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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2009

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 or
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from
__________ to ____________

Commission File Number: 000-51806

CHINA MARKETING MEDIA HOLDINGS,
INC.(Exact name of registrant as specified in its charter)

|Texas                           | 76-0641113                             
|------------------------------- | ---------------------------------------
|(State or other jurisdiction of | (I.R.S. Employer Identification Number)
|incorporation or organization)  |                                        

RMA 901 KunTai International Mansion No. 12 Chaowai
Street Beijing, 100020, China (Address of principal executive office and
zip code)

(86)10-59251090 (Registrants telephone number, including
area code)

Securities registered pursuant to Section 12(b) of the Act:
None.

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No 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 [   ] No [X]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).Yes [   ] No [X]

---

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K 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 in Part III of this Form 10-K
or any amendment to this Form 10-K.  [X]

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 [   ]                                                   | Accelerated Filer [   ]      
|------------------------------------------------------------------------------- | -----------------------------
|                                                                                |                              
|Non-Accelerated Filer [   ] (Do not check
      if a smaller reporting company) | Smaller reporting company
[X]

Indicate by check mark whether registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [   ] No [X]

As of June 30, 2009 (the last business day of the registrants
most recently completed second fiscal quarter), the aggregate market value of
the shares of the registrants common stock held by non-affiliates (based upon
the closing price of such shares as reported on the Over-the-Counter Bulletin
Board) was approximately $0.57 million. Shares of the registrants common stock
held by each executive officer and director and each by each person who owns 10%
or more of the outstanding common stock have been excluded from the calculation
in that such persons may be deemed to be affiliates of the registrant. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.

There were a total of 28,686,002 shares of the registrants
common stock outstanding as of April 12, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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CHINA MARKETING MEDIA HOLDINGS, INC.

Annual Report on FORM 10-KFor the Fiscal Year
Ended December 31, 2009

|Number                                                   |                                                                                                                           | Page                          
|-------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------
|PART I                                                  
|Item 1.                                                  | Business.                                                                                                                 | 2                             
|                                                         | Item 1A.                                                                                                                  | Risk Factors.                 
|Item 2.                                                  | Properties.                                                                                                               | 15                            
|Item 3.                                                  | Legal Proceedings.                                                                                                        | 16                            
|Item 4.                                                  | Submission of Matters to a Vote of
      Security Holders.                                                                | 16                            
|PART II                                                 
|Item 5.                                                  | Market for Registrants Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities. | 17                            
|Item 6.                                                  | Selected Financial
      Data.                                                                                            | 17                            
|Item 7.                                                  | Managements Discussion and Analysis
      of Financial Condition and Results of Operations.                              | 18                            
|Item 8.                                                  | Financial Statements
      and Supplementary Financial Data.                                                              | 24                            
|Item 9.                                                  | Changes in and Disagreements With
      Accountants on Accounting and Financial Disclosure.                               | 24                            
|                                                         | Item 9A(T)                                                                                                                | Controls and
      Procedures.
|                                                         | Item 9B.                                                                                                                  | Other Information.            
|PART III                                                
|Item 10.                                                 | Directors, Executive Officers and
      Corporate Governance.                                                             | 27                            
|Item 11.                                                 | Executive
      Compensation.                                                                                             | 29                            
|Item 12.                                                 | Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder Matters                      | 30                            
|Item 13.                                                 | Certain Relationships
      and Related Party Transactions.                                                               | 31                            
|Item 14.                                                 | Principal Accountant Fees and
      Services.                                                                             | 32                            
|PART IV                                                 
|Item 15. Exhibits, Financial Statements
      Schedules. | 33                                                                                                                       

i

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INTRODUCTORY NOTE

Except where the context otherwise requires and for the
purposes of this report only:

- BVI refers to the British Virgin Islands;
- China, Chinese and PRC refer to the Peoples Republic of China and
  do not include Taiwan and the special administrative regions of Hong Kong and
  Macao;
- China Marketing Media, the Company, we, us, and our refer to
  China Marketing Media Holdings, Inc. and its subsidiaries;
- Exchange Act refers to the Securities Exchange Act of 1934, as amended;
- Media Challenge refers to Medial Challenge Holdings, Limited, our
  direct, wholly-owned BVI subsidiary;
- RMB refers to Renminbi, the legal currency of China;
- CMO refers to our affiliate, Sale and Marketing Publishing House;
- SEC refers to the United States Securities and Exchange Commission;
- Securities Act refers to the Securities Act of 1933, as amended;
- Shenzhen Media are to Shenzhen Media Investment Co., Ltd., our indirect,
  wholly-owned subsidiary, a Chinese company;
- Shenzhen New Media refers to Shenzhen New Media Consulting Co., Ltd.,
  our indirect, wholly-owned subsidiary, a Chinese company; and
- U.S. dollar, $ and US$ refer to the legal currency of the United
  States.

FORWARD-LOOKING STATEMENTS

Statements contained in this annual report include
forward-looking statements within the meaning of such term in Section 27A of
the Securities Act and Section 21E of the Exchange Act. Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which could cause actual financial or operating results, performances or
achievements expressed or implied by such forward-looking statements not to
occur or be realized. Forward-looking statements made in this Report generally
are based on our best estimates of future results, performances or achievements,
predicated upon current conditions and the most recent results of the companies
involved and their respective industries. Forward-looking statements may be
identified by the use of forward-looking terminology such as may, will,
could, should, project, expect, believe, estimate, anticipate,
intend, continue, potential, opportunity or similar terms, variations of
those terms or the negative of those terms or other variations of those terms or
comparable words or expressions. Potential risks and uncertainties include,
among other things, such factors as:

- the recent credit crisis and turmoil in the global financial system
- strong competition in our industry;
- our significant reliance on the operation and management right agreement
  between us and CMO; and
- significant deficiency in our internal controls over our financial
  reporting.

Additional disclosures regarding factors that could cause our
results and performance to differ from results or performance anticipated by
this annual report are discussed in Item 1A. Risk Factors. Readers are urged
to carefully review and consider the various disclosures made by us in this
annual report and our other filings with the SEC. These reports attempt to
advise interested parties of the risks and factors that may affect our business,
financial condition and results of operations and prospects. The
forward-looking statements made in this annual report speak only as of the date
hereof and we disclaim any obligation to provide updates, revisions or
amendments to any forward-looking statements to reflect changes in our
expectations or future events.

1

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PART I

ITEM 1. BUSINESS

Overview

We are a holding company and we have no operations other than
administrative matters and the ownership of our direct and indirect operating
subsidiaries. Through our indirect Chinese subsidiaries, we are engaged in the
business of selling magazines and advertising space in our magazines, providing
sales and marketing consulting services and online sales of various products.
All of our operations, assets, personnel, officers and directors are located in
China. Currently, we publish China Marketing (Xiao Shou Yu Shi Chang)
magazine in China. We publish three issues of China Marketing per month,
including a sales edition, case edition and channel edition. From June 2003
through December 2006, we also published one issue of China Business &
Trade magazine per month, which was the training edition. In June 2009, we
began to publish eight special issues of China Marketing, which include
cosmetic edition, food edition, gift edition, tobacco edition, finance edition,
sporting goods edition, edition for agricultural resources and edition for
entrepreneurs in Henan. The special editions are published from time to time
based upon market conditions.

Our magazines are Chinese publications tailored to the sales
and marketing industry. The magazines were originally published by CMO, under
the Light Industrial Ministry of the Henan Provincial Government. On October 22,
2003, the Henan Provincial Government, Shenzhen Niu Si Tai Asset Management
Limited Corporation, and CMO incorporated Shenzhen Media under the laws of
China. On October 23, 2003, Shenzhen Media entered into a ten year operation and
management right agreement with CMO or Operation and Management Right Agreement,
pursuant to which from November 1, 2003 to October 31, 2013, Shenzhen Media is
obligated to market the magazines, sell the magazines and advertising space,
provide strategic planning for the magazines, and train the professional staff
of CMO. The agreement was amended on January 8, 2004. Under the terms of the
agreement, as amended, Shenzhen Media agreed to pay a lump sum deposit of RMB
10,109,300 (approximately $1,220,930) and bear all of the operating costs
relating to the publishing of the magazines in exchange for the right to all
revenues generated from selling the magazines and their advertising space.

On November 20, 2004, Shenzhen Media and Shenzhen New Media
entered into an entrust agreement or Entrust Agreement, under which Shenzhen
Media transferred all of its rights under the Operation and Management Right
Agreement to Shenzhen New Media. Shenzhen New Media agreed to pay Shenzhen Media
$1.45 million in connection with this transfer of rights. Shenzhen New Media
agreed to pay this amount over the 9 year term of the agreement, which is for
the full remaining term of the assigned contract. Thereafter, on December 21,
2005, our indirect subsidiary, Shenzhen New Media acquired Shenzhen Media.

We had to enter into the Operation and Management Right
Agreement and the Entrust Agreement instead of acquiring CMO outright as a
result of restrictions under Chinese law that prohibit foreign persons from
engaging in certain publishing activities in China. CMO is an affiliate of the
Administration of Press and Publication of Henan Provincial Government and was
established under the laws of China. Because of its ownership of the national
publishing codes of China Marketing, CMO is the owner of the magazine.
Although our Chief Executive Officer, Yingsheng Li, and other members of our
executive team are also executive officers and/or directors of CMO, it is only
through these two above agreements that we have obtained a right to oversee the
operation and strategic planning of advertising, publishing, and staff training
for the magazines that are published by CMO. Under these agreements, we are also
entitled to collect advertising revenues from clients already existing at the
time of the agreements, in addition to any new clients that we can solicit and
retain. As a result, we derive the economic benefits and incur the economic
burdens that we would otherwise have as the owner of CMO or the owner of CMOs
assets while still complying with Chinese law.

The Entrust Agreement and the Operation and Management Right
Agreement between Shenzhen New Media and Shenzhen Media and between Shenzhen
Media and CMO, respectively, are both protected by the laws of China and these
agreements cannot be amended or terminated without the written consent of all
parties involved.

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To increase our revenue stream, our management began exploring
the feasibility of engaging in new business lines in July 2007. Management
considered the potential costs and benefits of launching another magazine or
acquiring other publishing or advertising assets and determined that such
actions require capital outlays that are greater than the company can currently
afford and would take several months or years to implement. As a result,
management investigated other business types to increase our revenues with lower
capital expenditures and shorter ramp up times. During the search for new
business opportunities, management noted that credit cards are the
fastest-growing consumer credit product in China, and it is widely expected in
China that card usage and profitability will experience explosive growth over
the next decade. According to Shanghai Daily (June 25, 2008), China had
more than 104.73 million credit cards in circulation at the end of March of
2008, up 92.9 percent since a year ago. While cash is still the main form of
payment in China, the use of credit cards is becoming a popular alternative to
carrying banknotes. As a result of, or possible contributing to the increasing
popularity of credit cards, many consumers in China are choosing to shop online
and pay with credit cards. Consumers in China are realizing that online shopping
allows consumers to browse through many items and categories without leaving
their homes, to compare prices of multiple suppliers or stores, and to arrange
for convenient shipping of products by the supplier. Our management decided that
the company should enter into the online sales and marketing business to take
advantage of this marketplace trend. Management believes that engaging in online
business is beneficial and suitable for small businesses like ours as it
requires significantly lower capital outlay compared with traditional brick and
mortar business approaches. In July 2008, we began our new business of online
marketing and sales of electronic products by entering into various cooperation
arrangements with Chinese banks. These banks existing consumer communication
channel allows us to spend a limited amount of money as the startup cost for
advertisement. We have been able to market and sell our products by sending
marketing brochures with the banks' monthly statements to their credit card
customers and receive payments through the banks' already developed online
payment mechanism.

We do not maintain a corporate website, but we utilize the
following URL www.cmmo.com.cn for the sale and promotion of the magazines
we publish.

History and Corporate Structure

We were originally organized under the laws of the State of
Texas on October 29, 1999 under the name Brazos Strategies, Inc. We changed our
name to Infolife, Inc. on July 16, 2003 and finally to China Marketing Media
Holdings, Inc. on February 7, 2006. When we operated under the name Brazos
Strategies, Inc., we were an Internet service provider. Thereafter, when we
changed our name toInfolife, Inc. we continued our business as an
Internet service provider in Tomball, Texas. This business was later sold back
to the original shareholders of Infolife, Inc.

On December 31, 2005, we entered into a share exchange
agreement with Media Challenge and the shareholders of Media Challenge. Pursuant
to the share exchange agreement, we acquired 121,000 shares of Media Challenge,
constituting all of the issued and outstanding capital stock of Media Challenge,
in exchange for convertible promissory notes in the principal amount of
$441,600. These convertible promissory notes were convertible into 22,808,000
shares of our common stock, but only after the completion of a 1-for-10 reverse
split of our common stock that we became obligated to effect pursuant to the
share exchange agreement. Thereafter, on January 25, 2006, we completed a
1-for-10 reverse split of our common stock as contemplated by the share exchange
agreement. At that time, the convertible note issued to Media Challenge also
converted into 22,808,000 shares of our common stock and the former shareholders
of Media Challenge, Yingsheng Li, Xiaofeng Ding, and Dongsheng Ren became our
controlling stockholders. Collectively, they became the owners of about 82% of
our outstanding common stock. Media Challenge thereby became our wholly-owned
subsidiary and the former shareholders of Media Challenge became our controlling
stockholders. Immediately prior to the stock split, we had 47,780,000 shares of
common stock outstanding, and immediately following the stock split and the
issuance of our common stock pursuant to the share exchange agreement, there
were 27,586,002 shares of common stock outstanding.

3

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(1) Beijing Media Management Consultation Company was
incorporated in China in October 2004 to carry on consultation, professional
training and provide relevant sales and marketing services to business
enterprises in China.

(2) Shenzhen Keungxi Technology Company Ltd., or SKTC, was
incorporated in China in October 2005. Its business scope includes, among
others, sales and development of computer software, computers, and communication
systems. It also provides information system consulting services.

(3) Sale and Marketing Publishing House, or CMO, is the owner
of the China Marketing magazine. It is currently responsible for providing and
editing the contents of the magazine.

(4) Beijing Orient Converge Human Resources Management Center
Co. Ltd., or Beijing Orient, was incorporated in China in November 2007. It is
engaged in the business of vocational training, employment recommendation and
services. It also conducts sales and marketing professional training. On August
2, 2008, Shenzhen Media sold 42% of its ownership of Beijing Orient to Shanghai
Cheng Mei Biotechnology Co., Ltd. for a consideration of RMB987,461
(approximately $141,089). As a result, Shenzhen New Media Advertising Company
Ltd currently owns 10% of Beijing Orient.

(5) Shanghai Zhiduo Network Technology Company Limited, or
Shanghai Zhiduo, was incorporated in China on July 18, 2008. Shenzhen New Media
owns 51% of Shanghai Zhiduo, which is engaged in the business of management
consulting services and brand name consulting services.

Our Products

China Marketing was first published by CMO in April 1994
as a monthly magazine. Thereafter, in September 2001, CMO began publishing two
issues of this magazine per month. In May 2004, after the establishment of the
operation and management rights agreement, we started to publish three issues of
this magazine per month. In June 2003, the first issue of China Business
& Trade was published. In January 2007, we decided to stop publishing
China Business & Trade by combining the content of China Business
& Trade into the Case edition of China Marketing. In June 2009,
we began to publish eight special issues of China Marketing, which
include cosmetic edition, food edition, gift edition, tobacco edition, finance
edition, sporting goods edition, edition for agricultural resources and edition for entrepreneur in Henan. The special editions are
published from time to time based upon market conditions.

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The dimension of China Marketing is 210mm x 285mm. The
magazine is published in color. We use double-side offset paper within the
magazine and 157g double-side halftone paper for the covers of Sales edition and
Channel edition of the magazine and200g double-side halftone paper for
the covers of Case edition. All editions of the magazine are published in
Chinese and circulated within the greater China area, which includes mainland
China and Hong Kong.

Each issue of China Marketing focuses on specific
topics. The first monthly issue of the magazine, the Sales edition, is a blend
of overall discussion on sales and marketing for executives who need to keep
track of the latest developments in their industries. This issue also introduces
creative and successful marketing strategies and analyzes market trends of
different industries and new business opportunities. It offers the readers a
macro view of the developments and trends in various industries across China.
Competitive and sales strategies are proposed to readers who need advice on
formulating an appropriate strategy for their products. Practical methodologies
are also presented to facilitate the readers in managing their business
operations. The second issue of the magazine, the Case edition, features sales
and marketing case studies. This edition includes detailed reports by industry
experts that explain different sales and marketing techniques and theories
underlying the featured case study. These cases focus mainly on business sales
and marketing events that have occurred in China. These case studies offer our
Chinese readers some insight into particular sales and marketing approaches used
by the companies who are the subject of the case study. The third issue, the
Channel edition, is tailored to supply chain management executives. This edition
provides information on the supply chain management process including,
manufacturers, distributors, and logistics management.

Each of the eight special editions we published in 2009 focuses
on different sales and marketing strategies for a specific industry.

CMOs editorial department is solely responsible for providing
the editorial content of the magazines. The content of our magazines can be
broken down into three categories consisting of topics of interest, case studies
and management practice. Topics of interest are identified by CMOs editors and
articles are prepared by CMO editors based upon publicly available information
about the particular topic. Case studies on actual sales and marketing events
are identified by CMOs editors, who also provide commentary and analysis on
these case studies. Freelance writers are retained to write articles on
management practices in the sales and marketing industry. These management
practice articles are designed to utilize real life experiences to provide
readers with solutions to their sales and marketing problems and general sales
and marketing guidance.

The physical printing, assembling and production of our
magazines have been outsourced to independent third party printers. The printers
are responsible for typesetting the articles, proof reading, plate-making, paper
supplying, binding and packaging. Specifically, the printing works of the
publication of Sales edition and Case edition were contracted to Henan Xinhua
Printing Factory. The printing works of the publication of Channel edition were
contracted to Henan Ruiguang Printing Co., Ltd.

Under these outsourcing agreements, the paper cost accounts for
a large proportion of the quoted price. The printing price is equal to the
quantity of units multiplied by the unit price, which is a fixed price under the
agreement. This fixed price remains constant during the term of the agreement.
Therefore, the printer assumes the risk of increasing paper costs.

We outsource the production of our magazines to independent
third party printers because we are not in the printing business. We believe it
is commercially beneficial for us to hire the independent printers who have more
professional knowledge of printing than we do.

Advertising

In addition to generating revenues through sales of our
magazines, we also generate revenues through the sale of advertising that is
placed in our magazines.

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Based on the market position of each edition of the magazines,
our marketing team identifies the sort of potential clients that would be
interested in advertising in our magazines and offers them an advertising
package within the magazines. Also, our magazines have built up a base of
clients that regularly advertise in the magazines.

Advertising Consulting Services

We also provide advertising consulting services to our
customers through our subsidiary, Shenzhen Caina Brand Consultant Company. The
services that we currently offer mainly focus on assisting our customers on the
promotion of brand awareness.

