Co., Ltd. (“SHCCA”) and Tibet Asia Culture
Media Co., Ltd. (“TACM,”
collectively referred to as "BAHA Group"). The agreement
provides for the sale of the BAHA Group for an aggregate cash consideration of
$4.8 million, which compensation was agreed upon based on BAHA's audited
financial statements as of and for the year ended September 30, 2007. We
completed this divestment on January 10, 2008. Operating results of BAHA
subsequent to September 30, 2007 have not been consolidated with our operating
results, and our financial statements as of and for the fiscal year ended
September 30, 2008 do not include operating results of the BAHA
Group.
 
 Revenues
 
 For the
six month periods ended September 30, 2006 and 2007, and the fiscal years
ended March 31, 2007 and September 30, 2008, we had total revenues in the amount
of US$0 million, US$0 million, US$0 million, and US$1.4 million,
respectively. Our revenues are primarily derived from the planning and execution
of advertising programs in various media. Most of our client contracts are
individually negotiated and accordingly, the terms of client engagements and the
basis on which we earn fees vary significantly.
 
 Revenues
for the creation, planning and placement of advertising are primarily determined
on a negotiated fee basis, taking into account prevailing market standards and
our costs of production.
 
 Factors affecting
our revenues
 
 Our
revenues are directly dependent upon our clients’ needs for advertising,
marketing and corporate communications. Our revenues are driven by our ability
to maintain and grow existing business, as well as to generate new business. Our
business is directly affected by economic conditions in China and in the
industries we serve and by the marketing and advertising practices of our
existing and prospective clients. When economic conditions decline, companies
generally reduce advertising and marketing budgets, and it becomes more
difficult for us to achieve profitability. It is a highly competitive industry,
which tends to mitigate our pricing power.
 
  -12-
 Table of Contents
  Our P
Phone business segment is expected to be a primary contributor to revenue in the
next few years, beginning in 2008. We hope to achieve rapid adoption of our
services with corresponding increase to our revenue and profit. Factors
affecting this business are wide ranging and include both the overall Chinese
economic condition, the growth of particular products in our product mix, and
the actions of competitors. In particular our revenues will be shaped by the
formation and structure of our key partnerships, including those with China
Mobile’s subsidiaries and partners. Our approach will be to focus on select
Chinese provinces where we hope to achieve high penetration rates among existing
mobile consumers and secure a dominant position in the market. This vertical
approach will enable us to build brand recognition and create diversified
revenues of mobile on-the-fly debit-card based payments, mobile marketing
through a common customer base. P Phone will feature five services and products:
(1)Payment Services (resale of China Mobile Usage Minutes to end consumers),
(2)Wireless, Debit-card based Mobile Payment, (3)Personal media and content
services (4) P Phone-branded debit and cash cards; and (5) Mobile
marketing and advertising. These products and services will be the strong driven
force of our revenues.
 
 Revenue
recognition
 
 Depending
on the terms of the client contract, fees for the services we perform are
primarily recognized in one of three ways: completion of milestones,
straight-line (or monthly basis) or completed contract. See Note 1 to our
audited consolidated financial statements for a further discussion of our
revenue recognition accounting policies.
 
 Cost of Sales
 
 For the
six months ended September 30, 2006 and 2007, fiscal years ended
March 31, 2007 and September 30, 2008, our cost of sales were US$0 million,
US$0 million, US$0 million, and US$1.0
million,  respectively.
 
 Operating
Expenses
 
 For the
six months ended September 30, 2006 and 2007, the fiscal years ended
March 31, 2007 and September 30, 2008, our operating expenses were US$0.1
million, US$0.1 million, US$0.1 million, and US$2.5 million,
respectively. Our operating expenses consist of general and administrative
expense, bad debt expense,depreciation and
amortization. General and administrative expense is comprised of professional
fees, including legal and accounting fees, executive compensation, operating
overhead, entertainment expense and other miscellaneous expenses. Bad debt
expense is accrued when individual accounts receivable show signs of
uncollectability.
 
 PLAN
OF OPERATION OF THE NEXT 12 MONTHS
 
 We intend
to continue to focus on providing advertising, media and marketing solutions to
our customers. We attach great importance to customer satisfaction. We are also
focused on developing new customers to broaden our customer base and to avoid
excessive concentration in a limited number of large customers.
 
 We
believe we have sufficient working capital to meet our needs of existing and
planned operations for the next 12 months. We may consider raising
additional funds from various sources in order to further our goal of attracting
new customers and increasing our scale of operations, to further develop a new
operating model whereby we distribute air time and advertising space, and to
increase our profitability.
 
 Additionally,
we plan to enter the mobile phone services market through our P Phone business
segment. This business will primarily focus on sales of, specialized SIM cards,
smart films, and the associated payment services that will be enabled by this
equipment. We believe that we have sufficient working capital to proceed and
have partnered with industry leaders to enable this effort. We expect changes in
our employee count and revenue streams as a result of this focus shift to occur
gradually.
 
 Results of
Operations
 
 Six
Months Ended September 30, 2006 Compared to Six Months Ended
September 30, 2007
 
 Total
Revenues, Cost of Sales and
Gross Margin.We had no revenues, cost of sales or gross
margin during the six months ended September 30, 2007 or 2006.
 
 Total Expenses.Our total expenses for the six months ended September 30, 2007 were
US$0.15 million, which consisted primarily of general and administrative
expenses of US$0.14 million. This represented an increase of 36% from our
total expenses of US$0.11 million for the six months ended
September 30, 2006, which was primarily the result of an increase in
general and administration expense.
 
 Income Before
Income Taxes.Our loss before income taxes was US$0.14 million for
the six months ended September 30, 2007 compared to US$0.11 million
for the six months ended September 30, 2006.
   -13-
 Table of Contents
  
 Discontinued
operations.Our discontinued operations income was US$0.6 million for the
six months ended September 30, 2007 compared to US$0.3 million for the six
months ended September 30, 2006. This was from the operation of BAHA
group.
 
 Net Income.As a result of the foregoing, our net income increased by 177.13% to
US$0.5 million for the six months ended September 30, 2007 from
US$0.2 million for the six months ended September 30,
2006.
 
 Fiscal
Year ended September 30, 2008 Compared to Fiscal Year ended March 31,
2007
 
 Total
Revenues. Our total revenues for the fiscal year ended September 30, 2008
was US$1.4 million as compared to US$0 million for the fiscal year
ended March 31, 2007
 
 Cost of Sales.Our cost of sales for the fiscal year ended September 30, 2008 was
US$1.0 million as compared to US$0 million for the fiscal year ended
March 31, 2007.
 
 Gross Profit.As a result of the foregoing, our gross profit for the fiscal year ended
September 30, 2008 was US$0.4 million as compared to US$0 million for
the fiscal year ended March 31, 2007.
 
 Total Expenses.Our total expenses for the fiscal year ended September 30, 2008 were
US$2.5 million which consists primarily of general and administrative expenses
and depreciation and amortization expenses. This represented an increase of
2996% from our total expenses of US$0.1 million for the fiscal year ended
March 31, 2007, which was primarily the result of an increase in depreciation
and amortization by US$0.9 million from 2007 to 2008 and an increase in
general and administrative expenses in the amount of US$1.5 million from
2007 to 2008. The increase in general and administrative expenses in 2008 was
for our new PPhone business.
 
 Other Income
(Loss). Our other loss for the fiscal year ended September 30, 2008 was
US$4.7 million as compared to US$0.1 million other income for the fiscal year
ended March 31, 2007. The main loss was from the impairment of intangible assets
and goodwill.
  Income (Loss)
from Discontinued Operation. Our discontinued operation for the fiscal
year ended September 30, 2008 was US$0 million as compared to US$2.6 million for
the fiscal year ended March 31, 2007.
 
 Net Income
(Loss).As a result of the foregoing, our net loss for the fiscal year
ended September 30, 2008 was US$6.7 million compared to a net income as the
amount of US$2.6 for the fiscal year ended March 31, 2007.
 
 Liquidity and Capital
Resources
 
 We
finance our operations primarily through cash generated from operating
activities, a mixture of short and long-term loans and issuance of common
stock.
 
 The
following table summarizes our cash flows for the six months ended
September 30, 2006 and 2007, fiscal years ended March 31, 2007 and
September 30, 2008:
 
 Fiscal
      Year Ended
              
              Six
      Months EndedSeptember
      30,
              
              March
      31,
              
              September
      30,2008
              
              2007
              
              2007
              
              2006US$
              
              US$
              
              US$
              
              US$Net
      cash provided (used) by operating activities
              
              
              (960,364)
              
              
              
              2,556,611
              
              
              
              461,035
              
              
              
              274,797Net
      cash used by investing activities
              
              
              (7,106,620)
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      cash provided (used) by financing activities
              
              
              8,014,266
              
              
              
              -
              
              
              
              (254,541)
              
              
              
              -Effect
      of exchange rate change on cash
              
              
              (54,191)
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      increase in cash and cash equivalents
              
              
              (106,909)
              
              
              
              2,556,611
              
              
              
              206,494
              
              
              
              274,797Net
      decrease in cash from discontinued operations
              
              
              -
              
              
              
              (2,556,611)
              
              
              
              (36,968)
              
              
              
              (274,797)Cash
      and cash equivalents (closing balance)
              
              
              62,618
              
              
              
              1
              
              
              
              169,527
              
              
              
              1
 
  -14-
 Table of Contents
   Our total
assets as of September 30, 2008 were US$6.4 million. Our total
liabilities as of September 30, 2008 were US$0.4 million. Liabilities
consisted primarily of US$0.4 million in other payable.
 
 CRITICAL ACCOUNTING
POLICIES
 
 Our
significant accounting policies are described in Note 1 to our consolidated
financial statements included in this Annual Report. We prepare our financial
statements in conformity with U.S. GAAP, which requires our management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities on the date of the
financial statements and the reported amounts of revenues and expenses during
the financial reporting period. Since the use of estimates is an integral
component of the financial reporting process, actual results could differ from
those estimates. Some of our accounting policies require higher degrees of
judgment than others in their application. We consider the policies discussed
below to be critical to an understanding of our financial statements as their
application places the most significant demands on our management’s
judgment.
 
 NEW
ACCOUNTING PRONOUNCEMENTS
 
 In
September 2006, the FASB issued Statement No. 157, Fair Value Measurement (FAS
157).  While this statement does not require new fair value
measurements, it provides guidance on applying fair value and expands required
disclosures.  FAS 157 is effective for the Company beginning in the
first quarter of fiscal 2009.  This pronouncement should not have a
material impact on our financial statements.
 
