UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

x

OR

o

Commission File Number: 000-51806

CHINA MARKETING MEDIA HOLDINGS, INC.

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

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 o                   
No x

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 o                   
No x

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

Yes x                   
No o

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K 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, or a
non-accelerated filer. See definition of "large accelerated filer," "accelerated
filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer o           
Accelerated filer o           
Non-accelerated filer o           
Smaller reporting company x

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o                   
No x

As of June 30, 2008, 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 $0.72 million. Shares of the
Registrants common stock held by each executive officer and director and each
by each person who owns 10 percent or more of the outstanding common stock have
been excluded 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.

As of April 14, 2009, there were
28,686,002 shares of the Registrants common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

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|CHINA MARKETING MEDIA
      HOLDINGS, INC.       
|-------------------------------------------------
|FORM
      10-K                                  
|For the Fiscal Year Ended
      December 31, 2008
|Number                                           
|PART I                                           
|Item 1.                                          
|                                                 
|Item 2.                                          
|Item 3.                                          
|Item 4.                                          
|PART II                                          
|Item 5.                                          
|Item 6.                                          
|Item 7.                                          
|Item 8.                                          
|Item 9.                                          
|                                                 
|                                                 
|PART III                                         
|Item 10.                                         
|Item 11.                                         
|Item 12.                                         
|Item 13.                                         
|Item 14.                                         
|PART IV                                          
|Item 15.                                         

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INTRODUCTORY NOTE

Except as otherwise indicated by the context, references to we, us, our, or the Company are to China Marketing Media Holdings, Inc. and its subsidiaries. References to Media
Challenge are references to Media Challenge Holdings Limited, a British Virgin Islands company. Unless the context otherwise requires, all references to (i) Shenzhen New Media are to Shenzhen New Media Consulting Co., Ltd.; (ii)
Shenzhen Media are to Shenzhen Media Investment Co., Ltd.; (iii) BVI are to the British Virgin Islands; (iv) PRC and China are to the Peoples Republic of China; (v) U.S. dollar,
$ and US$ are to United States dollars; (vi) RMB are to Renminbi, the legal currency of China; (vii) Securities Act are to the United States Securities Act of 1933, as amended; and (viii)
Exchange Act are to the United States Securities Exchange Act of 1934, as amended. Effective January 25, 2006, we implemented a 1-for-10 reverse stock split in issued and outstanding shares of our common stock which
reduced the number of our issued and outstanding shares from 47,780,000 to 4,778,000 shares. Unless otherwise indicated, all share and per share information contained herein has been adjusted to give effect to such reverse stock split.

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.



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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 selling
electronic products. All of our operations, assets, personnel, officers and
directors are located in China. Currently, we publishChina Marketing(Xiao Shou Yu Shi Chang) magazine
in China. We publish three issues ofChina
Marketingper month, including a sales edition, case
edition and channel edition. From June 2003 through December 2006, we published
one issue ofChina Business & Trademagazine per month, which was the training edition.

|China Marketing-Sales edition           | China Marketing-Case edition | China Marketing-Channel edition
|--------------------------------------- | ---------------------------- | -------------------------------
|                                        |                              |                                
|                                        |                              |                                
|                                        |                              |                                
|China Business & Trade-Training edition |                              |                                
|                                        |                              |                                
|                                        |                              |                                

Our magazines are Chinese publications tailored to
the sales and marketing industry. The magazines were originally published by
Sale and Marketing Publishing House, or 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.

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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 ofChina 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.

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 toShanghai 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. The management believes that engaging in online business is beneficial and suitable for small business like us as it requires significantly lower capital outlay compared with traditional 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 URLwww.cmmo.com.cnfor 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.

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On December 31, 2005, we entered into a share exchange agreement with Media Challenge, a BVI corporation, 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.

The following chart reflects our organizational structure as of the date of this report.



--------------------------------------------------------- 
(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.

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(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 Marketingwas
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 ofChina Business &
Tradewas published. In January 2007, we decided to stop
publishingChina Business & Tradeby combining the content ofChina Business &
Tradeinto the Case edition ofChina Marketing.

The dimension ofChina
Marketingis 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 ofChina
Marketingfocuses 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.

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.

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Under these outsourcing agreements, the paper cost accounts for a large proportion of the quoted price. The printing price equals 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.

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 of Electronic Products

In July 2008, we began our new business of online marketing and sales of electronic products. These products currently consist of notebook computer hardware. We procure all of the notebook computers that we sell from the sales agents of
ASUSTek Computer Inc (华硕电脑) and resell them to consumers in China through our subsidiary Shenzhen Media. The two largest suppliers of our goods are Shanghai Hua Jie United Information Co. Ltd. and
Digital China Holding Limited Beijing Office.

We currently sell our computer products through our websitewww.ipinipin.com, on which we offer a complete line of our computer hardware 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.

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.             

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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, 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%) . As of December 31, 2007, the annual circulation of our
magazines during the 2007 fiscal year, was 3,557,139 units, among which,
approximately 63% of sales were made through retail agents such as newsstands,
airports, subways and bookstores throughout China. The remaining 37% of our
sales were through postal subscriptions 32% and direct orders 5%.

The following table lists the annual circulation
of our magazines during the fiscal year ended December 31, 2008:

|                                   |  | China Marketing |  |  | China Marketing |  |  | China Marketing   |  |  |           | 
|---------------------------------- |  | --------------- |  |  | --------------- |  |  | ----------------- |  |  | --------- | 
|                                   |  | (Sales edition) |  |  | (Case edition)  |  |  | (Channel edition) |  |  | Total     | 
|Distribution agents                |  | 502,934         |  |  | 345,065         |  |  | 501,200           |  |  | 1,349,199 | 
|Subscriptions through post offices |  | 337,965         |  |  | 339,613         |  |  | 341,238           |  |  | 1,018,816 | 
|Direct subscriptions               |  | 95,517          |  |  | 196,277         |  |  | 68,454            |  |  | 360,248   | 
|Total                              |  | 936,416         |  |  | 880,955         |  |  | 910,892           |  |  | 2,728,263 | 

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

|Names of Distribution Agents                          | Distribution Area   
|----------------------------------------------------- | --------------------
|Guangzhou Qiankuntai
      Bookstore                  | Guangzhou           
|Huadao Consulting Co., Ltd.                           | China               
|Nanjing Cultural Development
      Co., Ltd.          | Nanjing             
|Shandong Qianyan Culture Dissemination Co.,
      Ltd | Shangdong Province  
|Zhengzhou Huanghe Culture
      Group                 | Henan
      Province
|Changsha Youyou Reading Group                         | Hunan Province      
|Hangzhou Tianyi Books Co.,
      Ltd                  | Hangzhou            

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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 to 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 ofChina Marketingis RMB 7.5 per issue (approximately $1.12) and the fixed retail price of the Case edition ofChina Marketingis RMB 10 per issue (approximately $1.45) . Subscribers who subscribe to our magazines directly pay this same fixed retail price per issue on an issue by issue basis.

The subscription price paid for all editions ofChina Marketingby those subscribers who subscribe through post offices in China is RMB 7.5 per issue (approximately $1.12) . 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,andFortuneare
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.

Our local competition consists of three sub-titles, namelyNew Selling,Successful Selling, andContemporary
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 asBusiness Week,Harvard Business Review,Forbesand

Fortuneand our local competitors, such asNew Selling,Successful SellingandContemporary
Selling. We also believe that the quality and design features of our magazines are superior to the quality and design features ofNew Selling,Successful
SellingandContemporary Sellingbut 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 forChina Marketing. In
addition, CMO has obtained international standard code forChina 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 ourwww.cmmo.com.cnInternet 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.

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Our Employees

We currently have 123 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
      EmployeesManagement
    
    7Accounting Department
    
    6Administration
    
    10Brand Name Consulting
    
    18Customer Service
    
    18Design Department
    
    22Research Department
    
    3Sales Department
    
    6Issuing Department
    
    10Commercial Advertisement Department
    
    2Website Technology
      Department
    
    5Training Department
    
    6Partnership Advertisement
      Department
    
    6Video
      Center
    
    4Total
    
    123


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 Chinese subsidiaries have trade unions which
protect employees rights, aim to assist in the fulfillment of our economic
objectives, encourage employee participation in management decisions and assist
in mediating disputes between us and union members.

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 $55.58 for each of our employees and approximately $61.5 for each
of our executive officers and directors. The compensation expenses related to
this scheme were approximately $129,441 and $126,414 for the fiscal years 2008
and 2007, 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.