Online Sales

In July 2008, we began our new business of online marketing and
sales of various products. These products mainly consist of notebook computer
hardware. We currently sell our products through our website www.91ap.com, on which we offer a complete line of our
products to our consumers 24 hours a day, seven days a week. In order to attract
customers, we have entered into various cooperation arrangements with Chinese
banks, including Bank of China, China Construction Bank, Hua Xia Bank and China
Minsheng Bank, through which we are able to market our products by sending
marketing brochures with the banks monthly statements to credit card customers.
Our brochures include information about our computer hardware products as well
as purchase methods. The banks credit card customers can either purchase our
products directly by visiting our online sales website or call the purchase
hotline provided in the brochures; however, they must use their credit cards
issued by the banks with which we have a cooperation arrangement. We procure all
of the notebook computers that we sell from the sales agents of ASUSTek Computer
Inc (华硕电脑). The two largest suppliers of our goods are Shanghai Hua Jie United
Information Co. Ltd. and Digital China Holding Limited Beijing Office. After
consumers make orders online, we process these orders and ship and deliver the
products to consumers in China through our subsidiary Shenzhen Media. Currently,
the sales of computer hardware contributes approximately 95% of our total
revenue from online sales.

Our Distribution Channels of Our Magazines

Currently, the distribution network of our magazines consists
of over sixty distribution agencies and 30,000 shops covering over 300 cities
throughout China. We plan to develop a more comprehensive distribution network
for our magazines that we hope will eventually reach all major cities in
China.

There are three main distribution channels for our magazines in
China:

(1) postal subscription based distribution; (2) direct
order distribution; and (3) agency based distribution.

Our first distribution channel, postal subscription based
distribution, involves the distribution of our magazines by Chinese post
offices. Unlike the United States, subscribers of our magazines and other
magazines published in China, can request a subscription directly from the post
offices in China who arrange delivery of the magazines to the address requested
by the subscriber. Direct order based distribution involves a direct request
from a subscriber to us for a single issue or multiple issues of our magazines
that do not involve an ongoing subscription. Upon receipt of this request, we
deliver the ordered issues to the address requested by the subscriber. Finally,
agency based distribution, involves the delivery by us of our magazines to
distribution agents who then distribute the magazines to retail sales agents who
sell the magazines from various locations throughout China.

As of December 31, 2009, the annual circulation of our
magazines during the 2009 fiscal year was 2,669,715 units, among which
approximately 62.8% of sales were made through retail agents such as newsstands,
airports, subways and bookstores throughout China. These retail agents obtained
our magazines from our distribution agents who operate throughout China. The
remaining sales were through postal subscriptions (26.4%) and direct orders
(10.8%) . As of December 31, 2008, the annual circulation of our magazines
during the 2008 fiscal year was 2,728,263 units, among which approximately 49.5%
of sales were made through retail agents such as newsstands, airports, subways
and bookstores throughout China. These retail agents obtained our magazines from
our distribution agents who operate throughout China. The remaining
50.5% of our sales were through postal subscriptions (37.3%) and direct orders
(13.2%) .

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The following table lists the annual circulation of our
magazines during the fiscal year ended December 31, 2009:

China Marketing (Sales edition)
    China Marketing (Case edition)
    China Marketing (Channel edition)
    Special Editions
    TotalDistribution agents
    610,501
    483,787
    583,704
    0
    1,677,992Subscriptions through post offices
    233,075
    234,715
    236,019
    0
    703,809Direct subscriptions
    43,634
    31,311
    42,135
    170,834
    287,914Total
    887,210
    749,813
    861,858
    170,834
    2,669,715


The following table lists our principal distribution agents and
their distribution areas:

|Names of
      Distribution Agents             | Distribution Area       
|---------------------------------------------- | ------------------------
|Beijing Luopan Zhengzhang Books Co., Ltd       | Beijing,
      Hebei    
|Nanjing Raotian Cultural Development Co., Ltd. | Jiangsu Province        
|Guangzhou Rutu Culture Development Co., Ltd    | Guangdong
      Province
|Wuhan Dagong Books Co., Ltd                    | Hubei Province          
|Hengyang Post Office Books Retail Co., Ltd     | Hunan
      Province    

We have entered into a distribution agreement with each of
these principal distributors. The distribution agreement has a one year term
that is automatically renewed for an additional year unless either party
provides the other with notice of termination one month prior to the end of the
term. Pursuant to the agreement, the distributor has the obligation, at its own
expense, to sell and deliver our magazines to retail agents and readers within
the distributors authorized distribution territory. Our distributors receive
sales commissions on the distribution of our magazines ranging from 40-45
percent of total proceeds generated by their sales.

Prices of Our Products

The fixed retail price of the Sales edition and the Channel
edition of China Marketing is RMB 7.5 per issue (approximately $1.10);
the fixed retail price of the Case edition of China Marketing is RMB 10
per issue (approximately $1.47); the fixed retail price of the eight special
issues is RMB 15 per issue (approximately $2.20) . Subscribers who subscribe to
our magazines directly pay this same fixed retail price per issue on an issue by
issue basis.

Subscribers who subscribe through post offices in China are
charged through an annual payment arrangement where they pay for the annual
subscription fees at the beginning of each year based upon the number of issues
that will be published during the year.

Competition

Both local and overseas publishers issue business related
magazines in China. Business Week, Harvard Business Review, Forbes,
andFortune are some of the well-known international business magazine
titles that have Chinese versions published in China. These magazines publish translated
articles from the English version and develop some local stories with the
editorial staff hired by the local publishing houses.

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Our local competition consists of three sub-titles, namely
New Selling, Successful Selling, and Contemporary Selling.
We compete with our competitors based upon the price of our magazines, the
quality of the articles and information that we publish, and the design features
of our magazines. We believe that prices of our magazines are lower than the
prices of our international competitors such as Business Week, Harvard
Business Review, Forbes and Fortune and our local competitors,
such as New Selling, Successful Sellingand Contemporary
Selling. We also believe that the quality and design features of our
magazines are superior to the quality and design features of New Selling,
Successful Selling and Contemporary Selling but not as good as our
international competitors.

Our Intellectual Property

We believe that our business is dependent in part on our
ability to establish and maintain the copyright of the content and titles of our
magazines.

Our magazines have been registered with the General
Administration of Press & Publication of China and CMO has obtained the
national publishing code CN41-1210/F for China Marketing. In addition,
CMO has obtained international standard code for China Marketing, which
is ISSN1005-3530. These codes, respectively, are printed on the last page of
each publication.

We have registered our magazines title China Marketing as
trademark with the Trademark Office of the State Administration for Industry and
Commerce of China. We use our trademark for the sales and marketing of our
magazines.

We have registered our www.cmmo.com.cn Internet domain
name. The articles and other contents of our magazines are protected by
copyright laws of China.

Our Research and Development Initiatives

We do not currently undertake any research and development
activities and have not spent any money on research and development activities
during our last two fiscal years.

Our Employees

We currently have 202 full-time employees and we do not expect
any significant changes in the number of our employees during the next 12
months.

The following table illustrates the allocation of these
employees among the various job functions conducted at our company.

|Department                          | Number of Employees
|----------------------------------- | -------------------
|Management                          | 2                  
|Accounting Department               | 14                 
|Administration                      | 12                 
|Brand Name Consulting               | 21                 
|Customer Service                    | 23                 
|Commercial Advertisement Department | 16                 
|Consulting Service                  | 7                  
|Design Department                   | 21                 
|Issuing Department                  | 11                 
|New Media Department                | 36                 
|Special Edition Department          | 20                 
|Training Department                 | 16                 
|Video Center                        | 3                  
|Total                               | 202                

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We believe that our relationship with our employees is good.
The remuneration payable to employees includes basic salaries and
allowances.

We have not experienced any significant problems or disruption
to our operations due to labor disputes, nor have we experienced any
difficulties in recruitment and retention of experienced staff.

Our employees in China participate in a state pension scheme
organized by Chinese municipal and provincial governments. Currently, each month
we are required to contribute to the scheme with approximately $515 for each of
our employees and approximately $1,618 for each of our executive officers and
directors. The compensation expenses related to this scheme were approximately
$245,917 and $129,441 for the fiscal years 2009 and 2008, respectively.

In addition, we are required by Chinese law to cover employees
in China with various types of social insurance. We have purchased social
insurances for all of our employees.

Government Regulation

General

The media and advertising industry in China is governed by the
State Council, which is the highest authority in the executive branch of Chinas
central government, and several ministries and agencies under its authority,
including the State Administration for Industry and Commerce, the State
Administration of Radio, Film and Television, the General Administration of
Press and Publication , the Ministry of Culture and the State Council News
Office.

Regulations Regarding Foreign Investment in the Chinese
Media Sector

On July 6, 2005, the Chinese government promulgated Certain
Opinions on the Introduction of Foreign Investment in Cultural Fields, which
provide an overall framework with respect to foreign investments in Chinese
media and other cultural sectors. This document specifies the areas in which
foreign investments are permitted or prohibited in accordance with Chinas
commitments regarding its entry into the World Trade Organization or WTO. Under
the document, foreign investment in the media sector is permitted in the areas
of printing of packaging and decorating materials, redistributing books,
newspapers, periodicals, producing of recordable disks, duplication of read only
disks, and engaging in works of art and the construction and operation of
performance sites, cinema, event brokerage agencies and movie technology. In
addition, pursuant to the Administrative Measures on Foreign-Invested
Enterprises in Redistribution of Books, Newspapers and Periodicals issued by the
General Administration of Press and Publication and the Ministry of Commerce,
effective May 2003, foreign investors are permitted to establish wholly foreign
owned redistribution companies that redistribute and sell, on the wholesale or
retail level, books, newspapers or periodicals that have already been published
by a licensed content-oriented company in China.

Censorship of Advertising Content by the Chinese
Government

The advertising industry in China is governed by the
Advertising Law which came into effect in February 1995. In addition, principal
regulations governing advertising services in China include: (1) the Advertising
Administrative Regulations, effective December 1987; and (2) the Implementing
Rules for the Advertising Administrative Regulations, effective January 2005.
Chinese advertising laws and regulations set forth certain content requirements
for advertisements in China, which include prohibitions on, among other things,
misleading content, superlative wording, socially destabilizing content, or
content involving obscenities, the supernatural, violence, discrimination or
infringement of the public interest. There are specific restrictions and
requirements regarding advertisements that relate to matters such as patented
products or processes, pharmaceuticals, medical instruments, agrochemicals,
veterinary pharmaceuticals, foodstuff, alcohol, cosmetics and others. In
addition, all advertisements relating to pharmaceuticals, medical instruments,
agrochemicals and veterinary pharmaceuticals advertised through radio, film,
television, newspaper, periodical and other forms of media, together with any
other advertisements which are subject to censorship by administrative authorities according
to relevant laws and administrative regulations, must be submitted to the
relevant administrative authorities for content approval prior to dissemination.

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Advertisers, advertising operators and advertising distributors
are required by Chinese advertising laws and regulations to ensure that the
content of the advertisements they prepare or distribute are true and in full
compliance with applicable laws. In providing advertising services, advertising
operators and advertising distributors must review the prescribed supporting
documents in connection with any advertisements and verify that the content of
such advertisements comply with applicable Chinese laws and regulations. In
addition, prior to distributing advertisements for certain commodities that are
subject to government censorship and approval, advertising distributors are
required to ensure that governmental review has been performed and approval
obtained. Violation of these regulations may result in penalties, including
fines, confiscation of advertising income, orders to cease dissemination of
advertisements and orders to publish an advertisement correcting the misleading
information. In circumstances involving serious violations, the relevant
administrative authorities may order violators to cease their advertising
business operations. Furthermore, advertisers, advertising operators or
advertising distributors may be subject to civil liability if they infringe on
the legal rights and interests of third parties in the course of their
advertising business. At the present time, we are not subject to any of the
penalties mentioned above.

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below,
together with all of the other information included in this report. If any of
the following risks actually occurs, our business, financial condition or
results of operations could suffer. In that case, the trading price of our
common stock could decline. You should also refer to the other information about
us contained in this report, including our financial statements and related
notes.

RISKS RELATING TO OUR BUSINESS

The recent financial crisis could negatively affect our
business, results of operations, and financial condition.

The recent credit crisis and turmoil in the global financial
system may have an impact on our business and our financial condition, and we
may face challenges if conditions in the financial markets do not improve. Our
ability to access the capital markets may be restricted at a time when we would
like, or need, to raise capital, which could have an impact on our flexibility
to react to changing economic and business conditions. In addition, these
economic conditions also impact levels of consumer spending, which have recently
deteriorated significantly and may remain depressed for the foreseeable future.
Consumer purchases of discretionary items, including our magazines and
electronic products, generally decline during recessionary periods and other
periods where disposable income is adversely affected. In addition, a
substantial portion of our revenues is derived from the sale of advertising
space. In a down economy, advertising budgets are usually the first budgets to
be cut. Also, even slight downturns in the economy may cause our advertising
customers to advertise less or negotiate lower rates with us. If demand for our
products fluctuates as a result of economic conditions or otherwise, our revenue
and gross margin could be harmed.

Government regulation of currency conversion and the
fluctuation of RMB may materially and adversely affect our operations and
financial results.

We receive substantially all of our revenues in RMB, which
currently is not a freely convertible currency. We will have to convert a
portion of these revenues into other currencies in order to make payments to
those of our service providers and others who do not transact business in RMB.
Under the PRCs existing foreign exchange regulations, we will be able to make
payments to parties that do not transact business in RMB without prior approval
from the State Administration on Foreign Exchange, or SAFE, by complying with
various procedural requirements. The Chinese government, however, may, at its
discretion, restrict access in the future to foreign currencies for current
account transactions. If this were to occur, we may not be able to pay service
providers or others whom we work with that transact business in currencies other
than RMB. The value of RMB against the US dollar and other currencies fluctuates
and is affected by, among other things, changes in Chinas political and
economic conditions. Since 1994, the conversion of RMB into foreign currencies,
including US dollars, has been based on rates set by the Peoples Bank of China
, which are set daily based on the previous day's interbank foreign exchange
market rates and current exchange rates on the world financial markets. Any
devaluation of RMB, however, may materially and adversely affect the value of our assets and our financial
results, since we will receive substantially all of our revenues, and express
our profits, in RMB.

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Our holding company structure may limit the payment of
dividends to our stockholders.

We have no direct business operations, other than our ownership
of our subsidiaries and their contractual relationship with CMO and the business
incident to such contractual relationship. While we have no current intention of
paying dividends, should we decide in the future to do so, as a holding company,
our ability to pay dividends and meet other obligations depends upon the receipt
of dividends or other payments from our operating subsidiaries and other
holdings and investments. In addition, our operating subsidiaries, from time to
time, may be subject to restrictions on their ability to make distributions to
us, including as a result of restrictive covenants in loan agreements,
restrictions on the conversion of local currency into U.S. dollars or other hard
currency and other regulatory restrictions as discussed below. If future
dividends are paid in RMB, fluctuations in the exchange rate for the conversion
of RMB into U.S. dollars may reduce the amount received by U.S. stockholders
upon conversion of the dividend payment into U.S. dollars.

Chinese regulations currently permit the payment of dividends
only out of accumulated profits as determined in accordance with Chinese
accounting standards and regulations. Our subsidiaries in China are also
required to set aside a portion of their after tax profits according to Chinese
accounting standards and regulations to fund certain reserve funds. Currently,
our subsidiaries in China are the only sources of revenues or investment
holdings for the payment of dividends. If they do not accumulate sufficient
profits under Chinese accounting standards and regulations to first fund certain
reserve funds as required by Chinese accounting standards, we will be unable to
pay any dividends.

We face strong competition from both local and foreign
competitors and increased competition could negatively affect our financial
results.

Our magazines compete with a number of other magazine
publishers. Both local and overseas publishers issue business related magazines
in China, some of which may have substantially greater financial resources than
us that may enhance their ability to compete in the publication of sales and
marketing periodicals. In addition, we face broad competition for audiences and
advertising revenue from other media companies that produce magazines,
newspapers and online content. Overall competitive factors include product
positioning, editorial quality, circulation, price and customer service.
Competition for advertising dollars is primarily based on advertising rates, the
nature and scope of readership, reader response to advertisers products and
services and the effectiveness of the sales team. Increased competition could
force us to lower our prices or offer services at a higher cost to us, which
could reduce our operating income.

Fluctuations in the cost of paper, which can result in
increases in the price we pay to third parties to print our magazines, can have
a significant effect on our operating results.

The physical printing, assembling and production of the
magazines are outsourced to independent third party printers pursuant to
outsourcing agreements that we have entered into with these printers. Under
these outsourcing agreements, the paper cost accounts for a large proportion of
the quoted price. The printing price is equal to the quantity of units
multiplied by the unit price, which is a fixed price under the agreement. This
fixed price remains constant during the term of the agreement. Therefore, the
printer assumes the risk of increasing paper costs during the term of the
agreement. However, these agreements generally have a term of one yearand, therefore, increases in paper costs could result in increased
outsourcing costs for us from year to year. Unexpected or significant increases
in paper prices may have an adverse effect on our future results of operations.
We may not be able to recoup paper cost increases by passing them through to our
advertisers and readers and, accordingly, such cost increases could have a
material adverse effect on our results of operations.

Our success is dependent on our ability to modify our
magazines and develop new media products to address current trends in our
industry. The development of new products is costly and time consuming with no
guarantee that the new product will generate our intended results.

Our success depends, in large part, on our ability to monitor
the sales and marketing community in China and market trends, and to adapt our
magazines and any new media products that we develop to the evolving information needs of existing and emerging target audiences. Our future
success will depend in part on our ability to continue offering new publications
and services that successfully gain market acceptance by addressing the needs of
specific audience groups within our target markets. The process of internally
researching and developing, launching, gaining acceptance and establishing
profitability for a new publication or service, is inherently risky and costly
with no guarantee of success. New publications typically require several years
and significant investment to achieve profitability. We cannot guarantee that
our efforts to introduce new, or assimilate acquired, publications or services
will be successful or profitable. Costs related to the development of new
publications are expensed as incurred and, accordingly, our profitability from
year to year may be adversely affected by the number and timing of new product
launches.

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We are currently significantly dependent on an operation
and management right agreement between us and CMO and our failure to extend this
agreement may have a material negative effect on our results of operations,
financial condition and cash flow.

We obtained our rights to market the magazines, sell the
magazines and advertising space, pursuant to an operation and management right
agreement that runs through October 31, 2013. Therefore, our relationship with
CMO is critically important to us. Our failure to extend the contractual
relationship with CMO on commercially reasonable terms may make it difficult for
us to continue to operate our business unless and until we find a comparable
replacement publishing house. It would be very difficult for us to find a
comparable replacement publishing house and we are not at all certain that we
would be able to do so.

We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.

Our future business and results of operations depend in
significant part upon the continued contributions of our key editorial staff and
senior management personnel, including our Chief Executive Officer, Yingsheng
Li, who has over ten years of experience in the publication business. They also
depend in significant part upon our ability to attract and retain additional
qualified management, editorial staff, marketing and sales and support personnel
for our operations. If we lose a key employee or if a key employee fails to
perform in his or her current position, or if we are not able to attract and
retain skilled employees as needed, our business could suffer. Significant
turnover in our senior management could significantly deplete our institutional
knowledge held by our existing senior management team. We depend on the skills
and abilities of these key employees in managing the publication, marketing and
sales aspects of our business, any part of which could be harmed by further
turnover.