 In
February 2008, the FASB issued “Effective Date of FASB Statement No.157” FASB
Staff Position (FSP) No. 157-2 (FSP No. 157-2).  FSP No.157-2 delays
the effective date of SFAS No. 157 until fiscal years beginning after November
15, 2008, for fair value measurements of non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair value in
an entity’s financial statements on a recurring basis (at least
annually).
  In
February 2007, the FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities (FAS 159).  The statement,
which is expected to expand fair value measurement, permits entities to choose
to measure many financial instruments and certain others items at fair
value.  FAS 159 is effective for us beginning in the first quarter of
2009.  This pronouncement should not have a material impact on our
financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.”  The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows.  It is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early
application encouraged.  We do not expect the adoption of SFAS No.161
to have a material impact on our financial statements.
 
 OFF-BALANCE
SHEET COMMITMENTS AND ARRANGEMENTS
 
 We have
not entered into any financial guarantees or other commitments to guarantee the
payment obligations of any third parties. In addition, we have not entered into
any derivative contracts that are indexed to our own shares and classified as
shareholder’s equity, or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. Moreover, we do not have any variable
interest in any unconsolidated entity that provides financing, liquidity, market
risk or credit support to us or engages in leasing, hedging or research and
development services with us.
 
 Revenue
Recognition
 
 We rely
on SEC Staff Accounting Bulletin: No. 101 Revenue Recognition in Financial
Statements” (“SAB 101”) to recognize our revenue. SAB 101 states that revenue
generally is realized or realizable and earned when all of the following
criteria are met: (1) persuasive evidence of an arrangement exists,
(2) delivery has occurred or services have been rendered, (3) the
seller‘s price to the buyer is fixed or determinable, and
(4) collectability is reasonably assured.
 
  -15-
 Table of Contents
  We
provide advertising agent, media consulting and advertising production services.
These services can either be (1) bundled together, in one or more
combinations, in a single contract, or (2) provided independently pursuant
to separate contracts. Revenue recognition is dependent on the type of service
provided to the customer: (a) for advertising agent services, we recognize
revenue at the end of each month in which the services were provided;
(b) for both media consulting and advertising production services, we
recognize revenue upon the achievement of particular milestones set forth in the
contract.
 
 When two
or more services are bundled together in a single contract, the recognition of
revenue related to one deliverable is not contingent upon the provision of
service or milestone achievement of any subsequent deliverable. We follow
EITF00-21 for recognizing revenues in instances involving the delivery or
performance of multiple deliverables.
 
 We may be
required to provide a refund to a customer in the event of non-delivery of a
service by us if the customer does not otherwise extend the delivery deadline,
accept substitute service, or choose another alternative as set forth in the
contract. However, we are not required to refund any portions of amounts
previously received and for which services have been rendered because subsequent
deliverables are not provided. At no point do we recognize any revenue when
there is a possibility of having to refund anything to the
customer.
 
 We report
our revenue on a gross basis under the guidance of EITF 99-19, as (1) we
are the primary obligor under contracts with our suppliers and have the risks
and rewards of a principal in these transactions; (2) we have latitude in
establishing the price for services under our advertising contracts, and the net
amount earned by us varies with each contract; (3) we are primarily
responsible for the fulfillment of services ordered by the customer pursuant to
the contract, including the portion of the services performed by the media
supplier with whom we separately contract; and(4) we have discretion in supplier
selection.
 
 INCOME
TAXES
 
 We
account for income taxes under the provisions of SFAS No. 109, “Accounting
for Income Taxes,” as described in Note 9 to our audited consolidated financial
statements included in this Annual Report. We record a valuation allowance to
reduce our deferred tax assets to the amount that we believe is more likely than
not to be realized. In the event we were to determine that we would be able to
realize our deferred tax assets in the future in excess of their recorded
amount, an adjustment to our deferred tax assets would increase our income in
the period such determination was made. Likewise, if we determine that we would
not be able to realize all or part of our net deferred tax assets in the future,
an adjustment to our deferred tax assets would be charged to our income in the
period such determination is made. We record income tax expense on our taxable
income using the balance sheet liability method at the effective rate applicable
in China in our consolidated statements of operations and comprehensive
income.
 
 In
September 2007, the Company paid US$155,138 as income tax for the period
from January to April 2006. The payment was made as a result of a change in the
government income tax policy. Prior to such change, the Company did not have
income tax liabilities during the period from January until April 2006.
Following the change in policy, the Company became liable to payment in income
tax and made the required payment. As it was not an error of accounting records
or a change in the Company’s accounting policy, but rather a government policy
change, we recorded it in the current year as income tax expense.
 
 Item 7A. Quantitative
and Qualitative Disclosures about Market Risk
 
 Our
primary exposure to market risks relate to interest rates and foreign exchange
rates.
 
 Foreign exchange
rates
 
 Substantially
all our revenues and expenses are denominated in Renminbi, which are translated
to U.S. dollars as our reporting currency for our financial statements. As such,
our primary foreign exchange risk is to changes in the value of the Renminbi
relative to the U.S. dollar. See “Item 3A. Risk Factors —Fluctuations in
the value of the Renminbi could negatively impact our results of operations.” We
do not engage in any hedging activities, and as such, we may in the future
experience economic loss or gain as a result of any foreign currency exchange
rate fluctuations.
 
 ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
 
 Reference
is made to the Index to the audited consolidated financial statements on Page
F-1 for our audited consolidated financial statements and notes thereto and
supplementary schedules.






-16-
 Table of Contents




ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
 
 On
February 11, 2008, we dismissed HJ & Associates, LLC (“HJ”) as our
independent accountant and engaged Bernstein & Pinchuk LLP (“Bernstein”) as
our new independent accountant to audit the Company’s financial statements for
the fiscal year ending September 30, 2008. At no time since its engagement has
Bernstein had any direct or indirect financial interest in or any connection
with us or any of our subsidiaries other than as independent
accountant.
  Our
consolidated financial statements for the Company’s fiscal years ended March 31,
2006 and 2007, and for the transition period from April 1, 2007 through
September 30, 2007, respectively, were audited by HJ. The audit report of HJ for
these periods did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope or accounting
principles. During the Company’s two most recent fiscal periods and any
subsequent interim period through the date of resignation, there were no
disagreements with HJ on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of HJ, would have caused it
to make reference to the subject matter of the disagreements in connection with
its reports.
 
 ITEM 9A. CONTROLS AND
PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
 
 The
company’s management, with the participation of our Chief Executive Officer and
Finance Controller, carried out an evaluation of have evaluated the
effectiveness of our “the Company’s disclosure, controls and procedures” (as
defined in Rules Rule 13a-15(3) and 15-d-15(3) of the e) under the
Securities Exchange Act of 1934) as of the end of the period covered by this
Annual Report (the “Evaluation Date”). As a result of such evaluation, Chief
Executive Officer and the Finance Controller have concluded that, as of the
Evaluation Date, our such disclosure, controls and procedures are effective,
providing them with material to provide reasonable assurance that the
information relating to our company as required to be disclosed in the reports
we file the Company files or submits under the Securities Exchange Act on a
timely basis.
 
 There
were no changes in our internal controls over of 1934 is (i) recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's   rules and forms, and (ii)
accumulated and communicated to management, including the Company’s principal
executive and principal financial reporting, known to our Chief Executive
Officer or Finance Controller, persons performing such functions, as
appropriate, to allow timely decisions regarding disclosure. The Company
believes that a control system, no matter how well designed and operated, cannot
provide absolute assurance that the objectives of the control system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been
detected.
 
 Management's
Annual Report on Internal Control Over Financial Reporting.
 
 The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company.  Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
 
 Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of September 30, 2008.  The framework used by
management in making that assessment was the criteria set forth in the document
entitled “ Internal Control – Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that assessment,
our management has determined that as of September 30, 2008, the Company’s
internal control over financial reporting was effective for the purposes for
which it is intended.
 
 This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.
  Changes
in Internal Control over Financial Reporting
 
 No change
in our system of internal control over financial reporting occurred during the
period covered by this report, fourth quarter of the fiscal year ended September
30, 2008 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
 
 ITEM 9B. OTHER
INFORMATION
 
 None.






-17-
 Table of Contents




PART
III
 
 ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
 The
following table sets forth the name, age, position and term of office for each
our executive officers and directors.
 
 NAME
              
              AGE
              
              POSITION
              
              TERM
      EXPIRESJing
      Xing
              
              
              51
              
              
              Chief
      Executive Officer and Co-chairman
              
              February   2009Peide
      Lou
              
              
              46
              
              
              Co-chairman
              
              February   2009Li
      Li
              
              
              45
              
              
              Director
              
              February   2009Mark
      Mi
              
              
              27
              
              
              Financial
      Controller
              
              February   2009Wenjun
      Luo
              
              
              38
              
              
              Chief
      Technical Officer and Director
              
              February   2009Douglas
      J. Toth
              
              
              47
              
              
              Director
              
              February   2009
 
 Set forth
below is certain biographical information regarding each of our executive
officers and directors:
  Jing Xinghas served has a
director since June 2007. On January 3, 2008, Mr. Xing was elected to serve
as co-chairmen of the Board and on February 25, 2008, Mr. Xing was elected to
serve as Chief Executive Officer of the Company. Since 2006, Mr. Xing has
served as president of Sun New Media Inc., president of investment business at
Sun Media Investment Group, chairman of the board of Sun Capital Consultant
Ltd, and as the CEO of China Media Tradex Limited. From 2003 to2006,
Mr. Xing served as chairman, vice chairman, executive director and CEO of
SMI Corporation Ltd. (formerly known as Star EastHoldings Limited, HK listing
symbol 198). From 2003 to 2006 he also served as executive director of Stellar
Megamedia Group Limited. From 2003 to 2005, Mr. Xing served as executive
director & general manager of Sun TV, chairman and executive director of SMI
Publishing Group Limited ( HK listing symbol 8010 ), and as vice chairman
and executive director of M-Channel Limited (HK listing symbol 8036). Since
2000, Mr. Xing has served as the vice chairman and executive director of a
newspaper in Beijing, the People’s Republic of China called the Beijing Daily
Messenger. From 1999 to 2005, Mr. Xing was the chairman and CEO of Beijing
KP Network Technical Co. Ltd.. Mr. Xing holds master degree of science from
the Beijing Software Graduate School of Beijing University.
  Peide Louhasserved as co-chairmen of
the Board since January 3, 2008. Mr. Lou is a Professor of Telecom Engineering
School of Beijing University of Posts and Telecommunication. He serves as
Executive Secretary-General of China Mobile Communications Association, and he
also serves as a director of the Standardization Technical Committee of
Multimedia Communication and Broadcasting of China Association for
Standardization. Mr. Lou used to be a member of optical fiber communication
expert group of Natioanal“317”Telecom Subject of“863”Project; Director of
Wireless division of Department of Telecom Production of MEI; Director of
Telecom Division of Department of Electronic Information Production Management
of MII. He promoted and planned the implementation of national mobile
communication industry specific projects, and has made great effort to
establishment and development of China mobile communication domestic handset
industry.
 