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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.

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.

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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.

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.

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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.

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 and 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.

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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 deficiencies 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, 2008, 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.

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.

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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.

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.

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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.

RISKS RELATED TO THE MARKET FOR OUR STOCK

Our common stock is quoted on the Pink Sheets which may have an unfavorable impact on our stock price and liquidity.

Our common stock is currently quoted on the Pink Sheets and we plan to take action to have our common stock quoted on the OTC Bulletin Board. The Pink Sheets and the OTC Bulletin Board are significantly more limited markets than the New
York Stock Exchange or Nasdaq system. The quotation of our shares on the Pink Sheets or the OTC 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 13, 2009, the closing price for our common stock was $0.02 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.

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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 approximately 80% of our outstanding voting securities. They own 34.71%, 23.52% and 21.28% 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

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.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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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 pink sheets
under the symbol CMKM. The CUSIP number is 169411105. Prior to February 10,
2006, our stock symbol was IFLF. 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,
      2008 |   |                             | 
|First Quarter                      | $ | 0.28                        | 
|Second Quarter                     | $ | 0.15                        | 
|Third Quarter                      | $ | 0.15                        | 
|Fourth Quarter                     | $ | 0.15                        | 
|                                   |   |                             | 
|Year Ended December 31,
      2007 |   |                             | 
|First Quarter                      | $ | 0.25                        | 
|Second Quarter                     | $ | 0.25                        | 
|Third Quarter                      | $ | 2.00                        | 
|Fourth Quarter                     | $ | 0.32                        | 

________________________

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

Approximate Number of Holders of Our Common
Stock

As of April 13, 2009, there were approximately 30
stockholders of record of our common stock.

Dividends

In January 2006, our three directors, Yingsheng
Li, Xiaofeng Ding and Dongsheng Ren authorized the payment to themselves in the
aggregate amount of $972,754; the payments were originally characterized as a
dividend. Of the total $972,754 declared, $672,592 was paid during 2006. In July
2007, when the directors realized that the amounts paid were not properly
characterized, the board cancelled the remaining payments and recharacterized
the 2006 payments as compensation paid in 2006 for services as
directors.

Any future decisions regarding dividends will be
made by the board of directors of the company. The Company currently intends 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.

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Recent Sales of Unregistered Securities

On November 5, 2008, we entered into consulting agreements, or Consulting Agreements, with several people, or the Consultants. Each of the Consultants has been engaged to provide consulting services to the Company including, but not
limited to, services regarding the Companys business operations, compliance with SEC regulations, and identification and negotiation with potential investors. Pursuant to the Consulting Agreements, we issued an aggregate of 1,100,000 shares to
the Consultants and their designees in consideration for the services that they agreed to provide to us. The foregoing securities were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act for the offer
and sale of securities not involving a public offering.

ITEM 6.     SELECTED FINANCIAL DATA

Not applicable.

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

Overview

The following analysis discusses changes in the financial condition and results of operations for the periods covered and should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere
in this document.

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 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. During the fiscal year ended December 31, 2007, we generated $1,388,547 in revenues from the sale of our magazines, $6,047,678 in revenues from the sale of advertising space in these magazines and
$2,299,616 in revenues from providing consulting services.

On October 10, 2006, our wholly-owned subsidiary Shenzhen New Media entered into an equity transfer agreement or Equity Transfer Agreement with Yutong Zhu, the sole owner of Shenzhen Caina Brand Consultant Company or Shenzhen Caina,
pursuant to which Shenzhen New Media agreed to purchase 100% ownership of Shenzhen Caina from Mr. Zhu. Incorporated in the PRC, Shenzhen Caina engages in the business of advertisement design, brand, sales and marketing consulting and other related
services.

Under the Equity Transfer Agreement, Shenzhen New Media had the obligation to pay RMB 8 million (approximately $1.03 million) to Mr. Zhu within 30 business days following the date of execution of this agreement. Shenzhen New Media
paid RMB 8 million to Mr. Zhu on November 24, 2006. The acquisition of Shenzhen Caina was completed in March 2007. A copy of the Equity Transfer Agreement has been filed as Exhibit 10.5 to our annual report on Form 10-KSB on April 17,
2007.

On December 13, 2007, Shenzhen New Media entered into an operation and management agreement, or the Shanghai Longcom Agreement, with Shanghai Longcom Telecom Co., Ltd., or Shanghai Longcom, a company incorporated in the PRC, pursuant to
which from March 2008 to March 2009, Shenzhen New Media has exclusive rights to operate and manage the business of Shanghai Longcom. Shenzhen New Media paid RMB 40,000,000 (approximately $5.48 million) to Shanghai Longcom as a deposit in
exchange for such operation and management rights over the business of Shanghai Longcom. Under the Shanghai Longcom Agreement, Shenzhen New Media is also expected to acquire 100% equity interests in Shanghai Longcom by the end of 2009. Both parties
agreed that the purchase price of acquisition shall be adjusted based on the actual operating results of Shanghai Longcom. Shanghai Longcom is engaged in the business of online direct marketing, distribution, B2C e-commerce, IT retail and 3 C retail
sales model by cooperating with mainstream products OEM/ODM manufacturers. A copy of the Shanghai Longcom Agreement has been filed as Exhibit 10.20 to our annual report on Form 10-KSB on April 18, 2008.

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In July 2008, we began our new business of online
marketing and sales of electronic products. This new business generated
$2,059,579 in revenue in 2008, which constitutes 15.75% of total revenues that
we generated in 2008. 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. According to the press release
issued by ZenithOptimedia on ZenithOptimedias April 2006 Advertising
Expenditure Forecasts, advertising spending in China is expected to increase by
$6.44 billion from 2005 to 2008 with a growth rate of 66% over the three-year
forecast period. In 2008, China would become the 5thlargest advertisement market in the world
while it was the 7thlargest
advertisement market in the world in 2005. 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 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 the business of online sale,
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

Fiscal Year Ended December 31, 2008 Compared
with Fiscal Year Ended December 31, 2007

The following table summarizes the results of our
operations during the fiscal years ended December 31, 2008 and 2007. It provides
information regarding the dollar and percentage increase or (decrease) from 2007
fiscal year to 2008 fiscal year:

|                                      |   | Year Ended December
      31, |  |   |           |  |   |             |  
|------------------------------------- | - | ----------------------------- |  | - | --------- |  | - | ----------- | -
|Item                                  |   | 2008                          |  |   | 2007      |  |   | Increase    |  
|                                      |   |                               |  |   |           |  |   | (Decrease)  |  
|Revenue                               | $ | 13,080,206                    |  | $ | 9,735,841 |  | $ | 3,344,365   |  
|Cost of Sales                         | $ | 5,145,952                     |  | $ | 3,331,653 |  | $ | 1,814,299   |  
|Gross Profit                          | $ | 7,934,254                     |  | $ | 6,404,188 |  | $ | 1,530,066   |  
|Operating Expenses                    | $ | 5,970,141                     |  | $ | 3,400,696 |  | $ | 2,569,445   |  
|Other Income (Expense)                | $ | 80,377                        |  | $ | 13,426    |  | $ | 66,951      |  
|Provision for Taxes                   | $ | 451,027                       |  | $ | 35,896    |  | $ | 415,131     |  
|Net income from Continuing Operations | $ | 1,630,402                     |  | $ | 3,027,976 |  |   | ($1,397,574 | )

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Revenue

Our revenues in fiscal year 2008 amounted to
$13,080,206, which is approximately $3.3 million or 34.4% more than that of
fiscal year 2007, when we had revenues of $9,735,841. Compared to 2007, our
revenues attributable to sales of magazines increased by $260,103 in 2008,
advertising revenues in 2008 decreased by $948,909 as compared to 2007,
consulting services revenue in 2008 increased by $1,973,592 in 2008 and revenue
attributable to selling electronic products online increased by $2,059,579
compared to 2007. The increase in revenues during 2008 is mainly due to an
expansion of our consulting service and our new business of online sale of
electronic products, which began in July 2008.