Since we publish our magazines in China, we are subject
to the Chinese Advertising Law, which imposes upon us restrictions regarding the
content of our publication and our ability, as a foreign corporation, to own
media assets in China.

The advertising industry in China is governed by the
Advertising Law which came into effect in February 1995. Advertisers,
advertising operators and distributors, including entities such as ourselves,
which engage in advertising activities are required to comply with applicable
procedures and provisions under the Advertising Law. If our operations are
determined to be in breach of the Advertising Law, penalties may be imposed
which include fines, confiscation of advertising fees, orders to cease
dissemination of the relevant advertisement and orders to publish an
advertisement with corrective information.

Investor confidence and the market price of our shares
may be adversely impacted if we are unable to correct significant deficiency in
our internal controls over our financial reporting identified by our management.

During our assessment of the effectiveness of internal control
over financial reporting as of December 31, 2009, management identified
significant deficiencies related to our U.S. GAAP expertise, internal audit
functions and the absence of Audit Committee, as of that date. The current staff
in the accounting department of the subsidiaries is relatively new to U.S. GAAP
and internal control procedures and needs substantial additional training so as
to meet with the higher demands of being a U.S. public company. The significant
deficiency in internal audit function is also due to the Companys lack of
sufficient qualified resources to perform internal audit functions. We have
taken steps to address these deficiencies; however, if any of these deficiencies
remains, then our financial condition could be adversely affected.

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We do not have any independent directors and may be
unable to appoint any qualified independent directors.

We currently do not have any independent directors. We plan to
appoint a number of independent directors which will constitute a majority of
our board of directors before our common stock is listed on a national
securities exchange or NASDAQ, but we may not be able to identify independent
directors qualified to be on our board.

RISKS RELATED TO DOING BUSINESS IN CHINA

Changes in Chinas political or economic situation could
harm us and our operational results.

Economic reforms adopted by the Chinese government have had a
positive effect on the economic development of the country, but the government
could change these economic reforms or any of the legal systems at any time.
This could either benefit or damage our operations and profitability. Some of
the things that could have this effect are:

- Level of government involvement in the economy;
- Control of foreign exchange;
- Methods of allocating resources;
- Balance of payments position;
- International trade restrictions; and
- International conflict.

The Chinese economy differs from the economies of most
countries belonging to the Organization for Economic Cooperation and
Development, or OECD, in many ways. As a result of these differences, we 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.

Our business is largely subject to the uncertain legal
environment in China and your legal protection could be limited.

The Chinese legal system is a civil law system based on written
statutes. Unlike common law systems, it is a system in which precedents set in
earlier legal cases are not generally used. The overall effect of legislation
enacted over the past 20 years has been to enhance the protections afforded to
foreign invested enterprises in China. However, these laws, regulations and
legal requirements are relatively recent and are evolving rapidly, and their
interpretation and enforcement involve uncertainties. These uncertainties could
limit the legal protections available to foreign investors, such as the right of
foreign invested enterprises to hold licenses and permits such as requisite
business licenses. In addition, all of our executive officers and our directors
are residents of China and not of the U.S., and substantially all the assets of
these persons are located outside the U.S. As a result, it could be difficult
for investors to effect service of process in the U.S., or to enforce a judgment
obtained in the U.S. against us or any of these persons.

The Chinese government exerts substantial influence over
the manner in which we must conduct our business activities that could have
negative effect on our business operations in China.

China only recently has permitted provincial and local economic
autonomy and private economic activities. The Chinese government has exercised
and continues to exercise substantial control over virtually every sector of the
Chinese economy through regulation and state ownership. Our ability to operate
in China may be harmed by changes in its laws and regulations, including those
relating to taxation, import and export tariffs, environmental regulations, land
use rights, property and other matters. We believe that our operations in China
are in material compliance with all applicable legal and regulatory
requirements. However, the central or local governments of these jurisdictions
may impose new, stricter regulations or interpretations of existing regulations
that would require additional expenditures and efforts on our part to ensure our
compliance with such regulations or interpretations. Accordingly, government
actions in the future, including any decision not to continue to support recent
economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a
significant effect on economic conditions in China or particular regions
thereof, and could require us to divest ourselves of any interest we then hold
in Chinese properties or joint ventures.

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Any recurrence of severe acute respiratory syndrome, or
SARS, or another widespread public health problem, could harm our operations.

A renewed outbreak of SARS or another widespread public health
problem in China, where our operations are conducted, 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 damage our operations.

We may be unable to complete a business combination
transaction efficiently or on favorable terms due to complicated merger and
acquisition regulations that became effective on September 8, 2006.

On August 8, 2006, six PRC regulatory agencies promulgated the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, which became effective on September 8, 2006. This new regulation,
among other things, governs the approval process by which a PRC company may
participate in an acquisition of assets or equity interests. Depending on the
structure of the transaction, the new regulation will require the PRC parties to
make a series of applications and supplemental applications to the government
agencies. In some instances, the application process may require the
presentation of economic data concerning a transaction, including appraisals of
the target business and evaluations of the acquirer, which are designed to allow
the government to assess the transaction. Government approvals will have
expiration dates by which a transaction must be completed and reported to the
government agencies. Compliance with the new regulations is likely to be more
time consuming and expensive than in the past and the government can now exert
more control over the combination of two businesses. Accordingly, due to the new
regulation, our ability to engage in business combination transactions has
become significantly more complicated, time consuming and expensive, and we may
not be able to negotiate a transaction that is acceptable to our stockholders or
sufficiently protect their interests in a transaction.

The new regulation allows PRC government agencies to assess the
economic terms of a business combination transaction. Parties to a business
combination transaction may have to submit to the Ministry of Commerce and other
relevant government agencies an appraisal report, an evaluation report and the
acquisition agreement, all of which form part of the application for approval,
depending on the structure of the transaction. The regulations also prohibit a
transaction at an acquisition price obviously lower than the appraised value of
the PRC business or assets and in certain transaction structures, require that
consideration must be paid within defined periods, generally not in excess of a
year. The regulation also limits our ability to negotiate various terms of the
acquisition, including aspects of the initial consideration, contingent
consideration, holdback provisions, indemnification provisions and provisions
relating to the assumption and allocation of assets and liabilities. Transaction
structures involving trusts, nominees and similar entities are prohibited.
Therefore, such regulation may impede our ability to negotiate and complete a
business combination transaction on financial terms that satisfy our investors
and protect our stockholders economic interests.

We may be exposed to liabilities under the Foreign
Corrupt Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could have a material adverse effect on our
business.

We are subject to the Foreign Corrupt Practice Act, or FCPA,
and other laws that prohibit improper payments or offers of payments to foreign
governments and their officials and political parties by U.S. persons and
issuers as defined by the statute, for the purpose of obtaining or retaining
business. We have operations, agreements with third parties and we make sales in
China. Our activities in China create the risk of unauthorized payments or
offers of payments by the employees, consultants, sales agents or distributors
of our Company, even though they may not always be subject to our control. It is
our policy to implement safeguards to discourage these practices by our
employees. However, our existing safeguards and any future improvements may
prove to be less than effective, and the employees, consultants, sales agents or
distributors of our Company may engage in conduct for which we might be held
responsible. Violations of the FCPA may result in severe criminal or civil
sanctions, and we may be subject to other liabilities, which could negatively affect our
business, operating results and financial condition. In addition, the U.S.
government may seek to hold our Company liable for successor liability FCPA
violations committed by companies in which we invest or that we acquire.

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RISKS RELATED TO THE MARKET FOR OUR STOCK

Our common stock is quoted on the Over-the-Counter
Bulletin Board which may have an unfavorable impact on our stock price and
liquidity.

Our common stock is currently quoted on the Over-the-Counter
Bulletin Board. The Over-the-Counter Bulletin Board are significantly more
limited markets than the New York Stock Exchange or Nasdaq system. The quotation
of our shares on the Over-the-Counter Bulletin Board may result in a less liquid
market available for existing and potential stockholders to trade shares of our
common stock, could depress the trading price of our common stock and could have
a long-term adverse impact on our ability to raise capital in the future.

We are subject to penny stock regulations and
restrictions, which may affect the ability of broker-dealers to sell our
securities and may affect the ability of purchasers to sell any of our
securities in the secondary market.

The SEC has adopted regulations which generally define
so-called penny stocks to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. As of April 12, 2010, the closing price for our common
stock was $1.00 per share and therefore, it is designated a penny stock. As a
penny stock, our common stock may become subject to Rule 15g-9 under the
Exchange Act, or the Penny Stock Rule. This rule imposes additional sales
practice requirements on broker-dealers that sell such securities to persons
other than established customers and accredited investors (generally,
individuals with a net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). For transactions covered by
Rule 15g-9, a broker-dealer must make a special suitability determination for
the purchaser and have received the purchasers written consent to the
transaction prior to sale. As a result, this rule may affect the ability of
broker-dealers to sell our securities and may affect the ability of purchasers
to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
Disclosure is also required to be made about sales commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.

There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.

Certain of our stockholders hold a significant percentage
of our outstanding voting securities and accordingly may make decisions
regarding our daily operations, significant corporate transactions and other
matters that other stockholders may believe are not in their best interests .

Our three major stockholders, Yingsheng Li, Xiaofeng Ding, and
Dongsheng Ren, own in excess of 75% of our outstanding voting securities. They
own 34.72%, 23.52% and 19.30% of our outstanding common stock, respectively. As
a result, they possess significant influence, giving them the ability, among
other things, to elect a majority of our Board of Directors and to authorize or
prevent proposed significant corporate transactions. Their ownership and control
may also have the effect of delaying or preventing a future change in control,
impeding a merger, consolidation, takeover or other business combination or
discourage a potential acquirer from making a tender offer. Other stockholders
may believe that these future decisions made by these three major stockholders
are not in their best interests.

ITEM 2. PROPERTIES

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All land in China is owned by the State or collectives.
Individuals and companies are permitted to acquire rights to use land or land
use rights for specific purposes. In the case of land used for industrial
purposes, the land use rights are granted for a period of 50 years. This period
may be renewed at the expiration of the initial and any subsequent terms
according to the relevant Chinese laws. Granted land use rights are transferable
and may be used as security for borrowings and other obligations.

Our main executive office is located at RMA 901, KunTai
International Mansion, No. 12 Chaowai Street, Beijing, 100020, China. We have
land use rights relating to the land and physical office space within the
building where our offices are located. These land use rights initially expire
in 2056. This location has a total of 630 square feet of working space
including 150 square feet open working area, two large conference rooms, six
small meeting rooms and eight offices.

We believe that all our properties have been adequately
maintained, are generally in good condition, and are suitable and adequate for
our business.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits
and legal proceedings, which arise, in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have a material adverse affect on our business, financial condition or operating
results.

ITEM 4. (REMOVED AND RESERVED)

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Our Common Stock

Our common stock is quoted on the Over-the-Counter Bulletin
Board under the symbol CMKM. The CUSIP number is 169411105. Trading in our
common stock has been limited and sporadic.

The following table sets forth, for the periods indicated, the
high and low bid prices of our common stock. These prices reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.

|                             | Closing Bid Prices(1)
|---------------------------- | ---------------------
|                             | High                 
|Year Ended December 31, 2009 |                      
|First Quarter                | $0.02                
|Second Quarter               | $0.02                
|Third Quarter                | $0.02                
|Fourth Quarter               | $0.02                
|Year Ended December 31, 2008 |                      
|First Quarter                | $0.28                
|Second Quarter               | $0.15                
|Third Quarter                | $0.15                
|Fourth Quarter               | $0.15                

(1) The above tables set forth the range of high and low
closing prices per share of our common stock as reported by www.quotemedia.com for the periods indicated.

Approximate Number of Holders of Our Common Stock

As of April 12, 2010, there were approximately 29 stockholders
of record of our common stock.

Dividends

During fiscal years 2008 and 2009, we did not declare or pay a
cash dividend. Any future decisions regarding dividends will be made by our
board of directors. We currently intend to retain and
use any future earnings for the development and expansion of its business and
does not anticipate paying any cash dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity
Compensation Plans

We do not have in effect any compensation plans under which our
equity securities are authorized for issuance and we do not have any outstanding
stock options.

Recent Sales of Unregistered Securities

We have not sold any equity securities during the fiscal year
ended December 31, 2009 that were not previously disclosed in a quarterly report
on Form 10-Q or a current report on Form 8-K that was filed during the 2009
fiscal year.

Purchases of Equity Securities

17

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No repurchases of our common stock were made during the fourth
quarter of 2009.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following managements discussion and analysis should be
read in conjunction with our financial statements and the notes thereto and the
other financial information appearing elsewhere in this report. In addition to
historical information, the following discussion contains certain
forward-looking information. See Special Note Regarding Forward Looking
Statements above for certain information concerning those forward looking
statements.

General

We generate revenues through sales of our magazines, sales of
advertising space in our magazines, providing sales and marketing consulting
services and online sales of products. During the fiscal year ended December 31,
2009, we generated $1,638,966 in revenues from the sale of our magazines,
$4,504,651 in revenues from the sale of advertising space in these magazines,
$3,344,962 in revenues from providing consulting services and $15,411,781 in
revenues from online sales of electronic products. During the fiscal year ended
December 31, 2008, we generated $1,648,650 in revenues from the sale of our
magazines, $5,098,769 in revenues from the sale of advertising space in these
magazines, $4,273,208 in revenues from providing consulting services and
$2,059,579 in revenues from online sales of electronic products.

In July 2008, we began our new business of online marketing and
sales of electronic products. This new business generated $15,411,781 in revenue
in 2009, which constitutes 61.89% of total revenues that we generated in 2009.
In early 2010, we expanded our online sales business by offering additional
products including cell phones, jewelries, watches , apparel, beauty products
and home appliances. Because we just launched this new business recently, we are
still in the stage of investigating the market and evaluating potential
opportunities to increase our revenues from this business line. However, we
intend to sell more types of products online and expect that our online
marketing and sales in China will generate a significant part of annual revenues
of the Company over the next five years.

Industry Wide Factors that are Relevant to Our Business

We believe that the media and advertising industry in China is
one of the fastest growing in the world and presents numerous opportunities for
consolidation and growth. Based on the forecast by ZenithOptimedia, China is now
projected to become the fourth-largest global ad market in 2010. In addition, we
believe Chinas hosting of the Olympic Games in Beijing in 2008 and the
International World Exposition in Shanghai in 2010 have already and will benefit
its advertising industry. In light of Chinas growing number of consumers with
rising income and increasing consumer spending, we believe that the media and
advertising industry in China represents an attractive area where we could
generate more revenues in the future.

With respect to our online sales business, accompanying the
rapid development of Internet in China, more and more Chinese begin to favor
online shopping for its convenience, quick delivery and less cost. According to
a survey conducted by MasterCard in 2008, Online Shopping in Asia-Pacific 
Patterns, Trends and Future Growth, China will replace Japan as the largest
online shopping market in the Asia-Pacific region in 2010, with 480 million
online shoppers spending $1.4 trillion. An increase in income level and a
rapidly growing population of upper-middle class will positively boost the
online shopping markets in China. By 2010, Chinas online shopping population is
projected to increase to 480 million and contribute to 58.6 percent of the total
online shopping population in the region compared to 49.9 percent that it does
currently. Therefore, we believe that the business of online sale is an
important new business line that we should engage in to increase our revenue
stream.

Results of Operations

18

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Fiscal Year Ended December 31, 2009 Compared with Fiscal
Year Ended December 31, 2008

The following table summarizes the results of our operations
during the fiscal years ended December 31, 2009 and 2008. It provides
information regarding the dollar and percentage increase or (decrease) from 2008
fiscal year to 2009 fiscal year:

|                                      |   | Year Ended December 31, |  |   |            |  |   |            |  
|------------------------------------- | - | ----------------------- |  | - | ---------- |  | - | ---------- | -
|                                      |   |                         |  |   |            |  |   |            |  
|Item                                  |   | 2009                    |  |   | 2008       |  |   | Increase   |  
|                                      |   |                         |  |   |            |  |   | (Decrease) |  
|Revenue                               | $ | 24,900,360              |  | $ | 13,080,206 |  | $ | 11,820,154 |  
|Cost of Sales                         | $ | 17,652,056              |  | $ | 5,145,952  |  | $ | 12,506,104 |  
|Gross Profit                          | $ | 7,248,304               |  | $ | 7,934,254  |  |   | ($686,950  | )
|Operating Expenses                    | $ | 5,917,937               |  | $ | 5,970,141  |  |   | ($52,204   | )
|Other Income (expense)                | $ | 140,426                 |  | $ | 80,377     |  | $ | 60,049     |  
|Provision for Taxes                   | $ | 27,328                  |  | $ | 451,027    |  |   | ($423,699  | )
|Net income from Continuing Operations | $ | 1,443,465               |  | $ | 1,593,463  |  | $ | 149,998    |  

Revenue

Our revenues in fiscal year 2009 amounted to approximately
$24.9 million , which is $11.8 million or approximately 90.36% more than that of
fiscal year 2008, when we had revenues of approximately $13.08 million. The
overall increase in our revenues for the fiscal year 2009 is due to the
significant expansion of our online sale of electronic products, which began in
July 2008. Compared to 2008, our revenues attributable to sales of magazines
decreased by $9,684 in 2009 and advertising revenues in 2009 decreased by
$594,118. Our revenues attributable to consulting service decreased by $928,246
in 2009 and revenues generated from selling electronic products in 2009
increased by approximately $13.35 million as compared to 2008. In recent years,
the traditional media industry has been severely impacted by the rapid
development of internet media, which resulted in the decrease of the circulation
volume of our magazines. In addition, due to the overall economic slow down,
many companies have lowered their budget on marketing promotion and related
consulting service and therefore caused the decrease in our consulting service
and advertising sales.

Components of Revenues

The following table shows the different components comprising
our total revenues during each of the past two fiscal years.

|Revenue Category    |   | 2009       |  |   | 2008      |  |   | Increase   |   |  | % Increase   |  
|------------------- | - | ---------- |  | - | --------- |  | - | ---------- | - |  | ------------ | -
|                    |   |            |  |   |           |  |   | (Decrease) |   |  | (% Decrease) |  
|Magazine Sales      | $ | 1,638,966  |  | $ | 1,648,650 |  |   | ($9,684    | ) |  | (0.59%       | )
|Advertising Sales   | $ | 4,504,651  |  | $ | 5,098,769 |  |   | ($594,118  | ) |  | (11.65%      | )
|Consulting Services | $ | 3,344,962  |  | $ | 4,273,208 |  |   | ($928,246  | ) |  | (21.72%      | )
|Electronic products | $ | 15,411,781 |  | $ | 2,059,579 |  | $ | 13,352,202 |   |  | 648.30%      |  

|Total | $ | 24,900,360 |  | $ | 13,080,206 |  | $ | 11,820,154 |  |  | 90.36% | 
|----- | - | ---------- |  | - | ---------- |  | - | ---------- |  |  | ------ | 

19

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Cost of Sales

Our cost of sales in fiscal years 2009 and 2008 was $17,652,056
and $5,145,952, respectively, which accounts for approximately 70.89% and
39.34%, respectively, as a percentage of total revenues. The dollar amount of
the cost of sales increased with the growth of annual sales. Cost of sales as a
percentage of annual revenues increased by about 243.02% in 2009 as compared
with 2008, which is mainly attributable to the fact that lower margin electronic
products accounted for a much higher percentage of our total sales during the
year of 2009. Due to the nature of the wholesale business, our electronic
products have a lower profit margin of 6% as compared to a profit margin of 35%
for our other products.

