IDEANOMICS, INC. - FORM S-1

Attached files

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EX-5 - EXHIBIT 5 - IDEANOMICS, INC.	ex5.htm
EX-3.1 - EXHIBIT 3.1 - IDEANOMICS, INC.	ex3_1.htm
EX-21.1 - EXHIBIT 21.1 - IDEANOMICS, INC.	ex21_1.htm
EX-23.1 - EXHIBIT 23.1 - IDEANOMICS, INC.	ex23_1.htm

As filed with the Securities and Exchange Commission on October 7, 2010

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________

FORM S-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

CHINA BROADBAND, INC.

(Exact name of registrant as specified in its charter)

Nevada	4841	20-1778374
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

27 Union Square, West Suite 502

New York, New York 10003

(303) 449-7733

(Address and telephone number of principal executive offices)

____________________________

Mr. Shane McMahon

27 Union Square, West Suite 502

New York, New York 10003

(303) 449-7733

Copies to:

Louis A. Bevilacqua, Esq.

Pillsbury Winthrop Shaw Pittman LLP

2300 N Street, N.W.

Washington, D.C. 20037

(202) 663-8000

(Names, addresses and telephone numbers of agents for service)

____________________________

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)

Smaller reporting company x

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered	Amount to be registered(1)(3)	Proposed maximum offering price per unit (2)	Proposed maximum aggregate offering price (2)	Amount of registration fee
Common Stock, $0.001 par value	62,500,000	$0.05	$3,125,000	$222.81
Common Stock, $0.001 par value, issuable upon exercise of warrants	62,500,000	$0.05	$3,125,000	$222.81
Common Stock, $0.001 par value, issuable upon exercise of placement agent warrants	4,018,000	$0.05	$200,900	$14.32
TOTAL	129,018,000	$0.05	$6,450,900	$459.94

(1)	In accordance with Rule 416(a), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.

(2)

Estimated pursuant to Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee, based on the average of the high and low prices reported on the OTCQB Market on September 23, 2010, except that with respect to the shares underlying the warrants, the fee is calculated pursuant to Rule 457(g).

(3)	Represents shares of the Registrant’s common stock being registered for resale that have been issued to the selling stockholders named in this registration statement.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS

Subject to completion, dated October 7, 2010

CHINA BROADBAND, INC.

129,018,000 Shares of Common Stock

This prospectus relates to 129,018,000 shares of common stock of China Broadband, Inc. that may be sold from time to time by the selling stockholders named in this prospectus, which includes:

62,500,000 shares of common stock; and

66,518,000 shares of common stock issuable to the selling stockholders upon the exercise of warrants.

We will not receive any proceeds from sales by the selling stockholders.

Our common stock is quoted on the OTCQB inter-dealer electronic quotation and trading system maintained by Pink OTC Markets Inc. under the symbol “CBBD.” The closing bid price for our common stock on September 23, 2010 was $0.05 per share, as reported on the OTCQB.

Any participating broker-dealers and any selling stockholders who are affiliates of broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, or the Securities Act, and any commissions or discounts given to any such broker-dealer or affiliates of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 5 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is , 2010.

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PROSPECTUS SUMMARY	1

RISK FACTORS	5

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	17

USE OF PROCEEDS	17

DETERMINATION OF OFFERING PRICE	17

MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	17

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18

CORPORATE HISTORY AND STRUCTURE	33

OUR BUSINESS	35

DESCRIPTION OF PROPERTY	42

LEGAL PROCEEDINGS	42

MANAGEMENT	42

EXECUTIVE COMPENSATION	45

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	47

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS; DIRECTOR INDEPENDENCE	49

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS	50

SELLING STOCKHOLDERS	50

DESCRIPTION OF CAPITAL STOCK	53

SHARES ELIGIBLE FOR FUTURE SALE	57

PLAN OF DISTRIBUTION	58

LEGAL MATTERS	59

EXPERTS	59

WHERE YOU CAN FIND MORE INFORMATION	59

You should only rely on the information contained in this prospectus. We have not, and the selling stockholders have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date on the front cover, but the information may have changed since that date.

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PROSPECTUS SUMMARY

The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the financial statements, the notes thereto and matters set forth under “Risk Factors.”

Except as otherwise indicated by the context, references in this prospectus to “we,” “us,” “our,” “our Company,” or “the Company” are to the combined business of China Broadband, Inc., a Nevada corporation, and its consolidated subsidiaries and variable interest entities.

In addition, unless the context otherwise requires and for the purposes of this prospectus only:

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“AdNet” refers to Wanshi Wangjing Media Technologies (Beijing) Co., Ltd. (a/k/a Adnet Media Technologies (Beijing) Co., Ltd.), a PRC company controlled by CB Cayman through a contractual arrangement;

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“CB Cayman” refers to our wholly-owned subsidiary China Broadband Ltd., a Cayman Islands company;

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“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

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“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;

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“Jinan Broadband” refers to Jinan Guangdian Jiahe Broadband Co., Ltd., a PRC joint venture owned 51% by WFOE and 49% by Jinan Parent;

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“Jinan Parent” refers to Jinan Guangdian Jiahe Digital Television Co., Ltd., a PRC company;

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“Jinan Zhongkuan” refers to Jinan Zhongkuan Dian Guang Information Technology Co., Ltd., a PRC company owned 90% by Pu Yue and 10% by Liang Yuejing, PRC individuals, and controlled by CB Cayman through contractual arrangements;

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“Modern Movie” refers to Modern Movie and TV Biweekly Press, a PRC company;

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“Networks Center” refers to Jinan Radio & Television Network;

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“PRC,” “China,” and “Chinese,” refer to the People’s Republic of China;

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“Renminbi” and “RMB” refer to the legal currency of China;

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“SEC” refers to the Securities and Exchange Commission;

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“Securities Act” refers to the Securities Act of 1933, as amended;

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“Shandong Broadcast” refers to Shandong Broadcast & TV Weekly Press, a PRC company;

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“Shandong Publishing” refers to Shandong Lushi Media Co., Ltd., a PRC company owned 50% by Jinan Zhongkuan, 30% by Shandong Broadcast and 20% by Modern Movie;

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“Sinotop Beijing” refers to Beijing Sino Top Scope Technology Co., Ltd, a PRC company controlled by Sinotop HK through contractual arrangements;

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“Sinotop HK” refers to Sinotop Group Limited, a Hong Kong company wholly-owned by CB Cayman;

●

“U.S. dollars,” “dollars,” “US$” and “$” refer to the legal currency of the United States;

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“VIEs” refers to our variable interest entities, including Jinan Broadband, Shandong Publishing and Sinotop Beijing; and

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“WFOE” refers to Beijing China Broadband Network Technology Co., Ltd., a PRC company wholly-owned by CB Cayman.

In this prospectus we are relying on and we refer to information and statistics regarding the media industry in China that we have obtained from various public sources. Any such information is publicly available for free and has not been specifically prepared for us for use or incorporation in this prospectus or otherwise.

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The Company

Overview of our Business

We operate in the media segment, through our Chinese subsidiaries and VIEs, (1) a business which provides integrated value-added service solutions for the delivery of pay-per-view, or PPV, video-on-demand, or VOD, and enhanced premium content for cable providers, (2) a cable broadband business based in the Jinan region of China and (3) a television program guide, newspaper and magazine publishing business based in the Shandong region of China.

On July 30, 2010, we acquired Sinotop HK through our subsidiary CB Cayman. Through a VIE structure, which is a series of contractual arrangements, Sinotop HK controls Sinotop Beijing. Through Sinotop Beijing, a corporation established in the PRC which is a party to a joint venture with two other PRC companies, we provide integrated value-added service solutions for the delivery of PPV, VOD, and enhanced premium content for cable providers.

Through our VIE, Jinan Broadband, we provide cable and wireless broadband services, principally internet services, Internet Protocol Point wholesale services, related network equipment rental and sales, and fiber network construction and maintenance. Jinan Broadband’s revenue consists primarily of sales to our PRC-based internet consumers, cable modem consumers, business customers and other internet and cable services.

Through our VIE, Shandong Publishing, we operate our publishing business, which includes the distribution of periodicals, the publication of advertising, the organization of public relations events, the provision of information related services, copyright transactions, the production of audio and video products, and the provision of audio value added communication services. Shandong Publishing’s revenue consists primarily of sales of publications and advertising revenues.

We acquired AdNet, a company which provided internet content in cafes, during the first half of 2009. Due to the shift of our business model to the PPV and VOD business, as of December 31, 2009, we permanently suspended the day-to-day operations of AdNet. We have maintained our technology and other assets of AdNet for future use in our new pay-per-view business.

See “Corporate History and Structure” later in this prospectus for additional information on our VIE structures.

Our Industry

Until 2005, there were over 2,000 independent cable operators in the PRC. While PRC’s State Administration of Radio, Film, and Television, or SARFT, has advocated for national consolidation of cable networks, the consolidation has primarily occurred at the provincial level. The 30 provinces are highly variable in their consolidation efforts and processes.

SARFT has taken various steps to implement a separation scheme to achieve economies of scale in the value-added service and cable operation sector. First, SARFT has been separating cable network assets from broadcasting assets and currently allows state-owned-enterprises to hold up to 49% in the cable network infrastructure assets. Second, SARFT is separating the value-added services segment from the network infrastructure which tends to increase private investments.

Due to its highly-regulated nature, we believe that the radio and broadcasting industry does not have the same financial resources as the deregulated telecom industry in China, and that the priorities and goals of this industry are different from the telecom industry.

We believe that SARFT and its broadcasters are currently focusing on increasing subscription revenues by converting Chinese television viewers from “analog” service to “digital” (pay TV) service. The digitalization efforts include providing set-top-boxes free of charge as part of a digital television service bundling initiative. Due to the lack of financial resources, we believe that the rollout of cable broadband services and other value-added services has moved lower on SARFT’s priority list.

Our Growth Strategy

We intend to implement the following strategic plans to take advantage of industry opportunities and expand our business:

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Pay-Per-View and Video-On-Demand Services. Through our recently announced acquisition of Sinotop HK, and its VIE, Sinotop Beijing, which is a party to a joint venture consisting of partnerships with two major PRC companies, we have received an exclusive and national license to deploy PPV/VOD services onto cable TV networks throughout China. Currently we have access to the largest movie library in China and we plan to acquire content from entertainment companies and studios in the U.S. and other parts of the world to deliver an integrated solution for enhanced premium content through cable providers. There are over 170 million cable television households in China and we plan to capitalize on the revenue opportunities as the government continues to mandate the switch from analog to digital cable by 2015.

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Focus on Additional Delivery Platforms. Once we build an extensive entertainment content library and establish our reputation within the cable television industry, we plan to expand the distribution of our content over multiple delivery platforms including internet, mobile, IPTV and satellite to expand out product offerings and diversifying our revenue streams.

●

Our Corporate History

China Broadband, Inc., our parent holding company, was formed in the State of Nevada on October 22, 2004, pursuant to a reorganization of a California entity formed in 1988. Prior to January 2007, we were a blank check shell company.

On January 23, 2007, we acquired CB Cayman, which at the time was a party to the cooperation agreement with our PRC based WFOE, in a reverse acquisition transaction.

All of our business operations are conducted through our Chinese subsidiaries and VIEs, as described under “Corporate History and Structure” below.

Office Location

The address of our principal executive office is 27 Union Square, West Suite 502, New York, New York 10003 and our telephone number is (303) 449-7733. We maintain a website at www.chinabroadband.tv.

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The Offering

Common stock offered by selling stockholders		129,018,000 shares (consisting of 62,500,000 shares of common stock and 66,518,000 shares of common stock issuable upon the exercise of warrants. This number represents 65.5% of our current outstanding common stock (1)

Common stock outstanding before the offering		190,769,563 shares.

Common stock outstanding after the offering		190,769,563 shares.

Offering Price		The selling stockholders will determine at what price they may sell the offered shares, and such sales may be made at prevailing market prices or at privately negotiated prices.

Proceeds to us		All of the shares of common stock being offered under this prospectus are being offered and sold by the selling stockholders. Accordingly, although we may receive proceeds from time to time from the exercise of warrants by some of the selling stockholders, we will not receive any proceeds from the resale of the shares by the selling security holders.

Risk Factors		See “Risk Factors” beginning on page 5 of this prospectus and the risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2009, for a discussion of factors you should carefully consider before deciding to invest in our securities.

(1)	Based on 190,769,563 shares of common stock outstanding as of September 21, 2010.