Components of Revenues

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

|Revenue Category    |   | 2008       |  |   | 2007      |  |   | Increase   |   |  | % Increase   |  
|------------------- | - | ---------- |  | - | --------- |  | - | ---------- | - |  | ------------ | -
|                    |   |            |  |   |           |  |   | (Decrease) |   |  | (% Decrease) |  
|Magazine Sales      | $ | 1,648,650  |  | $ | 1,388,547 |  | $ | 260,103    |   |  | 18.7%        |  
|Advertising Sales   | $ | 5,098,769  |  | $ | 6,047,678 |  |   | ($948,909  | ) |  | (15.7%       | )
|Consulting Services | $ | 4,273,208  |  | $ | 2,299,616 |  | $ | 1,973,592  |   |  | 85.8%        |  
|Electronic Products | $ | 2,059,579  |  |   | 0         |  | $ | 2,059,579  |   |  | 100%         |  
|Total               | $ | 13,080,206 |  | $ | 9,735,841 |  | $ | 3,344,365  |   |  | 34.4%        |  

Cost of Sales

Our cost of sales in fiscal years 2008 and 2007
was $5,145,952 and $3,331,653, respectively, which accounts for approximately
39.3% and 34.2%, 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 5.1% in 2008 as
compared with 2007, which is mainly attributable to the change of product mix,
where lower margin products such as electronic products accounted for a higher
percentage of our revenues.

Expenses

Our expenses consist of payroll and other general
and administrative expense. Payroll expense was $2,328,513 in the 2008 fiscal
year compared to $1,423,251 in the 2007 fiscal year. The increase in payroll
expense is mainly due to more employees hired for the commencement of new
business of selling electronic products and the expansion of operations of our
subsidiary, Shanghai Zhiduo Network Technology Company Limited.

Our other general and administrative expenses were
$2,693,377 (20.6% of total sales) and $1,402,289 (14.4% of total sales) in
fiscal years 2008 and 2007, respectively. The increase of other general and
administrative expenses is mainly due to the increase of other general and
administrative expenses of our subsidiary, Shenzhen Caina Brand Consultant
Company, which had a full year operation as our subsidiary in year 2008 compared
to only nine months in year 2007. In addition, start up cost of the new business
of online sales of electronic products and the expansion of operations of
Shanghai Zhiduo Network Technology Company Limited also contributed to the
increase of other general and administrative expenses in year 2008.

20

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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. 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 the Company 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.

The Company is 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.

We incurred income taxes of $451,207 and $35,896 in 2008 and 2007, respectively or an increase of 1,156.5% . We paid more tax in 2008 because the increase of revenue generated from our consulting services and online sales of
electronic products.

21

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Net income from continuing operations (profit after taxes)

We earned net income of $1,630,402 in fiscal year
2008. This is a decrease of $1,397,574, or approximately 46.2% from fiscal year
2007 net income of $3,027,976. The decrease in our 2008 net income was mainly
due to the increase of cost of sales and operating expenses in 2008.

Liquidity and Capital Resources

As of December 31, 2008, we had cash and cash
equivalents of $2,161,227. 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,             |  
|                                                          |   | 2008                     |  
|Net cash provided by operating
      activities           | $ | 1,598,233                |  
|Net cash (used in) investing activities                   |   | (348,024                 | )
|Net cash provided by (used in)
      financing activities |   | (758,712                 | )
|Net cash inflow / Outflow                                 |   | 612,625                  |  

Operating Activities:

Net cash provided by operating activities was
approximately $1.60 million in fiscal year ended December 31, 2008, which is a
decrease of approximately $2.55 million from approximately $4.15 million net
cash provided by operating activities in fiscal year ended December 31, 2007.
Such decrease of net cash provided by operating activities was primarily
attributable to less net income generated from continuing operations in year
2008.

Investing Activities:

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

Net cash used in investing activities was
approximately $0.35 million in fiscal year 2008, a decrease of approximately
$4.52 million from approximately $4.87 million net cash used in investing
activities in fiscal year 2007. Such decrease of net cash used in investing
activities was primarily attributable to about $5.35 million more used in
deposit from investment in subsidiary in year 2007 compared with
2008.

Financing Activities

Net cash used in financing activities for the
fiscal year ended December 31, 2008 was approximately $0.76 million as compared
to approximately $3.28 million used in financing activities in fiscal year 2007.
The decrease of the net cash used in financing activities was mainly
attributable to about $3.1 million more used in repayment to affiliate in
2007.

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.

22

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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 a
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
2008, the value of RMB against US dollars appreciated by 6.5%, from RMB 8.1/ $1
to RMB 8.63/ $1.

Critical Accounting Policies

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 RecognitionWe
recognize magazine sales revenue in accordance with the provisions of SFAS 48,
"Criteria for Recognizing Revenue When Right of Return
Exists,"which states that if 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.

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|(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.

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 do 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 2006, the FASB issued SFAS No.
157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles ("GAAP"), and
expands disclosures about fair value measurements. This statement applies under
other accounting pronouncements that require or permit fair value measurement
where the FASB has previously determined that under those pronouncements fair
value is the appropriate measurement. This statement does not require any new
fair value measurements but may require companies to change current practice.
This statement is effective for those fiscal years beginning after November 15,
2007 and to the interim periods within those fiscal years. The Company believes
that SFAS No. 157 should not have a material impact on the financial position or
results of operations.

In February 2007, the FASB issued SFAS No. 159,"The Fair Value Option for Financial Assets and Financial
Liabilities"("SFAS No. 159"). SFAS No. 159 permits
entities to choose to measure, on an item-by-item basis, specified financial
instruments and certain other items at fair value. Unrealized gains and losses
on items for which the fair value option has been elected are required to be
reported in earnings at each reporting date. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007, the provisions of which are
required to be applied prospectively. The Company believes that SFAS No. 159
should not have a material impact on the consolidated financial position or
results of operations.

In December 2007, the FASB issued SFAS No. 141
(Revised 2007),"Business Combinations"("SFAS No. 141R"). SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following
existing GAAP until January 1, 2009. The Company expects SFAS No. 141R will have an impact on accounting for business combinations once adopted but the effect is dependent upon acquisitions at that time. The Company is still assessing the impact of
this pronouncement.

24

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In April 2008, the FASB issued FSP No. 142-3,Determination of the Useful Life of Intangible Assets(FSP No.142-3) that amends the factors considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142. FSP No. 142-3 requires a consistent approach between the useful life of a recognized intangible asset under SFAS No. 142 and the period of
expected cash flows used to measure the fair value of an asset under SFAS No. 141(R). FSP No. 142-3 also requires enhanced disclosures when an intangible assets expected future cash flows are affected by an entitys intent and/or ability
to renew or extend the arrangement. FSP No. 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008 and is applied prospectively. The Company does not expect the adoption of FSP No.142-3 to have a
material impact on its consolidated results of operations or financial condition.

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts--an interpretation of FASB Statement No. 60" ("SFAS No. 163"). SFAS No. 163 interprets
Statement 60 and amends existing accounting pronouncements to clarify their application to the financial guarantee insurance contracts included within the scope of that Statement. SFAS No. 163 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and all interim periods within those fiscal years. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating
the impact of SFAS No. 163 on its financial statements but does not expect it to have an effect on the Company's financial position, results of operations or cash flows.

In June 2008, the FASB ratified EITF No. 07-5,"Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock"("EITF 07-5"). EITF 07-5 provides that an
entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. EITF 07-5 is
effective for financial statements issued for fiscal years beginning after December 15, 2008. Early application is not permitted. The Company is assessing the potential impact of this EITF 07-5 on the financial condition and results of
operations.

In September 2008, the FASB issued FSP 133-1 and FIN 45-4,Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and
Clarification of the Effective Date of FASB Statement No. 161(FSP FAS 133-1 and FIN 45-4). FSP FAS 133-1 and FIN 45-4 amends disclosure requirements for sellers of credit derivatives and
financial guarantees. It also clarifies the disclosure requirements of SFAS No. 161 and is effective for quarterly periods beginning after November 15, 2008, and fiscal years that include those periods. The adoption of FSP FAS 133-1 and FIN 45-4 did
not have a material impact on the Companys current financial position, results of operation or cash flows.

In October 2008, the FASB issued Staff Position (FSP) No. 157-3,Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active(FSP FAS 157-3.) FSP FAS 157-3 clarifies the application of SFAS No. 157 in an inactive market. It illustrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP FAS 157-3 was
effective upon issuance, including prior periods for which financial statements had not been issued. The adoption of FSP FAS 157-3 did not have a material impact on the Companys current financial position, results of operations or cash flows.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA

The full text of our audited consolidated financial statements as of December 31, 2008 and 2007 begins on page F-1 of this annual report.

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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, 2008.