Expenses

Our expenses consist of payroll and other general and
administrative expenses. Payroll expense was $2,401,789 in the 2009 fiscal year
compared to $2,328,513 in the 2008 fiscal year. The increase in payroll expense
is mainly because more employees were hired for the expansion of our online
sales of electronic products.

Our other general and administrative expenses were $3,516,148
(14.12% of total sales) and $3,641,628 (27.84% of total sales) in fiscal years
2009 and 2008, respectively. The decrease of other general and administrative
expenses is mainly due to a decrease in bad debt expense, education expense,
legal and professional fees, and travel expense due to our tight cost control in
2009.

Income taxes

United States

China Marketing Media Holdings, Inc. is subject to United
States tax at a tax rate of 34%. No provision for income taxes in the United
States has been made as we had no U.S. taxable income for the period presented.

British Virgin Islands

Media Challenge was incorporated in the BVI, and, under the
current laws of the BVI, is not subject to income taxes.

PRC

Before the implementation of the enterprise income tax (EIT)
law (as discussed below), Foreign Invested Enterprises (FIE) established in
the PRC are generally subject to an EIT rate of 33.0%, which includes a 30.0%
state income tax and a 3.0% local income tax. On March 16, 2007, the National
Peoples Congress of China passed the new Corporate Income Tax Law (EIT Law),
and on November 28, 2007, the State Council of China passed the Implementing
Rules for the EIT Law (Implementing Rules) which took effect on January 1,
2008. The EIT Law and Implementing Rules impose a unified EIT of 25.0% on all
domestic-invested enterprises and FIEs, unless they qualify under certain
limited exceptions. Therefore, nearly all FIEs are subject to the new tax rate
alongside other domestic businesses rather than benefiting from the old tax laws
applicable to FIEs, and its associated preferential tax treatments, beginning
January 1, 2008.

Despite these pending changes, the EIT Law gives the FIEs
established before March 16, 2007 (Old FIEs) a five-year grandfather period
during which they can continue to enjoy their existing preferential tax
treatments. During this five-year grandfather period, the Old FIEs which enjoyed
tax rates lower than 25% under the original EIT Law shall gradually increase
their EIT rate by 2% per year until the tax rate reaches 25%. In addition, the
Old FIEs that are eligible for the two-year exemption and three-year half
reduction or five-year exemption and five-year half-reduction under the
original EIT Law, are allowed to remain to enjoy their preference until these
holidays expire.

20

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The discontinuation of any such special or preferential tax
treatment or other incentives would have an adverse effect on any organizations
business, fiscal condition and current operations in China.

In addition to the changes to the current tax structure, under
the EIT Law, an enterprise established outside of China with de facto
management bodies within China is considered a resident enterprise and will
normally be subject to a EIT of 25.0% on its global income. The Implementing
Rules define the term de facto management bodies as an establishment that
exercises, in substance, overall management and control over the production,
business, personnel, accounting, etc., of a Chinese enterprise. If the PRC tax
authorities subsequently determine that we should be classified as a resident
enterprise, then the organizations global income will be subject to PRC income
tax of 25.0% .

Under the income tax law and the related implementing rules,
FIEs engaging in manufacturing businesses with a term of operation exceeding ten
years may, subject to approval from local taxation authorities, be entitled to a
two-year tax exemption from PRC EIT starting from the year they become
profitable and a 50.0% tax reduction for the three years thereafter.

We are currently subject to income taxes according to
applicable tax laws in the PRC. The tax rates are 15% for NMA, 15% for Shenzhen
New Media and Shenzhen Media and 0% for CMO. CMO is exempt from PRC income tax
as a part of the government supporting program from year 2009 to 2013.

We incurred income taxes of $27,328 and $451,207 in 2009 and
2008, respectively or a decrease of 93.94% . We paid less tax in 2009 because of
the tax exempt status of CMO.

Net income (profit after taxes)

We earned net income of $1,443,465 in fiscal year 2009. This is
an increase of $11,106 or approximately 0.78% from the net income of $1,432,359
in fiscal year 2008. The increase was mainly due to the expansion of online
electronic products sales.

Liquidity and Capital Resources

As of December 31, 2009, we had cash and cash equivalents of
approximately $5.55 million. We had no bank loans during the period. The
following table provides detailed information about our net cash flow for all
financial statements periods presented in this report.

Cash Flow(All amounts in thousands of U.S. dollars)

|                                                          |   | Fiscal Years Ended |  
|--------------------------------------------------------- | - | ------------------ | -
|                                                          |   | December 31,       |  
|                                                          |   | 2009               |  
|Net cash provided by (used in) operating
      activities | $ | (480,937           | )
|Net cash provided by (used in) investing activities       |   | 4,718,816          |  
|Net cash provided by (used in) financing
      activities |   | (849,398           | )
|Net cash inflow                                           |   | 3,385,522          |  

Operating Activities:

Net cash used in operating activities was approximately $0.48
million in fiscal year ended December 31, 2009, which is a decrease of
approximately $2.08 million from approximately $1.6 million net cash provided by
operating activities in fiscal year ended December 31, 2008. Such decrease of
net cash provided by (used in) operating activities was primarily attributable
to the increase in accounts receivable of $2.67 million in 2009.

21

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Investing Activities:

Our main uses of cash for investing activities are payments
relating to the acquisition of property, plant and equipment.

Net cash provided by investing activities was approximately
$4.72 million in fiscal year 2009, an increase of approximately $5.1 million
from approximately $0.35 million net cash used in operating activities in fiscal
year 2008. Such increase of net cash provided by investing activities was
primarily attributable to approximately $5.9 million of a purchase deposit
returned to us after we terminated the operating and management agreement with
Shanghai Longcom Telecom Co. Ltd. in 2008.

Financing Activities

Net cash used in financing activities for the fiscal year ended
December 31, 2009 was approximately $0.85 million as compared to approximately
$0.76 million used in financing activities in fiscal year 2008. The increase of
the net cash used in financing activities was mainly attributable to an
approximately $1.6 million contract income receivable owned by CMO for
collecting payments for our subsidiary, Shenzhen Media Investment Co., Ltd.,
which resulted in the increase of total repayment of related party payable.

We believe that our current cash on hand and continuing revenue
from operations is sufficient to maintain operations at current levels for at
least the next twelve months. However, in order to expand operations, management
believes that it will be necessary for us to raise additional capital either
through the sale of equity securities or through a long-term debt financing.
Full implementation of the current expansion plans will include an acquisition
of other magazines and/or advertising businesses that requires approximately $10
million of additional capital. We can provide no assurances that we will be able
to obtain additional capital on terms favorable to the Company, if at all.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures, or capital resources
that is material to investors.

Inflation

Our results of operations have not been affected by inflation
and management does not expect that inflation risk would cause material impact
on its operations in the future.

Seasonality

Our results of operations are not materially affected by
seasonality and we do not expect seasonality to cause any material impact on our
operations in the future.

Currency Fluctuations

Our operating subsidiaries are located in China. All expenses
of the subsidiary and revenue received from customers are incurred in China
denominated in RMB as the functional currency. Based on Chinese government
regulation, all foreign currencies under the category of current accounts are
allowed to be freely exchanged with hard currencies. During the past years of
operation through July of 2005, there were no significant changes in exchange
rates. On July 21, 2005, the Chinese government changed its foreign currency
exchange policy from a fixed RMB/USD exchange rate into a flexible rate under
the control of the Chinese government. From August 2005 through December 2009,
the value of RMB against US dollars appreciated by 15.56%, from RMB 8.1/ $1 to
RMB 6.84/ $1.

Critical Accounting Policies

22

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The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires our
management to make assumptions, estimates and judgments that affect the amounts
reported in the financial statements, including the notes thereto, and related
disclosures of commitments and contingencies, if any. We consider our critical
accounting policies to be those that require the more significant judgments and
estimates in the preparation of financial statements, including the
following:

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

Cash and Cash Equivalents. For purposes of the statements of
cash flows, cash and cash equivalents includes cash on hand and demand deposits
held by banks. Deposits held in financial institutions in China are not insured
by any government entity or agency.

Trade Accounts Receivable. Trade accounts receivable are
recognized and carried at original invoice amount less an allowance for any
uncollectible amounts. An estimate for doubtful accounts is made when collection
of the full amount becomes questionable.

Revenue Recognition . In accordance with ASC Topic 605,
"Revenue Recognition", the Company recognizes revenue when persuasive evidence
of an arrangement exists, transfer of title has occurred or services have been
rendered, the selling price is fixed or determinable and collectibility is
reasonably assured. Revenue from the sales transaction shall be recognized at
time of sale only if all of the following conditions are met:

|(a) | The seller's price to the buyer is substantially fixed or
      determinable at the date of sale.                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                 
|(b) | The buyer has paid the seller, or the buyer is obligated
      to pay the seller and the obligation is not contingent on resale of the
      product.                           
|    |                                                                                                                                                                                 
|(c) | The buyer's obligation to the seller would not be changed
      in the event of theft or physical destruction or damage of the
    product.                                     
|    |                                                                                                                                                                                 
|(d) | The buyer acquiring the product for resale has economic
      substance apart from that provided by the seller.                                                                 
|    |                                                                                                                                                                                 
|(e) | The seller does not have significant obligations for
      future performance to directly bring about resale of the product by the
      buyer.                                 
|    |                                                                                                                                                                                 
|(f) | The amount of future returns can be reasonably estimated.
      Estimated returns are based on historical data but require significant
      judgment on the part of management.

Foreign Currency and Comprehensive Income. The financial
statements are presented in US dollars. The functional currency is the RMB of
the PRC. The financial statements are translated into US dollars from RMB using
exchange rates at the end of the period for assets and liabilities and weighted
average exchange rates for revenues and expenses. Capital accounts are
translated at their historical exchange rates when the capital transactions
occurred.

On July 21, 2005, the PRC changed its foreign currency exchange
policy from a fixed RMB/USD exchange rate into a flexible rate under the control
of the PRC's government. We use the Closing Rate Method in currency translation
of the financial statements of the Company.

RMB is not freely convertible into the currency of other
nations. All such exchange transactions must take place through authorized
institutions. There is no guarantee the RMB amounts could have been, or could
be, converted into US dollars at rates used in translation.

23

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Restrictions on Transfer of Assets Out of the PRC. Dividend
payments by Shenzhen New Media and its subsidiary are limited by certain
statutory regulations in China. No dividends may be paid by Shenzhen New Media
without first receiving prior approval from the State Administration of Foreign
Exchange. Dividend payments are restricted to 85% of profits, after tax.

Recent Changes in Accounting Standards

The Company has reviewed all recently issued, but not yet
effective, accounting pronouncements and does not believe the future adoption of
any such pronouncements may be expected to cause a material impact on its
financial condition or the results of its operations.

In September 2009, Accounting Standards Codification (ASC)
became the source of authoritative U.S. GAAP recognized by the Financial
Accounting Standards Board (FASB) for nongovernmental entities, except for
certain FASB Statements not yet incorporated into ASC. Rules and interpretive
releases of the SEC under federal securities laws are also sources of
authoritative U.S. GAAP for registrants. The discussion below includes the
applicable ASC reference.

In October 2009, the FASB issued Accounting Standards Update
(ASU) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable
Revenue Arrangements (a consensus of the FASB Emerging Issues Task Force) which
amends ASC 605-25, Revenue Recognition: Multiple-Element Arrangements. ASU No.
2009-13 addresses how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting and how to allocate
consideration to each unit of accounting in the arrangement. This ASU replaces
all references to fair value as the measurement criteria with the term selling
price and establishes a hierarchy for determining the selling price of a
deliverable. ASU No. 2009-13 also eliminates the use of the residual value
method for determining the allocation of arrangement consideration.
Additionally, ASU No. 2009-13 requires expanded disclosures. This ASU will
become effective for us for revenue arrangements entered into or materially
modified on or after April 1, 2011. Earlier application is permitted with
required transition disclosures based on the period of adoption. The Company is
currently evaluating the application date and the impact of this standard on its
financial statements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL
DATA

The full text of our audited consolidated financial statements
as of December 31, 2009 and 2008 begins on page F-1 of this annual report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A(T). CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and
Procedures

Our management, with the participation of our chief executive
officer and interim chief financial officer, Mr. Yingsheng Li, evaluated the
effectiveness of our disclosure controls and procedures. The term disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, means controls and other procedures of a company that are designed
to ensure that information required to be disclosed by a company in the reports,
such as this report, that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SECs rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the companys
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Based on that evaluation, Mr. Li concluded that
because of the significant deficiencies in internal control over financial
reporting described below, our disclosure controls and procedures were not
effective as of December 31, 2009.

24

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(b) Managements annual report on internal control over
financial reporting

Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. Internal
control over financial reporting refers to the process designed by, or under the
supervision of, our chief executive officer and chief financial officer, and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of financial statements for external purposes in accordance with
U.S. GAAP, and includes those policies and procedures that:

|(1) | pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      our assets;                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                  
|(2) | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with U.S. GAAP, and that our receipts and expenditures are
      being made only in accordance with the authorization of our management and
      directors; and
|    |                                                                                                                                                                                                                                                                                                                  
|(3) | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of our
      assets that could have a material effect on the financial
    statements.                                                                                               

Management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2009. In making this assessment,
management used the framework set forth in the report entitled Internal Control
- Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on that evaluation, our management determined that our internal controls over financial reporting as
of December 31, 2009 were not effective. During our assessment, management
identified the significant deficiencies related to (i) the U.S. GAAP expertise
of our internal accounting staff, (ii) our internal audit functions and (iii)
the absence of an Audit Committee.

Because our current accounting department is relatively new to
U.S. GAAP and the related internal control procedures required of U.S. public
companies, our management has determined that they require additional training
and assistance in U.S. GAAP matters. Management has determined that our internal
audit function is also significantly deficient due to insufficient qualified
resources to perform internal audit functions. Finally, management determined
that the lack of an Audit Committee of the board of directors of the Company
also contributes to insufficient oversight of our accounting and audit
functions.

In order to correct the foregoing significant deficiencies, we
have taken or are taking the following remediation measures:

- We are in the process of arranging necessary training for our accounting
  department staff;
- We are in the process of engaging external professional accounting or
  consultancy firms to assist us in the preparation of the US GAAP accounts;
- We have committed to the establishment of effective internal audit
  functions, however, due to the scarcity of qualified candidates with extensive
  experience in U.S. GAAP reporting and accounting in the region, we were not
  able to hire sufficient internal audit resources before the end of our
  reporting period. However, we will increase our search for qualified
  candidates with assistance from recruiters and through referrals;
- In addition, we have allocated significant financial and human resources
  to strengthen the internal control structure. As part of our efforts to comply
  with Section 404 of the Sarbanes-Oxley Act for fiscal year 2010, we have been
  actively working with external consultants to assess our data collection,
  financial reporting, and control procedures and to strengthen our
  internal controls over financial reporting.
- We have also launched a search for suitable
  candidates to serve as our independent directors and to serve on an audit
  committee and other standing committees in the near future.

25

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We believe that the foregoing steps will remediate the
significant deficiency identified above, and we will continue to monitor the
effectiveness of these steps and make any changes that our management deems
appropriate.

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only managements report in this
annual report.

(c) Changes in internal control over financial
reporting

As described above, during the fourth quarter of the fiscal
year ended December 31, 2009, we have taken certain remediation measures that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

26

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.

Directors and Executive Officers

The following table sets forth the name, age and position of
each of our current executive officers and directors:

|Name          | Age | Position                                                                              
|------------- | --- | --------------------------------------------------------------------------------------
|Yingsheng Li  | 49  | President, Chief Executive
      Officer, Interim Chief Financial Officer and Chairman
|Bin Li        | 45  | Executive Director                                                                    
|Xiaofeng Ding | 38  | Director                                                                              
|Dongsheng     | 35  | Director                                                                              

Yingsheng Li has been our Chief Executive Officer,
President and Chairman since December 31, 2005. Mr. Li has been working for our
magazines for over 11 years. Mr. Li has more than 10 years of experience in
magazine publishing and has worked in a number of different positions such as a
reporter, director, and associate editor at CMO. Mr. Li was named one of the top
ten publishers by the Henan Provincial Government in 2002. Mr. Li holds a
Bachelors degree in Commerce and a postgraduate degree in Economics from
Zhengzhou University.

Xiaofeng Ding has been our director since December 31,
2005. Mr. Ding has been working for the magazines for over 5 years and became
the distribution manager of CMO in 2000. Mr. Ding handles negotiations for
distribution contracts and assists in maintaining and establishing relationships
with advertising agencies. Mr. Ding graduated from He Fei Industry University of
China in 1990 with a Bachelors degree in Material Science and Engineering. He
also received a postgraduate degree in national economics at Zhengzhou
University in 2002.

Dongsheng Renhas been our director since December 31,
2005. Prior to joining the Company in 2003, Mr. Ren worked at the Bank of
Nanfang as an assistant general manger and general manager from 2000 to 2003.
Mr. Ren has more than 7 years of experience in asset management and investment
banking. He received his Bachelors degree in electronic engineering and a
Masters degree in international economics from Xian Jiao Tong University in
1993 and 1996, respectively. He has been a qualified accountant in China since
1999.

Bin Lihas been our executive director since December
31, 2005. Before joining the Company in March 2004, Mr. Li worked as the Vice
President of Henan Huayuan Corporation, a food service business, from 1996 to
2000. Mr. Li received his Ph.D. in Management in 2004 from the School of
Management of Xian Jiaotong University.

There are no agreements or understandings for any of our
executive officers or director to resign at the request of another person and no
officer or director is acting on behalf of nor will any of them act at the
direction of any other person.

Directors are elected until their successors are duly elected
and qualified.

Board Composition and Committees

The board of directors is currently composed of four members,
Yingsheng Li, Xiaofeng Ding, Dongsheng Ren and Bin Li. All board action requires
the approval of a majority of the directors in attendance at a meeting at which
a quorum is present. We may increase the size of our board of directors in the
future but have not determined the approximate time to take such action.