Unless we specifically state otherwise, the share information in this prospectus excludes shares of our common stock issuable upon exercise of warrants or options outstanding as of September 17, 2010.

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. 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, and you may lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

Our auditors have expressed substantial doubt in their report on our financial statements about our ability to continue as a going concern.

Our auditors have included an explanatory paragraph in their report dated as of April 15, 2010 on our consolidated financial statements for the year ended December 31, 2009, indicating that there is substantial doubt regarding our ability to continue as a going concern. The financial statements included elsewhere in this prospectus do not include any adjustments to asset values or recorded liability amounts that might be necessary in the event we are unable to continue as a going concern. If we are in fact unable to continue as a going concern, our shareholders may lose their entire investment in our Company. We will therefore need immediate additional substantial capital in order to continue to operate.

Expansion of our business may put added pressure on our management and operational infrastructure impeding our ability to meet any potential increased demand for our services and possibly hurting our future operating results.

Our business plan is to significantly grow our operations to meet anticipated growth in demand for the services that we offer, and by the introduction of new goods or services. Growth in our businesses may place a significant strain on our personnel, management, financial systems and other resources. The evolution of our business also presents numerous risks and challenges, including:

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our ability to successfully and rapidly expand sales to potential new distributors in response to potentially increasing demand;

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the costs associated with such growth, which are difficult to quantify, but could be significant; and

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rapid technological change.

To accommodate any such growth and compete effectively, we may need to obtain additional funding to improve information systems, procedures and controls and expand, train, motivate and manage our employees, and such funding may not be available in sufficient quantities, if at all. If we are not able to manage these activities and implement these strategies successfully to expand to meet any increased demand, our operating results could suffer.

In order to comply with PRC regulatory requirements, we operate our businesses through companies with which we have contractual relationships but in which we do not have controlling ownership. If the PRC government determines that our agreements with these companies are not in compliance with applicable regulations, our business in the PRC could be materially adversely affected.

We do not have direct or indirect equity ownership of our VIEs, which collectively operate all our businesses in China. At the same time, however, we have entered into contractual arrangements with each of our VIEs and their individual owners pursuant to which we received an economic interest in, and exert a controlling influence over each of the VIEs, in a manner substantially similar to a controlling equity interest.

Although we believe that our current business operations are in compliance with the current laws in China, we cannot be sure that the PRC government would view our operating arrangements to be in compliance with PRC regulations that may be adopted in the future. If we are determined not to be in compliance, the PRC government could levy fines, revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, require us to restructure our business, corporate structure or operations, impose additional conditions or requirements with which we may not be able to comply, impose restrictions on our business operations or on our customers, or take other regulatory or enforcement actions against us that could be harmful to our business. As a result, our business in the PRC could be materially adversely affected.

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We rely on contractual arrangements with our VIEs for our operations, which may not be as effective in providing control over these entities as direct ownership.

Our operations and financial results are dependent on our VIEs in which we have no equity ownership interest and must rely on contractual arrangements to control and operate the businesses of each of our VIEs. These contractual arrangements are not as effective in providing control over the VIEs as direct ownership. For example, one of the VIEs may be unwilling or unable to perform their contractual obligations under our commercial agreements. Consequently, we would not be able to conduct our operations in the manner currently planned. In addition, any of the VIEs may seek to renew their agreements on terms that are disadvantageous to us. Although we have entered into a series of agreements that provide us with substantial ability to control the VIEs, we may not succeed in enforcing our rights under them insofar as our contractual rights and legal remedies under PRC law are inadequate. In addition, if we are unable to renew these agreements on favorable terms when these agreements expire, or to enter into similar agreements with other parties, our business may not be able to operate or expand, and our operating expenses may significantly increase.

Our arrangements with our VIEs and their respective shareholders may be subject to a transfer pricing adjustment by the PRC tax authorities which could have an adverse effect on our income and expenses.

We could face material and adverse tax consequences if the PRC tax authorities determine that our contracts with our VIEs and their respective shareholders were not entered into based on arm’s length negotiations. Although our contractual arrangements are similar to other companies conducting similar operations in China, if the PRC tax authorities determine that these contracts were not entered into on an arm’s length basis, they may adjust our income and expenses for PRC tax purposes in the form of a transfer pricing adjustment. Such an adjustment may require that we pay additional PRC taxes plus applicable penalties and interest, if any.

The success of our business is dependent on our ability to retain our existing key employees and to add and retain senior officers to our management.

We depend on the services of our existing key employees, in particular, Mr. Shane McMahon, our Chairman and Chief Executive Officer, Mr. Marc Urbach, our President and Chief Financial Officer, Mr. Clive Ng, our Co-Chairman, and Mr. Weicheng Liu, a Senior Executive Officer. Our success will largely depend on our ability to retain these key employees and to attract and retain qualified senior and middle level managers to our management team. We have recruited executives and management in China to assist in our ability to manage the business and to recruit and oversee employees. While we believe we offer compensation packages that are consistent with market practice, we cannot be certain that we will be able to hire and retain sufficient personnel to support our business. In addition, severe capital constraints have limited our ability to attract specialized personnel. Moreover, our budget limitations will restrict our ability to hire qualified personnel. The loss of any of our key employees would significantly harm our business. We do not maintain key person life insurance on any of our employees.

Our officers and directors may allocate their time to other businesses, and are or may be affiliated with entities that may cause conflicts of interest.

Certain officers and all of our directors have the ability to allocate their time to other businesses and activities, thereby causing possible conflicts of interest in their determination as to how much time to devote to the affairs of our Company.

These individuals are engaged in several other business endeavors and will continue to be so involved from time to time, and are not obligated to devote any specific number of hours to our affairs. If other business affairs require them to devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ongoing business. Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us or otherwise, and accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular investment or business opportunity should be presented. Moreover, in light of our officers’ and directors’ existing affiliations with other entities, they may have fiduciary obligations to present potential investment and business opportunities to those entities in addition to presenting them to us, which could cause additional conflicts of interest. While we do not believe that any of our officers or directors has a conflict of interest in terms of presenting to entities other than our investment and business opportunities that may be suitable for it, conflicts of interest may arise in the future in determining to which entity a particular business opportunity should be presented.

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We can not assure you that any conflicts will be resolved in our favor. These possible conflicts may inhibit the activities of such officers and directors in seeking acquisition candidates to expand the geographic reach of the Company or broaden its service offerings. For a complete description of our management’s other affiliations, see “Management’’ below. In any event, it cannot be predicted with any degree of certainty as to whether or not our officers or directors will have a conflict of interest with respect to a particular transaction as such determination would be dependent upon the specific facts and circumstances surrounding such transaction at the time.

We may be unable to compete successfully against new entrants and established industry competitors.

The Chinese market for Internet content and services is intensely competitive and rapidly changing. Barriers to entry are relatively minimal, and current and new competitors can launch new websites at a relatively low cost. Many companies offer competitive products or services including Chinese language-based Web search, retrieval and navigation services, wireless value-added services, online games and extensive Chinese language content, informational and community features and e-mail. In addition, as a consequence of China joining the World Trade Organization, the Chinese government has partially lifted restrictions on foreign-invested enterprises so that foreign investors may hold in the aggregate up to approximately 51% of the total equity ownership in any value-added telecommunications business, including an Internet business, in China.

Currently, our competition comes from standard “telephone” internet providers. Any of our present or future competitors may offer products and services that provide significant performance, price, creativity or other advantages over those offered by us and, therefore, achieve greater market acceptance than ours.

Because many of our existing competitors, as well as a number of potential competitors, have longer operating histories in the Internet market, greater name and brand recognition, better connections with the Chinese government, larger customer bases and databases and significantly greater financial, technical and marketing resources than we have, we cannot assure you that we will be able to compete successfully against our current or future competitors. Any increased competition could reduce page views, make it difficult for us to attract and retain users, reduce or eliminate our market share, lower our profit margins and reduce our revenues.

Unexpected network interruption caused by system failures may reduce user base and harm our reputation.

Both the continual and foremost accessibility of Internet service websites and the performance and reliability of our technical infrastructure are critical to our reputation and the ability of our Internet services to attract and retain users and advertisers. Any system failure or performance inadequacy that causes interruptions or delays in the availability of our services or increases the response time of our services could reduce user satisfaction and traffic, which would reduce the internet service appeal to users of “high speed” internet usage. As the number of users and traffic increase, we cannot assure you that we will be able to scale our systems proportionately. In addition, any system failures and electrical outages could materially and adversely impact our business.

Computer viruses may cause delays or interruptions on our systems and may reduce our customer base and harm our reputation.

Computer viruses may cause delays or other service interruptions on our systems. In addition, the inadvertent transmission of computer viruses could expose us to a material risk of loss or litigation and possible liability. We may be required to expend significant capital and other resources to protect our internet service against the threat of such computer viruses and to alleviate any problems. Moreover, if a computer virus affecting our system is highly publicized, our reputation could be materially damaged and customers may cancel our service.

If our providers of bandwidth and server custody service fail to provide these services, our business could be materially curtailed.

We rely on affiliates of Jinan Parent to provide us with bandwidth and server custody service for Internet users. If Jinan Parent or their affiliates fail to provide such services or raise prices for their services, we may not be able to find a reliable and cost-effective substitute provider on a timely basis or at all. If this happens, our business could be materially curtailed.

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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.

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.

Our PPV and VOD business depends on third parties to provide the programming that we offer to subscribers in China, and if we are unable to secure access to this programming, we may be unable to attract subscribers.

Our PPV and VOD business depends on third parties to provide us with programming services which we would distribute to our subscribers in China. We plan to negotiate with various U.S. entertainment studios to secure access to programming content, however we may not be able to obtain access to the programming content on favorable terms or at all. If we are unable to successfully negotiate agreements for access to high quality programming content, we may not be able to attract subscribers for our service and our operating results would be negatively affected.

If we are unable to attract subscribers for our PPV and VOD services, or are unable to successfully negotiate agreements with cable television providers in China to deliver our programming content, our financial performance will be adversely affected.

At present, there is a limited market for PPV and VOD services in China, and there is no guarantee that a market will develop or that we will be able to attract subscribers to purchase our services. In addition, we rely on cable television providers to deliver our programming content to subscribers and we may not be able to negotiate agreements to deliver our programming content on favorable terms or at all. If we are unable to attract subscribers or successfully negotiate delivery agreements with cable television providers, our financial performance will be adversely affected.

We may be exposed to potential risks relating to our internal controls over financial reporting.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports, including Form 10-K. Under current law, we were subject to these requirements beginning with our annual report for the fiscal year ended December 31, 2007. Our internal control over financial reporting and our disclosure controls and procedures have been ineffective, and failure to improve them could lead to future errors in our financial statements that could require a restatement or untimely filings, which could cause investors to lose confidence in our reported financial information, and a decline in our stock price.

We are constantly striving to establish and improve our business management and internal control over financial reporting to forecast, budget and allocate our funds. However, as a PRC company that has become a US public company, we face difficulties in hiring and retaining a sufficient number of qualified employees to achieve and maintain an effective system of internal control over financial reporting in a short period of time.

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In connection with the preparation and audit of our 2009 financial statements and notes, we were informed by our auditor, UHY LLP, or UHY, of certain deficiencies in our internal controls that UHY considered to be material weaknesses. These deficiencies related to our financial closing procedures and errors in classification of warrants. After discussions between management, our audit committee and UHY, we concluded that the Company had not properly adopted FASB ASC Topic 815-40 (“Derivatives and Hedging: Contracts in Entity’s Own Equity”) and as a result had not reclassified warrants from equity to liabilities as of January 1, 2009. As a result of the change in accounting, the Company recognized a $512,000 charge for the year ended December 31, 2009.

Because of the above-referenced deficiencies and weaknesses in our disclosure controls and procedures and procedures and internal control over financial reporting, we may be unable to comply with the SOX 404 internal controls requirements. As a result of any deficiencies and weaknesses, we may experience difficulty in collecting financial data and preparing financial statements, books of account and corporate records, and instituting business practices that meet international standards, failure of which may prevent us from accurately reporting our financial results or detecting and preventing fraud.

RISKS RELATED TO DOING BUSINESS IN CHINA

Changes in China's political or economic situation could harm us and our operating 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:

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Level of government involvement in the economy;

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Control of foreign exchange;

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Methods of allocating resources;

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Balance of payments position;

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International trade restrictions; and

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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. For example, state-owned enterprises still constitute a large portion of the Chinese economy, and weak corporate governance and the lack of a flexible currency exchange policy still prevail in China. 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 was similar to those of the OECD member countries.