(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, 2008. 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 concluded that our management determined that our internal controls over financial reporting as of December 31, 2008
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.

26

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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
2009, 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.

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, 2008, 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.

The information pertaining to our issuance of shares of our common stock to certain Consultants in Item 5 is incorporated herein by reference in its entirety. The description of the Consulting Agreements in this report does not purport
to be complete and is qualified in its entirety by reference to the full text of the Consulting Agreements filed as Exhibits 10.22 to 10.24 hereto and incorporated herein by reference.

27

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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            
|Bin Li        | 45  | Chief Financial Officer and
      Chairman Executive Director
|Xiaofeng Ding | 38  | Director                                                     
|Dongsheng     | 35  | Director                                                     

Yingsheng Lihas 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 Dinghas 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. In 2001, Mr. Li was admitted to the School
of Management of Xian Jiaotong University and received his Ph.D. in Management
in 2004.

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.

28

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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 currently do not have standing audit, nominating or compensation committees. Currently, our entire board of directors is responsible for the functions that would otherwise be handled by these committees. We intend, however, to
establish an audit 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 compensation committee will be primarily responsible for reviewing and approving our salary and benefits policies (including stock options) and other compensation of our
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 (except where not subsequently dismissed
without sanction or settlement), or from engaging in any type of business practice, or a finding of any violation of federal or state securities laws. To the best of our knowledge, no petition under the federal bankruptcy laws or any state
insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of any of our directors or officers, or any partnership in which any of our directors or officers was a
general partner at or within two years before the time of such filing, or any corporation or business association of which any of our directors or officers was an executive officer at or within two years before the time of such filing. Except as set
forth in our discussion below in 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 2008 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.

29

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ITEM 11.     EXECUTIVE COMPENSATION

Summary Compensation Table  2007 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 2007 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 |  | 2007 |  |  | 19,050     |  |  | 12,818    |  |  | 31,868       | 
|                                     |  | 2008 |  |  | 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 7.2 and $1= RMB 6.8 for years 2007 and 2008, respectively.

Employment Agreements

We have not entered into a written or unwritten
employment agreement with Mr. Yingsheng Li, our named executive officer, nor is
he entitled to receive any payments upon termination of employment with or
without cause, change in control, or upon termination following a change in
control.

We entered into an employment agreement with our
Executive Director, Bin Li, on March 1, 2004. This agreement was renewed on
March 1, 2008 for a one-year term ending March 1, 2009. 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 12,000 (approximately $1,750).

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, 2008.

Director Compensation

The following table provides information on the
compensation paid by us to our directors for the fiscal years ended on December
31, 2007 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.

30

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|Name          |  | Year |  |  | Fees earned or paid in
      Cash ($) |  |  | Total ($)(1) | 
|------------- |  | ---- |  |  | ------------------------------------- |  |  | ------------ | 
|Xiaofeng Ding |  | 2007 |  |  | -                                     |  |  | -            | 

|              |  | 2008 |  |  | -      |  |  | -      | 
|------------- |  | ---- |  |  | ------ |  |  | ------ | 
|Dongsheng Ren |  | 2007 |  |  | -      |  |  | -      | 
|              |  | 2008 |  |  | -      |  |  | -      | 
|Bin Li        |  | 2007 |  |  | 22,864 |  |  | 22,864 | 
|              |  | 2008 |  |  | 24,852 |  |  | 24,852 | 

(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 7.2 and $1= RMB 6.8 for years
2007 and 2008, respectively.

Historically, except for Mr. Bin Li, we have not
paid 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. However, in January 2006, our three directors,
Yingsheng Li, Xiaofeng Ding and Dongsheng Ren authorized the payment to
themselves in the aggregate amount of $972,754; the payments were originally
characterized as a dividend. Of the total $972,754 declared, $672,592 was paid
during 2006. In July 2007, when the directors realized that the amounts paid
were not properly characterized, the board cancelled the remaining payments and
recharacterized the 2006 payments as bonuses paid in 2006 for services as
directors. Mr. Bin Li did not receive a dividend declaration because he did not
own any shares in either Media Challenge or the Company at the time the dividend
was declared.

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, 2008. 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 therefore 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.

31

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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 13, 2009 (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.

|Title of Class                   | Name of Beneficial
      Owner                                      | Office, If Any                                                                   | Amount and Nature of Beneficial Ownership | Percent of Class
|-------------------------------- | ------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------- | ----------------
|Common Stock, no par
      value | Yingsheng Li                                                        | President, Chief Executive Officer, Interim Chief Financial Officer and Chairman | 9,958,425                                 | 34.71%          
|Common Stock, no par value       | Xiaofeng Ding                                                       | Director                                                                         | 6,746,077                                 | 23.52%          
|Common Stock, no par
      value | Dongsheng Ren                                                       | Director                                                                         | 6,103,498                                 | 21.28%          
|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) |                                                                                  | 22,808,000                                | 79.51%          

* 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 13, 2009. 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.

32

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ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS.

Transactions with Related
Persons

The following includes a summary of transactions
since the beginning of the last fiscal year, or any currently proposed
transaction, in which we were or are to be a participant and the amount involved
exceeded or exceeds $120,000, and in which any related person had or will have a
direct or indirect material interest (other than compensation described under
Executive Compensation).

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.

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, 2008
and 2007:

|                      |   | 2008    |  |   | 2007    | 
|--------------------- | - | ------- |  | - | ------- | 
|                      |   |         |  |   |         | 
|Audit fees(1)         | $ | 90,000  |  | $ | 120,000 | 
|Audit-related fees(2) |   | 30,000  |  |   | 0       | 
|Tax fees              |   | 0       |  |   | 0       | 
|All other fees        |   | 0       |  |   | 0       | 
|                      |   |         |  |   |         | 
|Total                 | $ | 120,000 |  | $ | 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.                                                                                                                                                                                     

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 service performed by Child Van Wagoner & Bradshaw, PLLC for our consolidated financial statements as of and for the year ended December 31, 2008.

33

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PART IV

ITEM 15.     EXHIBITS, FINANCIAL STATEMENTS
SCHEDULES.

|(a)                                                         | The following documents are filed as part of
      this report:
|----------------------------------------------------------- | ---------------------------------------------------------------
|                                                            |                                                                
|                                                            | (1)                                                            
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            |                                                                
|                                                            | (2)                                                            
|                                                            |                                                                
|                                                            | (3)                                                            
|                                                            |                                                                
|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]              

34

---

|      |                                                                                                                                                                                                                                                                                                                                                                                          
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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]                                                                        

35

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|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]                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                   
|10.22 | Consulting Agreement, dated November 5,
      2008, by and between the Company and FirsTrust Group,
  Inc.*                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                   
|10.23 | Consulting Agreement, dated November 5,
      2008, by and between the Company and Xia Xu.*                                                                                                                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                   
|10.24 | Consulting Agreement, dated November 5,
      2008, by and between the Company and Yale
Yu.*                                                                                                                                                                                                                                                                      

36

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|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
      [Incorporated by reference to Exhibit 21 to the Annual Report of the
      Company on Form 10-KSB, filed with the SEC on April 18, 2008, in file
      number 0-51806]        
|   |                                                                                                                                                                                                                            
|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.

37

---

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 LiChief Executive Officer


Date: April 15, 2009

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 15, 2009
|Yingsheng Li      | Chief Financial Officer and Chairman        |               
|                  |                                             |               
|/s/ Xiaofeng Ding | Director                                    | April 15, 2009
|Xiaofeng Ding     |                                             |               
|                  |                                             |               
|/s/ Dongsheng Ren | Director                                    | April 15, 2009
|Dongsheng Ren     |                                             |               
|                  |                                             |               
|/s/ Bin Li        | Executive Director                          | April 15, 2009
|Bin Li            |                                             |               

---

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]                             
|      |                                                                                                                                                                                                                                                                                                                                            
|10.22 | Consulting Agreement, dated November 5,
      2008, by and between the Company and FirsTrust Group,
  Inc.*                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                            
|10.23 | Consulting Agreement, dated November 5,
      2008, by and between the Company and Xia Xu.*                                                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                                                            
|10.24 | Consulting Agreement, dated November 5,
      2008, by and between the Company and Yale Yu.*                                                                                                                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                                                            
|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
      [Incorporated by reference to Exhibit 21 to the Annual Report of the
      Company on Form 10-KSB, filed with the SEC on April 18, 2008, in file
      number 0-51806]                                                                                                                        
|      |                                                                                                                                                                                                                                                                                                                                            
|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.