 Li Lihas served as our
director of our company since May 2004. From 1997 to 2003 he served as
Chairman, Vice-Chairman and later General Manager of Chongqing Changjiang River
Water Transport Co., Ltd. Mr. Li was Chairman and General Manager of Hua
Rong Investment Co., Ltd. from 1996 to 2000. Mr. Li holds degrees from
University of Science and Technology of China. Mr. Li is also on the board
of directors of THZA and Shenzhou Lianhe Culture Media Development Co.,
Ltd.
 
 Mark Mi has served as our
Financial Controller from January 2008. In 2007, he served as financial
manager of Sun Media Investment Holdings Limited. Mr. Mi is familiar with PRC
GAAP and US GAAP.
  Wenjun Luo has served as our
Chief Technical Officer and director since February25, 2008. Dr. Luo is a
leading IT and mobile services professional with over 10 years of experience in
the global handheld industry. While at Globstream, Dr. Luo rolled out the first
wireless streaming audio/music portal for the mass mobile phone market in China
and built strategic partnerships with major media companies and mobile carriers
in China. Prior to Globstream, Dr. Luo served as a management consultant at
McKinsey & Company's Great China Office and held various management
positions at Sun Microsystems, Palm, Inc. and 3 Com Corp. Dr. Luo earned an MBA
from the University of California's Haas School of Business in Berkeley, CA, a
PhD from the University of Pennsylvania's School of Electrical Engineering in
Philadelphia, and a B.S. from Shanghai Jiao Tong University's School of
Electrical Engineering in Shanghai, China.
   -18-
 Table of Contents
   Douglas J. Tothhas served as
a director since June 2007. Since 2002, Mr. Toth has served as CEO of
Groupmark Financial Ltd. From 1998 to 2002, Mr. Toth served as a director
of Somerset Financial Group. Additionally, he has knowledge of financial and SEC
reporting. Mr. Toth studied theoretical mathematics at Rutgers University
and finance at the New York Institute of Finance.
 All the
other executive officers hold their positions at the discretion of our board of
directors. All of our directors hold their positions for a term of one year or
until their successors are duly elected and qualified.
 
 Audit
Committee and Audit Committee Financial Expert
 
 Our board
of directors does not have a separate audit committee as we are not required to
have an audit committee because we do not have any listed securities as defined
in Section 240.10A-3 of the Sarbanes-Oxley Act of 2002
(“Section 240.10A-3”). We do not have an audit committee financial expert,
as defined under Section 228.401 of the Sarbanes-Oxley Act of 2002, as we
do not have any listed securities as defined in
Section 240.10A-3.
 
 Code of
Ethics
 
 We have
adopted a code of ethics that applies to our Chief Executive Officer, Finance
Controller, other senior management, directors and other personnel. The code of
ethics was filed as Exhibit 99.1 to our Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2004 and is incorporated by reference in this
Annual Report. There has been no change to the code of ethics from
2004.
 
 Section 16(a)
Beneficial Ownership Reporting Compliance
 
 Section 16(a)
of the Securities and Exchange Act of 1934 requires our officers and directors
and persons who beneficially own more than 10% of the Company’s common stock
(collectively, the “Reporting Persons”) to file reports of beneficial ownership
and changes in beneficial ownership with the SEC. The Reporting Persons are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file.
 
 We
believe that the Reporting Persons have complied with all the applicable
reporting requirements, except certain late and delinquent filings of
Form 3, Form 4 and Form 13D by Her Village Limited, Global Women
Multi-Media, Ltd. (BVI), and Hershop.com Limited. We are implementing an
enhanced compliance program to assist the Reporting Persons to fully comply with
disclosure requirements pursuant to Section 16(a).
 
 ITEM 11. EXECUTIVE COMPENSATION
 
 Compensation of Executive
Officers
 
 The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the fiscal
years ended September 30, 2008 and 2007 in all capacities for the accounts of
our executives, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):
  SUMMARY
COMPENSATION TABLE
   Name
      and Principal Position
                Year
                Salary
                
                Bonus
                
                Stock
                  Awards
                Option
                  Awards
                
                Non-Equity
      Incentive Plan Compensation ($)
                
                Non-Qualified
      Deferred Compensation Earnings
                
                All
      Other Compensation
                Totals($)
                ($)
                ($)
                ($)
                ($)
                ($)
                ($)Qiong
      Jiang, Chief Executive
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0Officer
      and Director (1)
                2007
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0Xing
      Jing, Co-Chairman and Chief Executive
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0Officer
      (2)
                2007
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0
   -19-
 Table of Contents
  Luo
      Wenjun, Chief Technical Officer and Director (3)
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                02007
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0Lou
      Peide, Co-Chairman (4)
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                02007
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0Li
      Li, Director (5)
                2008
                $114,273
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $114,2732007
                $10,532
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $10,532
  Yan
      Gong, Chief Executive Officer and Director (6)
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                02007
                $12,677
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $12,677Hongmei
      Zhang,
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0Financial
      Manager (7)
                2007
                $3,480
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $3,480Chuan
      He, Media Planning Manager (8)
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                02007
                $6,663
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $6,663Dapeng
      Sun, Customer Service Manager (9)
                2008
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                02007
                $3,368
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $3,368
  Mark
      Mi, Finance Controller (10)
                2008
                $29,333
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                $29,3332007
                0
                
                
                0
                
                0
                
                
                0
                
                0
                
                
                0
                
                0
                0
  (1)
                Qiang
      Jiang ceased to be our Chief Executive Officer on June 30, 2006, and
      ceased to be our director on June 19,
2007.
 (2)
                Xing
      Jing has served has a director since June 2007. On January 3, 2008,
      Mr. Xing was elected to serve as co-chairmen of the Board and on February
      25, 2008, Mr. Xing was elected to serve as Chief Executive Officer of the
      Company.
 (3)
                Luo
      Wenjun has served as our Chief Technical Officer and director since
      February 25, 2008.
 (4)
                Lou
      Peide hasserved as
      co-chairmen of the Board since January 3,
2008.
 (5)
                Li
      Li has served as our Chairman and director of our company since
      May 2004. And on January 7 2008, the Company accepted Mr. Li’s
      voluntary resignation as Chairman. But he continues to serve as a member
      of the Board.
 (6)
                Yan
      Gong ceased to be our Chief Executive Officer and director of the Board on
      January 4, 2008.
 (7)
                Hongmei
      Zhang ceased to be our Financial Manager on January 4,
    2008.
 (8)
                Chuan
      He ceased to be the Media Planning Manager on January 4,
    2008.
 (9)
                Dapeng
      Sun ceased to be the Customer Service Manager on January 4,
      2008.
 (10)
                Mark
      Mi has served as our Finance Controller since January
  2008.
  Employment
Agreements
  We do not
have any employment agreements in place with our directors and
officers.
 
 Compensation of
Directors
 
 We have
no arrangements for the remuneration of officers and directors, except that they
will be entitled to receive reimbursement for actual, demonstrable out-of-pocket
expenses, including travel expenses, if any, made on our behalf in the
investigation of business opportunities. Other than as reflected in the table
above, no remuneration has been paid to our officers or directors. There are no
agreements or understandings with respect to the amount or remuneration those
officers and directors are expected to receive in the future. As of the date of
this Annual Report, no stock options have been issued to our officers or
directors.
 
   -20-
 Table of Contents
   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
 
 The
following table sets forth as of December 31, 2008, the number and percentage of
the 6,487,491 outstanding shares of common stock which, according to the
information supplied to us, were beneficially owned by (i) each director,
(ii) each executive officer, (iii) all directors and executive
officers as a group and (iv) each person who, to our knowledge, is the
beneficial owner of more than 5% of our outstanding common stock. Except as
otherwise indicated, the persons named in the table have sole voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws where applicable.
  AMOUNT
      ANDNATURE
      OFTITLE
      OFCLASS
                
                NAME
      AND ADDRESS OFBENEFICIAL
      OWNER
                BENEFICIAL

                    OWNERSHIP
                PERCENT
      OFCLASSCommon
      Stock
                
                Hershop.
      com Limited
                331,140
                5.10%8/F,Crawford
      Tower, 99 Jervois Street, Sheung Wan, Hong KongCommon
      Stock
                
                Global
      Women Multi-Media Co., Ltd. (BVI)
                428,751
                6.61%P.O.
      Box 957, Offshore Incorporations Centre, Road Town, Tortola, British
      Virgin IslandsCommon
      Stock
                
                Jing
      Xing
                -0-
                -0-73
      Jupiter Road Singapore, 576550Common
      Stock
                
                Lou
      Peide
                -0-
                -0-16/F
      A Business Office, East Area of Century Golden Resources
      Hotel,No.
      69 Banjing Road, Haidian District,100097,Beijing  P.R. ChinaCommon
      Stock
                
                Douglas
      J. Toth
                -0-
                -0-1120
      6th Ave. 4th Floor New York, NY 10032Common
      Stock
                
                Li
      Li
                -0-
                -0-Room 602,
      2 North Tuanjiehu Street ChaoyangDistrict,
      Beijing 100026 People’s Republic of ChinaCommon
      Stock
                
                Luo
      Wenjun
                -0-
                -0-21970
      Oaknoll CourtCupertino,
      CA 95014 USACommon
      Stock
                
                Her
      Village Limited
                1,200,000
                18.49%P.O.
      Box 957 Offshore Incorporations Centre  Road Town Tortola,
      British Virgin IslandsCommon
      Stock
                
                Chen
      Zengjie
                1,309,005
                20.18%No.16
      Room 40, E Mei road 366, Hongkou District, Shanghai, P.R.
      ChinaCommon Stock
                
                Officer and Directors as a
      Group: 5 persons
                0
                0
  ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
 
 Policies and procedures for review
and approval of related party transactions
 
 We do not
have a formal policy and related procedures for the review, approval and
ratification of transactions that are required to be reported pursuant to this
Item 13. If and when any such transactions have been proposed, they have
been reviewed by our board of directors. The approval of the chairman and at
least one director is required to ratify any transaction. Our board intends to
approve only those related party transactions that have fair terms at market
rate and are in our best interests. We expect to continue this policy in the
future.
 
 Anti-dilution
agreement
 
 On
October 21, 2002, we entered into an anti-dilution agreement (the
“Anti-Dilution Agreement”) with William Fisher, our former President, which
required us to issue additional shares of our common stock to Mr. Fisher as
and when necessary to enable him to maintain a 7% ownership in our company. On
December 15, 2003(effective November 4, 2003), we extended the
agreement indefinitely so long as Mr. Fisher did not voluntarily sell
shares of common stock to cause his ownership interest in our company to fall
below 7%, among other conditions. This agreement was cancelled pursuant to
satisfaction of the terms of a general release agreement we entered into with
Mr. Fisher in June 2005.
 
 General releases and Loan settlement
agreement
 
 On
June 28, 2005, we entered into a general release agreement with
Mr. Fisher and Hong Kong Pride Investment Ltd. (“HKPI”), a company
controlled by Mr. Fisher, pursuant to which Mr. Fisher and HKPI agreed
to release and discharge us from all obligations under the Anti-Dilution
Agreement and waive all claims against us for past due salary or compensation,
among other things, upon receipt of payment in the amount of
US$20,000.
 