Increased government regulation of the telecommunications and Internet industries in China may result in the Chinese government requiring us to obtain additional licenses or other governmental approvals to conduct our business which, if unattainable, may restrict our operations.

The telecommunications industry is highly regulated by the Chinese government, the main relevant government authority being the Ministry of Information Industry, or MII. Prior to China’s entry into the World Trade Organization, the Chinese government generally prohibited foreign investors from taking any equity ownership in or operating any telecommunications business. Internet Content Provider, or ICP, services are classified as telecommunications value-added services and therefore fall within the scope of this prohibition. This prohibition was partially lifted following China’s entry into the World Trade Organization, allowing foreign investors to own interests in Chinese businesses. In addition, foreign and foreign invested enterprises are currently not able to apply for the required licenses for operating cable broadband services in China.

We cannot be certain that we will be granted any of the appropriate licenses, permits or clearance that we may need in the future. Moreover, we cannot be certain that any local or national ICP or telecommunications license requirements will not conflict with one another or that any given license will be deemed sufficient by the relevant governmental authorities for the provision of our services.

We rely exclusively on contractual arrangements with Jinan Parent and its approvals to operate as an ICP. We believe that our present operations are structured to comply with applicable Chinese law. However, many Chinese regulations are subject to extensive interpretive powers of governmental agencies and commissions. We cannot be certain that the Chinese government will not take action to prohibit or restrict our business activities. We are uncertain as to whether the Chinese government will reclassify our business as a media or retail company, due to our acceptance of fees for Internet advertising, online games and wireless value-added and other services as sources of revenues, or as a result of our current corporate structure. Such reclassification could subject us to penalties, fines or significant restrictions on our business. Future changes in Chinese government policies affecting the provision of information services, including the provision of online services, Internet access, e-commerce services and online advertising, may impose additional regulatory requirements on us or our service providers or otherwise harm our business.

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Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.

We conduct substantially all of our business through our subsidiaries in the PRC. Our subsidiaries are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations, and rules are not always uniform, and enforcement of these laws, regulations, and rules involve uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. In addition, all of our executive officers and all of our directors are residents of China and not of the United States, and substantially all the assets of these persons are located outside the United States. As a result, it could be difficult for investors to affect service of process in the United States or to enforce a judgment obtained in the United States against our Chinese operations and subsidiaries.

You may have difficulty enforcing judgments against us.

Most of our assets are located outside of the United States and most of our current operations are conducted in the PRC. In addition, some of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors that are not residents in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts. Our counsel as to PRC law has advised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. Courts in China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the United States. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national sovereignty, security, or the public interest. So it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States.

The PRC government exerts substantial influence over the manner in which we must conduct our business activities.

The PRC 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 the jurisdictions in which we operate 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.

Future inflation in China may inhibit our ability to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 5.9% and as low as -0.8% . These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.

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Restrictions on currency exchange may limit our ability to receive and use our sales effectively.

The majority of our revenues will be settled in RMB and U.S. dollars, and any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business. In addition, conversion of RMB for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the RMB.

Fluctuations in exchange rates could adversely affect our business and the value of our securities.

The value of our common stock will be indirectly affected by the foreign exchange rate between the U.S. dollar and RMB and between those currencies and other currencies in which our revenues may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.

Since July 2005, the RMB has no longer been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.

Restrictions under PRC law on our PRC VIEs’ ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.

Substantially all of our revenues are earned by our PRC VIEs. However, PRC regulations restrict the ability of our PRC VIEs to make dividends and other payments to its offshore parent company. PRC legal restrictions permit payments of dividends by our PRC VIEs only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC VIEs are also required under PRC laws and regulations to allocate at least 10% of their annual after-tax profits determined in accordance with PRC generally accepted accounting principles to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances, or cash dividends. Any limitations on the ability of our PRC VIEs to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Because Our Assets Are Located In China, Any Dividends Of Proceeds From Liquidation Is Subject To The Approval Of The Relevant Chinese Government Agencies.

Our assets are located inside China. Under the laws governing foreign invested enterprises in China, dividends of proceeds from liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend of proceeds from liquidation is subject to both the relevant government agency’s approval and supervision as well as the foreign exchange control. This may generate additional risk for our investors in case of liquidation.

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Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into PRC subsidiaries, limit our PRC subsidiary's ability to distribute profits to us or otherwise materially adversely affect us.

In October 2005, the PRC State Administration of Foreign Exchange, or SAFE, issued the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China, generally referred to as Circular 75, which required PRC residents to register with the competent local SAFE branch before establishing or acquiring control over an offshore special purpose company, or SPV, for the purpose of engaging in an equity financing outside of China on the strength of domestic PRC assets originally held by those residents. Internal implementing guidelines issued by SAFE, which became public in June 2007 (known as Notice 106), expanded the reach of Circular 75 by (1) purporting to cover the establishment or acquisition of control by PRC residents of offshore entities which merely acquire “control” over domestic companies or assets, even in the absence of legal ownership; (2) adding requirements relating to the source of the PRC resident’s funds used to establish or acquire the offshore entity; (3) covering the use of existing offshore entities for offshore financings; (4) purporting to cover situations in which an offshore SPV establishes a new subsidiary in China or acquires an unrelated company or unrelated assets in China; and (5) making the domestic affiliate of the SPV responsible for the accuracy of certain documents which must be filed in connection with any such registration, notably, the business plan which describes the overseas financing and the use of proceeds. Amendments to registrations made under Circular 75 are required in connection with any increase or decrease of capital, transfer of shares, mergers and acquisitions, equity investment or creation of any security interest in any assets located in China to guarantee offshore obligations, and Notice 106 makes the offshore SPV jointly responsible for these filings. In the case of an SPV which was established, and which acquired a related domestic company or assets, before the implementation date of Circular 75, a retroactive SAFE registration was required to have been completed before March 31, 2006. This date was subsequently extended indefinitely by Notice 106, which also required that the registrant establish that all foreign exchange transactions undertaken by the SPV and its affiliates were in compliance with applicable laws and regulations. Failure to comply with the requirements of Circular 75, as applied by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign exchange restrictions. Any such failure could also result in the SPV’s affiliates being impeded or prevented from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the SPV, or from engaging in other transfers of funds into or out of China.

We have asked our stockholders who are PRC residents, as defined in Circular 75, to register with the relevant branch of SAFE as currently required in connection with their equity interests in us and our acquisitions of equity interests in our PRC subsidiary. However, we cannot provide any assurances that they can obtain the above SAFE registrations required by Circular 75 and Notice 106. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, our present and prospective PRC subsidiaries' ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with Circular 75 and Notice 106 by our PRC resident beneficial holders.

In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 75 and Notice 106. We also have little control over either our present or prospective direct or indirect stockholders or the outcome of such registration procedures. A failure by our PRC resident beneficial holders or future PRC resident stockholders to comply with Circular 75 and Notice 106, if SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries' ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

The implementation of the new PRC employment contract law and increases in the labor costs in China may hurt our business and profitability.

We are primarily a service provider. A new employment contract law became effective on January 1, 2008 in China. It imposes more stringent requirements on employers in relation to entry into fixed-term employment contracts, recruitment of temporary employees and dismissal of employees. In addition, under the newly promulgated Regulations on Paid Annual Leave for Employees, which also became effective on January 1, 2008, employees who have worked continuously for more than one year are entitled to paid vacation ranging from 5 to 15 days, depending on the length of the employee’s service. Employees who waive such vacation entitlements at the request of the employer will be compensated for three times their normal daily salaries for each vacation day so waived. As a result of the new law and regulations, our labor costs may increase. There is no assurance that disputes, work stoppages or strikes will not arise in the future. Increases in the labor costs or future disputes with our employees could damage our business, financial condition or operating results.

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Under the New Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.

China passed a new Enterprise Income Tax Law, or the EIT Law, and its implementing rules, both of which became effective on January 1, 2008. Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise.

On April 22, 2009, the State Administration of Taxation issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the EIT Law and its implementation against non-Chinese enterprise or group controlled offshore entities. Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “domestically incorporated resident enterprise” if (i) its senior management in charge of daily operations reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management often resident in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and its non-PRC stockholders would be subject to a withholding tax at a rate of 10% when dividends are paid to such non-PRC stockholders. However, it remains unclear as to whether the Notice is applicable to an offshore enterprise incorporated by a Chinese natural person. Nor are detailed measures on enforcement of PRC tax against non-domestically incorporated resident enterprises are available. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.

We may be deemed to be a resident enterprise by Chinese tax authorities. If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on financing proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiary would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC stockholders and with respect to gains derived by our non-PRC stockholders from transferring our shares. We are actively monitoring the possibility of “resident enterprise” treatment for the 2010 tax year and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible.

If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be creditable against our U.S. tax.

We May Be Classified As A Passive Foreign Investment Company, Which Could Result In Adverse U.S. Tax Consequences To U.S. Investors.

Based upon the nature of our income and assets, we may be classified as a passive foreign investment company, or PFIC, by the United States Internal Revenue Service for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences to you. For example, if we are a PFIC, our U.S. investors will become subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to more burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis, and those determinations depend on the composition of our income and assets, including goodwill, from time to time. We intend to operate our business so as to minimize the risk of PFIC treatment, however you should be aware that certain factors that could affect our classification as PFIC are out of our control. For example, the calculation of assets for purposes of the PFIC rules depends in large part upon the amount of our goodwill, which in turn is based, in part, on the then market value of our shares, which is subject to change. Similarly, the composition of our income and assets is affected by the extent to which we spend the cash we have raised on acquisitions and capital expenditures. In addition, the relevant authorities in this area are not clear and so we operate with less than clear guidance in our effort to minimize the risk of PFIC treatment. Therefore, we cannot be sure whether we are not and will not be a PFIC for the current or any future taxable year. In the event we are determined to be a PFIC, our stock may become less attractive to U.S. investors, which may negatively impact the price of our common stock.

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We face uncertainty from China’s Circular on Strengthening the Administration of Enterprise Income Tax on NonResident Enterprises' Share Transfer, or Circular 698, that was released in December 2009 with retroactive effect from January 1, 2008.

The Chinese State Administration of Taxation released a circular on December 15, 2009 that addresses the transfer of shares by nonresident companies, generally referred to as Circular 698. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698, which provides parties with a short period of time to comply with its requirements, indirectly taxes foreign companies on gains derived from the indirect sale of a Chinese company. Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes. There is uncertainty as to the application of Circular 698. For example, while the term "indirectly transfer" is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. It is also unclear, in the event that an offshore holding company is treated as a domestically incorporated resident enterprise, whether Circular 698 would still be applicable to transfer of shares in such offshore holding company. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the country or jurisdiction and to what extent and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are not any formal declarations with regard to how to decide “abuse of form of organization” and “reasonable commercial purpose,” which can be utilized by us to balance if our Company complies with the Circular 698. If Circular 698 is determined to be applicable to us based on the facts and circumstances around such share transfers, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws 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 make most of our sales in China. The PRC also strictly prohibits bribery of government officials. 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 or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

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RISKS RELATED TO THE MARKET FOR OUR STOCK

The market price of our common stock is volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings.

The market price of our common stock is volatile, and this volatility may continue. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. In addition to market and industry factors, the price and trading volume for our common stock may be highly volatile for specific business reasons. Factors such as variations in our revenues, earnings and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and fluctuations in market prices for our products could cause the market price for our shares to change substantially.

Securities class action litigation is often instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us and divert our management’s attention and resources.

Moreover, the trading market for our common stock will be influenced by research or reports that industry or securities analysts publish about us or our business. If one or more analysts who cover us downgrade our common stock, the market price for our common stock would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market price for our common stock or trading volume to decline.

Furthermore, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our company at a time when you want to sell your interest in us.

Although publicly traded, the trading market in our common stock has been substantially less liquid than the average trading market for a stock quoted on the Nasdaq Global Market and this low trading volume may adversely affect the price of our common stock.

Our common stock trades on the OTCQB market maintained by Pink OTC Markets Inc. The trading market in our common stock has been substantially less liquid than the average trading market for companies quoted on the Nasdaq Global Market. Although we believe that this offering will improve the liquidity for our common stock, there is no assurance that the offering will increase the volume of trading in our common stock. Limited trading volume will subject our shares of common stock to greater price volatility and may make it difficult for you to sell your shares of common stock at a price that is attractive to you.

Provisions in our articles of incorporation and bylaws or Nevada law might discourage, delay or prevent a change of control of us or changes in our management and, therefore depress the trading price of the common stock.