---

CHINA MARKETING MEDIA HOLDINGS, INC.

Consolidated Financial Statements

For The Years Ended December 31, 2008 and 2007

---

CHINA MARKETING MEDIA HOLDINGS, INC.

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       
|Consolidated Statements of Cash Flows                                | F-5  F-6 
|Consolidated Statements of Stockholders
      Equity                | F-7       
|Notes to Consolidated Financial Statements                           | F-8  F-20

F-1

---

|                                                                                                                                                                                                                                                                                                                                                                                              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                              
|Douglas W. Child, CPA 
    Marty D. Van Wagoner, CPA 
    J. Russ Bradshaw, CPA 
    William R. Denney, CPA 
    Roger B. Kennard, CPA 
    Russell E. Anderson, CPA 
    Scott L. Farnes                                                                                                                                                                                                     
|1284
    W. Flint Meadow Dr. #D 
    Kaysville, Utah 84037 
    Telephone 801.927.1337 
    Facsimile 801.927.1344 
    5296 S. Commerce Dr. #300 
    Salt Lake City, Utah 84107 
    Telephone 801.281.4700 
    Facsimile 801.281.4701 
    Suite A, 5/F 
    Max Share Centre 
    373 Kings Road 
    North Point, Hong Kong 
    Telephone 852.21.555.333 
    Facsimile 852.21.165.222
|                                                                                                                                                                                                                                                                                                                                                                                              

F-2

---

CHINA MARKETING MEDIA HOLDINGS, INC.CONSOLIDATED
BALANCE SHEETSAS OF DECEMBER 31, 2008 AND 2007(Currency
expressed in United States Dollars (US$), except for number of shares)

|                                                                                                                       |   | As of December 31, |  
|---------------------------------------------------------------------------------------------------------------------- | - | ------------------ | -
|                                                                                                                       |   | 2008               |  
|ASSETS                                                                                                                 |   |                    |  
|Current assets:                                                                                                        |   |                    |  
|Cash and cash equivalents                                                                                              | $ | 2,161,227          |  
|Accounts receivable                                                                                                    |   | 19,253             |  
|Prepaid expenses                                                                                                       |   | 110,525            |  
|Inventory                                                                                                              |   | 421,479            |  
|                                                                                                                       |   |                    |  
|Total current assets                                                                                                   |   | 2,712,484          |  
|                                                                                                                       |   |                    |  
|Non-current assets:                                                                                                    |   |                    |  
|Investment deposit  purchase
      of targets                                                                         |   | 5,967,143          |  
|Deferred tax asset                                                                                                     |   | -                  |  
|Loans receivable from major
      sales agents                                                                         |   | 716,072            |  
|Loans receivable                                                                                                       |   | 72,948             |  
|Investment (equity method)                                                                                             |   | 344,591            |  
|Related party receivables  affiliates                                                                                 |   | 1,960,166          |  
|Related party receivables                                                                                              |   | 411,040            |  
|Other receivable                                                                                                       |   | 199,880            |  
|Goodwill                                                                                                               |   | 810,450            |  
|Other assets                                                                                                           |   | -                  |  
|Property, plant and equipment                                                                                          |   | 1,704,179          |  
|Less: accumulated depreciation                                                                                         |   | (335,101           | )
|License agreement                                                                                                      |   | 1,474,906          |  
|Less: accumulated amortization                                                                                         |   | (748,894           | )
|                                                                                                                       |   |                    |  
|Total non-current assets                                                                                               |   | 12,577,380         |  
|                                                                                                                       |   |                    |  
|TOTAL ASSETS                                                                                                           | $ | 15,289,864         |  
|                                                                                                                       |   |                    |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                   |   |                    |  
|Current liabilities:                                                                                                   |   |                    |  
|Accounts payable                                                                                                       | $ | 285,730            |  
|Accrued expenses                                                                                                       |   | 199,346            |  
|Deferred revenues                                                                                                      |   | 185,575            |  
|Taxes payable                                                                                                          |   | 16,897             |  
|Other payable                                                                                                          |   | 131,185            |  
|                                                                                                                       |   |                    |  
|Total current liabilities                                                                                              |   | 818,733            |  
|                                                                                                                       |   |                    |  
|Minority interest                                                                                                      |   | 33,967             |  
|                                                                                                                       |   |                    |  
|Stockholders equity:                                                                                                  |   |                    |  
|Common stock, no par value,
      100,000,000 shares authorized, 28,686,002 common shares issued and
      outstanding |   | 1,277,546          |  
|Retained earnings                                                                                                      |   | 11,254,479         |  
|                                                                                                                       |   |                    |  
|Accumulated other
      comprehensive income                                                                           |   | 1,905,139          |  
|                                                                                                                       |   |                    |  
|Total stockholders equity                                                                                             |   | 14,437,164         |  
|                                                                                                                       |   |                    |  
|TOTAL LIABILITIES AND STOCKHOLDERS
      EQUITY                                                                       | $ | 15,289,864         |  

See accompanying notes to consolidated financial statements.

F-3

---

CHINA MARKETING MEDIA HOLDINGS, INC.CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEFOR THE YEARS ENDED
DECEMBER 31, 2008 AND 2007(Currency expressed in United States
Dollars (US$), except for number of shares)

|                                                                     |   | Years ended December 31, |  
|-------------------------------------------------------------------- | - | ------------------------ | -
|                                                                     |   | 2008                     |  
|Revenue, net                                                         | $ | 13,080,206               |  
|Cost of revenue (inclusive of amortization)                          |   | 5,145,952                |  
|Gross profit                                                         |   | 7,934,254                |  
|Operating expenses:                                                  |   |                          |  
|Amortization and depreciation                                        |   | 293,687                  |  
|Advertising and promotion                                            |   | 280,325                  |  
|Payroll expenses                                                     |   | 2,328,513                |  
|Legal and professional fees                                          |   | 209,239                  |  
|Shares issued for services, non-cash                                 |   | 165,000                  |  
|Other general and administrative                                     |   | 2,693,377                |  
|Total operating expenses                                             |   | 5,970,141                |  
|Income from operations                                               |   | 1,964,113                |  
|Other income (expense):                                              |   |                          |  
|Interest income                                                      |   | 27,230                   |  
|Interest (expense)                                                   |   | (175                     | )
|Equity investment loss from unconsolidated subsidiary                |   | (47,908                  | )
|Subsidies income                                                     |   | 87,454                   |  
|Other income                                                         |   | 13,776                   |  
|Income from continuing operations before
      income taxes          |   | 2,044,490                |  
|Provision for income taxes                                           |   | 451,027                  |  
|Income before minority interest                                      |   | 1,593,463                |  
|Earnings of minority interest                                        |   | (36,939                  | )
|Income from continuing operations                                    |   | 1,630,402                |  
|Discontinued operations:                                             |   |                          |  
|Loss from discontinued operations                                    |   | (98,378                  | )
|Loss from disposal of subsidiaries                                   |   | (62,726                  | )
|NET INCOME                                                           | $ | 1,469,298                |  
|Other comprehensive income:                                          |   |                          |  
|Foreign currency translation gain                                    |   | 901,606                  |  
|COMPREHENSIVE INCOME                                                 | $ | 2,370,904                |  
|Basic and diluted earnings per share 
      continuing operations   | $ | 0.06                     |  
|Basic and diluted earnings per share  discontinued
      operations | $ | (0.01                    | )
|Weighted average common stock
      outstandingBasic and Diluted    |   | 28,129,890               |  

See accompanying notes to consolidated financial statements.