  -21-
 Table of Contents
   On
June 28, 2005, we also entered into a general release agreement with
Stanley Roy Goss, our former Chief Financial Officer, and AOI, pursuant to which
Mr. Goss and AOI agreed to release all claims against us for past due
salary or compensation, among other things, upon receipt of payment in the
amount of US$10,000.
 
 In
July 2005, we entered into a loan settlement agreement (the “Loan
Settlement Agreement”) with Zheng (Bruno) Wu, one of our shareholders, pursuant
to which Mr. Wu agreed to loan us US$30,000, which was to be repaid by the
issuance of our shares to Mr. Wu, and to accept repayment for a previous
loan to us in the amount of US$27,027 in the form of additional shares. On
August 9, 2005, pursuant to the Loan Settlement Agreement, we issued 1,629
shares of our common stock, valued at the market price of $35 per share, to
Mr. Wu as repayment for the loans in the amount of US$30,000 and
US$27,027.
 
 ITEM14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
 
 Audit Fees
 
 The
aggregate fees billed for professional services rendered by Bernstein &
Pinchuk LLP, our current auditor, for the audit of our annual financial
statements, review of our financial statements included in our quarterly reports
and services normally provided by the auditor in connection with statutory and
regulatory filings or engagements was US$155,000 for the fiscal year ended
September 30, 2008. The aggregate fees billed for professional services rendered
by HJ & Associates, LLC, our former auditor, for the audit of our annual
financial statements, review of our financial statements included in our
quarterly reports and services normally provided by the auditor in connection
with statutory and regulatory filings or engagements was US$90,000 for the
fiscal year ended March 31, 2007, US$83,000 for the six months ended
September 30, 2007, US$64,000 for the six months ended September 30,
2006.
 Audit-Related
Fees
 
 There
were no audit-related fees billed by our principal auditor during the six months
ended September 30, 2006 and 2007, fiscal year ended March 31, 2007
and September 30, 2008. In the fiscal year ended March 31, 2006, our former
auditor billed fees in the amount US$2,500 in connection with responding to
comments we received from the SEC with respect to our annual report on Form
10-KSB for the year ended March 31, 2005 we filed with the
SEC.
 
 Tax
Fees
 
 The
aggregate fees billed during the six months ended September 30, 2006 and
2007, fiscal years ended March 31, 2007 and September 30, 2008 for
professional services rendered by the principal auditor for tax compliance, tax
advice, and tax planning were all US$0.
 
 All Other
Fees
 
 There
were no other aggregate fees billed in either of the last two fiscal years for
products and services provided by the principal auditor, other than the services
reported above.
 
 We do not
have an audit committee currently serving and as a result our board of directors
performs the duties of an audit committee. Our board of directors will evaluate
and approve in advance, the scope and cost of the engagement of an auditor
before the auditor renders audit and non-audit services. We do not rely on
pre-approval policies and procedures.
 
 PART
IV
 
 ITEM 15.EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
 
 (a). Documents filed as part of this
Annual Report:
 
 1. Consolidated Financial
Statements
 
 The
audited consolidated financial statements filed in this Annual Report are listed
on page F-1 hereof.
 
 2.
Financial Statement Schedules
 
 The
Supplemental Schedule of Non-Cash Investing and Financing Activities appears on
page F-8 hereof.
   -22-
 Table of Contents
 
 3.
Exhibits
 
 Exhibit
      No.
              
              Description3.1
              
              Certificate
      of Incorporation(1)3.2
              
              Articles
      of Amendment to Charter(1)3.3
              
              Certificate
      of Amendment to Certificate of Incorporation(2)3.4
              
              Bylaws
      (3)4.1
              
              2001
      Stock Plan (4)10.1
              
              Convertible
      Promissory Note(5)10.2
              
              Convertible
      Promissory Note(5)10.3
              
              Registration
      Rights Agreement(5)14.1
              
              Code
      of Ethics(6)21.1
              
              List
      of Subsidiaries31.1
              
              Certification
      of Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
              
              Certification
      of Finance Controller pursuant to Section 302 of the Sarbanes-Oxley
      Act of 200232.1
              
              Certification
      of Chief Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
              
              Certification
      of Finance Controller pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002
 
 (1)
              
              Incorporated
      by reference to our Annual Report on Form 10-KSB for the year ended
      December 31, 1999, filed on April 17, 2000.(2)
              
              Incorporated
      by reference to our report on Form 8-K filed on October 9,
      2002.(3)
              
              Incorporated
      by reference to our Annual Report on Form 10-KSB for the year ended
      December 31, 2006, filed on June 28, 2006.(4)
              
              Incorporated
      by reference to our Registration Statement on Form S-8 filed on
      September 21, 2001.(5)
              
              Incorporated
      by reference to our Annual Report on Form 10-KSB for the year ended
      December 31, 2002, filed on May 20, 2003.(6)
              
              Incorporated
      by reference to our Annual Report on Form 10-KSB for the year ended
      March 31, 2004, filed on August 11,
  2004.
   -23-
 Table of Contents
  
 ASIA
PREMIUM TELEVISION GROUP, INC.
 AND
SUBSIDIARIES
 
 
 
 CONTENTS
 
 
 PAGE
              F-1-
      F-2
              REPORTS
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMPAGE
              F-3
              CONSOLIDATED
      BALANCE SHEETS AS OF SEPTEMBER 30, 2008 AND 2007.PAGE
              F-4
              CONSOLIDATED
      STATEMENTS OF OPERATIONS.PAGE
              F-5
              CONSOLIDATED
      STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
  (DEFICIENCY).PAGE
              F-6
              CONSOLIDATED
      STATEMENTS OF CASH FLOWS.PAGES
              F-7
      - F-15
              NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS.
 
 Table of Contents
   REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To
the Board of Directors and Stockholders of
 Asia
Premium Television Group, Inc.
  We have
audited the accompanying consolidated balance sheet of Asia Premium Television
Group, Inc. (“the Company”) as of September 30, 2008, and the related
consolidated statements of operations and comprehensive income, changes in
stockholders’ equity, and
cash flows for the year then ended. The Company’s management is
responsible for these financial statements. Our responsibility is to express an
opinion on these financial statements based on our audits.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of September 30,
2008, and the results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.
  /s/ Bernstein & Pinchuk
LLP
  New York,
NY
 December
19, 2008
  F-1
 Table of Contents
  Report
of Independent Registered Public Accounting Firm
  To the
Board of Directors
 Asia
Premium Television Group, Inc.
 Beijing,
China
  We have
audited the consolidated balance sheet of Asia Premium Television Group, Inc.
and subsidiaries as of September 30, 2007 and the related consolidated
statements of income, comprehensive income, stockholders equity (deficit) and
cash flows for the six months ended September 30, 2007 and the year ended March
31, 2007. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
  We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provided a reasonable basis for our
opinion.
  In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Asia Premium
Television Group, Inc. and subsidiaries as of September 30, 2007 and March 31,
2007, and the results of their operations and their cash flows for the six
months ended September 30, 2007 and the year ended March 31, 2007, in conformity
with U.S. generally accepted accounting principles.
   /s/  HJ & Associates, LLC
 HJ &
Associates, LLC
 Salt Lake
City, Utah
 December
29, 2007
   F-2
 Table of Contents
  ASIA
      PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIESConsolidated
      balance sheetsSeptember
      30, 2008
                                      
                                      
                                      
                                      September
      30, 2007(Audited)
                                      
                                      
                                      
                                      (Audited)ASSETS
                                      
                                      US$
                                      
                                      
                                      
                                      US$CURRENT
      ASSETSCash
      and cash equivalents
                                      
                                      $
                                      62,618
                                      
                                      
                                      
                                      $
                                      169,527Accounts
      receivable, net
                                      
                                      
                                      16,134
                                      
                                      
                                      
                                      
                                      -Related
      party receivable
                                      
                                      
                                      127,285
                                      
                                      
                                      
                                      
                                      397,323Other
      receivables
                                      
                                      
                                      114,048
                                      
                                      
                                      
                                      
                                      -Prepaid
      expenses
                                      
                                      
                                      13,126
                                      
                                      
                                      
                                      
                                      -Inventory
                                      
                                      
                                      367
                                      
                                      
                                      
                                      
                                      -Current
      assets of discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      16,457,477Total
      Current Assets
                                      
                                      
                                      333,578
                                      
                                      
                                      
                                      
                                      17,024,327Convertible
      note receivable
                                      
                                      
                                      240,000
                                      
                                      
                                      
                                      
                                      -Property
      and equipment, net
                                      
                                      
                                      678,098
                                      
                                      
                                      
                                      
                                      175,984Goodwill
                                      
                                      
                                      4,172,982
                                      
                                      
                                      
                                      
                                      -Intangible
      assets
                                      
                                      
                                      949,944Assets
      of discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      956,997$
                                      6,374,602
                                      
                                      
                                      
                                      $
                                      18,157,308LIABILITIES AND STOCKHOLDERS'
      EQUITYCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                                      
                                      $
                                      44,725
                                      
                                      
                                      
                                      $
                                      745Other
      payables
                                      
                                      
                                      379,387
                                      
                                      
                                      
                                      
                                      113,028Liabilities
      of discontinued operations
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      12,601,751Total
      Current Liabilities
                                      
                                      
                                      424,112
                                      
                                      
                                      
                                      
                                      12,715,524Minority
      interest
                                      
                                      
                                      (110,189
                                      )
                                      
                                      
                                      
                                      -STOCKHOLDERS'
      EQUITYCommon
      stock, $.001 par value, authorized 1,750,000,000 shares; 6,487,491 shares
      issued (2008) 3,445,791 shares issued (2007)
                                      
                                      
                                      6,487
                                      
                                      
                                      
                                      
                                      3,446Additional
      paid-in capital – common stock
                                      
                                      
                                      9,487,278
                                      
                                      
                                      
                                      
                                      2,086,185Additional
      paid-in capital – warrants
                                      
                                      
                                      745,281
                                      
                                      
                                      
                                      
                                      340,756Subscription
      receivable
                                      
                                      
                                      (86,647
                                      )
                                      
                                      
                                      
                                      -Accumulated
      other comprehensive income
                                      
                                      
                                      (117,981
                                      )
                                      
                                      
                                      
                                      266,029Retained
      earnings (deficit)
                                      
                                      
                                      (3,973,729
                                      )
                                      
                                      
                                      
                                      2,745,378Treasury
      stock
                                      
                                      
                                      (10
                                      )
                                      
                                      
                                      
                                      (10
                                      )Total
      Stockholders' Equity
                                      
                                      
                                      6,060,679
                                      
                                      
                                      
                                      
                                      5,441,784$
                                      6,374,602
                                      
                                      
                                      
                                      $
                                      18,157,308
  See notes
to consolidated financial statements.
 