Our articles of incorporation authorize our board of directors to issue up to 50,000,000 shares of preferred stock. The preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the board of directors without further action by the stockholders. These terms may include preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of such common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common stock.

In addition, Nevada corporate law and our articles of incorporation and bylaws contain certain other provisions that could discourage, delay or prevent a change in control of our Company or changes in its management that our stockholders may deem advantageous. These provisions:

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deny holders of our common stock cumulative voting rights in the election of directors, meaning that stockholders owning a majority of our outstanding shares of common stock will be able to elect all of our directors;

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require any stockholder wishing to properly bring a matter before a meeting of stockholders to comply with specified procedural and advance notice requirements; and

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allow any vacancy on the board of directors, however the vacancy occurs, to be filled by the directors.

We may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

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. If our common stock becomes a “penny stock,” we 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 the Penny Stock Rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

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

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

Certain of our stockholders hold a significant percentage of our outstanding voting securities.

Mr. Shane McMahon, our Chairman and Chief Executive Officer, is the beneficial owner of approximately 84.15% of our outstanding voting securities, and Mr. Weicheng Liu, a Senior Executive Officer, is the beneficial owner of approximately 23.77% of our outstanding voting securities (as calculated in accordance with Rule 13d-3(d)(1) of the Exchange Act). As a result, each possesses significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions. Their respective 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.

The number of shares being registered for sale is significant in relation to our trading volume.

All of the shares registered for sale on behalf of the selling stockholders are “restricted securities” as that term is defined in Rule 144 under the Securities Act. We have filed this registration statement to register these restricted shares for sale into the public market by the selling stockholders. These restricted securities, if sold in the market all at once or at about the same time, could depress the market price during the period the registration statement remains effective and also could affect our ability to raise equity capital. Any outstanding shares not sold by the selling stockholders pursuant to this prospectus will remain as “restricted shares” in the hands of the holders, except for those sales that satisfy the requirements under Rule 144 or another exemption to the registration requirements under the Securities Act.

We do not intend to pay dividends for the foreseeable future.

For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Accordingly, investors must be prepared to rely on sales of their common stock after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Our Business.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” above. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. These forward-looking statements include, among other things, those concerning market and industry segment growth and demand and acceptance of new and existing products or services; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we reference in this prospectus, or that we filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders, nor will any of the proceeds from resale be available for our use or otherwise for our benefit. The selling stockholders will receive all of the net proceeds from the sales of common stock offered by them under this prospectus. Although we may receive proceeds from time to time from the exercise of warrants by some of the selling security holders, we will not receive any proceeds from the resale of the underlying shares by the selling security holders.

DETERMINATION OF OFFERING PRICE

The selling stockholders will determine at what price they may sell the offered shares, and such sales may be made at prevailing market prices or at privately negotiated prices.

MARKET PRICE OF AND DIVIDENDS ON OUR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is quoted on the OTCQB market maintained by Pink OTC Markets Inc. under the symbol “CBBD.” Trading of our common stock is sometimes limited and sporadic. The following table sets forth, for the periods indicated, the high and low closing 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		Low
Year Ended December 31, 2010
1st Quarter	$	0.20	$	0.08
2nd Quarter		0.16		0.07
3rd Quarter (through September 23, 2010)		0.11		0.05

Year Ended December 31, 2009
1st Quarter	$	0.24	$	0.02
2nd Quarter		0.25		0.10
3rd Quarter		0.20		0.15
4th Quarter		0.25		0.05

Year Ended December 31, 2008
1st Quarter	$	0.02	$	0.02
2nd Quarter		0.10		0.10
3rd Quarter		0.50		0.50
4th Quarter		1.15		0.51

________________________

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

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Approximate Number of Holders of Our Common Stock

As of September 10, 2010, there were approximately 381 stockholders of record of our common stock, as reported by our transfer agent. In computing the number of holders of record, each broker-dealer and clearing corporation holding shares on behalf of its customers is counted as a single shareholder.

Dividends

We have never declared dividends or paid cash dividends. Our board of directors will make any future decisions regarding dividends. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the near future. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We operate in the media segment, through our Chinese subsidiaries and VIEs, (1) a business which provides integrated value-added service solutions for the delivery of PPV, VOD, and enhanced premium content for cable providers, (2) a cable broadband business based in the Jinan region of China and (3) a television program guide, newspaper and magazine publishing business based in the Shandong region of China.

Through our VIE, Sinotop Beijing, we provide integrated value-added service solutions for the delivery of PPV, VOD, and enhanced premium content for cable providers. Sinotop Beijing’s revenue is derived primarily from a pay-TV model, consisting of a one-time fee to view movies, popular titles and live events.

Through our VIE Shandong Publishing, we operate our publishing business, which includes the distribution of periodicals, the publication of advertising, the organization of public relations events, the provision of information related services, copyright transactions, the production of audio and video products, and the provision of audio value added communication services. Shandong Publishing’s revenue consists primarily of sales of publications and advertising revenues.

We acquired AdNet, a business that provided internet content advertising in cafes, during the first half of 2009. Due to the shift of our business model to the PPV and VOD business, as of December 31, 2009, we permanently suspended the day-to-day operations of AdNet. We have maintained our technology and other assets of AdNet for future use in our new pay-per-view business.

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Recent Developments

On July 30, 2010, we acquired Sinotop HK through our subsidiary CB Cayman. Through a series of contractual arrangements, Sinotop HK controls Sinotop Beijing. Sinotop Beijing, a corporation established in the PRC is, in turn, a party to a joint venture with two other PRC companies to provide integrated value-added service solutions for the delivery of PPV, VOD and enhanced premium content for cable providers.

Also on July 30, 2010, in connection with the acquisition of Sinotop HK, we closed financings with several accredited investors and sold an aggregate of $9,625,000 of securities, including (i) $3.125 million of common units, at a per unit price of $0.05, each common unit consisting of one share of common stock and a warrant for the purchase of one share of common stock at an exercise price of $0.05, (ii) $3.5 million of Series A units, at a per unit price of $0.50, each Series A unit consisting of one share of Series A Preferred Stock (convertible into ten shares of common stock) and a warrant to purchase 34.2857 shares of common stock at an exercise price of $0.05, and (iii) $3.0 million of Series B units, at a per unit price of $0.50, each Series B unit consisting of one share of Series B Preferred Stock (convertible into ten shares of common stock) and a warrant to purchase ten shares of common stock.

Simultaneous with the closing of the financings above, and pursuant to (i) a Waiver and Agreement to Convert, dated May 20, 2010, with the holders of an aggregate of $4,971,250 in principal amount of notes of the Company, dated January 11, 2008, and (ii) a Waiver and Agreement to Convert, dated May 20, 2010, with the holders of an aggregate of $304,902 in principal amount of notes of the Company, dated June 30, 2009, the holders of such notes agreed to convert 100% of the outstanding principal and interest owing on such notes into an aggregate of 62,855,048 shares of common stock, 4,266,800 shares of Series B Preferred Stock and warrants for the purchase of an aggregate of 105,523,048 shares of common stock, as set forth in the respective waivers.

On July 30, 2010, Oliveira Capital LLC agreed to (i) cancel the remaining $20,000 of the March 9, 2010 loan and (ii) assign the $580,000 note of Sinotop HK to the Company, in exchange for 1,200,000 shares of our Series B Preferred Stock and warrants to purchase of 36,000,000 shares of our common stock.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

Growth in the Chinese Economy. We operate in China and derive almost all of our revenues from sales to customers in China. Economic conditions in China, therefore, affect virtually all aspects of our operations, including the demand for our products, the availability and prices of our raw materials and our other expenses. China has experienced significant economic growth, achieving a compound annual growth rate of over 10% in gross domestic product from 1996 through 2008. China is expected to experience continued growth in all areas of investment and consumption, even in the face of a global economic recession. However, China has not been entirely immune to the global economic slowdown and is experiencing a slowing of its growth rate.

PRC Economic Stimulus Plans. The PRC government has issued a policy entitled “Central Government Policy On Stimulating Domestic Consumption To Counter The Damage Result From Export Business Of The Country,” pursuant to which the PRC Central Government is dedicating approximately $580 billion to stimulate domestic consumption. Companies that are either directly or indirectly related to construction, and to the manufacture and sale of building materials, electrical household appliances and telecommunication equipment, are expected to benefit. China Broadband could potentially benefit if the stimulus plan injects funds into cable infrastructure allowing access to our PPV network.

Deployment of Value-added Services. To augment our product offerings and create other revenue sources, we work with strategic partners to deploy value-added services to our cable broadband customers. Value-added services, including but not limited to the synergies created by the additions of our new assets, will become a focus of revenue generation for our company. No assurance can be made that we will add other value-added services, or if added, that they will succeed.

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Taxation

United States

China Broadband, 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 China Broadband, Inc. had no income taxable in the United States.

Cayman Islands

CB Cayman was incorporated in the Cayman Islands. Under the current law of the Cayman Islands, it is not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.

Hong Kong

Our indirect subsidiary, Sinotop HK, was incorporated in Hong Kong and under the current laws of Hong Kong, is subject to Profits Tax of 16.5%. No provision for Hong Kong Profits Tax has been made as Sinotop HK has no taxable income.

The People’s Republic of China

Under the EIT Law, our Chinese subsidiaries and VIEs are subject to an earned income tax of 25.0%. See “Our Business – Regulation – Taxation” for a detailed description of the EIT Law and tax regulations applicable to our Chinese subsidiaries and VIEs.

Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income and non-tax deductible expenses incurred. Our management carefully monitors these legal developments to determine if there will be any change in the statutory income tax rate.

Results of Operations

Comparison of Six months Ended June 30, 2010 and June 30, 2009

The following table sets forth key components of our results of operations for the periods indicated.

	Six Months Ended June 30,						Amount			%
	2010			2009			Change			Change
Revenue	$	3,693,000		$	3,939,000		$	(246,000	)		-6	%
Cost of revenue		2,109,000			2,277,000			(168,000	)		-7	%
Gross profit		1,584,000			1,662,000			(78,000	)		-5	%
Selling, general and administrative expenses		1,339,000			1,459,000			(120,000	)		-8	%
Professional fees		550,000			292,000			258,000			88	%
Depreciation and amortization		1,903,000			1,736,000			167,000			10	%
Loss from operations		(2,208,000	)		(1,825,000	)		(383,000	)		21	%

Interest & other income / (expense)
Interest income		2,000			5,000			(3,000	)		-60	%
Interest expense		(274,000	)		(176,000	)		(98,000	)		-56	%
Change in fair value of warrant liabilities		64,000			(1,241,000	)		1,305,000			-105	%
Gain (loss) on sale of securities		1,000			(31,000	)		32,000			-103	%
Impairment of intangibles		(900,000	)		-			(900,000	)		-
Impairment of equipment		(750,000	)		-			(750,000	)		-
Other		1,000			-			1,000			-

Loss before income taxes and noncontrolling interest		(4,064,000	)		(3,268,000	)		(796,000	)		24	%

Income tax benefit		260,000			29,000			231,000			797	%
Net loss, net of tax		(3,804,000	)		(3,239,000	)		(565,000	)		17	%
Net loss attributable to noncontrolling interests		1,580,000			384,000			1,196,000			311	%

Net loss attributable to shareholders	$	(2,224,000	)	$	(2,855,000	)	$	631,000			-22	%

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The following table breaks down the results of operations for the six months ended June 30, 2010 and 2009 between our VIE operating companies and our non-operating companies. Our VIE operating companies include Jinan Broadband and Shandong Publishing.