F-4

---

CHINA MARKETING MEDIA HOLDINGS, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007 (Currency expressed in United States Dollars (US$))

|                                                                                        |   | Years ended December 31, |  
|--------------------------------------------------------------------------------------- | - | ------------------------ | -
|                                                                                        |   | 2008                     |  
|Cash flows from operating
      activities:                                             |   |                          |  
|Net income from continuing operations                                                   | $ | 1,630,402                |  
|Adjustments to reconcile net income to net
      cash provided by operating activities: |   |                          |  
|Minority interest                                                                       |   | (36,939                  | )
|Amortization and depreciation                                                           |   | 293,687                  |  
|Shares issued for services                                                              |   | 165,000                  |  
|Gain on disposals of plant and equipment                                                |   | (64                      | )
|Equity investment loss from
      unconsolidated subsidiary                             |   | 47,908                   |  
|Changes in operating assets and liabilities:                                            |   |                          |  
|Accounts receivable                                                                     |   | 196,050                  |  
|Settlement receivable                                                                   |   | -                        |  
|Prepaid expenses                                                                        |   | 145,855                  |  
|Inventory                                                                               |   | (414,937                 | )
|Due from major sales agents                                                             |   | (643,111                 | )
|Deferred tax assets                                                                     |   | 35,833                   |  
|Other receivable                                                                        |   | 2,074                    |  
|Other assets                                                                            |   | 143,632                  |  
|Accounts payable                                                                        |   | 174,996                  |  
|Accrued expenses and levies                                                             |   | (88,329                  | )
|Deferred revenues                                                                       |   | (80,250                  | )
|Tax payable                                                                             |   | (34,225                  | )
|Other payable                                                                           |   | 124,133                  |  
|                                                                                        |   |                          |  
|Net cash provided by operating activities 
      continuing operations                 |   | 1,661,715                |  
|Net cash used in discontinued operations                                                |   | (63,482                  | )
|Net cash provided by operating activities                                               |   | 1,598,233                |  
|                                                                                        |   |                          |  
|Cash flows from investing
      activities:                                             |   |                          |  
|Repayment from directors                                                                |   | -                        |  
|Purchase of property, plant
      and equipment                                         |   | (256,000                 | )
|Purchase of intangible assets                                                           |   | (12,937                  | )
|Deposit paid on investment in
      subsidiary                                          |   | (129,269                 | )
|Cash acquired in purchase of subsidiary                                                 |   | 70,380                   |  
|Proceeds from disposal of a
      subsidiary                                            |   | 141,831                  |  
|Advance to unconsolidated entity                                                        |   | -                        |  
|Loan receivable from affiliate                                                          |   | -                        |  
|                                                                                        |   |                          |  
|Net cash used in investing activities 
      continuing operations                     |   | (185,995                 | )
|Net cash used in discontinued operations                                                |   | (162,029                 | )
|Net cash used in investing activities                                                   |   | (348,024                 | )
|                                                                                        |   |                          |  
|Cash flows from financing
      activities:                                             |   |                          |  
|Repayment of payable to affiliate                                                       |   | (510,514                 | )
|Capital contribution from
      minority interest                                       |   | -                        |  
|                                                                                        |   |                          |  
|Net cash used in financing activities 
      continuing operations                     |   | (510,514                 | )
|Net cash used in discontinued operations                                                |   | (248,198                 | )
|Net cash used in financing activities                                                   |   | (758,712                 | )

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, 2008 AND
2007 (Currency expressed in United States Dollars (US$))

|                                                                   |   | Years ended December 31, | 
|------------------------------------------------------------------ | - | ------------------------ | 
|                                                                   |   | 2008                     | 
|Effect of exchange rate changes in cash and
      cash equivalents |   | 121,128                  | 
|NET CHANGE IN CASH AND CASH EQUIVALENTS                            |   | 612,625                  | 
|BEGINNING OF YEAR                                                  |   | 1,548,602                | 
|END OF YEAR                                                        | $ | 2,161,227                | 
|SUPPLEMENTAL DISCLOSURE OF
      CASH FLOW INFORMATION:            |   |                          | 
|Cash paid for income taxes                                         | $ | 483,358                  | 
|Cash paid for interest expense                                     | $ | 77,293                   | 
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                       |   |                          | 
|Dividend payable offset by related party
      receivable          | $ | -                        | 
|Deposit conversion to subsidiary                                   | $ | -                        | 

See accompanying notes to consolidated financial statements.

F-6

---

CHINA MARKETING MEDIA HOLDINGS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (Currency expressed in United States Dollars (US$), except
for number of shares)

|                                              |  |               |  |   |           |  |   |               |  |   | Accumulated   |  |   |            | 
|--------------------------------------------- |  | ------------- |  | - | --------- |  | - | ------------- |  | - | ------------- |  | - | ---------- | 
|                                              |  |               |  |   |           |  |   |               |  |   | other         |  |   | Total      | 
|                                              |  | Common stock  |  |   | Retained  |  |   | comprehensive |  |   | stockholders | 
|                                              |  | No. of shares |  |   | Amount    |  |   | earnings      |  |   | income        |  |   | equity     | 
|                                              |  |               |  |   |           |  |   |               |  |   |               |  |   |            | 
|Balance at January 1, 2007                    |  | 27,586,002    |  | $ | 1,112,546 |  | $ | 6,855,026     |  | $ | 328,421       |  | $ | 8,295,993  | 
|                                              |  |               |  |   |           |  |   |               |  |   |               |  |   |            | 
|Net income for the year                       |  | -             |  |   | -         |  |   | 2,930,155     |  |   | -             |  |   | 2,930,155  | 
|Foreign currency translation adjustment       |  | -             |  |   | -         |  |   | -             |  |   | 675,112       |  |   | 675,112    | 
|Appropriation to statutory
      reserve      |  | -             |  |   | -         |  |   | -             |  |   | -             |  |   | -          | 
|                                              |  |               |  |   |           |  |   |               |  |   |               |  |   |            | 
|Balance as of December 31,
      2007         |  | 27,586,002    |  | $ | 1,112,546 |  | $ | 9,785,181     |  |   | 1,003,533     |  |   | 11,901,260 | 
|                                              |  |               |  |   |           |  |   |               |  |   |               |  |   |            | 
|Net income for the year                       |  | -             |  |   | -         |  |   | 1,469,298     |  |   | -             |  |   | 1,469,298  | 
|Shares issued for services, non-cash          |  | 1,100,000     |  |   | 165,000   |  |   | -             |  |   | -             |  |   | 165,000    | 
|Foreign currency translation
      adjustment |  | -             |  |   | -         |  |   | -             |  |   | 901,606       |  |   | 901,606    | 
|                                              |  |               |  |   |           |  |   |               |  |   |               |  |   |            | 
|Balance as of December 31,
      2008         |  | 28,686,002    |  | $ | 1,277,546 |  | $ | 11,254,479    |  | $ | 1,905,139     |  | $ | 14,437,164 | 

See accompanying notes to consolidated financial statements

F-7

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

1. ORGANIZATION AND BUSINESS BACKGROUND

China Marketing Media Holdings, Inc. (fka Infolife, Inc. and
Brazos Strategies, Inc.) ("China Marketing") 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 three common owners of Media Challenge. Shenzhen Media
was formed on October 22, 2003, under the laws of 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 three common owners of Media Challenge. Shenzhen Media was
formed on October 22, 2003, under the laws of 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 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 PRC known as Shenzhen New Media Advertising Co., Ltd. ("NMA"). The
registered capital of NMA is one million RMB, i.e., $122,100USD (exchange rate
as 1USD: 8.19 RMB).

In November 2007, Shenzhen Media formed a new 52% owned
subsidiary in PRC known as Beijing Orient Converge Human Resources Management
Center Co. Ltd.( "BJOC"). The registered capital of BJOC is RMB5,000,000, i.e.,
$684,500USD (exchange rate as 1USD: 7.30 RMB).

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 its 42% ownership of
BJOC to Shanghai Cheng Mei Biotechnology Co., Ltd. ("Shanghai Cheng Mei") for a
cash price of RMB987,461 (approximately $141,831).

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

F-8

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

1. ORGANIZATION AND BUSINESS BACKGROUND - Continued

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. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of
China Marketing, Media Challenge, Shenzhen New Media, Shenzhen Media, Beijing
Media, NMA, Shenzhen Caina Brand Consultant Company ("Shenzhen Caina"), Beijing
Caina Xianliang Marketing and Layout Company ("Beijing Caina"), BJOC, and SZNT.
All material intercompany accounts and transactions have been eliminated in
consolidation.

The accompanying consolidated financial statements are prepared
in accordance with accounting principles generally accepted in the United States
of America ("US GAAP"). This basis differs from that used in the statutory
accounts of our subsidiaries, Beijing Media, NMA, Shenzhen Caina, Beijing Caina
and BJOC, which were prepared in accordance with the accounting principles and
relevant financial regulations applicable to enterprises in the PRC. All
necessary adjustments have been made to present the financial statements in
accordance with US GAAP.

3. 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.

 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. An
estimate for doubtful accounts is made when collection of the full amount
becomes questionable.

 Inventory

Inventories 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.