  F-3
 Table of Contents
 
 
   ASIA
      PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIESConsolidated
      Statements of OperationsFor
      the Year Ended September 30,
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        For
      the Six Months Ended September 30,
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        For
      the Six Months Ended September 30,
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        For
      the Year Ended March 31,2008
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2007
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2006
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2007(Audited)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (Audited)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (Unaudited)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (Audited)US$
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        US$
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        US$
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        US$REVENUE
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        1,390,525
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        -COST
      OF SALES
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        960,272
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -GROSS
      MARGIN
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        430,253
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -General
      and administrative
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,652,379
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        140,325
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        110,583
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        80,694Depreciation
      and amortization
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        845,681
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        4,995
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -2,498,060
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        145,320
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        110,583
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        80,694INCOME
      (LOSS) FROM OPERATIONS
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (2,067,807
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (145,320
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (110,583
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (80,694
                                                                                                                                                                        )OTHER
      INCOMEInterest
      income
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        8,657
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        7,383
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -Impairment
      loss on intangible assets and goodwill
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (4,747,584
                                                                                                                                                                        )Other
      income (expenses)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        357
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        88,515(4,738,570
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        7,383
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        88,515INCOME
      (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAX
EXPENSE
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (6,806,377
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (137,937
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (110,583
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        7,821Income
      tax expense
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -Minority
      interest
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        87,258
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -Income
      (loss) from continuing operations
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        (6,719,119
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        (137,937
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        (110,583
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        7,821Income
      from discontinued operations
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        593,019
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        274,797
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2,556,611Net
      Income (Loss)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (6,719,119
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        455,082
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        164,214
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2,564,432OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation adjustment
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (384,010
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        -TOTAL
      COMPREHESIVE INCOME (LOSS)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        (7,103,129
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        455,082
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        164,214
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        2,564,432Weighted
      average number of common shares outstanding – basic
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        4,645,655
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2,381,698
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,613,191
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,613,191Weighted
      average number of common shares outstanding – diluted
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        4,645,655
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        3,084,700
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,613,191
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,613,191EARNINGS
      (LOSS) PER SHARE – BASIC
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        (1.45
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        0.19
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        0.10
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        1.59EARNINGS
      (LOSS) PER SHARE – DILUTED
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        (1.45
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        0.15
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        0.10
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        1.59
  See notes
to consolidated financial statements.
   F-4
 Table of Contents
  ASIA
      PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIESConsolidated
      Statement Of Changes in Stockholders’ Equity
  (Deficiency)Capital
      in
                                                        
                                                        
                                                        
                                                        
                                                        Accumulated
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        Totalexcess
      of
                                                        
                                                        Subscription
                                                        
                                                        
                                                        other
                                                        
                                                        
                                                        Retained
                                                        
                                                        
                                                        Stockholders’Common
      Stock
                                                        
                                                        
                                                        par
      value
                                                        
                                                        receivable
                                                        
                                                        
                                                        comprehensive
                                                        
                                                        
                                                        Earnings
                                                        
                                                        
                                                        equityShares
                                                        
                                                        
                                                        Dollars
                                                        
                                                        
                                                        (deficit)
                                                        
                                                        
                                                        
                                                        
                                                        income
                                                        
                                                        
                                                        (Deficit)
                                                        
                                                        
                                                        (Deficit)Balance,
      March 31,2007
                                                        
                                                        
                                                        1,613,297
                                                        
                                                        
                                                        $
                                                        1,613
                                                        
                                                        
                                                        $
                                                        (2,453,719)
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        125,582
                                                        
                                                        
                                                        $
                                                        2,290,296
                                                        
                                                        
                                                        $
                                                        (36,228)New
      Issuance of common stock, net of offering cost of $98,101
                                                        
                                                        
                                                        1,200,000
                                                        
                                                        
                                                        
                                                        1,200
                                                        
                                                        
                                                        
                                                        860,699
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        861,899Conversion
      of the Convertible Notes
                                                        
                                                        
                                                        596,765
                                                        
                                                        
                                                        
                                                        597
                                                        
                                                        
                                                        
                                                        3,999,403
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        4,000,000Issuance
      for anti-dilution agreement
                                                        
                                                        
                                                        25,729
                                                        
                                                        
                                                        
                                                        26
                                                        
                                                        
                                                        
                                                        20,558
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        20,584Foreign
      Currency translation Adjustment
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        140,447
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        140,447Net
      income for the six months ended September 30, 2007
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        455,082
                                                        
                                                        
                                                        
                                                        455,082Balance,
      September 30, 2007
                                                        
                                                        
                                                        3,435,791
                                                        
                                                        
                                                        
                                                        3,436
                                                        
                                                        
                                                        
                                                        2,426,941
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        266,029
                                                        
                                                        
                                                        
                                                        2,745,378
                                                        
                                                        
                                                        
                                                        5,441,784New
      Issuance of common stock
                                                        
                                                        
                                                        3,041,700
                                                        
                                                        
                                                        
                                                        3,041
                                                        
                                                        
                                                        
                                                        7,805,618
                                                        
                                                        
                                                        (86,647)
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        7,722,012Foreign
      Currency translation Adjustment
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (384,010)
                                                        
                                                        
                                                        
                                                        12
                                                        
                                                        
                                                        
                                                        (383,998)Net
      loss for the year ended September 30, 2008
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        (6,719,119)
                                                        
                                                        
                                                        
                                                        (6,719,119)Balance,
      September 30, 2008
                                                        
                                                        
                                                        6,477,491
                                                        
                                                        
                                                        $
                                                        6,477
                                                        
                                                        
                                                        $
                                                        10,232,559
                                                        
                                                        $
                                                        (86,647)
                                                        
                                                        
                                                        $
                                                        (117,981)
                                                        
                                                        
                                                        $
                                                        (3,973,729)
                                                        
                                                        
                                                        $
                                                        6,060,679
  See
notes to consolidated financial statements.
  
 F-5
 Table of Contents
  ASIA
      PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIESConsolidated
      Statements of Cash FlowsFor
      the Year Ended September 30,
                                      
                                      
                                      
                                      For
      the Six Months Ended September 30,
                                      
                                      
                                      For
      the Six Months Ended September 30,
                                      
                                      
                                      For
      the Year Ended March 31,2008
                                      
                                      
                                      
                                      2007
                                      
                                      
                                      2006
                                      
                                      
                                      2007US$
                                      
                                      
                                      
                                      US$
                                      
                                      
                                      US$
                                      
                                      
                                      US$(Audited)
                                      
                                      
                                      
                                      (Audited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Audited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income (loss)
                                      
                                      
                                      $
                                      (6,719,119
                                      )
                                      
                                      
                                      $
                                      455,082
                                      
                                      
                                      $
                                      164,214
                                      
                                      
                                      $
                                      2,564,432Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      expense
                                      
                                      
                                      
                                      845,681
                                      
                                      
                                      
                                      
                                      4,995
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Impairment
      in intangible assets and goodwill
                                      
                                      
                                      
                                      4,747,584Minority
      interest
                                      
                                      
                                      
                                      (87,258
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Changes
      in assets and liabilities:Account
      receivable & other receivables
                                      
                                      
                                      
                                      (82,584
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Inventories
                                      
                                      
                                      
                                      40,003
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Prepaid
      expenses
                                      
                                      
                                      
                                      (12,619
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Accounts
      payable, accrued expenses & other payable
                                      
                                      
                                      
                                      307,948
                                      
                                      
                                      
                                      
                                      958
                                      
                                      
                                      
                                      110,583
                                      
                                      
                                      
                                      (7,821
                                      )Net
      Cash Provided by (Used in) Operating Activities
                                      
                                      
                                      
                                      (960,364
                                      )
                                      
                                      
                                      
                                      461,035
                                      
                                      
                                      
                                      274,797
                                      
                                      
                                      
                                      2,556,611CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of property and equipment
                                      
                                      
                                      
                                      (555,861
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Additions
      to intangible assets
                                      
                                      
                                      
                                      (4,420,000
                                      )Investment
      in subsidiaries
                                      
                                      
                                      
                                      (6,390,759
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Disposal
      of subsidiaries
                                      
                                      
                                      
                                      4,500,000Purchase
      of note receivable
                                      
                                      
                                      
                                      (240,000
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Net
      Cash Used in Investing Activities
                                      
                                      
                                      
                                      (7,106,620
                                      )
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from issuing shares
                                      
                                      
                                      
                                      7,957,452
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Decrease
      (Increase) in advances receivable-related party
                                      
                                      
                                      
                                      (127,702
                                      )
                                      
                                      
                                      
                                      (54,012
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Increase
      (Decrease) in advances payable-related party
                                      
                                      
                                      
                                      184,516
                                      
                                      
                                      
                                      
                                      (200,529
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Net
      Cash Provided by (Used in) by Financing Activities
                                      
                                      
                                      
                                      8,014,266
                                      
                                      
                                      
                                      
                                      (254,541
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -EFFECT
      OF FOREIGN CURRENCY TRANSLATION ON CASH
                                      
                                      
                                      (54,191)
                                      
                                      
                                      
                                      -
                                      
                                      
                                      -
                                      
                                      
                                      -NET
      (DECREASE) INCREASE IN CASH FROM CONTINUED
OPERATIONS
                                      
                                      
                                      
                                      (106,909
                                      )
                                      
                                      
                                      
                                      206,494
                                      
                                      
                                      
                                      274,797
                                      
                                      
                                      
                                      2,556,611NET
      DECREASE IN CASH FROM DISCONTINUED OPERATIONS
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      (36,968
                                      )
                                      
                                      
                                      (274,797
                                      )
                                      
                                      
                                      (2,556,611
                                      )CASH
      AT BEGINNING OF PERIOD
                                      
                                      
                                      
                                      169,527
                                      
                                      
                                      
                                      
                                      1
                                      
                                      
                                      
                                      1
                                      
                                      
                                      
                                      1CASH
      AT END OF PERIOD
                                      
                                      
                                      $
                                      62,618
                                      
                                      
                                      
                                      $
                                      169,527
                                      
                                      
                                      $
                                      1
                                      
                                      
                                      $
                                      1Supplemental
      disclosure of cash flow informationInterest
      paid
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      
                                      $
                                      26,785
                                      
                                      
                                      $
                                      3,141
                                      
                                      
                                      $
                                      27,128Income
      taxes paid
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      
                                      $
                                      167,085
                                      
                                      
                                      $
                                      13,548
                                      
                                      
                                      $
                                      45,538
  See notes
to consolidated financial statements.
  F-6
 Table of Contents
  ASIA
PREMIUM TELEVISION GROUP, INC. AND SUBSIDIARIES
 Notes to
the Consolidated Financial Statements
 
 NOTE 1 —
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 The
accompanying consolidated financial statements of Asia Premium Television Group,
Inc (“Parent”) and subsidiaries SNMTS, CFCD JXHC defined herein below,
collectively referred to as the “Company”) have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted in
accordance with such rules and regulations.
 