	Six Months Ended June 30, 2010												Six Months Ended June 30, 2009
	Operating			% of Total Revenue			Non-Operating			Total			Operating			% of Total Revenue			Non-Operating			Total
Revenue	$	3,693,000					$	-		$	3,693,000		$	3,939,000					$	-		$	3,939,000
Cost of revenue		2,109,000						-			2,109,000			2,277,000						-			2,277,000
Gross profit		1,584,000			43	%		-			1,584,000			1,662,000			42	%		-			1,662,000
Selling, general and administrative expenses		952,000			26	%		389,000			1,341,000			1,056,000			27	%		403,000			1,459,000
Professional fees		-			0	%		549,000			549,000			16,000			0	%		276,000			292,000
Depreciation and amortization		1,621,000			44	%		281,000			1,902,000			1,510,000			38	%		226,000			1,736,000
Loss from operations		(989,000	)		-27	%		(1,219,000	)		(2,208,000	)		(920,000	)		-23	%		(905,000	)		(1,825,000	)

Interest & other income / (expense)
Interest income		2,000						-			2,000			5,000						-			5,000
Interest expense		(1,000	)					(273,000	)		(274,000	)		-						(176,000	)		(176,000	)
Change in fair value of warrant liabilities		-						64,000			64,000			-						(1,241,000	)		(1,241,000	)
Gain (loss) on sale of securities		-						1,000			1,000			-						(31,000	)		(31,000
Impairment of intangibles		-						(900,000	)		(900,000	)		-						-			-
Impairment of equipment		(750,000	)					-			(750,000	)		-						-			-
Other		-						1,000			1,000			-						-			-

Loss before income taxes and noncontrolling interest		(1,738,000	)					(2,326,000	)		(4,064,000	)		(915,000	)					(2,353,000	)		(3,268,000	)

Income tax benefit		-						260,000			260,000			-						29,000			29,000
Net loss, net of tax		(1,738,000	)					(2,066,000	)		(3,804,000	)		(915,000	)					(2,324,000	)		(3,239,000	)
Net loss attributable to noncontrolling interests		1,580,000						-			1,580,000			384,000						-			384,000

Net loss attributable to shareholders	$	(158,000	)				$	(2,066,000	)	$	(2,224,000	)	$	(531,000	)				$	(2,324,000	)	$	(2,855,000	)

Revenues

Our revenues are generated by our operating VIEs in the PRC, Jinan Broadband and Shandong Publishing. Revenues for the six months ended June 30, 2010 totaled $3,693,000, as compared to $3,939,000 for the six months ended June 30, 2009, a decrease of approximately $246,000, or 6%.

Jinan Broadband’s revenue consists primarily of sales to our PRC based internet consumers, cable modem consumers, business customers and other internet and cable services. For the six months ended June 30, 2010, revenues totaled $2,310,000, an increase of $86,000, or 4%, as compared to revenues of $2,224,000 for the same period of 2009. The increase is attributable to increased sales to business customers.

Shandong Publishing’s revenue consists primarily of sales of publications and advertising revenues. For the six months ended June 30, 2010, revenues totaled $1,383,000, a decrease of $332,000, or 19%, as compared to revenues of $1,715,000 for the same period of 2009. Although we had decreases in both our publication and advertising revenues, the decrease is mainly attributable to decreases in advertising revenue which can be directly correlated to the decline of the advertising market as a whole in China. We believe this decrease to be temporary. We will continue to look to increase our advertising sales for the publishing side of the business. We have experienced advertising growth from Q1 to Q2 of 2010.

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We did not acquire Sinotop HK until July 30, 2010, and therefore our results of operations as of June 30, 2010 does not include revenue from our new PPV and VOD business.

Gross Profit

Our gross profit for the six months ended June 30, 2010 was $1,584,000, as compared to $1,662,000 for the six months ended June 30, 2009, a decrease of approximately $78,000, or 5%. Jinan Broadband’s gross profit increased $16,000, or 2%, mainly due to increased revenue. Shandong Publishing’s gross profit decreased $104,000, or 17%, primarily due to decreased revenues.

Gross profit as a percentage of revenue was 43% for the six months ended June 30, 2010, as compared to 42% for the six months ended June 30, 2009.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the six months ended June 30, 2010 decreased approximately $120,000 to $1,339,000, as compared to $1,459,000 for the six months ended June 30, 2009.

Salaries and personnel costs are the major component of selling, general and administrative expenses. For the six months ended June 30, 2010, salaries and personnel costs totaled $847,000, a decrease of $4,000 or 1/2% as compared to $851,000 for the same period of 2009. During the six months ended June 30, 2010, salaries and personnel costs accounted for 59% of our selling, general and administrative expenses.

We expect our selling, general and administrative expenses will increase as we continue to grow our business.

Professional Fees

Our professional fees are generally related to public company reporting and governance expenses as well as costs related to our acquisitions. Our costs for professional fees increased $258,000, or 88%, to $550,000 during the six months ended June 30, 2010 from $292,000 in 2009. Increases for this period relate to current fundraising activities. See “Recent Developments” above.

Depreciation and Amortization

Our depreciation expense increased $111,000, or 7%, to $1,620,000 for the six months ended June 30, 2010 from $1,509,000 in 2009. The increase is mainly due to the acquisition of new equipment by our Jinan Broadband subsidiary.

Our amortization expense increased $56,000, or 24%, to $283,000 for the six months ended June 30, 2010 from $227,000 in 2009. The increase is mainly due to the amortization expense related to our software technology acquired from our AdNet Media acquisition.

Interest and Other Income (Expense), net

Interest income. Our interest income decreased $3,000, or 60%, to $2,000 for the six months ended June 30, 2010 from $5,000 in 2009.

Interest expense. Interest expense is related to our 5% Convertible Notes issued in January 2008 and June 2009 and our April 2010 convertible note. Interest expense increased $98,000, or 56%, to $274,000 for the six months ended June 30, 2010 from $176,000 in 2009, primarily due to additional convertible notes issued in 2009 and 2010. Interest expense includes amortization of the original issue discount on the notes resulting from the allocation of fair value to the warrants issued in the financing. Interest on the Notes compounds monthly at the annual rate of five percent (5%). The outstanding principal amount of the January 2008 Notes as of June 30, 2010 was $4,971,250, net of original issue discount of $504,661. The outstanding principal amount on the June 2009 Notes as of December 31, 2009 was approximately $305,000. We expect our interest expense to decrease substantially. Simultaneous with the closing of the financings on July 30, 2010 (see “Recent Developments” above), and pursuant to a Waiver and Agreement to Convert, dated May 20, 2010, the note holders agreed to convert 100% of the outstanding principal and interest owing on such notes into shares of common stock and warrants. In addition, the convertible promissory note issued in April 2010 was paid in full.

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Change in fair value of warrant liabilities. Under new authoritative guidance, effective January 1, 2009, the Company was required to reclassify warrants from equity to warrant liabilities. Warrants are fair valued quarterly using the Black-Scholes Merton Model and changes in fair value are recorded to the statement of operations. We recorded a gain of $64,000 classified as a change in fair value of warrants on our statement of operations for the six months ended June 30, 2010 and we recorded a charge of $1,241,000 in 2009.

Loss on sale of marketable equity securities. During the six month period ended June 30, 2010 we recorded a gain of approximately $1,000 on the sale of our China Cablecom shares and we recorded a loss of approximately $31,000 during the same period of 2009. See the discussion below regarding the Settlement Agreement, dated January 11, 2008, with Stephen P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I. Lev, Wellfleet Partners, Inc., Pu Yue, Clive Ng, Chardan Capital Markets, LLC, Jaguar Acquisition Corporation, and China Cablecom.

Impairment of intangibles. As of June 30, 2010, our Shandong Publishing joint venture has not experienced the growth anticipated. We prepared an analysis and accordingly recorded an impairment charge of $900,000 to our Shandong Publishing intangibles which include publication rights, operating permits and customer relationships during the second quarter of 2010.

Impairment of equipment. During the second quarter of 2010, based on our best estimate, we recorded an impairment reserve of $750,000 related to the equipment at our Jinan Broadband subsidiary. In July 2010, the equipment was taken out of service due to changes in customer needs. The net book value of the equipment is $1,483,000. During the next quarter, we will evaluate whether there are other uses for the equipment or whether the equipment can be sold.

Net Loss Attributable to Noncontrolling Interest

49% of the operating loss of Jinan Broadband is allocated to Jinan Parent, the 49% co-owner of this business. During the six months ended June 30, 2010, $938,000 of our operating losses from Jinan Broadband was allocated to Jinan Parent, as compared to $366,000 during the same period of 2009.

50% of the operating loss of Shandong Publishing is allocated to our 50% joint venture partners, Shandong Broadcast and Modern Movie. During the six months ended June 30, 2010, $642,000 of our operating loss from Shandong Publishing was allocated to Shandong Broadcast and Modern Movie as compared to $18,000 during the same period of 2009.

Net Loss Attributable to Shareholders

Net loss attributable to shareholders for the six months ended June 30, 2010 was $2,224,000, an increase of $631,000, or 22%, as compared to $2,855,000 for the six months ended June 30, 2009. The increase is primarily due to impairment charges recognized in 2010 related to our Shandong Publishing intangibles and Jinan Broadband equipment offset by the recognition of a $1,241,000 charge due to the increase in the fair value of warrant liabilities in 2009.

Comparison of Years Ended December 31, 2009 and December 31, 2008

The following table sets forth key components of our results of operations for the periods indicated.

	Year Ended December 31,						Amount			%
	2009			2008			Change			Change
Revenue	$	8,443,000		$	6,362,000		$	2,081,000			33	%
Cost of revenue		5,661,000			3,741,000			1,920,000			51	%
Gross profit		2,782,000			2,621,000			161,000			6	%
Selling, general and administrative expenses		3,228,000			1,923,000			1,305,000			68	%
Professional fees		641,000			619,000			22,000			4	%
Depreciation and amortization		3,564,000			3,037,000			527,000			17	%
Loss from operations		(4,651,000	)		(2,958,000	)		(1,693,000	)		57	%

Interest & other income / (expense)
Settlement gain		-			1,301,000			(1,301,000	)		-100	%
Interest income		8,000			43,000			(35,000	)		-81	%
Interest expense		(363,000	)		(346,000	)		(17,000	)		5	%
Change in fair value of derivative liabilities		(512,000	)		-			(512,000	)		-
Loss on sale and write-down of securities		(15,000	)		(1,900,000	)		(1,885,000	)		-99	%
Goodwill impairment		(1,239,000	)		-			(1,239,000	)		-
Other		(13,000	)		(10,000	)		(3,000	)		-34	%

Loss before income taxes and noncontrolling interest		(6,785,000	)		(3,870,000	)		(2,915,000	)		75	%

Income tax benefit (expense)		243,000			(94,000	)		337,000			-359	%
Net loss, net of tax		(6,542,000	)		(3,964,000	)		(2,578,000	)		65	%
Net loss attributable to noncontrolling interests		1,102,000			610,000			492,000			81	%

Net loss attributable to shareholders	$	(5,440,000	)	$	(3,354,000	)	$	(2,086,000	)		62	%

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The following table breaks down the results of operations for the years ended 2009 and 2008 between our operating companies and our non-operating companies. The operating companies include Jinan Broadband, Shandong Publishing and AdNet Media. Year 2009 includes operations for 12 months, 12 months and 9 months from Jinan Broadband, Shandong Publishing and AdNet Media compared to 2008 which includes 12 months, 6 months and 0 months, respectively.

	Year Ended December 31, 2009												Year Ended December 31, 2008
	Operating			% of Total Revenue			Non-Operating			Total			Operating			% of Total Revenue			Non-Operating			Total
Revenue	$	8,443,000					$	-		$	8,443,000		$	6,362,000					$	-		$	6,362,000
Cost of revenue		5,661,000						-			5,661,000			3,741,000						-			3,741,000
Gross profit		2,782,000			33	%		-			2,782,000			2,621,000			41	%		-			2,621,000
Selling, general and administrative expenses		2,402,000			28	%		826,000			3,228,000			1,100,000			17	%		823,000			1,923,000
Professional fees		45,000			1	%		596,000			641,000			25,000			0	%		594,000			619,000
Depreciation and amortization		3,071,000			36	%		493,000			3,564,000			2,801,000			44	%		236,000			3,037,000
Loss from operations		(2,736,000	)		-32	%		(1,915,000	)		(4,651,000	)		(1,305,000	)		-21	%		(1,653,000	)		(2,958,000	)

Interest & other income / (expense)
Settlement gain		-						-			-			-						1,301,000			1,301,000
Interest income		8,000						-			8,000			25,000						18,000			43,000
Interest expense		(1,000	)					(362,000	)		(363,000	)		(1,000	)					(345,000	)		(346,000	)
Change in fair value of derivative liabilities		-						(512,000	)		(512,000	)		-						-			-
Loss on sale and write-down of securities		-						(15,000	)		(15,000	)		-						(1,900,000	)		(1,900,000	)
Impairment loss		-						(1,239,000	)		(1,239,000	)		-						-			-
Other		(14,000	)					-			(14,000	)		-						(10,000	)		(10,000	)

Loss before income taxes and noncontrolling interest		(2,743,000	)					(4,043,000	)		(6,786,000	)		(1,281,000	)					(2,589,000	)		(3,870,000	)

Income tax benefit		-						244,000			244,000			-						(94,000	)		(94,000	)
Net loss, net of tax		(2,743,000	)					(3,799,000	)		(6,542,000	)		(1,281,000	)					(2,683,000	)		(3,964,000	)
Net loss attributable to noncontrolling interests		1,102,000						-			1,102,000			610,000						-			610,000

Net loss attributable to shareholders	$	(1,641,000	)				$	(3,799,000	)	$	(5,440,000	)	$	(671,000	)				$	(2,683,000	)	$	(3,354,000	)

Revenues

Our revenues are generated by our operating companies in the PRC. Our revenues in the year ended December 31, 2009 include revenues primarily from our Jinan Broadband and Shandong Publishing companies for a full year while the revenues for the year ended 2008 include revenues for a full year from Jinan Broadband, but only 6 months revenue from Shandong Publishing.