27

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We currently do not have standing audit, nominating or
compensation committees. Our board of directors handles the functions that would
otherwise be handled by each of the committees. We intend, however, to establish
an audit committee, a nominating committee and a compensation committee of the
board of directors as soon as practicable. We envision that the audit committee
will be primarily responsible for reviewing the services performed by our
independent auditors, evaluating our accounting policies and our system of
internal controls. The nominating committee would be primarily responsible for
nominating directors and setting policies and procedures for the nomination of
directors. The nominating committee would also be responsible for overseeing the
creation and implementation of our corporate governance policies and procedures.
The compensation committee will be primarily responsible for reviewing and
approving our compensation and benefit policies, including compensation of
executive officers.

Our board of directors has not made a determination as to
whether any member of our board is an audit committee financial expert. Upon the
establishment of an audit committee, the board will determine whether any of the
directors qualify as an audit committee financial expert.

Family Relationships

Except as described below, there are no family relationships
among our directors or officers:

Mr. Bin Li, our Executive Director is the brother of our Chief
Executive Officer, Mr. Yingsheng Li.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or
executive officers has been convicted in a criminal proceeding, excluding
traffic violations or similar misdemeanors, or has been a party to any judicial
or administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws, except for matters
that were dismissed without sanction or settlement. Except as set forth in our
discussion below in Item 13, Certain Relationships and Related Transactions,
and Director Independence, none of our directors, director nominees or
executive officers has been involved in any transactions with us or any of our
directors, executive officers, affiliates or associates which are required to be
disclosed pursuant to the rules and regulations of the SEC.

Section 16(A) Beneficial Ownership Reporting Compliance

Under U.S. securities laws, directors, certain executive
officers and persons holding more than 10% of our common stock must report their
initial ownership of the common stock, and any changes in that ownership, to the
SEC. The SEC has designated specific due dates for these reports. Based solely
on our review of copies of such reports filed with the SEC and written
representations of our directors and executive officers, we believe that all
persons subject to reporting filed the required reports on time in the 2009
fiscal year.

Code of Ethics

On December 28, 2006, our board of directors adopted a code of
ethics that applies to all of our directors, officers and employees, including
our principal executive officer, principal financial officer, and principal
accounting officer. The code of ethics addresses, among other things, honesty
and ethical conduct, conflicts of interest, compliance with laws, regulations
and policies, including disclosure requirements under the federal securities
laws, confidentiality, trading on inside information, and reporting of
violations of the code. A copy of the code of ethics has been filed as Exhibit
14 to our registration statement on Form 10-SB/A on January 3, 2007. We are in
the process of building up the Company website. Once our website is available,
we will make the code of ethics available on the website. Thereafter, any
amendments or waivers to the code of ethics will be posted on our website within
four business days of such amendment or waiver. Until such time, however, any
amendments or waivers to our code of ethics will be filed with the SEC in a
Current Report on Form 8-K.

28

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ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table  2009 and 2008

The following summary compensation table sets forth the
aggregate compensation we paid or accrued to Yingsheng Li, our Chief Executive
Officer and Chairman for services rendered in all capacities during the fiscal
years 2009 and 2008. No other executive officers received total compensation in
excess of $100,000 in either year.

Name and Principal Position
    Year
    Salary ($)
    Bonus ($)
    Total ($)(1)Yingsheng Li, CEO and Chairman
    2009
    14,470
    7,588
    22,0582008
    21,029
    14,705
    35,734


(1) Mr. Yingsheng Lis compensation was paid by the Company in
RMB. The dollar amounts in the above table were calculated on the base that $1=
RMB 6.8 and $1= RMB 6.8 for years 2008 and 2009, respectively.

Employment Agreements

We entered into an employment agreement with Mr. Yingsheng Li,
our named executive office. This agreement was signed on March 26, 2009 for a
two-year term ending April 1, 2011. We expect that this agreement will be
automatically renewed for an additional year by the parties upon its expiration.
Under the terms of the agreement, as renewed, we are obligated to pay Mr. Li a
monthly salary of RMB 8,200 (approximately $1,200).

We entered into an employment agreement with our Executive
Director, Bin Li, on March 1, 2004. This agreement was renewed on March 26, 2010
for a one-year term ending April 1, 2011. We expect that this agreement will be
automatically renewed for an additional year by the parties upon its expiration.
Under the terms of the agreement, as renewed, we are obligated to pay Mr. Li a
monthly salary of RMB 16,000 (approximately $2,353).

Outstanding Equity Awards at Fiscal Year End

None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives, during the
fiscal year ended December 31, 2009.

Director Compensation

The following table provides information on the compensation
paid by us to our directors for the fiscal years ended on December 31, 2009 and
2008. Bonus compensation that Mr. Yingsheng Li, our Chairman and Chief Executive
Officer, received for his services as a director is reflected in the summary
compensation table above.

|Name          | Year   | Fees earned or paid in Cash | Total  
|------------- | ------ | --------------------------- | -------
|              |        | ($)                         | ($)(1) 
|Xiaofeng Ding | 2009   | -                           | -      
|2008          | -      | -                          
|Dongsheng Ren | 2009   | -                           | -      
|2008          | -      | -                          
|Bin Li        | 2009   | $29,411                     | $29,411
|2008          | 24,852 | 24,852                     

29

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(1) Each of the persons listed in the above table received
compensation from the Company in RMB. The dollar amounts in the above table were
calculated on the base that $1= RMB 6.8 and $1= RMB 6.8 for years 2008 and 2009,
respectively.

During 2009 and 2008, we did not pay our directors retainer
fees or fees for attending meetings of our board of directors, but we do
reimburse directors for reasonable travel expenses related to attendance at
board meetings. In the future, we may adopt a policy of paying independent
directors a fee for their attendance at board and committee meetings. No stock
or stock options or other equity incentives were awarded to our directors during
the fiscal year ended December 31, 2009. We do not have non-equity incentive or
a deferred compensation plan that our directors may participate in.

Indemnification of Directors and Executive Officers and
Limitation of Liability

Our Bylaws provide for the indemnification of our directors and
officers, past, present and future, under certain circumstances, against
attorneys fees, judgments, fines and other expenses incurred by them in any
litigation to which they become a party arising from their association with or
activities on behalf of us. We will also bear expenses of such litigation for
any of our directors, officers, employees or agents upon such persons promise to
repay us therefor if it is ultimately determined that any such person shall not
have been entitled to indemnification. This indemnification policy could result
in substantial expenditure by us, which we may be unable to recoup.

Insofar as indemnification by us for liabilities arising under
the Exchange Act may be permitted to our directors, officers and controlling
persons pursuant to provisions of the Articles of Incorporation and Bylaws, or
otherwise, we have been advised that in the opinion of the SEC, such
indemnification is against public policy and is, therefore, unenforceable. In
the event that a claim for indemnification by such director, officer or
controlling person of us in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person in
connection with the securities being offered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
us is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and
Management

The following table sets forth information regarding beneficial
ownership of our common stock as of April 12, 2010 (i) by each person who is
known by us to beneficially own more than 5% of our common stock; (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group. Except as otherwise noted, each person listed below is the sole
beneficial owner of the shares and has sole investment and voting power as to
such shares. No person listed below has any options, warrants or other rights to
acquire additional securities of the Company except as may be otherwise noted.

Address of each of the persons set forth below is in care of
China Marketing Media Holdings, Inc. RMA 901, KunTai International Mansion, No.
12 Chaowai Street, Beijing, 100020, China.

30

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Title of Class
    Name of Beneficial Owner
    Office, If Any
    Amount and Nature of
      Beneficial Ownership
    Percent of ClassCommon Stock, no par value
    Yingsheng Li
    President, Chief Executive
      Officer, Interim Chief Financial Officer and Chairman
    9,958,425
    34.72%Common Stock, no par value
    Xiaofeng Ding
    Director
    6,746,077
    23.52%Common Stock, no par value
    Dongsheng Ren
    Director
    5,535,316
    19.30%Common Stock, no par value
    Bin Li
    Executive Director
    0
    *Common Stock, no par value
    All officers and directors as
      a group (4 persons named above)
    
    22,239,818
    77.53%


* Less than 1%

1Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment power with
respect to securities.

2A total of 28,686,002 shares of our common stock
are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of April
12, 2010. For each beneficial owner above, any options or warrants exercisable
within 60 days have been included in the denominator.

Changes in Control

There are no arrangements known to us, including any pledge by
any person of our securities, the operation of which may at a subsequent date
result in a change in control of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS.

Transactions with Related Persons

The following includes a summary of transactions since the
beginning of the 2009 fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds the lesser of $120,000 or one percent of the average of our total assets
at year-end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest (other than
compensation described under Item 11, Executive Compensation).

31

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Our Chief Executive Officer, Yingsheng Li, and our director,
Xiaofeng Ding are also executive officers and/or directors of CMO. We are
parties to the Operation and Management Right Agreement with CMO. This agreement
is material to the operation of our business. Under this agreement, from
November 1, 2003 to October 31, 2013, our subsidiary, Shenzhen Media, is
obligated to market the magazines, sell the magazines and advertising space,
provide strategic planning for the magazines, and train the professional staff
of CMO. Under the terms of the contract, Shenzhen Media bears all of the
operating costs relating to the publishing of the magazines and is entitled to
all revenues generated from selling the magazines and its advertising space.

Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five
fiscal years.

Director Independence

We currently do not have any independent directors, as the term
independent is defined by the rules of the Nasdaq Stock Market.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.  CHILD,
VAN WAGONERPLEASE HELP TO FILL IN THE AUDIT FEE

The following is a summary of the fees billed to the Company by
our independent auditor, Child Van Wagoner & Bradshaw, PLLC, for
professional services rendered for the fiscal years ended December 31, 2009 and
2008:

|                      |   | 2009    |  |   | 2008    | 
|--------------------- | - | ------- |  | - | ------- | 
|Audit fees(1)         | $ | 95,000  |  | $ | 90,000  | 
|Audit-related fees(2) |   | 30,000  |  |   | 30,000  | 
|Tax fees(3)           |   | 0       |  |   | 0       | 
|All other fees        |   | 0       |  |   | 0       | 
|Total                 | $ | 125,000 |  | $ | 120,000 | 

|(1) | Consists of fees billed for the audit of our annual
      financial statements, review of financial statements included in our
      Quarterly Reports on Form 10-Q and services that are normally provided by
      the accountant in connection with statutory and regulatory filings or
      engagements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                              
|(2) | Consists of fees billed for all out-of-pocket expenses
      associated with performing audit and review services.                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                              
|(3) | Consists of fees billed for professional services
      rendered by the principal accountant for tax compliance, tax advice, and
      tax planning.                                                                                                                                                         

Pre-Approval Policies and Procedures

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit
services performed by our auditors must be approved in advance by our Board to
assure that such services do not impair the auditors independence from us. In
accordance with its policies and procedures, our Board pre-approved the audit
and non-audit services performed by Child Van Wagoner & Bradshaw, PLLC for
our consolidated financial statements as of and for the year ended December 31,
2009.

32

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES.

| | (a) | The following documents are filed as part of this
      report:
| | --- | ---------------------------------------------------------------

| | (1) | Financial Statement are set forth beginning on page F-1
      of the Report
| | --- | ---------------------------------------------------------------------------

| | Report of Independent Registered Public
      Accounting Firm        | F-2       
| | --------------------------------------------------------------------- | ----------
| |                                                                       |           
| | Consolidated Balance Sheets                                          | F-3       
| |                                                                       |           
| | Consolidated Statements of Operations And
      Comprehensive Income | F-4  F-5 
| |                                                                       |           
| | Consolidated Statements of Cash Flows                                | F-6  F-7 
| |                                                                       |           
| | Consolidated Statements of Stockholders Equity                      | F-8       
| |                                                                       |           
| | Notes to Consolidated Financial Statements                           | F-9  F-21

| | (2) | Financial Statement Schedules: All Schedules are omitted
      because the information called for is not applicable, is not required, or
      because the financial information is set forth in the financial statements
      or notes thereto.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                  
| | (3) | Exhibits                                                                                                                                                                                                                                         

| | Exhibits (including those incorporated by
      reference).
| | ------------------------------------------------------------

|Exhibit Number | Description of Exhibit                                                                                                                                                                                                                                                                                                                            
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | Share Exchange Agreement by and among the Company, Media
      Challenge Holdings Limited and certain shareholders thereof, dated as of
      December 31, 2005 [Incorporated by reference to Exhibit 2.1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      February 14, 2006, in file number 0-51806]
|2.2            | Convertible Promissory Note [Incorporated by reference to
      Exhibit 2.2 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                                                                         
|3.1            | Articles of Incorporation, as amended [Incorporated by
      reference to Exhibit 3.1 to the Registration Statement of the Company on
      Form 10-SB, filed with the SEC on February 14, 2006, in file number
      0-51806]                                                                                                                    
|3.2            | Amended and Restated Bylaws [Incorporated by reference to
      Exhibit 3.2 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                                                                         
|10.1           | Operation and Management Right Agreement, dated October
      23, 2006, by and between CMO and Shenzhen Media [Incorporated by reference
      to Exhibit 10.1 to the Amendment No. 1 to the Registration Statement of
      the Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                      
|10.2           | Amendment to Operation and Management Right Agreement,
      dated January 8, 2004, by and between CMO and Shenzhen Media [Incorporated
      by reference to Exhibit 10.2 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]          

33

---

|10.3  | Description of Verbal Amendment to Operation and
      Management Right Agreement, dated January 8, 2004, by and between Sale and
      Marketing Publishing House and Shenzhen Media Investment Co., Ltd.
      [Incorporated by reference to Exhibit 10.3 to the Annual Report of the
      Company on Form 10-KSB, filed with the SEC on April 17, 2007, in file
      number 0-51806]
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4  | Entrust Agreement, dated November 20, 2004, by and
      between Shenzhen New Media and Shenzhen Media [Incorporated by reference
      to Exhibit 10.3 to the Amendment No. 1 to the Registration Statement of
      the Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                                    
|10.5  | Equity Transfer Agreement, dated October 10, 2006, by and
      between Zhu Yu Tong and Shenzhen New Media. [Incorporated by reference to
      Exhibit 10.5 to the Annual Report of the Company on Form 10-KSB, filed
      with the SEC on April 17, 2007, in file number 0- 51806]                                                                                                    
|10.6  | Outsourcing Agreement, dated December 30, 2006, by and
      between Henan Xinhua Printing Factory and CMO. [Incorporated by reference
      to Exhibit 10.6 to the Annual Report of the Company on Form 10-KSB, filed
      with the SEC on April 17, 2007, in file number 0-51806]                                                                                                     
|10.7  | Outsourcing Agreement, dated December 30, 2006, by and
      between Henan Xinhua Printing Factory and CMO. [Incorporated by reference
      to Exhibit 10.6 to the Annual Report of the Company on Form 10-KSB, filed
      with the SEC on April 17, 2007, in file number 0-51806]                                                                                                     
|10.8  | Outsourcing Agreement, dated December 16, 2006, by and
      between Henan Ruiguang Printing Co., Ltd. and CMO. [Incorporated by
      reference to Exhibit 10.6 to the Annual Report of the Company on Form
      10-KSB, filed with the SEC on April 17, 2007, in file number 0-51806]                                                                                                 
|10.9  | Employment Agreement, dated March 1, 2004, by and between
      Bin Li and Shenzhen New Media [Incorporated by reference to Exhibit 10.7
      to the Amendment No. 1 to the Registration Statement of the Company on
      Form 10-SB, filed with the SEC on January 3, 2007, in file number
      0-51806]**                                                                           
|10.10 | Employment Agreement, dated December 15, 2006, by and
      between Yifang Fu and China Marketing [Incorporated by reference to
      Exhibit 10.8 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]**                                                                       
|10.11 | Agreement of Share Transfer, dated March 7, 2005, by and
      among Yingsheng Li, Xiaofeng Ding, Dongsheng Ren and Shenzhen New Media
      [Incorporated by reference to Exhibit 10.9 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]                                    
|10.12 | Agreement of Share Transfer, dated March 7, 2005, by and
      between CMO and Shenzhen New Media [Incorporated by reference to Exhibit
      10.10 to the Amendment No. 1 to the Registration Statement of the Company
      on Form 10-SB, filed with the SEC on January 3, 2007, in file number
      0-51806]                                                                        

34

---

|10.13 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Guangzhou Qiankuntai Bookstore
      [Incorporated by reference to Exhibit 10.11 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]                  
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14 | Distribution Agreement, dated April 3, 2006, by and
      between Shenzhen New Media and Huadao Consulting Co., Ltd. [Incorporated
      by reference to Exhibit 10.12 to the Amendment No. 1 to the Registration
      Statement of the Company on Form 10-SB, filed with the SEC on January 3,
      2007, in file number 0-51806]                        
|10.15 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Nanjing Cultural Development Co., Ltd.
      [Incorporated by reference to Exhibit 10.13 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]          
|10.16 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Shandong Qianyan Culture Dissemination Co.,
      Ltd. [Incorporated by reference to Exhibit 10.14 to the Amendment No. 1 to
      the Registration Statement of the Company on Form 10-SB, filed with the
      SEC on January 3, 2007, in file number 0-51806]
|10.17 | Distribution Agreement, dated February 28, 2006, by and
      between Shenzhen New Media and Changsha Youyou Reading Group [Incorporated
      by reference to Exhibit 10.15 to the Amendment No. 1 to the Registration
      Statement of the Company on Form 10-SB, filed with the SEC on January 3,
      2007, in file number 0-51806]                  
|10.18 | Distribution Agreement, dated February 9, 2006, by and
      between Shenzhen New Media and Zhengzhou Huanghe Culture Group
      [Incorporated by reference to Exhibit 10.16 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]                 
|10.19 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Hangzhou Tianyi Books Co., Ltd.
      [Incorporated by reference to Exhibit 10.17 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]                 
|10.20 | Operation and Management Agreement, dated December 13,
      2007, by and between Shenzhen New Media and Shanghai Longcom Telecom Co.,
      Ltd. [Incorporated by reference to Exhibit 10.20 to the Annual Report of
      the Company on Form 10-KSB, filed with the SEC on April 18, 2008, in file
      number 0-51806]                                 
|10.21 | Termination Agreement, dated December 12, 2008, by and
      between Shenzhen New Media and Shanghai Longcom Telecom Co., Ltd.
      [Incorporated by reference to Exhibit 10.1 to the Current Report of the
      Company on Form 8-K, filed with the SEC on December 17, 2008, in file
      number 0-51806]                                              
|14    | Code of Ethics [Incorporated by reference to Exhibit 14
      to the Amendment No. 1 to the Registration Statement of the Company on
      Form 10-SB, filed with the SEC on January 3, 2007, in file number 0-51806]                                                                                                                                       
|21    | List of Subsidiaries of the Registrant*                                                                                                                                                                                                                                                                                                                     
|31    | Certification of Principal Executive Officer and
      Principal Financial Officer filed pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002*                                                                                                                                                                                                   

35

---

|32 | Certifications of Principal
      Executive Officer and Principal Financial Officer furnished pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
      Oxley Act of 2002*
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* Filed herewith. ** Represents management contract or
compensatory plan or arrangement.

36

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

China Marketing Media Holdings,
Inc.

By: /s/Yingsheng
LiYingsheng Li Chief Executive Officer and
Interim Chief Financial Officer

Date: April 14, 2010

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company in the capacities and on the dates indicated.