F-9

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 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        
|Vehicles                | 5 years         
|Furniture and equipment | 5 years         
|Computer equipment      | 5 years         

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, |  
|------------------------------ | - | ------------------ | -
|                               |   | 2008               |  
|                               |   |                    |  
|Buildings                      | $ | 1,075,494          |  
|Vehicle                        |   | 327,260            |  
|Furniture and equipment        |   | 162,911            |  
|Computer equipment             |   | 138,514            |  
|                               |   | 1,704,179          |  
|Less: accumulated depreciation |   | (335,101           | )
|                               |   |                    |  
|                               | $ | 1,369,078          |  

Depreciation expense for the years ended December 31, 2008 and
2007 was $195,385 and $140,207, 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 Statement of Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." No
impairment of assets was recorded in the periods reported.

 Intangible assets

In accordance with SFAS No. 142, "Goodwill and Other
Intangible Assets", 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 years ended
December 31, 2008 and 2007.

Amortization expense of license agreement included in cost of
revenue for the years ended December 31, 2008 and 2007 was $145,202 and
$133,627, respectively.

F-10

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

 Investment (equity method)

Shenzhen Keungxi Technology Company Ltd. ("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.
Shenzhen Media holds 48% of the equity of SKTC and three individual
shareholders, Wengao Luo, Xi Chen and Bin Li own the remaining 21.5%, 21.5% and
9% of SKTC, respectively.

|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 |  

 Minority interest

Minority interest represents non-controlling owners 49% of
equity in SZNT as of December 31, 2008.

Minority interest represents non-controlling owners 48% of
equity in BJOC as of December 31, 2007. On August 2, 2008, the company has sold
42% of its 52% interest.

 Revenue recognition

In accordance with the SECs Staff Accounting Bulletin No. 104,
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.

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 service are provided. Total revenue from the advertising sales
is $5,098,769 and $6,047,678 for the years ended December 31, 2008 and 2007,
respectively. Total revenue from marketing consulting service is $4,273,208 and
$2,299,616 for the years ended December 31, 2008 and 2007 respectively.

In addition, the Company recognizes revenue from the publishing
of 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 $1,648,650 and $1,388,547 for the
years ended December 31, 2008 and 2007, respectively. The new business of
selling electronic products online attributed $2,059,579 for the year ended
December 31, 2008.

F-11

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Continued

 Cost of revenue

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 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 year ended December 31, 2008 was 12.76%
and for the year ended December 31, 2007 was 10.17% .

In accordance with the provisions of SFAS No. 48, "Criteria
for Recognizing Revenue When Right of Return Exists." If 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 SFAS No. 48: first, our price to the sale agent is fixed;
second, the sale 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 sale agents include bookstores, reading groups, and
culture groups, etc.; fifth, the Company has no obligations to resell the
magazines distributed to sales agents; finally, the amount of returns can be
reasonably estimated and are included in accrued liabilities.

 Advertising expenses

Advertising costs are expensed as incurred under SOP 93-7,
Reporting for Advertising Costs. The Company incurred 280,325 and
$184,859 of sales and marketing expense for the years ended December 31, 2008
and 2007.

F-12

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Continued

 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, |  
|---------------------------------------------------------- | - | ------------------------ | -
|                                                           |   | 2008                     |  
|Numerator for basic and diluted EPS                        |   |                          |  
|- Net income from continuing operations                    | $ | 1,630,402                |  
|- Net loss from discontinued operations                    | $ | (161,104                 | )
|                                                           |   |                          |  
|Denominator for basic and diluted EPS                      |   |                          |  
|- Weighted average shares of common stock outstanding      |   | 28,129,890               |  
|                                                           |   |                          |  
|EPS from continuing operations  basic and diluted         | $ | 0.06                     |  
|EPS from discontinued operations  basic
      and diluted | $ | (0.01                    | )

 Foreign currency translation and comprehensive income

The accompanying financial statements are presented in US
dollars. 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/USD 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 dollars at rates used in translation.

 Income taxes

The Company accounts for income tax using SFAS No. 109
Accounting for Income Taxes, which requires the asset and liability
approach for financial accounting and reporting for income taxes. Under this
approach, deferred income taxes are provided for the estimated future tax
effects attributable to temporary differences between financial statement
carrying amounts of assets and liabilities and their respective tax bases, and
for the expected future tax benefits from loss carry-forwards and provisions, if
any. Deferred tax assets and liabilities are measured using the enacted tax
rates expected in the years of recovery or reversal and the effect from a change
in tax rates is recognized in the statements of operations in the period of
enactment. A valuation allowance is provided to reduce the amount of deferred
tax assets if it is considered more likely than not that some portion of, or all
of the deferred tax assets will not be realized. The Company has recorded
deferred tax assets of $0 and $34,154 as of December 31, 2008 and 2007,
respectively.

F-13

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Continued

The Company also adopted Financial Accounting Standards Board
(FASB) Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (FIN 48), on January 1, 2007. FIN 48 prescribes a more likely than
not threshold for financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This Interpretation also
provides guidance on derecognition of income tax assets and liabilities,
classification of current and deferred income tax assets and liabilities,
accounting for interest and penalties associated with tax positions, accounting
for income taxes in interim periods, and income tax disclosures. The Company did
not have any adjustment to the opening balance of retained earnings as of
January 1, 2007 as a result of the implementation of FIN 48. In accordance with
FIN 48, the Company also adopted the policy of recognizing interest and
penalties, if any, related to unrecognized tax positions as income tax expense.
For the years ended December 31, 2008 and 2007, the Company did not have any
interest and penalties associated with tax positions. As of December 31, 2008
and 2007, 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.

 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

SFAS No. 131 Disclosures about Segments of an Enterprise
and Related Information 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 of financial instruments

SFAS No.107 "Disclosures About Fair Value of Financial
Instruments", requires that the Company disclose estimated fair values of
financial instruments. The carrying amounts of reported current assets and
current liabilities approximate their fair value because of the short maturity
of these instruments and market rates of interest.

 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.

F-14

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

4. STOCK BASED COMPENSATION

On November 5, 2008, the Company issued 1,100,000 shares of
common stock to three consultants for their business advisory services to the
Company, from November 6, 2008 to November 6, 2009. The fair value of this stock
issuance was determined using the fair value of the Companys common stock on
the grant date, at a market quoted price of $0.15 per share. The Company
recognized $165,000 in the statements of operations for the year ended December
31, 2008.

5. DISCONTINUED OPERATIONS

On August 2, 2008, Shenzhen Media sold 42% ownership of BJOC
for a cash price of approximately $141,831. The transaction was closed on August
2, 2008 and the Company recognized a loss on disposal of subsidiary of $62,726,
representing the excess of the book value of assets sold over purchase
consideration received at closing. As of December 31, 2008, the Company has
received the full purchase price from the buyer.

Total revenues related to the discontinued operations were $0
and $0 for the years ended December 31, 2008 and 2007, respectively. There were
no assets or liabilities of BJOC in the consolidated balance sheets as of
December 31, 2008 and the results of operations have been reclassified as income
from discontinued operations in the consolidated statements of operations for
all dates and periods presented.

6. LOANS RECEIVABLE FROM MAJOR SALES AGENTS

The Company had loans receivable amounting to $716,072 and
$58,949 as of December 31, 2008 and 2007, 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 payable 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, the management believes no severe impact on the company
sales would result if any of the sales agents are lost.

7. PREPAID EXPENSES

Prepaid expenses consist primarily of prepayments made to an
unrelated company in advance for future financial and legal consultation
services. As of December 31, 2008 and 2007, prepaid balance under these
arrangements totaled $110,525 and $289,381, respectively.

8. INVESTMENT DEPOSIT  PURCHASE OF A TARGET COMPANY

On December 13, 2007, Shenzhen New Media signed an 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, the agreement was mutually terminated and
the investment deposit will be fully refunded within three months.

F-15

---

CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

9. 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.

Shenzhen Caina Corporate Image Consulting and Design Company is
a company owned and controlled by Mr. Zhu Yuhong, brother of Mr. Zhu Yu Tong.
Shenzhen Caina loaned $0 and $104,044 as of December 31, 2008 and 2007 to
Shenzhen Caina Corporate Image Consulting and Design Company to develop
businesses for Shenzhen Caina.

Related party balance as of December 31, 2008 and 2007 are as
follows:

|                                                                      |   | As of December 31, | 
|--------------------------------------------------------------------- | - | ------------------ | 
|                                                                      |   | 2008               | 
|                                                                      |   |                    | 
|Loan receivable  CMO                                                 | $ | 1,960,166          | 
|Loan receivable  Shenzhen Caina Corporate Image Consulting
      and |   |                    | 
|Design Company                                                        |   | -                  | 
|                                                                      |   |                    | 
|Related party receivables - affiliates                                | $ | 1,960,166          | 

The above loans are unsecured, and bear no interest. These
loans have no fixed payment schedule and are payable on demand.