 Organization
 Asia
Premium Television Group, Inc. (“Parent”) was organized under
the laws of the State of Nevada on September 21, 1989. Parent went through
various name changes prior to September 2002 when the name was changed to
Asia Premium Television Group, Inc. Parent was originally formed to purchase,
merge with or acquire any business or assets which management believes has
potential for being profitable.
 
 Parent
entered into a stock for stock acquisition with Beijing Asia Hongzhi Advertising
Co., Ltd. (“BAHA”)
during March 2003, which was finalized on July 9, 2004, in a
transaction that has been accounted for as a recapitalization of BAHA in a
manner similar to a reverse purchase. There was no adjustment required to the
carrying values of the acquired assets or liabilities. Operations prior to
July 2004 are those of BAHA. The parent is the continuing entity for legal
purposes; BAHA is the continuing entity for accounting purposes.
 
 On
January 3, 2008, in order to divest from our traditional advertising business
and focus on our new mobile phone-based marketing and advertising business, we
entered into a sale and purchase agreement with Fanya Advertising Company Ltd.
("Fanya") to sell BAHA
and its wholly-owned Chinese subsidiaries Shandong Hongzhi Communications and
Career Advertising Co., Ltd. (“SHCCA”) and Tibet Asia Culture
Media Co., Ltd. (“TACM,”
collectively referred to as "BAHA Group"). The agreement
provides for the sale of the BAHA Group for an aggregate cash consideration of
$4.8 million, which compensation was agreed upon based on BAHA's audited
financial statements as of and for the year ended September 30, 2007. We
completed this divestment on January 10, 2008. Operating results of BAHA
subsequent to September 30, 2007 have not been consolidated with our operating
results, and our financial statements as of and for the fiscal year ended
September 30, 2008 do not include operating results of the BAHA
Group.  All of the Company’s operating activities are located in the
People’s Republic of China.
 
 Subsidiaries
 On
July 1, 2007, the Company acquired 100% of Sun New Media Transaction
Service Ltd. (“SNMTS”),
a company incorporated in Hong Kong, and its wholly owned subsidiary China Focus
Channel Development Co., Ltd (“CFCD”), a company incorporated
in People’s Republic of China, from a third party with a net book value of $0 at
a price of $1.
 
 On
January 3, 2008, the Company entered into a share purchase agreement (the "Share Purchase Agreement")
with the China Mobile and Communications Association ("CMCA") and its
wholly-controlled affiliate, Union Max Enterprises, Ltd. ("Union Max"), to obtain the
right to operate as a Provincial Class One Full Service Operator in Jiangxi
Province, the People's Republic of China. As the Company's key business
partner based in Beijing, CMCA is China's leading association of
telecommunications and telecommunication-related companies. Pursuant to the
Agreement, the Company has been entitled 70% of profits in Jiangxi Hongcheng
Tengyi Telecommunication Company, Ltd ("JXHC"), a local reseller of
mobile minutes in Jiangxi Province Pursuant to the Agreement, the Company will
pay the aggregate consideration of US$6 million by issuing 300,000 shares of the
Company's common stock at the price of US$5 per share and a lump-sum cash
payment of US$4.5 million. According to the terms in the Agreement, the
acquisition was completed on March 28, 2008.
 
 Fiscal Year
change
 On
November 14, 2007, our Board of Directors approved a change in our financial
year-end from March 31 to September 30. This 10-K covers among other periods the
transition period from April 1, 2007 to September 30, 2007. The 2008 Fiscal Year
began on October 1, 2007.
 
 Consolidation
 The
consolidated financial statements include the accounts of Parent, SNMTS, CFCD,
and JXHC (“the Company”). All inter-company balances and transactions between
Parent and subsidiaries have been eliminated in consolidation.
 
 Reclassification
 The
financial statements for periods and years prior to September 30, 2008 have
been reclassified to conform to the headings and classifications used in the
September 30, 2008 financial statements.
   F-7
 Table of Contents
  
 Use of
estimates
 The
preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates. The Company bases its estimates on historical
experience and various other factors believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Significant accounting estimates reflected in the Company's
consolidated financial statements include allowance for doubtful accounts,
estimated useful lives and impairment of acquired intangible assets and
goodwill.
 
 Cash and Cash
Equivalents
 The
Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
 
 Accounts
Receivable
 Accounts
receivable are carried at the expected realizable value. The provision for bad
debt losses is estimated by management based on individual accounts receivable
which show signs of uncollectability and an ageing analysis for receivables of
over 90 days at the end of each quarter.
 
 Property and
Equipment
 Property
and equipment are recorded at cost less accumulated depreciation and
amortization. Expenditures for major renewals and betterments that extend the
useful lives of property and equipment are capitalized, upon being placed in
service. Expenditures for maintenance and repairs are charged to expense as
incurred. Depreciation and amortization are provided on a straight-line basis
over the estimated useful lives of the assets. Estimated useful lives of
property and equipment are as follows:
  Software
              3
      yearsComputer
      equipment
              5
      yearsMotor
      vehicles
              5
      yearsLeasehold
      improvement
              2
      yearsPaintings
              Infinite
 
 Acquired intangible
assets
 Acquired
intangible assets, which consist primarily of purchased software technology, are
carried at cost, less accumulated amortization.
 
 Amortization
is calculated on a straight-line basis over the expected useful life of the
assets of 3 years. Amortization expenses for the years ended September 30, 2008
and March 31, 2007 were USD736,667 and USD$0 respectively. Amortization expenses
for six months ended September 30, 2007 and 2006 were USD$0 and USD$0
respectively.
 
 Impairment of long-lived
assets
 The Company evaluates its long-lived
assets for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. When these events occur,
the Company measures impairment by comparing the carrying amount of the assets
to the amount of replacement cost. If the sum of the replacement cost is less
than the carrying amount of the assets, the Company would adjust the carrying
value of the asset based on the fair value andrecognize an impairment loss. We also
use the replacement cost method to test our unused assets and record impairment
loss. Impairment loss in the year ended September 30, 2008 was USD2,733,390
which was generated from the impairment of purchased intangible
assets.There were no impairment losses in the
year ended March31, 2007, and six months ended September 30, 2007 and
2006 .
 Goodwill
 Goodwill
represents the excess of the purchase price over the fair value of the
identifiable assets and liabilities acquired. Goodwill is tested for impairment
annually or more frequently if events or changes in circumstances indicate that
it might be impaired. The Company completes a two-step goodwill impairment test.
The first step compares the fair values of each reporting unit to its carrying
amount, including goodwill. If the fair value of each reporting unit exceeds its
carrying amount, goodwill is not impaired and the second step will not be
required. If the carrying amount of a reporting unit exceeds its fair value, the
second step compares the implied fair value of goodwill to the carrying value of
a reporting unit's goodwill. The implied fair value of goodwill is determined in
a manner similar to accounting for a business combination with the allocation of
the assessed fair value determined in the first step to the assets and
liabilities of the reporting unit. The excess of the fair value of the reporting
unit over the amounts assigned to the assets and liabilities is the implied fair
value of goodwill. An impairment loss is recognized for any excess in the
carrying value of goodwill over the implied fair value of goodwill.
 
 F-8
 Table of Contents
   Management
performed the annual goodwill impairment test as of September 30, 2008. Based on
the impairment assessment performed by management, the Company incurred a total
goodwill impairment charge of USD2,014,194.  This impairment charge is
related to our future discounted net cash flows expected to result from the use
of the assets and their eventual disposition.
 
 The
changes in the carrying amount of goodwill by reporting unit for the year ended
September 30, 2008 were as follows:
 
 Unit1USDBalance
      as of September 30, 2007
                  
                  
                  -Goodwill
      acquired during the year
                  
                  
                  6,187,176Goodwill
      impairment during the year
                  
                  
                  2,014,194Balance
      as of December 31, 2007
                  
                  
                  4,172,982
 
 Income
Taxes
 The
Company follows the liability method of accounting for income taxes in
accordance with SFAS No. 109. Under this method, future tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax balances. Future tax assets and
liabilities are measured using enacted or substantially enacted tax rates
expected to apply to the taxable income in the years in which those differences
are expected to be recovered or settled. The effect on future tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the date of enactment or substantive enactment. The tax loss arising
from PRC can be carried forward for five years. Agreed tax losses by respective
local tax authorities can be offset against future taxable profits of the
respective companies. A valuation allowance is provided for deferred tax assets
if it is more likely than not that the Company will not realize the future
benefit, or if the future deductibility is uncertain.  It is
uncertain for the Company that the operating result in mainland China will have
profit and it is more likely than not that the Company will not realize the
future benefit. Therefore, there was no deferred tax asset as of September 30,
2008.
 
 Revenue
Recognition
 The
Company relies on SEC Staff Accounting Bulletin: No. 104“Revenue
Recognition” (“SAB 104”) to recognize its revenue. SAB 101 states that revenue
generally is realized or realizable and earned when all of the following
criteria are met: (1) persuasive evidence of an arrangement exists,
(2) delivery has occurred or services have been rendered, (3) the
seller’s price to the buyer is fixed or determinable, and
(4) collectability is reasonably assured.
 
 The
Company entered in an agreement with China Mobile to resell mobile minutes to
our distributors. The Company realized the revenue when we collected the funds
from our distributors due to uncertainties regarding their collection. The fund
and air time could not return to the Company which stated in the agreement with
our distributors.
 
 The
Company reports its revenue for top-up business on a gross basis under the
guidance of EITF 99-19, as (1) the Company is the primary obligor under the
contracts with its suppliers and has the risks and rewards of a principal in
these transactions; (2) the Company has latitude in establishing the price
for services under its distributing contracts, and the net amount earned by the
Company varies with each contract; (3) the Company is primarily responsible
for the fulfillment of services ordered by the customer pursuant to the
contract, including the portion of the services performed by the supplier with
whom the Company separately contracts; (4) the Company has discretion in
supplier selection.
 
 Cost of
revenues
 The cost
of revenue was the air time purchased from China Mobile. We record cost when we
completed the transaction with China Mobile. The fund paid and the air time we
bought could not be returned to China Mobile.
 
 Earnings (Loss) Per
Share
 The
Company accounts for earnings per share in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share”,
which requires the Company to present basic income per share and dilutive income
per share. Basic earnings (loss) per share includes no dilution and is computed
by dividing income (loss) available to common stockholders by the weighted
average number of common shares outstanding for the year.
 