Each person whose signature appears below hereby authorizes
Yingsheng Li as attorneys-in-fact to sign on his behalf, individually, and in
each capacity stated below, and to file all amendments and/or supplements to
this annual report on Form 10-K.

|Signature               | Capacity                                    | Date          
|----------------------- | ------------------------------------------- | --------------
|                        |                                             |               
|/s/ Yingsheng
      Li  | President, Chief Executive Officer, Interim | April 14, 2010
|Yingsheng Li            | Chief Financial Officer and Chairman        |               
|                        |                                             |               
|/s/ Xiaofeng
      Ding | Director                                    | April 14, 2010
|Xiaofeng Ding           |                                             |               
|                        |                                             |               
|/s/ Dongsheng
      Ren | Director                                    | April 14, 2010
|Dongsheng Ren           |                                             |               
|                        |                                             |               
|/s/ Bin
      Li        | Executive Director                          | April 14, 2010
|Bin Li                  |                                             |               

37

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EXHIBITS

|Exhibit Number | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                   
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            | Share Exchange Agreement by and among the Company, Media
      Challenge Holdings Limited and certain shareholders thereof, dated as of
      December 31, 2005 [Incorporated by reference to Exhibit 2.1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      February 14, 2006, in file number 0-51806]                                       
|2.2            | Convertible Promissory Note [Incorporated by reference to
      Exhibit 2.2 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                                                                                                                
|3.1            | Articles of Incorporation, as amended [Incorporated by
      reference to Exhibit 3.1 to the Registration Statement of the Company on
      Form 10-SB, filed with the SEC on February 14, 2006, in file number
      0-51806]                                                                                                                                                           
|3.2            | Amended and Restated Bylaws [Incorporated by reference to
      Exhibit 3.2 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                                                                                                                
|10.1           | Operation and Management Right Agreement, dated October
      23, 2006, by and between CMO and Shenzhen Media [Incorporated by reference
      to Exhibit 10.1 to the Amendment No. 1 to the Registration Statement of
      the Company on Form 10- SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                            
|10.2           | Amendment to Operation and Management Right Agreement,
      dated January 8, 2004, by and between CMO and Shenzhen Media [Incorporated
      by reference to Exhibit 10.2 to the Amendment No. 1 to the Registration
      Statement of the Company on Form 10-SB, filed with the SEC on January 3,
      2007, in file number 0-51806]                                                 
|10.3           | Description of Verbal Amendment to Operation and
      Management Right Agreement, dated January 8, 2004, by and between Sale and
      Marketing Publishing House and Shenzhen Media Investment Co., Ltd.
      [Incorporated by reference to Exhibit 10.3 to the Annual Report of the
      Company on Form 10-KSB, filed with the SEC on April 17, 2007, in file
      number 0-51806]
|10.4           | Entrust Agreement, dated November 20, 2004, by and
      between Shenzhen New Media and Shenzhen Media [Incorporated by reference
      to Exhibit 10.3 to the Amendment No. 1 to the Registration Statement of
      the Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]                                                                    
|10.5           | Equity Transfer Agreement, dated October 10, 2006, by and
      between Zhu Yu Tong and Shenzhen New Media. [Incorporated by reference to
      Exhibit 10.5 to the Annual Report of the Company on Form 10-KSB, filed
      with the SEC on April 17, 2007, in file number 0-51806]                                                                                                     
|10.6           | Outsourcing Agreement, dated December 30, 2006, by and
      between Henan Xinhua Printing Factory and CMO. [Incorporated by reference
      to Exhibit 10.6 to the Annual Report of the Company on Form 10-KSB, filed
      with the SEC on April 17, 2007, in file number 0-51806]                                                                                                     

---

|10.7  | Outsourcing Agreement, dated December 30, 2006, by and
      between Henan Xinhua Printing Factory and CMO. [Incorporated by reference
      to Exhibit 10.6 to the Annual Report of the Company on Form 10-KSB, filed
      with the SEC on April 17, 2007, in file number 0-51806]                                                                        
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8  | Outsourcing Agreement, dated December 16, 2006, by and
      between Henan Ruiguang Printing Co., Ltd. and CMO. [Incorporated by
      reference to Exhibit 10.6 to the Annual Report of the Company on Form
      10-KSB, filed with the SEC on April 17, 2007, in file number 0-51806]                                                                    
|10.9  | Employment Agreement, dated March 1, 2004, by and between
      Bin Li and Shenzhen New Media [Incorporated by reference to Exhibit 10.7
      to the Amendment No. 1 to the Registration Statement of the Company on
      Form 10-SB, filed with the SEC on January 3, 2007, in file number
      0-51806]**                                              
|10.10 | Employment Agreement, dated December 15, 2006, by and
      between Yifang Fu and China Marketing [Incorporated by reference to
      Exhibit 10.8 to the Amendment No. 1 to the Registration Statement of the
      Company on Form 10-SB, filed with the SEC on January 3, 2007, in file
      number 0-51806]**                                          
|10.11 | Agreement of Share Transfer, dated March 7, 2005, by and
      among Yingsheng Li, Xiaofeng Ding, Dongsheng Ren and Shenzhen New Media
      [Incorporated by reference to Exhibit 10.9 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]       
|10.12 | Agreement of Share Transfer, dated March 7, 2005, by and
      between CMO and Shenzhen New Media [Incorporated by reference to Exhibit
      10.10 to the Amendment No. 1 to the Registration Statement of the Company
      on Form 10-SB, filed with the SEC on January 3, 2007, in file number
      0-51806]                                           
|10.13 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Guangzhou Qiankuntai Bookstore
      [Incorporated by reference to Exhibit 10.11 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]                  
|10.14 | Distribution Agreement, dated April 3, 2006, by and
      between Shenzhen New Media and Huadao Consulting Co., Ltd. [Incorporated
      by reference to Exhibit 10.12 to the Amendment No. 1 to the Registration
      Statement of the Company on Form 10-SB, filed with the SEC on January 3,
      2007, in file number 0-51806]                        
|10.15 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Nanjing Cultural Development Co., Ltd.
      [Incorporated by reference to Exhibit 10.13 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]          
|10.16 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Shandong Qianyan Culture Dissemination Co.,
      Ltd. [Incorporated by reference to Exhibit 10.14 to the Amendment No. 1 to
      the Registration Statement of the Company on Form 10-SB, filed with the
      SEC on January 3, 2007, in file number 0-51806]

---

|10.17 | Distribution Agreement, dated February 28, 2006, by and
      between Shenzhen New Media and Changsha Youyou Reading Group [Incorporated
      by reference to Exhibit 10.15 to the Amendment No. 1 to the Registration
      Statement of the Company on Form 10-SB, filed with the SEC on January 3,
      2007, in file number 0-51806] 
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.18 | Distribution Agreement, dated February 9, 2006, by and
      between Shenzhen New Media and Zhengzhou Huanghe Culture Group
      [Incorporated by reference to Exhibit 10.16 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]
|10.19 | Distribution Agreement, dated February 8, 2006, by and
      between Shenzhen New Media and Hangzhou Tianyi Books Co., Ltd.
      [Incorporated by reference to Exhibit 10.17 to the Amendment No. 1 to the
      Registration Statement of the Company on Form 10-SB, filed with the SEC on
      January 3, 2007, in file number 0-51806]
|10.20 | Operation and Management Agreement, dated December 13,
      2007, by and between Shenzhen New Media and Shanghai Longcom Telecom Co.,
      Ltd. [Incorporated by reference to Exhibit 10.20 to the Annual Report of
      the Company on Form 10-KSB, filed with the SEC on April 18, 2008, in file
      number 0-51806]                
|10.21 | Termination Agreement, dated December 12, 2008, by and
      between Shenzhen New Media and Shanghai Longcom Telecom Co., Ltd.
      [Incorporated by reference to Exhibit 10.1 to the Current Report of the
      Company on Form 8-K, filed with the SEC on December 17, 2008, in file
      number 0-51806]                             
|14    | Code of Ethics [Incorporated by reference to Exhibit 14
      to the Amendment No. 1 to the Registration Statement of the Company on
      Form 10-SB, filed with the SEC on January 3, 2007, in file number 0-51806]                                                                                                                      
|21    | List of Subsidiaries of the Registrant*                                                                                                                                                                                                                                                                                                    
|31    | Certification of Principal Executive Officer and
      Principal Financial Officer filed pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002*                                                                                                                                                                                  
|32    | Certifications of Principal Executive Officer and
      Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*                                                                                                                              

* Filed herewith ** Represents management contract or
compensatory plan or arrangement.

---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                     | Page      
|-------------------------------------------------------------------- | ----------
|Report of Independent Registered Public
      Accounting Firm        | F-2       
|Consolidated Balance Sheets                                          | F-3       
|Consolidated Statements of Operations And
      Comprehensive Income | F-4  F-5 
|Consolidated Statements of Cash Flows                                | F-6  F-7 
|Consolidated Statements of Stockholders
      Equity                | F-8       
|Notes to Consolidated Financial Statements                           | F-9  F-21

F-1

---

| | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    To The Board of Directors and Stockholders of
    China Marketing Media Holdings, Inc. 
    Beijing, China
    We have audited the accompanying consolidated balance
    sheets of China Marketing Media Holdings, Inc. (the Company) as of December
    31, 2009 and 2008, and the related consolidated statements of operations and
    comprehensive income, cash flows, and changes in stockholders equity for
    the years ended December 31, 2009 and 2008. 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 of America).
    Those standards require that we plan and perform the audits to obtain
    reasonable assurance about whether the consolidated 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 audits 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 audits provide
    a reasonable basis for our opinion.
    In our opinion, the consolidated financial statements
    referred to above present fairly, in all material respects, the financial
    position of China Marketing Media Holdings, Inc. as of December 31, 2009 and
    2008, and the results of its operations and its cash flows for the years
    ended December 31, 2009 and 2008, in conformity with accounting principles
    generally accepted in the United States of America.
    Child, Van Wagoner & Bradshaw, PLLC 
    Salt Lake City, Utah 
    March 31, 2010
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-2

---

|CHINA MARKETING MEDIA HOLDINGS, INC.                       
|-----------------------------------------------------------
|CONSOLIDATED BALANCE SHEETS                                
|AS OF DECEMBER 31, 2009 AND 2008                           
|(Currency expressed in United States Dollars
      (US$))

|                                                                                                                          |   | As of December 31, |  
|------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | -
|                                                                                                                          |   | 2009               |  
|ASSETS                                                                                                                    |   |                    |  
|Current assets:                                                                                                           |   |                    |  
|Cash and cash equivalents                                                                                                 | $ | 5,546,749          |  
|Accounts receivable                                                                                                       |   | 2,780,489          |  
|Prepaid expenses                                                                                                          |   | 578,652            |  
|Inventory                                                                                                                 |   | 279,807            |  
|                                                                                                                          |   |                    |  
|Total current assets                                                                                                      |   | 9,185,697          |  
|                                                                                                                          |   |                    |  
|Non-current assets:                                                                                                       |   |                    |  
|Investment deposit  purchase
      of targets                                                                            |   | -                  |  
|Loans receivable from major sales agents                                                                                  |   | -                  |  
|Loans receivable                                                                                                          |   | 1,170,070          |  
|Long-term investments                                                                                                     |   | 456,180            |  
|Related party receivables 
      affiliates                                                                              |   | 2,685,944          |  
|Related party receivables                                                                                                 |   | 354,063            |  
|Other receivable                                                                                                          |   | 489,356            |  
|Goodwill                                                                                                                  |   | 812,465            |  
|Property, plant and equipment                                                                                             |   | 1,765,843          |  
|Less: accumulated depreciation                                                                                            |   | (510,772           | )
|License agreement                                                                                                         |   | 1,482,823          |  
|Less: accumulated amortization                                                                                            |   | (883,746           | )
|                                                                                                                          |   |                    |  
|Total non-current assets                                                                                                  |   | 7,822,226          |  
|                                                                                                                          |   |                    |  
|TOTAL ASSETS                                                                                                              | $ | 17,007,923         |  
|                                                                                                                          |   |                    |  
|LIABILITIES AND EQUITY                                                                                                    |   |                    |  
|Current liabilities:                                                                                                      |   |                    |  
|Accounts payable                                                                                                          | $ | 152,104            |  
|Accrued expenses and levies                                                                                               |   | 90,117             |  
|Deferred revenues                                                                                                         |   | 342,126            |  
|Taxes payable                                                                                                             |   | 91,770             |  
|Other payable                                                                                                             |   | 375,000            |  
|                                                                                                                          |   |                    |  
|Total current liabilities                                                                                                 |   | 1,051,117          |  
|                                                                                                                          |   |                    |  
|Commitments and contingencies                                                                                             |   |                    |  
|                                                                                                                          |   |                    |  
|Equity:                                                                                                                   |   |                    |  
|China Marketing Media Holdings, Inc.
      stockholders equity:                                                          |   |                    |  
|Common stock, no par value, 100,000,000
      shares authorized,    28,686,002 common shares
      issued and outstanding |   | 1,112,546          |  
|Additional paid-in capital                                                                                                |   | 165,000            |  
|Retained earnings                                                                                                         |   | 12,760,253         |  
|Accumulated other
      comprehensive income                                                                              |   | 1,947,349          |  
|Total China Marketing Media Holdings, Inc.
      stockholders equity                                                     |   | 15,985,148         |  
|                                                                                                                          |   |                    |  
|Non-controlling interests                                                                                                 |   | (28,342            | )
|Total equity                                                                                                              |   | 15,956,806         |  
|                                                                                                                          |   |                    |  
|TOTAL LIABILITIES AND EQUITY                                                                                              | $ | 17,007,923         |  

See accompanying notes to consolidated financial statements.

F-3

---

|CHINA MARKETING MEDIA HOLDINGS, INC.                                
|--------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS AND
      COMPREHENSIVE INCOME
|FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008                      
|(Currency expressed in United States Dollars
      (US$))         

|                                                            |   | Years ended December 31, |  
|----------------------------------------------------------- | - | ------------------------ | -
|                                                            |   | 2009                     |  
|Revenue, net                                                |   |                          |  
|Magazine advertising                                        | $ | 9,488,579                |  
|Electronics                                                 |   | 15,411,781               |  
|                                                            |   | 24,900,360               |  
|                                                            |   |                          |  
|Cost of revenue                                             |   |                          |  
|Magazine advertising                                        |   | 3,151,729                |  
|Electronics                                                 |   | 14,500,327               |  
|                                                            |   | 17,652,056               |  
|                                                            |   |                          |  
|Gross profit                                                |   | 7,248,304                |  
|                                                            |   |                          |  
|Operating expenses:                                         |   |                          |  
|Payroll expenses                                            |   | 2,401,789                |  
|Other general and
      administrative                      |   | 3,516,148                |  
|                                                            |   |                          |  
|Total operating expenses                                    |   | 5,917,937                |  
|                                                            |   |                          |  
|Income from operations                                      |   | 1,330,367                |  
|                                                            |   |                          |  
|Other income (expense):                                     |   |                          |  
|Interest income                                             |   | 55,767                   |  
|Interest expense                                            |   | -                        |  
|Investment loss (equity method)                             |   | (55,369                  | )
|Subsidy income                                              |   | 140,028                  |  
|Other income                                                |   | -                        |  
|                                                            |   |                          |  
|Total other income                                          |   | 140,426                  |  
|                                                            |   |                          |  
|Income from continuing operations before income
      taxes |   | 1,470,793                |  
|                                                            |   |                          |  
|Income tax expense                                          |   | (27,328                  | )
|                                                            |   |                          |  
|Income from continuing operations, net of tax               |   | 1,443,465                |  
|                                                            |   |                          |  
|Discontinued operations, net of tax                         |   | -                        |  
|                                                            |   |                          |  
|NET INCOME                                                  | $ | 1,443,465                |  

See accompanying notes to consolidated financial statements.

F-4

---

|CHINA MARKETING MEDIA HOLDINGS, INC.                       
|-----------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS AND                  
|COMPREHENSIVE INCOME (CONTINUED)                           
|FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008             
|(Currency expressed in United States Dollars
      (US$))

|                                                                                                                          |   | Years ended December 31, | 
|------------------------------------------------------------------------------------------------------------------------- | - | ------------------------ | 
|                                                                                                                          |   | 2009                     | 
|                                                                                                                          |   |                          | 
|Add: net loss attributable to
      non-controlling interests                                                             |   | 62,309                   | 
|                                                                                                                          |   |                          | 
|Net income attributable to China Marketing
      Media Holdings, Inc.                                                     | $ | 1,505,774                | 
|                                                                                                                          |   |                          | 
|Earnings per share  basic and diluted:                                                                                   |   |                          | 
|Income from continuing operations attributable to
      China    Marketing Media Holdings, Inc. common
      stockholders | $ | 0.05                     | 
|Discontinued operations attributable to
      China Marketing Media    Holdings, Inc. common
      stockholders           |   | -                        | 
|Net income attributable to China Marketing Media
      Holdings,    Inc. common stockholders                              | $ | 0.05                     | 
|                                                                                                                          |   |                          | 
|Weighted average common stock outstanding  basic and
      diluted                                                       |   | 28,686,002               | 
|                                                                                                                          |   |                          | 
|NET INCOME                                                                                                                | $ | 1,443,465                | 
|                                                                                                                          |   |                          | 
|Other comprehensive income                                                                                                |   |                          | 
|- Foreign currency translation gain                                                                                       |   | 42,210                   | 
|                                                                                                                          |   |                          | 
|COMPREHENSIVE INCOME                                                                                                      | $ | 1,485,675                | 
|                                                                                                                          |   |                          | 
|Comprehensive loss attributable to
      non-controlling interests                                                        | $ | 62,309                   | 
|Comprehensive income attributable to China Marketing
      Media    Holdings, Inc.                                        | $ | 1,547,984                | 

See accompanying notes to consolidated financial statements.