10. INCOME TAXES EXPENSE

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 periods presented. The
applicable income tax rates for the Company for the years ended December 31,
2008 and 2007 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, 2008 and 2007 was
$451,027 and $35,896, respectively.

F-16

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CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

10. INCOME TAXES EXPENSE - Continued

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, | 
|------------ | - | ------------------------ | 
|             |   | 2008                     | 
|PRC:         |   |                          | 
|Current tax  | $ | 451,027                  | 
|Deferred tax |   | -                        | 
|             |   |                          | 
|             | $ | 451,027                  | 

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

(b) Deferred tax

Deferred taxes result from temporary differences relating to
items that are expensed/recognized as revenue for financial reporting, but are
not currently deductible/taxable for income tax purposes. Significant components
of our deferred tax assets and liabilities as at December 31, 2008 and 2007 are
as follows:

|                          |   | As of December 31, | 
|------------------------- | - | ------------------ | 
|                          |   | 2008               | 
|Deferred tax assets:      |   |                    | 
|Deferred revenue          | $ | -                  | 
|                          |   |                    | 
|Deferred tax liabilities: |   |                    | 
|Accrued expense           |   | -                  | 
|Less: valuation allowance |   | -                  | 
|                          |   |                    | 
|Net deferred tax asset    | $ | -                  | 

11. CONCENTRATIONS AND RISK

The Company is exposed to the following concentrations of risk:

As discussed in Note 1, the Company's major operations are
conducted through an agreement with CMO, a company owned by the PRC government.
All the revenues are generated through production of the magazines owned by CMO.
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 distribution agents for the publishing business

For the years ended December 31, 2008 and 2007, approximately
64% and 57% of the Companys sales are generated from its 4 and 4 major sales
agents in the PRC, respectively. The representatives solicited advertising from
the general public in their designated geographic territory.

F-17

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CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

11. CONCENTRATIONS AND RISK - Continued

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

(b) 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.

(c) 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.

12. COMMITMENTS AND CONTINGENCIES

(a) Lease commitments

The Company leases four office spaces located at Room 101-114,
Jinglian Garden, Jingtian Road, Futian District, Shenzhen, 518000, PRC; Room
903-905, Kun Tai International Mansion, Chao Wai Street, Beijing, 100020, PRC;
Rm A-1203, Building 2, Dacheng International Center, No. 78 Dongsihuan Middle
Road, Chaoyang District, Beijing; and Rm 610A & C, Shanghai Withub Hi-Tech
Business Incubator, No.333 Hongqiao Road, Xu Hui District, Shanghai.

These leases require monthly payments as follows: a monthly
payment of $17,809 from November 2007 to November 2009, a monthly payment of
$5,249 from September 2007 to August 2009, a monthly payment of $4,498 from
October 2008 to October 2009, and a monthly payment of $2,015 from April 2008 to
April 2009, respectively.

The future lease commitment for the office lease is $277,544
for fiscal year 2009.

(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.

Deposits in banks in the PRC are not insured by any government
entity or agency, and are consequently exposed to risk of loss. Management
believes the probability of a bank failure, causing loss to the Company, is
remote.

F-18

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CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

13. RECENT ACCOUNTING PRONOUNCEMENTS

The Company has reviewed all recently issued, but not yet
effective, accounting pronouncements and do 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 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements" ("SFAS No. 157"). SFAS No. 157 defines fair value, establishes
a framework for measuring fair value in generally accepted accounting principles
("GAAP"), and expands disclosures about fair value measurements. This statement
applies under other accounting pronouncements that require or permit fair value
measurement where the FASB has previously determined that under those
pronouncements fair value is the appropriate measurement. This statement does
not require any new fair value measurements but may require companies to change
current practice. This statement is effective for those fiscal years beginning
after November 15, 2007 and to the interim periods within those fiscal years.
The Company believes that SFAS No. 157 should not have a material impact on the
financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, "The Fair
Value Option for Financial Assets and Financial Liabilities"("SFAS No.
159"). SFAS No. 159 permits entities to choose to measure, on an item-by-item
basis, specified financial instruments and certain other items at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are required to be reported in earnings at each reporting date. SFAS No.
159 is effective for fiscal years beginning after November 15, 2007, the
provisions of which are required to be applied prospectively. The Company
believes that SFAS No. 159 should not have a material impact on the consolidated
financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised 2007),
"Business Combinations"("SFAS No. 141R"). SFAS No. 141R will change the
accounting for business combinations. Under SFAS No. 141R, an acquiring entity
will be required to recognize all the assets acquired and liabilities assumed in
a transaction at the acquisition-date fair value with limited exceptions. SFAS
No. 141R will change the accounting treatment and disclosure for certain
specific items in a business combination. SFAS No. 141R applies prospectively to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2008. Accordingly, any business combinations the Company engages in will be
recorded and disclosed following existing GAAP until January 1, 2009. The
Company expects SFAS No. 141R will have an impact on accounting for business
combinations once adopted but the effect is dependent upon acquisitions at that
time. The Company is still assessing the impact of this pronouncement.

In April 2008, the FASB issued FSP No. 142-3, Determination
of the Useful Life of Intangible Assets(FSP No.142-3) that amends the
factors considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142.
FSP No. 142-3 requires a consistent approach between the useful life of a
recognized intangible asset under SFAS No. 142 and the period of expected cash
flows used to measure the fair value of an asset under SFAS No. 141(R). FSP No.
142-3 also requires enhanced disclosures when an intangible assets expected
future cash flows are affected by an entitys intent and/or ability to renew or
extend the arrangement. FSP No. 142-3 is effective for financial statements
issued for fiscal years beginning after December 15, 2008 and is applied
prospectively. The Company does not expect the adoption of FSP No.142-3 to have
a material impact on its consolidated results of operations or financial
condition.

In May 2008, the FASB issued SFAS No. 163, "Accounting for
Financial Guarantee Insurance Contracts--an interpretation of FASB Statement No.
60" ("SFAS No. 163"). SFAS No. 163 interprets Statement 60 and amends
existing accounting pronouncements to clarify their application to the financial
guarantee insurance contracts included within the scope of that Statement. SFAS
No. 163 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and all interim periods within those fiscal years. As
such, the Company is required to adopt these provisions at the beginning of the
fiscal year ended December 31, 2009. The Company is currently evaluating the
impact of SFAS No. 163 on its financial statements but does not expect it to
have an effect on the Company's financial position, results of operations or
cash flows.

F-19

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CHINA MARKETING MEDIA HOLDINGS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008 AND
2007

13. RECENT ACCOUNTING PRONOUNCEMENTS - Continued

In June 2008, the FASB ratified EITF No. 07-5, "Determining
Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own
Stock" ("EITF 07-5"). EITF 07-5 provides that an entity should use a
two-step approach to evaluate whether an equity-linked financial instrument (or
embedded feature) is indexed to its own stock, including evaluating the
instrument's contingent exercise and settlement provisions. EITF 07-5 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. Early application is not permitted. The Company is assessing
the potential impact of this EITF 07-5 on the financial condition and results of
operations.

In September 2008, the FASB issued FSP 133-1 and FIN 45-4,
Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the
Effective Date of FASB Statement No. 161 (FSP FAS 133-1 and FIN 45-4).
FSP FAS 133-1 and FIN 45-4 amends disclosure requirements for sellers of credit
derivatives and financial guarantees. It also clarifies the disclosure
requirements of SFAS No. 161 and is effective for quarterly periods beginning
after November 15, 2008, and fiscal years that include those periods. The
adoption of FSP FAS 133-1 and FIN 45-4 did not have a material impact on the
Companys current financial position, results of operation or cash flows.

In October 2008, the FASB issued Staff Position (FSP) No.
157-3, Determining the Fair Value of a Financial Asset When the Market for
That Asset is Not Active (FSP FAS 157-3.) FSP FAS 157-3 clarifies the
application of SFAS No. 157 in an inactive market. It illustrated how the fair
value of a financial asset is determined when the market for that financial
asset is inactive. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements had not been issued. The adoption of FSP
FAS 157-3 did not have a material impact on the Companys current financial
position, results of operations or cash flows.

F-20

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