 Foreign Currency
Translation
 The
translations of the functional currency financial statements of subsidiaries
into reporting currency United States dollars are performed for assets and
liabilities denominated in foreign currencies into U.S. dollars using the
closing exchange rates in effect at the balance sheet dates. For revenues and
expenses, the average exchange rate during the years was used to translate
functional currency into U.S. dollars. The gains or losses resulting from
translation are included in stockholders’ equity (deficit) separately as other
comprehensive income.
   F-9
 Table of Contents
  Gains and
losses resulting from transactions in foreign currencies are included in the
determination of net income (loss) for the period. JXHC’s functional
currency is the China Renminbi (“RMB”). SNMTS’s functional currency is the Hong
Kong Dollar (“HKD”).
 
 Other comprehensive
income
 Other
comprehensive income is defined as the change in equity of a company during a
period from transactions and other events and circumstances excluding
transactions resulting from investments from owners and distributions to owners.
Accumulated other comprehensive income at September 30, 2008 represented
the cumulative foreign currency translation adjustment.
 
 Recently Issued Accounting
Pronouncements
 In
September 2006, the FASB issued Statement No. 157, Fair Value Measurement (FAS
157).  While this statement does not require new fair value
measurements, it provides guidance on applying fair value and expands required
disclosures.  FAS 157 is effective for the Company beginning in the
first quarter of fiscal 2009.  This pronouncement should not have a
material impact on our financial statements.
 
 In
February 2008, the FASB issued “Effective Date of FASB Statement No.157” FASB
Staff Position (FSP) No. 157-2 (FSP No. 157-2).  FSP No.157-2 delays
the effective date of SFAS No. 157 until fiscal years beginning after November
15, 2008, for fair value measurements of non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair value in
an entity’s financial statements on a recurring basis (at least
annually).
  In
February 2007, the FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities (FAS 159).  The statement,
which is expected to expand fair value measurement, permits entities to choose
to measure many financial instruments and certain others items at fair
value.  FAS 159 is effective for us beginning in the first quarter of
2009.  This pronouncement should not have a material impact on our
financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities.”  The new standard is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows.  It is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early
application encouraged.  We do not expect the adoption of SFAS No.161
to have a material impact on our financial statements.
 
 Unaudited information for
the six months ended September 30, 2006
 The
information for the six months ended September 30, 2006 included normal
recurring adjustments and reflects all adjustments that, in the opinion of
management, were necessary for a fair presentation of such consolidated
financial statements. Although management believes the disclosures and
information presented are adequate to make the information not misleading, it is
suggested that these information be read in conjunction with the Company’s most
recent audited consolidated financial statements and notes included in its
annual report on Form 10-K for the fiscal year ended March 31, 2006, filed
on June 28, 2006.
 
 NOTE 2 —
PROPERTY AND EQUIPMENT
  The
following is a summary of property and equipment, at cost, less accumulated
depreciation:
  September
              
              
              September30,
      2008
              
              
              30,
      2007Office
      equipment
              
              $
              418,004
              
              
              $
              181,012Vehicles
              
              
              185,190
              
              
              
              -Leasehold
      improvement
              
              
              10,451
              
              
              
              -Paintings
              
              
              179,954
              
              
              
              -793,599
              
              
              
              181,012Less
      accumulated depreciation
              
              
              (115,501)
              
              
              
              (5,028)$
              678,098
              
              
              $
              175,984
 
 Depreciation
expenses for the year ended September 30, 2008 and six months ended
September 30, 2007 were $109,014, and $5,028 respectively. There was no
significant depreciation in prior periods except for $5,028 during the six
months this ended September 30, 2007.
 
  F-10
 Table of Contents
  NOTE 3 —
CONVERTIBLE NOTE RECEIVABLE
  On May 1,
2008, the Company purchased $160,000 convertible notes issued by Globstream
Technology Ltd. The interest rate is 8% per year. The maturity date of the
convertible notes is October 24, 2010.
 
 On June
6, 2008, the Company purchased $80,000 convertible notes issued by Globstream
Technology Ltd. The interest rate is 8% per year. The maturity date of the
convertible notes is October 24, 2010.
 
 NOTE 4 —
INTANGIBLE ASSETS
  The
following table summarizes intangible assets:
  September
      30, 2008
                          
                          
                          September
      30, 2007PPhone
                          
                          $
                          427,966
                          
                          
                          
                          -PIMIE
                          
                          
                          229,676
                          
                          
                          
                          -Globestream
                          
                          
                          292,302
                          
                          
                          
                          -$
                          949,944
                          
                          
                          
                          --
  Amortization
expenses for the year ended September 30, 2008 was $736,667. There was no
significant amortization in the prior periods.
 There was
an impairment loss of $2,733,390 to intangible assets for the year ended
September 30, 2008.
 
 NOTE 5 —
ACCOUNT PAYABLE AND ACCRUED EXPENSES
  As of
September 30, 2008, the Company had an amount of $41,114 account payable which
was the discount payable to distributors. The accrued expenses as of September
30, 2008 and 2007 were $3,611 and $745, respectively, which was mainly business
tax payable.
 
 NOTE 6 —
OTHER PAYABLES
  The
following table summarizes other payables:
 September
      30, 2008
                  
                  
                  September
      30, 2007Salaries
      Payable
                  
                  $
                  114,273
                  
                  
                  $
                  -Other
      Payables
                  
                  
                  265,114
                  
                  
                  
                  113,028$
                  379,387
                  
                  
                  $
                  113,028
 
 As of
September 30, 2008, we have the amount of $114,273 salaries payable to Li Li who
is acting as our director. The other payables in the amount of $265,114 included
lawyer’s fee, accounting fee, and payables to staff.
 
 NOTE 7 —
CAPITAL STOCK
  Common
Stock
 On
November 23 2007, we entered into an agreement with the China Mobile and
Communications Association (“CMCA”) to acquire 100% of the P Phone Project (“P”
in “P Phone” stands for personalization  and  payment ),
held by CMCA. Under the terms of agreement, ATVG acquired from CMCA 100% of the
rights to the P Phone Project for an aggregate consideration of USD $2.8
million. The consideration is satisfied through the issuance of 700,000 shares
of ATVG common stock (the “Consideration Shares”) valued at $4 per share on
March 5, 2008.
 
 On
January 3, 2008, the Company entered into a shares purchase agreement (the
"Shares Purchase Agreement") with the China Mobile and Communications
Association ("CMCA") and its wholly-controlled affiliate, Union Max Enterprises,
Ltd. ("Union Max"), to obtain the right to operate as a Provincial Class One
Full Service Operator in Jiangxi Province, the People's Republic of
China. As the Company's key business partner based in Beijing, CMCA is
China's leading association of telecommunications and telecommunication-related
companies. Pursuant to the Shares Purchase Agreement, the Company has also
acquired a 70% stock ownership interest in Jiangxi Hongcheng Tengyi
Telecommunication Company, Ltd ("Jiangxi Hongcheng"), a local reseller of mobile
minutes in Jiangxi Province. Pursuant to the Shares Purchase Agreement, the
Company will pay the aggregate consideration of US$6 million by issuing 300,000
shares of the Company's common stock at the price of US$5 per share and a
lump-sum cash payment of US$4.5 million. The shares were issued on March 28,
2008.
   F-11
 Table of Contents
  
 On
January 8, 2008, the Company entered into an asset transfer agreement (the
"Asset Transfer Agreement") with Will Sincere Investment Holdings Limited
("WSIH") to acquire the right to use certain software technologies as follows:
(1) flash electronic publishing technology; (2) virtual reality network
application technology; (3) DJVU document scanning, searching and storage
technology; and (4) mobile search technology. To fulfill the payment obligation
of RMB2,000,000 pursuant to the Asset Transfer Agreement, the Company will issue
66,700 shares of the Company's common stock at the price of US$4.00 per share.
The shares were issued on March 28, 2008.
 
 On
January 17, 2008, the Company entered into an agreement with the Globstream
Technology, Inc. to acquire technology for the development of its P Phone
personal media services. According to the terms of agreement, the Company will
acquire exclusive, permanent global rights to Globstream's content delivery
software (in all areas except for financial or business-related content) for a
consideration of US$960,000. The consideration is to be satisfied through the
issuance of 240,000 new shares of the Company at US$4 per share. The shares were
issued on March 28, 2008.
 
 On May
16, 2008, we entered into an agreement with Her Village, Ltd. (“Her Village”),
China’s leading producer and distributor of women’s-interest media content, to
acquire PIMIE. The total consideration to be paid for the acquisition is US$0.9
million which will be satisfied through the issuance of 300,000 shares of the
Company’s common stock. The shares were issued on May 21, 2008.
 
 In
connection with the acquisition of PIMIE, on May 16, 2008, the Company entered
into a Consulting Service Agreement with Morgen Evan Redrock (“MER”), a
Beijing-based advisory firm (the “Consulting Agreement). Under this Consulting
Agreement, MER will provide consulting services related to P
Phone.  The Company shall pay US$150,000 to MER as compensation for
its services under the Consulting Agreement to be satisfied by the issuance of
50,000 shares of the Company’s common stock valued. The shares were issued on
May 21, 2008.
 
 On May
22, 2008, the Company entered into a share purchase agreement with CEC Unet Plc.
pursuant to which the Company will issue 385,000 shares of ATVG common stock
valued at US$2.00 per share. The shares were issued on June 6,
2008.
 
 On July
4, 2008, we entered into a definitive Stock Purchase Agreement with Her Village
Limited (the “Investor”) for the sale of 1,000,000 shares of Common Stock for a
total purchase price of $1,000,000 (the “Stock Purchase Agreement). Pursuant to
the Stock Purchase Agreement, we issued warrants to the Investor for the option
to purchase 1,000,000 shares of Common Stock with an exercise price of $1.00 per
share and an expiration date of 18 months from the date of issuance. As part of
the Agreement and at no extra cost to the Company, the Investor agreed to grant
to the Company access to a series of marketing assets.  In connection
with the private placement and as part of the Stock Purchase Agreement, we also
entered into a Registration Rights Agreement. The shares were issued on July 23,
2008.
 At
September 30, 2008, the Company had 6,487,491 shares issued and
outstanding. At September 30, 2007, the Company had 3,445,791 shares issued
and outstanding.
 
 Warrants/Options
 On July
22, 2007, 1,200,000 common stock warrants were issued to Investors. Under the
Warrant, the investors have the right, for a period of three years from the date
of such Warrant, to purchase a total of 1,000,000 shares of the Company’s common
stock. The per share exercise price of the Warrant is $1.65.
 
 On July 4
2008, Pursuant to the Stock Purchase Agreement made and entered into by the
Company and Her Village Limited, we issued warrants to the investor for the
option to purchase 1,000,000 shares of Common Stock with an exercise price of
$1.00 per share and an expiration date of 18 months from the date of
issuance.
 
 The
Warrant may be exercised, in whole or in part, by the Holder during the Exercise
Period by (i) the presentation and surrender of this Warrant to the Company
along with a duly executed Notice of Exercise specifying the number of Warrant
Shares to be purchased, and (ii) delivery of payment to the Company of the
Exercise Price for the number of Warrant Shares specified in the Notice of
Exercise.
 