F-5

---

|CHINA MARKETING MEDIA HOLDINGS, INC.                       
|-----------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS                      
|FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008             
|(Currency expressed in United States Dollars
      (US$))

|                                                                                                                                  |   | Years ended December 31, |  
|--------------------------------------------------------------------------------------------------------------------------------- | - | ------------------------ | -
|                                                                                                                                  |   | 2009                     |  
|Cash flows from operating
      activities:                                                                                       |   |                          |  
|Net income                                                                                                                        | $ | 1,443,465                |  
|Adjustments to reconcile income from
      continuing operations to net    cash (used in)
      provided by operating activities: |   |                          |  
|Amortization and depreciation                                                                                                     |   | 316,947                  |  
|Shares issued for services                                                                                                        |   | -                        |  
|Gain on disposal of property, plant and
      equipment                                                                           |   | -                        |  
|Investment loss (equity
      method)                                                                                             |   | 55,369                   |  
|Deferred tax assets                                                                                                               |   | -                        |  
|Changes in operating assets and
      liabilities:                                                                                |   |                          |  
|Accounts receivable                                                                                                               |   | (2,671,113               | )
|Prepaid expenses                                                                                                                  |   | (431,055                 | )
|Inventory                                                                                                                         |   | 142,643                  |  
|Due from major sales agents                                                                                                       |   | 717,466                  |  
|Other receivable                                                                                                                  |   | (298,283                 | )
|Other asset                                                                                                                       |   | -                        |  
|Accounts payable and accrued expenses                                                                                             |   | (223,162                 | )
|Deferred revenues                                                                                                                 |   | 156,005                  |  
|Taxes payable                                                                                                                     |   | 74,903                   |  
|Other payable                                                                                                                     |   | 235,878                  |  
|                                                                                                                                  |   |                          |  
|Net cash provided by (used in) operating
      activities  continuing    operations                                              |   | (480,937                 | )
|Net cash provided by discontinued operations                                                                                      |   | -                        |  
|                                                                                                                                  |   |                          |  
|Net cash provided by (used in) operating activities                                                                               |   | (480,937                 | )
|                                                                                                                                  |   |                          |  
|Cash flows from investing activities:                                                                                             |   |                          |  
|Purchase of property, plant
      and equipment                                                                                   |   | (57,396                  | )
|Purchase of intangible assets                                                                                                     |   | (11,184                  | )
|Deposit paid on investment in
      subsidiary                                                                                    |   | -                        |  
|Payment on loan advances to a third party                                                                                         |   | (1,169,440               | )
|Cash acquired in purchases of
      subsidiary                                                                                    |   | -                        |  
|Proceeds from disposal of subsidiary                                                                                              |   | -                        |  
|Refund from investment deposit                                                                                                    |   | 5,978,763                |  
|Purchase of investment                                                                                                            |   | (21,927                  | )
|                                                                                                                                  |   |                          |  
|Net cash provided by (used in) investing activities 
      continuing    operations                                              |   | 4,718,816                |  
|Net cash used in discontinued operations                                                                                          |   | -                        |  
|                                                                                                                                  |   |                          |  
|Net cash provided by (used in) investing
      activities                                                                         |   | 4,718,816                |  

See accompanying notes to consolidated financial statements.

F-6

---

|CHINA MARKETING MEDIA HOLDINGS, INC.                       
|-----------------------------------------------------------
|CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)           
|FOR THE YEAR ENDED DECEMBER 31, 2009 AND 2008              
|(Currency expressed in United States Dollars
      (US$))

|                                                                   |   | For the year ended December 31, |  
|------------------------------------------------------------------ | - | ------------------------------- | -
|                                                                   |   | 2009                            |  
|Cash flows from financing
      activities:                        |   |                                 |  
|Repayment of related party payables                                |   | (849,398                        | )
|                                                                   |   |                                 |  
|Net cash used in discontinued operations                           |   | -                               |  
|                                                                   |   |                                 |  
|Net cash used in financing activities                              |   | (849,398                        | )
|                                                                   |   |                                 |  
|Effect of exchange rate changes in cash and cash
      equivalents |   | (2,959                          | )
|                                                                   |   |                                 |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                            |   | 3,385,522                       |  
|                                                                   |   |                                 |  
|BEGINNING OF YEAR                                                  |   | 2,161,227                       |  
|                                                                   |   |                                 |  
|END OF YEAR                                                        | $ | 5,546,749                       |  
|                                                                   |   |                                 |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                  |   |                                 |  
|Cash paid for income taxes                                         | $ | 25,987                          |  
|Cash paid for interest                                             | $ | 125,704                         |  

See accompanying notes to consolidated financial statements.

F-7

---

|CHINA MARKETING MEDIA HOLDINGS, INC.                       
|-----------------------------------------------------------
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY            
|FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008             
|(Currency expressed in United States Dollars
      (US$))

|                                        | Stockholders equity |                     |  |   |           |  |   |           
|--------------------------------------- | -------------------- | ------------------- |  | - | --------- |  | - | ----------
|                                        |                      |                     |  |   |           |  |   |           
|                                        |                      |                     |  |   |           |  |   |           
|                                        |                      | Common stock        |  |   | Retained  |  |   | Additional
|                                        |                      | No.
      of shares |  |   | Amount    |  |   | earnings  
|                                        |                      |                     |  |   |           |  |   |           
|Balance at January 1, 2008              |                      | 27,586,002          |  | $ | 1,112,546 |  | $ | 9,785,181 
|                                        |                      |                     |  |   |           |  |   |           
|Net income for the year                 |                      | -                   |  |   | -         |  |   | 1,469,298 
|Shares issued for services, non-cash    |                      | 1,100,000           |  |   | -         |  |   | -         
|Foreign currency translation adjustment |                      | -                   |  |   | -         |  |   | -         
|                                        |                      |                     |  |   |           |  |   |           
|Balance as of December 31, 2008         |                      | 28,686,002          |  | $ | 1,112,546 |  | $ | 11,254,479
|                                        |                      |                     |  |   |           |  |   |           
|Net income for the year                 |                      | -                   |  |   | -         |  |   | 1,505,774 
|Foreign currency translation adjustment |                      | -                   |  |   | -         |  |   | -         
|                                        |                      |                     |  |   |           |  |   |           
|Balance as of December 31, 2009         |                      | 28,686,002          |  | $ | 1,112,546 |  | $ | 12,760,253

See accompanying notes to consolidated financial statements

F-8

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

1. ORGANIZATION AND BUSINESS BACKGROUND

China Marketing Media Holdings, Inc. ("China Marketing" or the
"Company") was incorporated under the laws of the State of Texas on October 29,
1999.

On December 31, 2005, China Marketing completed a share
exchange (the "Exchange") with the stockholders of Media Challenge Holdings
Limited ("Media Challenge") pursuant to the terms of an Agreement for Share
Exchange dated December 31, 2005. In the Exchange, China Marketing acquired all
of the issued and outstanding stock of Media Challenge in exchange for a
convertible promissory note in the amount of $441,600 that was converted into
22,808,002 shares of China Marketing common stock upon the completion of a one
for ten reverse stock split. The Exchange resulted in the previous controlling
shareholders of Media Challenge becoming the controlling shareholders of China
Marketing. Consequently, the Exchange is accounted for as a reverse merger,
whereby the accounts of Media Challenge are recapitalized to show the adopted
capital structure of China Marketing.

Media Challenge was incorporated on August 12, 2004, under the
laws of the Territory of the British Virgin Islands (BVI). Media Challenge is a
holding company and has no operations other than operations that it conducts
through its direct and indirect subsidiaries. One of Media Challenge's
subsidiaries, Shenzhen New Media Consulting Co., Ltd. ("Shenzhen New Media") was
incorporated on November 15, 2004 under the laws of the People's Republic of
China ("PRC").

According to an agreement, dated March 7, 2005, Shenzhen New
Media acquired 100% of Shenzhen Media Investment Co., Ltd. ("Shenzhen Media"),
an entity controlled by six common owners of Media Challenge. Shenzhen Media was
formed on October 22, 2003, under the laws of the PRC. China Marketing completed
the acquisition of Shenzhen Media on December 21, 2005, and Shenzhen Media is
now a wholly-owned subsidiary of Shenzhen New Media. The transaction was
accounted for as a transfer of entities under common control.

On March 7, 2005, Shenzhen New Media entered into an agreement
to acquire 100% of Shenzhen Media Investment Co., Ltd. ("Shenzhen Media"), an
entity controlled by six common owners of Media Challenge. Shenzhen Media was
formed on October 22, 2003, under the laws of the PRC. Shenzhen New Media
completed the acquisition of Shenzhen Media on December 21, 2005, and Shenzhen
Media is now a wholly-owned subsidiary of Shenzhen New Media. The transaction
was accounted for as a transfer of entities under common control.

In October 2004, Shenzhen Media formed a new wholly-owned
subsidiary in the PRC known as Beijing Media Management and Consulting Co., Ltd.
("Beijing Media").

In November 2005, Shenzhen New Media formed a new wholly-owned
subsidiary in the PRC known as Shenzhen New Media Advertising Co., Ltd. ("NMA").
The registered capital of NMA is one million RMB (approximately $122,100).

In November 2007, Shenzhen Media formed a new 52% owned
subsidiary in the PRC known as Beijing Orient Converge Human Resources
Management Center Co. Ltd. ("BJOC"). The registered capital of BJOC is RMB
5,000,000 (approximately $684,500).

On July 18, 2008, Shenzhen New Media formed a new 51% owned
subsidiary, Shanghai Zhiduo Network Technology Company Limited ("SZNT") under
the laws of the PRC. The registered capital of SZNT is RMB 1,000,000
(approximately $142,879). SZNT is engaged in the business of management
consulting services and brand name consulting services.

On August 2, 2008, Shenzhen Media sold 42% ownership of BJOC to
Shanghai Cheng Mei Biotechnology Co., Ltd. ("Shanghai Cheng Mei") for a cash
price of $141,831 (equivalent to RMB 987,461). After the sale, Shenxhen Media
owns 10% of BJOC.

F-9

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

The consolidated entity is hereafter referred to as "the
Company".

The Company engages in the sale of its magazines and
advertising space within its magazines, which are sold throughout China; and
provides consulting services to clients concerning advertising and marketing
matters. The Company also conducts online sales of electronic products through
Shenzhen Media.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

- Use of estimates

In preparing these consolidated financial statements,
management makes estimates and assumptions that affect the reported amounts of
assets and liabilities in the balance sheets and revenues and expenses during
the years reported. Actual results may differ from these estimates.

- Basis of consolidation

The condensed consolidated financial statements reflect the
consolidated operations of CMKM and its subsidiaries. All significant
inter-company balances and transactions have been eliminated in
consolidation.

- Cash and cash equivalents

For purposes of the statements of cash flows, cash and cash
equivalents includes cash on hand and demand deposits held by banks. Deposits
held in financial institutions in the PRC are not insured by any government
entity or agency.

- Trade accounts receivable

Trade accounts receivable are recognized and carried at
original invoice amount less an allowance for any uncollectible amounts.
Management reviews the adequacy of the allowance for doubtful accounts on an
ongoing basis, using historical collection trends and aging of receivables.
Management also periodically evaluates individual customers financial
condition, credit history, and the current economic conditions to make
adjustments in the allowance when it is considered necessary. Account balances
are charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. The Company does
not have any off-balance-sheet credit exposure related to its customers.

- Inventory

Inventories mainly consist of the electronic products purchased
from third parties, which are stated at the lower of cost, as determined on a
first-in, first-out basis, or market. Management compares the cost of
inventories with the market value, and allowance is made for writing down the
inventories to their market value, if lower.

- Property, plant and equipment

Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses, if any. Depreciation
is calculated on the straight-line basis over the following expected useful
lives from the date on which they become fully operational:

|                        | Depreciable life
|----------------------- | ----------------
|Buildings               | 20 years        
|Motor vehicles          | 5 years         
|Furniture and equipment | 5 years         
|Computer equipment      | 5 years         

F-10

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

Expenditure for maintenance and repairs is expensed as
incurred. The gain or loss on the disposal of plant and equipment is the
difference between the net sales proceeds and the carrying amount of the
relevant assets and is recognized in the consolidated statement of operations.

|                                   |   | As of December 31, |  
|---------------------------------- | - | ------------------ | -
|                                   |   | 2009               |  
|                                   |   |                    |  
|Buildings                          | $ | 1,078,168          |  
|Motor vehicles                     |   | 328,074            |  
|Furniture and equipment            |   | 158,059            |  
|Computer equipment                 |   | 201,542            |  
|                                   |   | 1,765,843          |  
|Less: accumulated depreciation     |   | (510,772           | )
|                                   |   |                    |  
|Property, plant and equipment, net | $ | 1,255,071          |  

Depreciation expense for the years ended December 31, 2009 and
2008 was $174,746 and $195,385, respectively.

Long-lived assets of the Company are reviewed annually to
assess whether the carrying value has become impaired according to the
guidelines established in the Accounting Standards Codification ("ASC") Topic
360-10-5, Impairment or Disposal of Long-Lived Assets. No impairment of
assets was recorded in the years reported.

- Intangible assets

In accordance with ASC Topic 350-50, General Intangibles
Other Than Goodwill,goodwill amounts are not amortized, but rather are
tested for impairment at least annually. Intangible assets that are not
considered to have an indefinite useful life are amortized over their useful
lives, which is the ten years of the "license agreement." The carrying amount of
the asset is reviewed whenever events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable. Recoverability of these
assets is measured by comparison of the carrying amount of the asset to the
future undiscounted cash flows the asset is expected to generate. If the asset
is considered to be impaired, the amount of any impairment is measured as the
difference between the carrying value and the fair value of the impaired asset.
No intangible asset impairment charges are deemed necessary for the year ended
December 31, 2009.

Amortization expense of the license agreement included in cost
of revenue for the years ended December 31, 2009 and 2008 was $142,201 and
$145,202, respectively. Estimated future amortization expense related to the
license agreement as of December 31, 2009 is as follows:

|Years ending December 31, |   |         | 
|------------------------- | - | ------- | 
|2010                      | $ | 149,770 | 
|2011                      |   | 149,770 | 
|2012                      |   | 149,770 | 
|2013                      |   | 149,767 | 
|                          |   |         | 
|Total:                    | $ | 599,077 | 

- Long-term investments

F-11

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

Long-term investments represent cost and equity method
investments in the PRC. Equity method investments are recorded at original cost
and adjusted to recognize the Companys proportionate share of the investees
net income or losses and additional contributions made and distributions
received. The Company recognizes a loss if it is determined that other than
temporary decline in the value of the investment exists. The Company also
accounts for investments with ownership less than 20% using the cost method.

(a) Shenzhen Keungxi Technology Company Ltd. ("SKTC")

SKTC was incorporated in China in October 2005. Its business
scope includes, among others, sales and development of computer software, and
computer and communication systems. It also provides information system
consulting services. The Company, through Shenzhen Media, holds 48% of the
equity interest of SKTC and three individual shareholders, Wengao Luo, Xi Chen
and Bin Li own the remaining 21.5%, 21.5% and 9% equity interest of SKTC,
respectively and accounts for the investment using the equity method.

|Balance as of December 31, 2005 | $ | 78,555  |  
|------------------------------- | - | ------- | -
|Investment loss (48%)           |   | (41,835 | )
|Advances made to SKTC           |   | 166,031 |  
|Balance as of December 31, 2006 |   | 202,751 |  
|Investment loss (48%)           |   | (49,916 | )
|Advances made to SKTC           |   | 217,541 |  
|Balance as of December 31, 2007 |   | 370,376 |  
|Investment loss (48%)           |   | (47,908 | )
|Advances made to SKTC           |   | 22,123  |  
|Balance as of December 31, 2008 |   | 344,591 |  
|Investment loss (48%)           |   | (33,455 | )
|Advances made to SKTC           |   | 71,915  |  
|Balance as of December 31, 2009 | $ | 383,051 |  

(b) Shanghai Qiyu Information Technology Co., Limited (SQIT)

SQIT was incorporated in China in November 2007 and is mainly
engaged in the provision of network services. In January 2009, the Company,
through Shenzhen Media, holds 30% of the equity interest of SQIT and accounts
for the investment using the equity method.

|Balance as of January 1, 2009   | $ | 21,914  |  
|------------------------------- | - | ------- | -
|Investment loss (30%)           |   | (21,914 | )
|Balance as of December 31, 2009 | $ | -       |  

(c) Beijing Orient Converge Human Resources Management Center
Co. Ltd (BJOC)

BJOC was incorporated in China in October 2004 and is mainly
engaged in providing consultation, professional training and relevant sale and
marketing services to business enterprises in China. In November 2007, the
Company, through Shenzhen Media, held 52% of the equity interest of BJOC and
accounted for the investment in consolidation.

On August 2, 2008, the Companys subsidiary, Shenzhen Media,
sold 42% ownership of BJOC to Shanghai Cheng Mei Biotechnology Co., Ltd.
("Shanghai Cheng Mei") for a cash consideration of $141,831 (equivalent to RMB
987,461). As of December 31, 2009, the Company, through Shenxhen Media owns the
remaining 10% of BJOC amounting to $73,129 and records this investment using the
cost method.

F-12

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

- Non-controlling interest

Non-controlling interest represents non-controlling owners 49%
of equity in SZNT as of December 31, 2009.

- Revenue recognition

In accordance with ASC Topic 605, "Revenue Recognition",
the Company recognizes revenue when persuasive evidence of an arrangement
exists, transfer of title has occurred or services have been rendered, the
selling price is fixed or determinable and collectibility is reasonably assured.

(a) Magazine advertising

The Company publishes three issue magazines each month, (namely
Sale edition, Channel edition and Case edition) of "China Marketing" and other
special editions periodically, for example, "China Business & Trade" 
(Training edition).

The Company recognizes revenues for the advertising sales and
consulting service ratably over the periods when the customer's advertisements
are published and services are provided. Total revenue from the advertising
sales is $4,504,651 and $5,098,769 for the years ended December 31, 2009 and
2008, respectively. Total revenue from marketing consulting service is
$3,344,962 and $4,273,208 for the years ended December 31, 2009 and 2008,
respectively.

The Company recognizes revenue from the publishing of the above
magazines when the risks and rewards of ownership of the goods have transferred
to the customer, which is usually on delivery or when title passes. Total
revenue from the publishing business is $1,638,966 and $1,648,650 for the years
ended December 31, 2009 and 2008, respectively. Since the fourth quarter of
2008, the Company commenced the new business line of selling electronic products
on the internet portal www.ipinipin.com, which
attributed $15,411,781 and $2,059,579 of revenue for the years ended December
31, 2009 and 2008 respectively.

(b) Electronics trading

The Company derives the major revenues from the trading of
electronic products. The Company recognizes its revenues net of value-added
taxes (VAT) when the products are delivered to the customers, which occurs
when the customer has taken title and has assumed the risks and rewards of
ownership, prices are fixed or determinable and collectibility is reasonably
assured.

An analysis of the Companys revenues by products is as
follows:

|                             |   | Years ended December 31, | 
|---------------------------- | - | ------------------------ | 
|                             |   | 2009                     | 
|                             |   |                          | 
|Magazine advertising:        |   |                          | 
|Advertising pages sales      | $ | 4,504,651                | 
|Marketing consulting service |   | 3,344,962                | 
|Publishing                   |   | 1,638,966                | 
|                             |   | 9,488,579                | 
|Electronics trading          |   | 15,411,781               | 
|                             |   |                          | 
|Total revenue                | $ | 24,900,360               | 

F-13

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

- Cost of revenue

(a) Magazine advertising

Cost of revenue includes printing, labor costs and amortization
incurred by the Company in the production of its magazines. The Company records
the estimated cost of returned magazines at the date we delivered the magazines
to our vendors. Our sales are based on three main distribution channels
throughout China: (1) postal subscription base distribution; (2) direct order
distribution; and (3) agency base distribution.

First, postal subscription channel involves the distribution of
our magazines by Chinese post offices. Magazine subscribers can request their
subscriptions delivered from the post offices in China. Returns are not allowed
for magazines sold through postal subscription.

Second, order distribution involves requests made by a
subscriber to us for a single or multiple issues of magazines that do not
involve an ongoing subscription. Upon receipt of order requests and payment, we
deliver the ordered issues to the address requested by the subscriber. Returns
are not permitted for magazines sold through direct request subscription.