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Revenues for the year ended 2009 totaled $8,443,000, as compared to $6,362,000 for 2008. The increase in revenue of approximately $2,081,000, or 33%, is primarily attributable to including a full year of revenues from our Shandong Publishing joint venture while the 2008 period includes only 6 months of operating results.

For the year ended 2009, Jinan Broadband’s revenue consisted primarily of sales to our PRC based Internet consumers, cable modem consumers, business customers and other internet and cable services of $4,993,000, an increase of $275,000, or 5%, as compared to revenues of $4,718,000 for 2008. The increase is attributable to increases in our internet income and network leasing.

Shandong Publishing’s revenue consists primarily of sales of publications and advertising revenues. For the year ended 2009, revenues from the Shandong Media joint venture totaled $3,443,000. By comparison, Shandong Publishing’s revenues of $1,644,000 for the year ended 2008 only include six months operating results.

AdNet Media’s revenue totaled $7,000 for the year ended 2009 and accounted for sales since acquisition in April 2009.

Gross Profit

Our gross profit in the year ended December 31, 2009 was $2,782,000, as compared to $2,621,000 for 2008. The increase in gross profit of approximately $161,000, or 6%, is primarily due to $473,000 decrease from our Jinan Broadband operations offset by $655,000 increase from a 12 month inclusion for 2009 compared to 6 months for 2008 of our Shandong Publishing joint venture. The decrease in gross profit attributable to Jinan Broadband was primarily due to charges associated with the write down of obsolete and damaged switches and other consumer related parts held in inventory.

Gross profit as a percentage of revenue was 33% for the year ended 2009, as compared to 41% for 2008. The increase is mainly due to the inventory write-down from Jinan Broadband as well as increases in printing and supply costs at Shandong Publishing.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the year ended December 31, 2009 increased approximately $1,305,000 to $3,228,000, as compared to $1,923,000 for the year ended 2008. The increase is primarily attributable to a 12 month inclusion for 2009 compared to 6 months for 2008 of our Shandong Publishing joint venture acquired in July 2008 and the inclusion of our AdNet Media acquisition in April 2009.

Salaries and personnel costs are the major component of selling, general and administrative expenses. For the year ended 2009, salaries and personnel costs accounted for 58% of our selling, general and administrative expenses. During 2009, salaries and personnel costs totaled $1,821,000, an increase of $614,000, or 51%, as compared to $1,207,000 for 2008. The increase in salaries and personnel costs is primarily attributable to the inclusion of our Shandong Publishing joint venture in July 2008 and the inclusion of our AdNet Media acquisition in April 2009.

We expect our selling, general and administrative expenses will increase as we continue to grow our business.

Professional Fees

Professional fees are generally related to public company reporting and governance expenses as well as costs related to our acquisitions. Our costs for professional fees increased $22,000, or 4%, to $641,000 in the year ended December 31, 2009 from $619,000 in 2008. We expect our costs for professional services for public company reporting and corporate governance expenses to remain significant, but to decrease as a percentage of our overall revenues if we continue to acquire new entities and enter into strategic partnerships.

Depreciation and Amortization

Our depreciation expense increased $268,000, or 10%, to $3,068,000 in the year ended December 31, 2009 from $2,800,000 in 2008. The increase is mainly due to the acquisition of new equipment by Jinan Broadband.

Our amortization expense increased $259,000, or 109%, to $496,000 in the year ended December 31, 2009 from $237,000 in 2008. The increase is mainly due to the amortization expense related to the software technology acquired from our AdNet Media acquisition. The increase is also due to Shandong Publishing intangible assets acquired in 2008

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Goodwill Impairment

We initially recorded a $1,900,000 intangible asset related to the AdNet Acquisition. After completion of our purchase accounting for the AdNet acquisition, we recorded $1,239,000 to goodwill and $757,000 to software technology. Due to the shift of our business model to the pay-per-view and video-on-demand business, as of December 31, 2009 we temporarily suspended day to day operations of AdNet. We have maintained our licenses, contracts, technology and other assets for future use. Consequently, we recorded an impairment charge to goodwill of $1,239,000 as of December 31, 2009

Warrant Liability

Under new authoritative guidance, effective January 1, 2009, the Company was required to reclassify warrants from equity to warrant liabilities. Warrants are fair valued quarterly using the Black-Scholes Merton Model and changes in fair value are recorded to the statement of operations. We recorded a charge of $512,000 classified as change in fair value of warrants on our statement of operations for the year ended December 31, 2009.

Interest and Other Income (Expense), net

Settlement Agreement. On January 11, 2008, we entered into a Settlement Agreement with Stephen P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I. Lev, Wellfleet Partners, Inc., Pu Yue, Clive Ng, Chardan Capital Markets, LLC, Jaguar Acquisition Corporation, and China Cablecom, pursuant to which the parties released certain potential claims against one another. The following table provides the details on the net gain we recognized in 2008 as a result of the Settlement Agreement which is recorded in the accompanying Statement of Operations:

Fair value of China Cablecom Shares	$	2,515,500
Waiver of accrued compensation		212,054
Warrant extension		(1,426,862	)
Net Gain	$	1,300,692

Interest income. Interest income decreased $35,000, or 81%, to $8,000 in the year ended December 31, 2009 from $43,000 in 2008, primarily due to decreases in our cash and cash equivalent balances.

Interest expense. Interest expense is related to our 5% Convertible Notes issued in January 2008 and June 2009. Interest expense increased $16,000, or 5%, to $362,000 in the year ended December 31, 2009 from $346,000 in 2008, primarily due to additional convertible notes issued in 2009 in the amount of approximately $305,000. Interest expense includes amortization of the original issue discount on the notes resulting from the allocation of fair value to the warrants issued in the financing. We expect our interest expense to increase due to the convertible notes issued in 2009. Interest on the Notes compounds monthly at the annual rate of five percent (5%). The January 2008 Notes mature on January 11, 2013. The outstanding principal amount of the January 2008 Notes as of December 31, 2009 was $4,971,250, net of original issue discount of $504,661. The June 2009 Notes mature on May 27, 2010. The outstanding principal amount on the June 2009 Notes as of December 31, 2009 was approximately $305,000.

Loss on sale and write-down of marketable equity securities. The loss on the sale and write-down of marketable equity securities decreased $1,885,000 primarily due to the recognition of an other-than-temporary impairment of $1,797,000 in 2008 related to our Cablecom Holdings, Ltd. shares.

Net Loss Attributable to Noncontrolling Interest

49% of the operating loss of Jinan Broadband is allocated to Jinan Parent, the 49% co-owner of this business. In the year ended December 31, 2009, $1,056,000 of our operating loss from Jinan Broadband was allocated to Jinan Parent, as compared to $588,000 in 2008.

50% of the operating loss of Shandong Publishing is allocated to our 50% joint venture partners, Shandong Broadcast and Modern Movie. In the year ended December 31, 2009, $46,000 of our operating loss from Shandong Publishing was allocated to Shandong Broadcast and Modern Movie as compared to $22,000 in 2008. We consolidated the results of Shandong Publishing effective July 1, 2008.

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Net Loss Attributable to Shareholders

Net loss attributable to shareholders increased $2,086,000, or 62%, to $5,440,000 in the year ended December 31, 2009 from $3,354,000 in 2008.

Liquidity and Capital Resources

As of June 30, 2010 we had cash and cash equivalents of approximately $1,607,000. The following table provides a summary of our net cash flows from operating, investing, and financing activities.

	Six Months Ended June 30,						Year Ended December 31,
	2010			2009			2009			2008
Net cash provided by operating activities	$	256,000		$	166,000		$	852,000		$	1,674,000
Net cash used in investing activities		(1,566,000	)		(693,000	)		(1,069,000	)		(1,942,000	)
Net cash provided by (used in) financing activities		732,000			(2,046,000	)		(2,046,000	)		4,233,000
Effects of exchange rate change in cash		(5,000	)		22,000			28,000			(11,000	)
Net increase (decrease) in cash and cash equivalents		(583,000	)		(2,551,000	)		(2,235,000	)		3,953,000
Cash and cash equivalents at beginning of the period		2,190,000			4,426,000			4,426,000			473,000
Cash and cash equivalent at end of the period		1,607,000			1,875,000			2,190,000			4,426,000

Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2010 and 2009 was $256,000 and $166,000, respectively.

Cash provided by operating activities for the years ended 2009 and 2008 was $852,000 and $1,674,000, respectively.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2010 and 2009 was $1,566,000 and $693,000, respectively. For 2010, this amount consisted primarily of (i) $469,000 for additions to property, (ii) $580,000 loan to Sinotop Group Ltd for our acquisition (see “Recent Developments” above) and (iii) $526,000 loan to our Shandong Publishing shareholders. For 2009, this amount consisted primarily of (i) $237,000 for additions to property and equipment and (ii) $552,000 loan to our Shandong Publishing shareholders.

Net cash used in investing activities for the years ended 2009 and 2008 was $1,069,000 and $1,942,000, respectively. For 2009, this amount consisted of (i) cash acquired in our AdNet acquisition of $18,000 and (ii) proceeds of $174,000 from the sale of our Cablecom Holdings, Ltd. shares, offset by (i) $1,135,000 for additions to property and equipment and (ii) $126,000 loans to our Shandong Publishing shareholders and related party. For 2008, this amount consisted of additions to property and equipment in the amount of $2,061,000 and $242,000 loan to our Shandong Publishing shareholders, partially offset by the proceeds from the sale of Cablecom Holding, Ltd. shares in the amount of $361,000.

Financing activities

Net cash provided by financing activities for the six months ended June 30, 2010 was $732,000, as compared to $2,046,000 net cash used in financing activities for the six months ended June 30, 2009. For 2010, the amount consisted primarily of $750,000 from the issuance of a convertible notes payable. For 2009, the amount was due to an increase in the payables to Jinan Parent in the amount of $2,643,000, offset by total proceeds of approximately $605,000 from the sale of equity securities and the issuance of convertible notes payable.

Net cash used in financing activities for the year ended December 31, 2009 was $2,046,000, as compared to $4,233,000 net cash provided by financing activities for the year ended December 31, 2008. For 2009, the amount consisted of proceeds from the sale of our common stock of $300,000 and proceeds from the issuance of convertible notes of $305,000, offset by payment to Jinan Parent of $2,643,000. For 2008, this amount consisted of proceeds from the issuance of convertible notes of $4,850,000, offset by $104,000 of payments related to issuance costs associated with the convertible notes and a decrease in the payable to Jinan Parent in the amount of $513,000.

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On June 30, 2009, we completed a private placement transaction and sold 5% Convertible Promissory Notes, or the 2009 Notes, for gross proceeds of approximately $305,000 and an aggregate of 2,000,000 shares of our common stock at a purchase price of $.15 per share, for aggregate proceeds of $300,000. The Notes accrue interest at 5% per year payable quarterly in cash or stock, are initially convertible at $.20 per share, and become due and payable in full on May 27, 2010. The Company did not pay any placement agent or similar fees in connection with the Note Offering.

In connection with the 2009 private placement, we entered into a waiver letter regarding contractual anti-dilutive provisions with all the holders of January 2008 Notes, pursuant to which, among other things, the conversion price of the January 2008 Notes were reduced from $.75 per share to (i) $.20 per share for existing note holders that invested in the 2009 private placement and (ii) $.25 per share for those that did not participate. All of the existing note holders waived certain anti dilution adjustments contained in the January 2008 Notes and the Class A Warrants in exchange for this anti-dilution.

During the year ended December 31, 2009, we incurred $361,000 in interest expense related to these private placements. Based on conversion values, we issued 921,040 shares to the note holders in lieu of cash interest payments of approximately $260,000 for interest accrued.

As discussed above, on July 30, 2010, we consummated financings which resulted in gross proceeds of $9.625 million. While we believe that the proceeds from these financings will sustain our business operations for the near term, we anticipate that we will need to raise additional funds to fully implement our business model and related strategies. In addition, the fact that we have incurred significant continuing losses during the first six months of 2010, had a working capital deficit at June 30, 2010, and have relied on debt and equity financings to fund out operations to date, could raise substantial doubt about our ability to continue as a going concern.