 At
September 30, 2008, the Company had 2,200,000 common stock warrants. The
Company has no warrants/options issued and outstanding as of March 31,
2007.
 
 2001 Stock
Plan
 In 2001,
the Board of Directors adopted a Stock Plan (“Plan”). Under the terms and
conditions of the Plan, the Board of Directors is empowered to grant stock
options to employees, consultants, officers and directors of the Company.
Additionally, the Board will determine at the time of granting the vesting
provisions and whether the options will be qualified as Incentive Stock Options
under Section 422 of the Internal Revenue Code (Section 422 provides
certain tax advantages to the employee recipients). The Plan was approved by the
shareholders of the Company on September 15, 2001. The total number of
shares of common stock available under the Plan may not exceed 2,000. As of
September 30, 2008, no options were granted under the Plan.
 
  F-12
 Table of Contents
   Development
Fund
 In 2004,
certain shareholders, directors, and officers entered into an agreement to
establish a fund wherein 0.65 million shares of common stock would be
returned by the shareholders to the Company for cancellation and reissuance as
incentives to compensate new officers, directors and other management team
members based on the management effort and performance decided by the three
shareholders.
 
 On
July 28, 2005, one of the shareholders returned 10,000 shares to the
Company, which is treated as treasury stock at the face value and the premium as
additional paid-in capital. The shares have been valued at a predecessor cost
value of $0.001 per share. At present, only 10,000 shares have been returned and
no shares have been reissued. When the shares are reissued to management
personnel, the Company will record the fair market value of the shares issued as
compensation expenses.
 
 NOTE 8 —
OPERATING LEASES
  We have
entered into two building leases for our offices, one located in Beijing and one
in JiangXi province. The Beijing facility lease for CFCD is from
September 27, 2007 to December 31, 2010. The JiangXi province facility
lease for JXHC expires on January 1, 2008. The combined lease expense for the
six months ended September 30, 2007 and 2006, years ended March 31,
2007 and September 30, 2008 amounted to $0, $0, $0, and $89,380, respectively.
Future
minimum lease payments under non-cancellable operating lease agreements at
September 30, 2008 were as follows:
  September
      30, 2009
                      
                      $
                      97,058September
      30, 2010
                      
                      
                      97,058Total
                      
                      $
                      194,116
 
 NOTE 9 –
RELATED PARTY TRANSACTIONS
  Receivables from related
party
 The
receivables from related party mainly include the loan to related parties, and
are carried at the expected realizable value. The
balance had no stated terms for repayment and was non
interest-bearing.
 
 NOTE 10 –
MINORITY INTEREST
  The
minority interest was negative as of September 30, 2008 for JXHC’s minority
shareholder Jiangxi Tengyi Technology Ltd absorbed JXHC’s net loss for the year
ended September 30, 2008. This was a provision for minority interest when JXHC
has net income in the future.
 NOTE 11 –
EARNINGS PER SHARE
  The
following data show the amounts used in computing income per share and the
effect on income and the weighted average number of shares of dilutive potential
common stock for the six months ended September 30, 2007 and 2006, the year
ended March 31, 2007 and September 30, 2008.
  For
      the Year Ended
                
                
                For
      the Six Months EndedSeptember
      30, 2008
                
                
                March
      31,
                  2007
                
                
                September
      30, 2007
                
                
                September
      30, 2006Income
      available to common shareholders (Numerator)
                
                $
                (6,719,119)
                
                
                $
                2,564,432
                
                
                $
                455,082
                
                
                $
                164,214Weighted
      average number of
                
                
                4,645,655
                
                
                
                1,613,191
                
                
                
                2,381,698
                
                
                
                1,613,191common
      shares outstanding used inearnings
      per share during theperiod
      (Denominator)Weighted
      average number of common shares outstanding used in diluted earnings per
      share during the period (Denominator)
                
                
                4,645,655
                
                
                
                1,613,191
                
                
                
                3,084,700
                
                
                
                1,613,191
 
 
 F-13
 Table of Contents
   NOTE 12 –CONCENTRATION AND CREDIT RISK
 
 China
Mobile is the Company’s only vendor who provided 100% air time of the Company
top-up business for the year ended September 30, 2008. The amount was $959,370
for the year ended September 30, 2008. The purchase price of the air time from
China Mobile was determined by the Company and China Mobile each
year.
 
 NOTE 13 –
DISCONTINUED OPERATIONS AND ASSETS
 
 On January 8, 2008, the
Company filed an 8-K to disclose thatthe Company entered into an
agreement with Fanya Advertising Company Ltd. ("Fanya"), an affiliate of one of
the Company's media-buying clients. The Company sold its media buying operations
to Fanya for cash consideration of US$4.5 million. The Company also paid Fanya a
separate one-time fee of US$300,000 in exchange for Fanya's assumption of all
debts and payables associated with the media-buying business. The entire US$4.5
million proceeds paid to the Company by Fanya was used for the US$4.5 million
cash payment required by the Shares Purchase Agreement. The assets and
liabilities of the media buying operations were $17,414,474 and $12,601,751 as
of September 30, 2007. Our media buying operations and cash flows for the six
months ended September 30, 2007 and the year ended March 31, 2007 have been
reflected as discontinued operations in the accompanying consolidated
financials..
 
 The
following assets and liabilities have been segregated and included in assets and
liabilities of discontinued operations, as appropriate, in the consolidated
balance sheet as of September 30, 2007:
  September 30,
                            2007Cash
      and cash equivalent
                          
                          $
                          5,235,585Account
      receivables, net of allowance for doubtful accounts
                          
                          
                          7,375,506Prepaid
      expenses
                          
                          
                          3,123,542Other
      current assets
                          
                          
                          722,844Property
      and equipment, net
                          
                          
                          956,997Assets
      of discontinued operations
                          
                          $
                          17,414,474Account
      payable
                          
                          
                          10,145,010Accrued
      expenses and other payable
                          
                          
                          705,571Customer
      deposits
                          
                          
                          909,678Short-term
      loan
                          
                          
                          732,470Other
      current liabilities
                          
                          
                          109,022Liabilities
      of discontinued operations
                          
                          $
                          12,601,751
 
 The
following income statement have been segregated and included in income from
discontinued operations, as appropriate, in the consolidated income statement
for the six months ended September 30, 2007 and 2006, and for the year ended
March 31, 2007:
 
 Six
      months ended September 30, 2007
                      
                      
                      Six
      months ended September 30, 2006
                      
                      
                      Year
      ended March 31, 2007REVENUE
                      
                      
                      28,348,347
                      
                      
                      
                      33,052,628
                      
                      
                      
                      65,733,578COST
      OF SALES
                      
                      
                      26,457,983
                      
                      
                      
                      31,401,447
                      
                      
                      
                      62,282,688GROSS
      PROFIT
                      
                      
                      1,890,364
                      
                      
                      
                      1,651,181
                      
                      
                      
                      3,450,890General
      and administrative
                      
                      
                      891,035
                      
                      
                      
                      610,246
                      
                      
                      
                      1,384,001Bad
      debt expenses (recovery)
                      
                      
                      157,763
                      
                      
                      
                      682,347
                      
                      
                      
                      (678,480
                      )Depreciation
      and amortization
                      
                      
                      87,407
                      
                      
                      
                      71,934
                      
                      
                      
                      156,317INCOME
      (LOSS) FROM OPERATIONSOTHER
      INCOMEInterest
      expense
                      
                      
                      (26,785
                      )
                      
                      
                      (4,993
                      )
                      
                      
                      (24,181
                      )Interest
      income
                      
                      
                      36,574
                      
                      
                      
                      21,196
                      
                      
                      
                      45,961Other
      income (expenses)
                      
                      
                      (6,911
                      )
                      
                      
                      (423
                      )
                      
                      
                      (14,119
                      )Income
      tax expense
                      
                      
                      164,018
                      
                      
                      
                      27,637
                      
                      
                      
                      40,102Net
      Income from discontinued operations
                      
                      
                      593,019
                      
                      
                      
                      274,797
                      
                      
                      
                      2,556,611
   F-14
 Table of Contents
   NOTE 14 –
SUBSEQUENT EVENTS
 
 On
December 1, 2008, the Company entered into a Consulting Agreement with Morgen
Evan Redrock Limited ("Consultant") to engage MER as its consultant to provide
consulting services for the Company's fundraising and streamline its business
and organization. The service includes but not limited to organization of
management team, design of business strategy, assistance of fund raising and
investment.  If the consultant introduced the new strategic investor
to the Company and assist the Company's reorganization successfully, the Company
shall pay to the Consultant, as compensation for its services at one time, which
equal to 10% of the total transaction amount and shall be satisfied by issuing
new shares of common stock of ATVG par value $0.001 per share (the "shares")
within one month of the completion of the transaction. MER shall retain the
right to request registration of its shares in the Company subject to any
necessary rules and regulations of the exchange's listing authorities and
regulators.
 
 Xing Jing
and Li Li are the related parties to Morgen Evan Redrock Limited, the Company
believes the consulting agreement is the result of arms' length negotiation
between the companies and its terms are fair and reasonable to ATVG. As of
September 30, 2008, MER owned 50,000 shares of the Company.
 
 On
December 3, 2008, the Company entered into an Asset Transfer Agreement (the
"Asset Transfer Agreement") with Her Village Limited, China's leading producer
and distributor of women's-interest media content, pursuant to which Her Village
will return 19,989 shares of the Company's common stock valued at US$ 1.00 per
share to the Company. And the Company agrees to accept these shares. According
to the Asset Transfer Agreement, Her Village also will provide to the Company
US$ 383,942 for the operation of the Company's business. These amounts will be
paid to the Company within 5 months after the signing of this
agreement.
 
 In
exchange for the returned shares and the amount of US$ 383,942 provided by Her
Village, the Company agrees to make an exemption of the amount of US$ 87,000
which owed by Her Village to the Company. The Company also agrees to transfer to
Her Village or itsdesignated
third party a famous painting named "Sister" painted by He Duoling valued at US$
179,461 and a car  valued at US$ 137,470.
    F-15
 Table of Contents
 
  SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 ASIA
PREMIUM TELEVISION GROUP, INC.
  Date:
      January
      7, 2009
              By
      : /s/ Jing
      XingJing Xing

                Chief Executive Officer
  Date:
      January 7, 2009
              By
      : /s/ Mark
      MiMark
      Mi

                Finance Controller
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this Annual Report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
 
 Date:
      January 7, 2009
              By
      : /s/ Peide
      LouPeide Lou

                Co-Chairman and Director
  Date:
      January 7, 2009
              By
      : /s/ Jing
      XingJing Xing

                Co-Chairman and Director
  Date:
      January 7, 2009
              By
      : /s/ Wenjun
      LuoWenjun Luo

                Director
  Date:
      January 7, 2009
              By
      : /s/Li
      LiLi Li

                Director
  Date:
      January 7, 2009
              By
      : /s/Douglas
      TothDouglas Toth

                Director