Third, agency distribution involves delivery of our magazines
to sales agents who in turn distribute the magazines to retail agents at various
locations throughout China. The Company granted sales agents a two-month return
privilege. Average return rate for the years ended December 31, 2009 and 2008
was 11% and 12.76%, respectively.

In accordance with the provisions of ASC Topic 605-15-25-1,
Sales of Product when Right of Return Exists (ASC 605-15-25-1), an
enterprise sells its product but gives the buyer the right to return the
product, revenue from the sales transaction shall be recognized at time of sale
only if all of the following conditions are met:

a. The seller's price to the buyer is substantially fixed or
determinable at the date of sale. b. The buyer has paid the seller, or the
buyer is obligated to pay the seller and the obligation is not contingent on
resale of the product. c. The buyer's obligation to the seller would not be
changed in the event of theft or physical destruction or damage of the product.
d. The buyer acquiring the product for resale has economic substance apart
from that provided by the seller. e. The seller does not have significant
obligations for future performance to directly bring about resale of the product
by the buyer. f. The amount of future returns can be reasonably estimated.

The Company recognizes magazine sales revenue in accordance
with the provisions of ASC 605-15-25-1: first, our price to the sales agent is
fixed; second, the sales agent has to pay us fully upon order request and the
payment is not contingent on resale of the magazines; third, the Company is not
responsible in the event of theft or physical destruction or damage of the
product after delivery; fourth, our sales agents include bookstores, reading
groups, and culture groups, etc.; fifth, the Company has no obligations to
resell the magazines distributed to sales agents; and finally, the amount of
returns can be reasonably estimated and are included in accrued liabilities.

(b) Electronics trading

Cost of revenue consists primarily of purchase cost of
electronics products, direct labor, depreciation and other overheads, which are
directly attributable to the sale of electronics products. Shipping and handling
cost, associated with the delivery of electronic products to the customers, are
recorded in cost of revenue and are recognized when the related product is
delivered to the customer.

- Advertising expenses

F-14

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

Advertising costs are expensed as incurred under ASC Topic
720-35, Advertising Costs. The Company incurred advertising cost of
$57,180 and $275,042 for the years ended December 31, 2009, and 2008.

- Earnings per share

Basic earnings per common share ("EPS") are calculated by
dividing net income by the weighted average number of common shares outstanding
during the year. Diluted EPS is calculated by adjusting the weighted average
outstanding shares, assuming conversion of all potentially dilutive securities,
such as stock options and warrants. The numerators and denominators used in the
computations of basic EPS are presented in the following table:

|                                                                                                                    |   | Years ended December 31, | 
|------------------------------------------------------------------------------------------------------------------- | - | ------------------------ | 
|                                                                                                                    |   | 2009                     | 
|Numerator for basic and diluted EPS                                                                                 |   |                          | 
|Income from continuing operations attributable to China
         Marketing Media Holdings, Inc. common stockholders | $ | 1,505,774                | 
|Discontinued operations attributable to
      China Marketing Media    Holdings, Inc. common stockholders           |   | -                        | 
|Net income attributable to China Marketing Media Holdings,
         Inc. common stockholders                        | $ | 1,505,774                | 
|                                                                                                                    |   |                          | 
|Denominator for basic and diluted EPS                                                                               |   |                          | 
|- Weighted average shares of common stock
      outstanding                                                         |   | 28,686,002               | 
|                                                                                                                    |   |                          | 
|Earnings per share  basic and diluted                                                                              |   |                          | 
|Income from continuing operations attributable to China
         Marketing Media Holdings, Inc. common stockholders | $ | 0.05                     | 
|Discontinued operations attributable to
      China Marketing Media    Holdings, Inc. common stockholders           | $ | -                        | 
|Net income attributable to China Marketing Media Holdings,
         Inc. common stockholders                        | $ | 0.05                     | 

- Foreign currency translation and comprehensive income

The accompanying financial statements are presented in United
States Dollars (US$). The functional currency is the Renminbi ("RMB") of the
PRC. The financial statements are translated into US dollars from RMB at
year-end exchange rates for assets and liabilities, and weighted average
exchange rates for revenues and expenses. Capital accounts are translated at
their historical exchange rates when the capital transactions occurred.

On July 21, 2005, the PRC changed its foreign currency exchange
policy from a fixed RMB/US$ exchange rate into a flexible rate under the control
of the PRC's government. The Company uses the Closing Rate Method in currency
translation of the financial statements of the company.

RMB is not freely convertible into the currency of other
nations. All such exchange transactions must take place through authorized
institutions. There is no guarantee the RMB amounts could have been, or could
be, converted into US$ at rates used in translation.

- Income taxes

The Company adopted ASC Topic 740, Income Taxes
regarding accounting for uncertainty in income taxes, which prescribes the
recognition threshold and measurement attributes for financial statement
recognition and measurement of tax positions taken or expected to be taken on a
tax return. In addition, the guidance requires the determination of whether the
benefits of tax positions will be more likely than not sustained upon audit
based upon the technical merits of the tax position. For tax positions that are
determined to be more likely than not sustained upon audit, a company recognizes
the largest amount of benefit that is greater than 50% likely of being realized
upon ultimate settlement in the financial statements. For tax positions that are
not determined to be more likely than not sustained upon audit, a company does
not recognize any portion of the benefit in the financial statements. The
guidance provides for de-recognition, classification, penalties and interest,
accounting in interim periods and disclosure.

F-15

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

The Company has recorded no deferred tax assets as of December
31, 2009 and 2008, respectively. For the years ended December 31, 2009 and 2008,
the Company did not have any interest and penalties associated with tax
positions. As of December 31, 2009, the Company did not have any significant
unrecognized uncertain tax positions.

The Company conducts major businesses in the PRC and is subject
to tax in this jurisdiction. As a result of its business activities, the Company
files tax returns that are subject to examination by the foreign tax authority.

- Retirement plan costs

Contributions to retirement schemes (which are defined
contribution plans) are charged to general and administrative expenses in the
consolidated statements of operation and comprehensive income as and when the
related employee service is provided.

- Related parties

Parties, which can be a corporation or individual, are
considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other
party in making financial and operating decisions. Companies are also considered
to be related if they are subject to common control or common significant
influence.

- Segment reporting

ASC Topic 280, Segment Reporting establishes standards
for reporting information about operating segments on a basis consistent with
the Companys internal organization structure as well as information about
geographical areas, business segments and major customers in the financial
statements. The Company currently operates in a single reportable business
segment in the PRC.

- Fair value measurement

ASC Topic 820, Fair Value Measurements and Disclosures
("ASC 820") establishes a new framework for measuring fair value and expands
related disclosures. Broadly, ASC 820 framework requires fair value to be
determined based on the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants. ASC 820 establishes a three-level valuation hierarchy based
upon observable and non-observable inputs. These tiers include: Level 1, defined
as observable inputs such as quoted prices in active markets; Level 2, defined
as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to develop its
own assumptions.

For financial assets and liabilities, fair value is the price
the Company would receive to sell an asset or pay to transfer a liability in an
orderly transaction with a market participant at the measurement date. In the
absence of active markets for the identical assets or liabilities, such
measurements involve developing assumptions based on market observable data and,
in the absence of such data, internal information that is consistent with what
market participants would use in a hypothetical transaction that occurs at the
measurement date.

F-16

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

- Financial instruments

The carrying value of the Companys financial instruments
include cash and cash equivalents, accounts receivable, prepaid expense, other
receivables, accounts payable, accrued expenses and levies, deferred revenues,
taxes payable and other payables. Fair values were assumed to approximate
carrying values for these financial instruments because they are short term in
nature and their carrying amounts approximate fair values.

- Restrictions on transfer of assets out of the PRC

Dividend payments by Shenzhen New Media and its direct and
indirect subsidiary are limited by certain statutory regulations in the PRC. No
dividends may be paid by Shenzhen New Media without first receiving prior
approval from the State Administration of Foreign Exchange or its local offices.
Dividend payments are restricted to 85% of profits, after tax.

- Reclassification

Certain amounts in the prior year have been reclassified to
conform to the current year's presentation.

3. INVESTMENT DEPOSIT

On December 13, 2007, Shenzhen New Media entered into an
Operating and Management Agreement with Shanghai Longcom Telecom Co. Ltd.
("Longcom") for an acquisition of 100% operation rights in Shanghai Longcom.
Shenzhen New Media paid RMB 40,000,000 (approximately $5,967,143) as a purchase
deposit. Longcom is engaged in online direct marketing, distribution, B2C
(business to consumer) e-commerce, IT retail and 3 C (computer, communication
and consumer products) retail sales model by cooperating with mainstream
products OEM / ODM manufacturers.

On December 5, 2008, Shenzhen New Media and Longcom mutually
agreed to terminate the agreement and the investment deposit was fully refunded
in March 2009. The agreement was terminated as Longcom was not able to achieve
its after-tax net income for the fiscal year ending December 31, 2008 as
promised.

4. LOANS RECEIVABLE FROM MAJOR SALES AGENTS

The Company had loans receivable amounting to $0 and $716,072
as of December 31, 2009 and 2008, respectively. Loans were provided to the
Company's major sales agents. The loans are unsecured, and bear no interest.
These loans have no fixed payment schedule and are due on demand.

Approximately 64% of the Company's magazine and advertising
sales are generated from its four major sales agents in the PRC. The
representatives of these sales agents solicited advertising from the general
public in their respective designated geographic territories. The Company's
magazines are believed to be well established and recognized by the general
public. In this regard, management believes no severe impact on the Companys
sales would result if any of the sales agents were lost.

5. PREPAID EXPENSES

F-17

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

Prepaid expenses consist primarily of prepayments made to an
unrelated company in advance for future financial and legal consultation
services. As of December 31, 2009 and 2008, prepaid balance under these
arrangements totaled $578,652 and $110,525, respectively.

6. RELATED PARTY TRANSACTIONS WITH AN AFFILIATE

Sale and Marketing Publishing House ("CMO"), an affiliate owned
by the PRC government, is controlled and directed by a common director and major
shareholder of the Company. CMO is not a direct or indirect subsidiary of the
Company. Transactions with CMO are listed as follows:

Operation and Management Right Agreement

On October 23, 2003, Shenzhen Media entered into a 10-year
agreement with CMO. The agreement calls for the payment of $1,220,930 to CMO in
exchange for a right to oversee the operation and strategic planning of
advertising, publishing, and staff training for the magazines that are published
by CMO. Under this agreement, Shenzhen Media is entitled to collect advertising
revenues from customers already existing at the time of the contract, in
addition to any new clients that Shenzhen Media can solicit and develop.
Shenzhen Media shall bear all the operating costs and receive all the revenues
from the contracted businesses.

As of December 31, 2009 and 2008, related party receivables
represented loans receivable from CMO totaling $2,685,944 and $1,960,166, which
are unsecured, and bear no interest. These loans have no fixed repayment
schedule and are receivable on demand.

7. RELATED PARTY RECEIVABLES

As of December 31, 2009 and 2008, related party receivables
represented temporary advances totaling $354,063 and $411,040, which are
unsecured, and bear no interest. These related party receivables have no fixed
repayment schedule and are receivable on demand.

8. LOAN RECEIVABLE

On September 24, 2009, the Company, through Shenzhen New Media,
entered into a loan and investment option agreement (the Agreement) with
Beijing Kang Pusen Management Consultants Co., Ltd (Kang Pusen). Kang Pusen is
mainly engaged in sales training services in the PRC.

Under the Agreement, the Company provides a loan advance of
$1,170,070 (equivalent to RMB8,000,000) to Kang Pusen, which is non-interest
bearing, secured by 100% equity interest of Kang Pusen and repayable by cash in
full or conversion to equity, subject to the fulfillment of performance
requirements in 2010 results. Based on the agreed conditions, when Kang Pusen
achieves its revenue up to RMB10 million before May 2010, the loan advances at
the discretion of the Company may be converted into common stock at the
conversion price equal to 20% ownership in Kang Pusen. Additionally, when Kang
Pusen achieves 2010 full years performance milestone, whereas annual revenue is
RMB30 million and net income is RMB12 million, together with the profit
commitment of not less than 30% annual growth in the next three years, the
Company may agree to increase its equity interest in Kang Pusen up to 45%-55%,
at the conversion price of not exceeding 6 times of its earnings per share. The
note will automatically mature on December 24, 2010 in full repayment, given
that the Company elects not to exercise the conversion option.

As of December 31, 2009, the loan balance amounted to
$1,170,070.

F-18

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

9. INCOME TAXES

United States

The Company was incorporated in the United States of America
and is subject to U.S. tax law. No provisions for income taxes have been made as
the Company has no U. S. taxable income for the years presented. The applicable
income tax rates for the Company for the years ended December 31, 2009 and 2008
are 34%.

British Virgin Islands

The Companys subsidiary, Media Challenge was incorporated in
the British Virgin Islands and is not subject to income taxes under the current
laws of the British Virgin Islands.

PRC

The Companys subsidiaries in the PRC are currently subject to
income taxes according to applicable tax laws in the PRC. The tax rates are 15%
for NMA, 15% for Shenzhen New Media and Shenzhen Media and 0% for CMO. The
provision for income taxes for the years ended December 31, 2009 and 2008 was
$27,328 and $451,027, respectively.

Pursuant to the laws and regulations in the PRC, NMA, as a
wholly-foreign-owned enterprise ("WFOE") in the PRC, is entitled to an exemption
from the PRC enterprise income tax for two years commencing from its first
profitable year in 2006. NMA accounts for most of the revenue during the periods
presented. Other subsidiaries income tax rates range from 0% to 25%.

(a) The provision for income taxes consists of the following:

|             |   | Years ended December 31, | 
|------------ | - | ------------------------ | 
|             |   | 2009                     | 
|PRC:         |   |                          | 
|Current tax  | $ | 27,328                   | 
|Deferred tax |   | -                        | 
|             |   |                          | 
|             | $ | 27,328                   | 

The amount represents the difference of the provision for PRC
enterprise income tax calculated at the subsidiarys statutory income tax rate
of 15%.

(b) Deferred tax

No provision for deferred tax assets or liabilities has been
made, since the Company had no material temporary differences between the tax
bases of assets and liabilities and their carrying amounts.

10. CONCENTRATIONS AND RISK

The Company is exposed to the following concentrations of risk:

As discussed in Note 6, the Company's operations are conducted
through an agreement with CMO, a company owned by the PRC government. The
revenues are generated through production of the magazines owned by CMO.

F-19

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CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

The current contract will terminate in 2013, and it is unknown
whether the contract will be renewed. A change in the political climate in the
PRC could also have a material adverse effect on the Company's business.

(a) Major customers

For the year ended December 31, 2009, one customer represents
more than 10% of the Companys purchases. This customer accounts for 10% of the
Companys revenues amounting to $2,560,948, with $490,441 of accounts
receivables.

For the year ended December 31, 2008, there is no customer who
accounts for 10% or more of revenues.

(b) Major vendors

For the years ended December 31, 2009 and 2008, there is no
vendor who accounts for 10% or more of purchases.

(c) Major distribution agents for the publishing business

For the years ended December 31, 2009 and 2008, approximately
26% and 64% of the Companys sales are generated from its 4 major sales agents
in the PRC, respectively. The representatives solicited advertising from the
general public in their designated geographic territory.

The Companys magazines are believed to be well established and
recognized by the general public. In this regard, management believes no severe
impact would occur on the Companys sales if any of the distributing agents were
lost.

(d) Economic and political risks

The Company faces a number of risks and challenges as a result
of having primary operations and marketing in the PRC. Changing political
climates in the PRC could have a significant effect on the Company's business.

(e) Control by principal stockholders

The directors, executive officers and their affiliates or
related parties own, beneficially and in the aggregate, the majority of the
voting power of the outstanding shares of the common stock of the Company.
Accordingly, the directors, executive officers and their affiliates, if they
voted their shares uniformly, would have the ability to control the approval of
most corporate actions, including increasing the authorized capital stock of the
Company and the dissolution, merger or sale of the Company's assets.

11. COMMITMENTS AND CONTINGENCIES

(a) Operating lease commitments

The Company leases various office spaces under non-cancelable
operating agreements in a term ranging from 1 to 4 years, with fixed monthly
rentals, expiring between December 2010 and December 2014. Costs incurred under
these operating leases are recorded as rent expense and totaled approximately
$359,880 and $386,055 for the years ended December 31, 2009 and 2008.

As of December 31, 2009, future minimum rent payments due under
various non-cancelable operating leases in next three years are as follows:

F-20

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CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER, 2009
AND 2008 (Currency expressed in United States Dollars (US$))

|Years ending December 31: |   |         | 
|------------------------- | - | ------- | 
|2010                      | $ | 240,065 | 
|2011                      |   | 230,284 | 
|2012                      |   | 165,229 | 
|                          |   |         | 
|Total:                    | $ | 635,578 | 

(b) Contingencies

The Company has not, historically, carried any property or
casualty insurance. No amounts have been accrued for any liability that could
arise from the lack of insurance. Management feels the chances of such an
obligation arising are remote.

12. RECENT ACCOUNTING PRONOUNCEMENTS

The Company has reviewed all recently issued, but not yet
effective, accounting pronouncements and does not believe the future adoption of
any such pronouncements may be expected to cause a material impact on its
financial condition or the results of its operations.

In September 2009, Accounting Standards Codification (ASC)
became the source of authoritative U.S. GAAP recognized by the Financial
Accounting Standards Board (FASB) for nongovernmental entities, except for
certain FASB Statements not yet incorporated into ASC. Rules and interpretive
releases of the SEC under federal securities laws are also sources of
authoritative U.S. GAAP for registrants. The discussion below includes the
applicable ASC reference.

In June 2009, the FASB finalized SFAS No. 167, Amending
FASB interpretation No. 46(R), which was included in ASC Topic 810-10-05
Variable Interest Entities. The provisions of ASC Topic 810-10-05 amend
the definition of the primary beneficiary of a variable interest entity and will
require the Company to make an assessment each reporting period of its variable
interests. The provisions of this pronouncement are effective January 1, 2010.
The Company is evaluating the impact of the statement on its financial
statements.

In October 2009, the FASB issued Accounting Standards Update
(ASU) No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable
Revenue Arrangements (a consensus of the FASB Emerging Issues Task Force)
which amends ASC 605-25, Revenue Recognition: Multiple-Element
Arrangements. ASU No. 2009-13 addresses how to determine whether an
arrangement involving multiple deliverables contains more than one unit of
accounting and how to allocate consideration to each unit of accounting in the
arrangement. This ASU replaces all references to fair value as the measurement
criteria with the term selling price and establishes a hierarchy for determining
the selling price of a deliverable. ASU No. 2009-13 also eliminates the use of
the residual value method for determining the allocation of arrangement
consideration. Additionally, ASU No. 2009-13 requires expanded disclosures. This
ASU will become effective for us for revenue arrangements entered into or
materially modified on or after April 1, 2011. Earlier application is permitted
with required transition disclosures based on the period of adoption. The
Company is currently evaluating the application date and the impact of this
standard on its financial statements.

F-21

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