Obligations Under Material Contracts

On March 7, 2008, we entered into a cooperation agreement with Shandong Broadcast and Modern Movie, pursuant to which Shandong Broadcast and Modern Movie contributed their entire businesses and transferred certain employees to Shandong Publishing in exchange for a 50% stake in Shandong Publishing. In exchange, we were required to pay 10 million RMB (approximately $1.5 million), which was contributed to Shandong Publishing as working and acquisition capital. Based on certain financial performance requirements, we were required to make an additional payment of 5 million RMB (approximately US $730,000). In 2008, we recorded the additional payment due as an increase to our Shandong Publishing noncontrolling interest account. We are currently in discussions with Shandong Broadcast and Modern Movie with regards to the outstanding $730,000 payment.

On June 30, 2009, we consummated a note offering pursuant to which we issued $304,902 principal amount of notes to nine investors. The notes accrue interest at 5% per year payable quarterly in cash or stock, were initially convertible at $.20 per share, and become due and payable in full on May 27, 2010. Simultaneous with the closing of the financings above, and pursuant to (i) a Waiver and Agreement to Convert, dated May 20, 2010, with the holders of an aggregate of $4,971,250 in principal amount of notes, dated January 11, 2008, and (ii) a Waiver and Agreement to Convert, dated May 20, 2010, with the holders of an aggregate of $304,902 in principal amount of notes, dated June 30, 2009, the holders of such notes agreed to convert 100% of the outstanding principal and interest owing on such notes into an aggregate of 62,855,048 shares of common stock, 4,266,800 shares of Series B Preferred Stock and warrants for the purchase of an aggregate of 105,523,048 shares of common stock, as set forth in the respective waivers.

Effects of Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor the price change and continually maintain effective cost control in operations.

Off Balance Sheet Arrangements

We do not have 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 or capital expenditures or capital resources that is material to an investor in our securities.

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Seasonality

Our operating results and operating cash flows historically have not been subject to seasonal variations. This pattern may change, however, as a result of new market opportunities or new product introductions.

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, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

Variable Interest Entities. We account for entities qualifying as VIEs in accordance with ASC 810, Consolidation. VIEs are required to be consolidated by the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the variable interest entity. A VIE is an entity for which the primary beneficiary’s interest in the entity can change with changes in factors other than the amount of investment in the entity.

Revenue Recognition. Revenue is recorded as services are provided to customers. We generally recognize all revenue in the period in which the service is rendered, provided that persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. We record deferred revenue for payments received from customers for the performance of future services and recognizes the associated revenue in the period that the services are performed. Provision for discounts and rebates to customers and other adjustments, if any, are provided for in the same period the related sales are recorded.

Inventories. Inventories, consisting of cables, fiber, connecting material, power supplies and spare parts are stated at the lower of cost or market value. Cost is determined using the first-in, first-out (FIFO) method.

Intangible Assets. We follow Financial Accounting Standards Board, or FASB, ASC 350, Intangibles-Goodwill and Other, or ASC 350. ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. ASC 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events indicate the carrying amount may not be recoverable. In accordance with ASC 350, goodwill is allocated to reporting units, which are either the operating segment or one reporting level below the operating segment. On an annual basis, we must test goodwill and other indefinite life intangible assets for impairment. To determine the fair value of these intangible assets, there are many assumptions and estimates used that directly impact the results of the testing. In making these assumptions and estimates, we will use set criteria that are reviewed and approved by various levels of management, and we will estimate the fair value of our reporting units by using discounted cash flow analyses and other valuation methods. At December 31, 2009 we recorded a goodwill impairment charge of $1,239,291 related to goodwill from our AdNet acquisition.

Income Taxes. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

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Warrant Liabilities. We account for derivative instruments and embedded derivative instruments in accordance with the accounting standard for Accounting for Derivative Instruments and Hedging Activities, as amended. The amended standard requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure these instruments at fair value. Fair value is estimated using the Black-Scholes Pricing model. We also follow accounting standards for the Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in, a Company’s Own Stock, which requires freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. Under these provisions a contract designated as an asset or a liability must be carried at fair value, with any changes in fair value recorded in the results of operations. A contract designated as an equity instrument can be included in equity, with no fair value adjustments required. The asset/liability derivatives are valued on a quarterly basis using the Black-Scholes Pricing model. Significant assumptions used in the valuation included exercise dates, fair value for our common stock, volatility of our common stock and a proxy-free interest rate. Gains (losses) on warrants are included in “Changes in fair value of warrant liabilities in our consolidated statement of operations”.

Foreign Currency Translation. The businesses of our operating subsidiaries are currently conducted in and from China in Renminbi. The Company makes no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. The Chinese government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. The Company uses the U.S. dollar as its reporting and functional currency. Translation adjustments are reported as other comprehensive income or expenses and accumulated as other comprehensive income in the equity section of the balance sheet. Financial information is translated into U.S. dollars at prevailing or current rates respectively, except for revenues and expenses which are translated at average current rates during the reporting period. Exchange gains and losses resulting from retained profits are reported as a separate component of stockholders’ equity.

Recent Accounting Pronouncements

ASC 810. We adopted ASC 810 on January 1, 2010, which provides consolidation guidance for variable-interest entities include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. The adoption of ASC 810 did not have a material impact on the Company’s financial statements.

ASU 2010-06. On January 1, 2010, we adopted ASU No. 2010-06 which provides improvements to disclosure requirements related to fair value measurements. The adoption of these provisions did not have an effect on the Company’s financial reporting. New disclosures are required for significant transfers in and out of Level 1 and Level 2 fair value measurements, disaggregation regarding classes of assets and liabilities, valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 or Level 3. Additional new disclosures regarding the purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010 beginning with the first interim period, the Company does not expect the adoption of these new Level 3 disclosures to have a material impact on the Company’s financial reporting.

ASC 105. In June 2009, the FASB issued FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”, or SFAS No. 168, “— a replacement of FASB Statement No. 162. SFAS No. 168 is the new source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This statement was incorporated into ASC 105, Generally Accepted Accounting Principles under the new FASB codification which became effective on July 1, 2009. The new Codification supersedes all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. The Company has included the references to the Codification, as appropriate, in these consolidated financial statements. Adoption of this statement did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

ASC 805. FASB Statement No. 141(R) Business Combinations was issued in December 2007. This statement was incorporated into ASC 805, Business Combinations, under the new FASB codification. ASC 805 requires that upon initially obtaining control, an acquirer should recognize 100% of the fair values of acquired assets, including goodwill and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100% of its target. Additionally, contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. This statement also modifies the recognition for pre-acquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. This statement amends ASC 740-10, Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. ASC 805 is effective for fiscal years beginning after December 15, 2008. The Company adopted this statement on January 1, 2009 and accounted for its acquisition in 2009 in accordance with the provisions of ASC 805.

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ASC 805 Update. In February 2009, the FASB issued SFAS No. 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, which allows an exception to the recognition and fair value measurement principles of ASC 805. This exception requires that acquired contingencies be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the allocation period. This statement update was effective for the Company as of January 1, 2009 for all business combinations that close on or after January 1, 2009 and it did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

ASC 810. In December 2007, the FASB issued FASB Statement No. 160, Non-controlling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, which is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. SFAS No. 160 was incorporated into ASC 810, Consolidation and requires companies to present minority interest separately within the equity section of the balance sheet. The Company adopted this statement as of January 1, 2009 and it did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

ASC 855. In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events. The statement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but prior to the issuance of financial statements. This statement was incorporated into ASC 855, Subsequent Events. This statement was effective for interim or annual reporting periods after June 15, 2009. ASC 855 sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements as well as the circumstances under which the entity would recognize them and the related disclosures an entity should make. This statement became effective for the Company’s financial statements as of June 30, 2009.

ASC 810. In June 2009, the FASB issued FASB Statement No. 167, Amendments to FASB Interpretation No. 46 (R), which amended the consolidation guidance for variable-interest entities. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. This Statement is effective for financial statements issued for fiscal years periods beginning after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company will adopt these provisions on January 1, 2010 and the adoption is not expected to not have an impact on the Company’s financial statements.

ASC 275 and ASC 350. In April 2008, the FASB issued FASB Staff Position, or FSP, No. 142-3, Determination of the Useful Lives of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. Under the new codification this FSP was incorporated into two different ASC’s, ASC 275, Risks and Uncertainties and ASC 350, Intangibles — Goodwill and Other. This interpretation was effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The Company adopted this FSP on January 1, 2009, and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition, and did not require additional disclosures related to existing intangible assets.

ASC 820. On February 12, 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS No. 157 Fair Value Measurements, for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. Under the new codification the FSP was incorporated into ASC 820, Fair Value Measurements and Disclosures. The Company adopted this ASC update on January 1, 2009 and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.

ASC 820. FSP 157-4, FSP FAS 115-2 and FAS 124-2, and FSP FAS 107-1 and APB 28-1. On April 2, 2009, the FASB issued three FSPs to address concerns about measuring the fair value of financial instruments when the markets become inactive and quoted prices may reflect distressed transactions, recording impairment charges on investments in debt instruments, and requiring the disclosure of fair value of certain financial instruments in interim financial statements. These FSP’s were incorporated into ASC 820 under the new codification.

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The first ASC update Staff Position, FSP FAS 157-4, “Determining Whether a Market is Not Active and a Transaction is Not Distressed”, provides additional guidance to highlight and expand on the factors that should be considered in estimating fair value when there has been a significant decrease in market activity for a financial asset. This update became effective for the Company’s financial statements as of June 30, 2009 and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition and did not require additional disclosures.

The second ASC update Staff Position, FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, changes the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of an impairment charge to be recorded in earnings. The Company adopted this update during the second quarter of 2009 and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.

The third ASC update, Staff Position, FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, increases the frequency of fair value disclosures from annual only to quarterly. All three updates are effective for interim periods ending after June 15, 2009, with the option to early adopt for interim periods ending after March 15, 2009. ASC update FSP FAS 107-1 and APB 28-1 became effective for the Company’s financial statements as of June 30, 2009.

ASC 260. In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. Under the new FASB codification this FSP was incorporated into ASC 260, Earnings Per Share. ASC 260 clarifies that unvested share-based payment awards that entitle holders to receive non-forfeitable dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and should be included in the computation of earnings per share pursuant to the two-class method. The Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this FSP will not have an effect on the Company's financial reporting.

ASU 2009-05. The FASB issued Accounting Standards Update, or ASU, No. 2009-05 which provides additional guidance on how companies should measure liabilities at fair value and confirmed practices that have evolved when measuring fair value such as the use of quoted prices for a liability when traded as an asset. While reaffirming the existing definition of fair value, the ASU reintroduces the concept of entry value into the determination of fair value. Entry value is the amount an entity would receive to enter into an identical liability. Under the new guidance, the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. The effective date of this ASU is the first reporting period (including interim periods) after August 26, 2009. Early application is permitted for financial statements for earlier periods that have not yet been issued.

ASU 2010-09. The FASB issued ASU No. 2010-09 which provides amendments to certain recognition and disclosure requirements. Previous guidance required that an entity that is an SEC filer be required to disclose the date through which subsequent events have been evaluated. This update amends the requirement of the date disclosure to alleviate potential conflicts between ASC 855-10 and the SEC’s requirements. The adoption of these provisions did not have an effect on the Company’s financial reporting.

In May 2008, the FASB issued ASC 470-20, Debt with Conversion and Other Options. ASC 470-20 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The FSP includes guidance that convertible debt instruments that may be settled in cash upon conversion should be separated between the liability and equity components, with each component being accounted for in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. Adoption of this statement did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

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Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

CORPORATE HISTORY AND STRUCTURE

General

China Broadband, Inc., a Nevada corporation and our parent holding company, was formed on October 22, 2004, pursuant to a reorganization of a California entity formed in 1988. Prior to January 2007, we were a blank check shell company. On January 23, 2007, we acquired CB Cayman, which at the time was a party to the cooperation agreement with our PRC based WFOE, Beijing China Broadband Network Technology Co., Ltd., in a reverse acquisition transaction and simultaneously completed the first closing of an equity financing of common stock and warrants.

Acquisitions and VIE Arrangements

Jinan Broadband

In December 2006, through our WFOE, we entered into to a cooperation agreement with Jinan Parent, pursuant to which we acquired and currently own a 51% controlling interest in Jinan Broadband. The cooperation agreement provides that Jinan Broadband’s operations and pre-tax revenues would be assigned to our WFOE for 20 years, effectively providing for an acquisition of the business. In consideration for this 20 year business and management rights license, we paid approximately $2,572,000, including expenses, in March 2007 and the remaining approximate $3.2 million (based on 23 million RMB) in March of 2008. While this acquisition was completed in late March of 2007 with an effective transfer of assets date of April 1, 2007, we commenced certain operational oversight of this entity prior to such time.

Jinan Broadband also entered into an exclusive service agreement and cooperation agreement with Networks Center, the primary cable TV network in China, and Jinan Parent, pursuant to which the parties cooperate and provide each other with technical services related to their respective broadband, cable and Internet content-based businesses.

Shandong Publishing

On March 7, 2008, we entered into a cooperation agreement with Shandong Broadcast and Modern Movie. The cooperation agreement provides for, among other terms, the creation of a joint venture entity in the PRC, Shandong Publishing, that would own and operate the television program guide, newspaper and magazine publishing businesses previously owned and operated by Shandong Broadcast and Modern Movie, pursuant to exclusive licenses.

Under the terms of the cooperation agreement and related pledge and trust documents, Shandong Broadcast and Modern Movie contributed their entire businesses and transferred certain employees to Shandong Publishing in exchange for a 50% stake in Shandong Publishing, with the other 50% of Shandong Publishing to be owned by Jinan Zhongkuan, an entity controlled by us through a series of contractual arrangements. In exchange, we paid 10 million RMB (approximately $1.5 million), which was contributed to Shandong Publishing as working and acquisition capital. The results of Shandong Publishing have been consolidated with our consolidated financial statements as of July 1, 2008.

Based on certain financial performance thresholds being satisfied we were required to make an additional payment of 5 million RMB (approximately $730,000). In 2008, we recorded the additional payment due as an increase to our Shandong noncontrolling interest account. We are currently in discussions with Shandong Broadcast and Modern Movie with regards to this outstanding payment.

As part of the transaction, and to facilitate our ownership and control over Shandong Publishing under PRC law, we loaned Shandong Publishing the above mentioned 10 million RMB pursuant to a loan agreement and equity option agreement, and the shares of Jinan Zhongkuan are held on our behalf by Pu Yue, our former Vice Chairman, and Liang Yuejing, as trustees on behalf of CB Cayman pursuant to a trustee agreement and power of attorney. These shares are also pledged to our WFOE.

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In addition, Shandong Publishing entered into an exclusive advertising agency agreement and an exclusive consulting services agreement with Shandong Broadcast, Modern Movie and Music Review Press, which requires that Shandong Broadcast, and Modern Movie and Music Review Press shall appoint Shandong Publishing as their exclusive advertising agents and providers of technical and management support for a fee.

AdNet

On April 7, 2009, we acquired AdNet, a development stage company, whose primary business was, until December 2009 as discussed above, the delivery of multimedia advertising content to internet cafés in the PRC. Pursuant to the terms of this acquisition, we issued 11,254,898 shares of our common stock to AdNet’s shareholders in exchange for 100% of AdNet’s equity ownership and $100,000 paid to us. As part of the terms of this acquisition, and to facilitate our ownership and control over AdNet under PRC law, we loaned AdNet $100,000 pursuant to a loan agreement and equity option agreement, and all of the shares of AdNet are held by a trustee appointed by us to act as directed by CB Cayman. Due to the shift of our business model to the PPV and VOD business, as of December 31, 2009, we permanently suspended the day-to-day operations of AdNet. We have maintained our technology and other assets of AdNet for future use in our new pay-per-view business.

Sinotop Beijing

On July 30, 2010, we acquired Sinotop HK through CB Cayman. Through a series of contractual arrangements, Sinotop HK controls Sinotop Beijing. Sinotop Beijing, a corporation established in the PRC is, in turn, a party to a joint venture with two other PRC companies to provide integrated value-added service solutions for the delivery of pay-per-view, video-on-demand and enhanced premium content for cable providers.

In March 2010, Sinotop HK entered into a management services agreement with Sinotop Beijing pursuant to which Sinotop Beijing pays consulting and service fees, equal to 100% of all pre-tax revenues of Sinotop Beijing, to Sinotop HK for various management, technical, consulting and other services in connection with its business. Payment of the fees under the management services agreement is secured through an equity pledge agreement pursuant to which the sole shareholder of Sinotop Beijing pledged all equity interests in Sinotop Beijing to Sinotop HK. In addition, Sinotop HK entered into a voting rights agreement with Sinotop Beijing and the sole shareholder of Sinotop Beijing, whereby Sinotop HK was entrusted with all of the voting rights of the sole shareholder of Sinotop Beijing. Through these contractual arrangements, upon our acquisition of Sinotop HK, we acquired control over, and rights to 100% of the economic benefit of, Sinotop Beijing.

Recent Private Placements and Related Transactions

On July 30, 2010, we closed financings with several accredited investors and sold an aggregate of $9,625,000 of securities, including (i) $3.125 million of common units, at a per unit price of $0.05, each common unit consisting of one share of common stock and a warrant for the purchase of one share of common stock at an exercise price of $0.05, (ii) $3.5 million of Series A units, at a per unit price of $0.50, each Series A unit consisting of one share of our Series A Preferred Stock (convertible into ten shares of common stock) and a warrant to purchase 34.2857 shares of common stock at an exercise price of $0.05, and (iii) $3.0 million of Series B units, at a per unit price of $0.50, each Series B unit consisting of one share of our Series B Preferred Stock (convertible into ten shares of common stock) and a warrant to purchase ten shares of common stock. Accordingly, we issued 62,500,000 shares of common stock, 7,000,000 shares of Series A Preferred Stock, 6,000,000 shares of Series B Preferred Stock in connection with the financings, and warrants to purchase an aggregate of 362,500,000 shares of common stock. The proceeds of the financings will be used to fund our value added service platform and for general working capital purposes.

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Corporate Structure

The following chart depicts our corporate structure as of the date of this prospectus:

1.	Controlled through a Trust Agreement.

2.	Equity Pledge of 100% of Jinan Zhongkuan in favor of WFOE.

3.	Exclusive Advertising Agency and Exclusive Consulting Service Agreements dated June 2, 2008 between Shandong Publishing, Shandong Broadcast, Modern Movie and Music Review Press; Cooperation Agreement dated as of March 7, 2008, between Jinan Zhongkuan, Shandong Broadcast and Modern Movie.

Exclusive Service Agreements dated December 2006 and March 2007 between Jinan Broadband, Jinan Parent and Networks Center; Cooperation Agreement dated as of January 2007 between Jinan Broadband and Networks Center; Cooperation Agreement dated as of December 26, 2006 between CB Cayman and Jinan Parent.

5.	Media Cooperation Agreement.

6.	Sinotop VIE Agreements, including with Zhang Yan, the sole shareholder of SinoTop Beijing; a complete list of the Sinotop VIE Agreements appears in the supplemental definitions to these Schedules

7.	Controlling interest.

8.	Controlled through a Loan Agreement dated January 2008, an Equity Option Agreement dated January 2008, a Trustee Arrangement dated January 2008, and a Power of Attorney dated January 2008.

9.	Exclusive Service Agreement, undated.

10.	Joint Venture Agreements

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OUR BUSINESS

Overview

On July 30, 2010, we acquired Sinotop HK through our subsidiary China Broadband Cayman. Through series of contractual arrangements, Sinotop HK controls Sinotop Beijing. Through Sinotop Beijing, a corporation established in the PRC which is party to a joint venture with two other PRC companies, we provide integrated value-added service solutions for the delivery of PPV, VOD, and enhanced premium content for cable providers.

Through our VIE Jinan Broadband, we provide cable and wireless broadband services, principally internet services, Internet Protocol Point wholesale services, related network equipment rental and sales, and fiber network construction and maintenance. Jinan Broadband’s revenue consists primarily of sales to our PRC-based internet consumers, cable modem consumers, business customers and other internet and cable services. This broadband business constitutes our flagship operations and accounted for 59% of our revenues in 2009.

We acquired AdNet during the first half of 2009. Due to the shift of our business model to the PPV and VOD business, as of December 31, 2009, we permanently suspended the day-to-day operations of AdNet. We have maintained our technology and other assets of AdNet for future use in our new pay-per-view business.

Our Pay-Per-View and Video-On-Demand Business

Through our acquisition of Sinotop HK and its VIE Sinotop Beijing, we have acquired a national license to provide the first integrated value-added service solution for the delivery of PPV and VOD in China. Our core revenues are derived from a pay-TV model, consisting of a one-time fee to view movies, popular titles, and live events. The service provides cable television households subscribers, the ability to view broadcast events at any time using an on-screen guide and the streaming of content through a set-top box. Currently, there are no other companies offering PPV or VOD services in China.

China is the largest cable TV market in the world. We believe that spending on television in China will continue to grow, as it is still regarded as the most effective form of media in China, largely due to television’s ability to reach a nationwide audience. With the increase of middle class income and greater disposable budgets, we anticipate seeing greater demand for entertainment, including movies, concerts and sporting events. This projection has been reflected through box office receipts, up 86% from last year according to China’s Film Bureau, and the exploding sales of flat screen televisions, up 32% from 2009 according to the China Electronic Chamber of Commerce. Premium content is still missing from the market and we believe the key opportunity for growth is in China’s next generation broadcasting initiatives, expected to power 200 million digital cable customers with high definition television, internet and 2-way interactive services capability by 2020 according to the Chinese State Administration of Radio, Film and Television.

Our Broadband Business

Jinan Parent, the entity that sold its cable broadband business to us, is an emerging cable consolidator and operator in China’s cable broadband market. Jinan Broadband, which is 49% owned by Jinan Parent and 51% owned by our WFOE, is operated in accordance with a cooperation agreement and one or more operating agreements, including the an exclusive service agreement. Jinan Broadband operates out of its base in Shandong where it has an exclusive cable broadband deployment partnership and exclusive service agreement with Networks Center, the only cable TV operator in Jinan. Pursuant to the exclusive service agreement, Jinan Broadband, Jinan Parent and Networks Center cooperate and provide each other with technical services related to their respective broadband, cable and Internet content-based businesses.

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Currently, the only broadband services available in the Jinan region are through cable and high speed internet lines, as satellite internet cable connections are not currently available in Jinan, China. We believe that we compete on the basis of more favorable rates and our ability to provide a variety of interactive media services through a partnership with Networks Center. Finally, cable enjoys a high household penetration rate in urban areas and our internet service is competitively fast and reliable. (See www.jinan.gov.cn). The broadband internet business in China has limited competition, since we were granted an exclusive license and right to do so via cable in the Jinan region.

Our Publishing Business

Shandong Publishing, which is 50% owned by Shandong Broadcase and Modern Movie and 50% owned by Jinan Zhongkuan, an entity controlled by us through a series of contractual arrangements. Through Shandong Publishing, our publishing business includes the distribution of periodicals, the publication of advertising, the organization of public relations events, the provision of information related services, copyright transactions, the production of audio and video products, and the provision of audio value added communication services. Our cooperation agreement with Shandong Broadcast and Modern Movie also provides that these businesses will be operated primarily by employees contracted to Shandong Publishing through secondment by Shandong Broadcast and Modern Movie.

In addition to being the exclusive provincial television programming guide publishing group in the Shandong province, Shandong Publishing has:

a combined subscription basis of approximately 250,000 subscribers;

five publishing assets focused on different readership segments;

retail and subscription incomes accounting for more than 75% of total revenue, indicating great growth potential for advertising revenue; and

unique publishing titles and exclusive copyrights.

Following is a description of some of our publications:

Shandong Broadcast and TV Weekly (Newspaper). Established in 1954, Shandong Broadcast & TV Weekly is a provincial TV programming guide & general entertainment newspaper. Published on weekly basis, it has maintained 90,000 average copies in circulation per week. Target readership of Shandong Broadcast & TV Weekly consists primarily of middle-age to senior readers in the Shandong region.

TV Weekly Magazine. TV Weekly Magazine is a national PRC magazine title, ranked among China’s top 5 TV Guide & general entertainment magazines. Published on a weekly basis, this magazine’s average circulation is 40,000 copies in the Shandong region. The unique national publishing title encourages TV Weekly to expand it’s target market to neighboring regions in northern China.

Modern Movie Times Magazine (Bi-Weekly). Modern Movie Time Magazine is published jointly by Shandong TV Drama and Movie Production Center and Shandong TV Station. Ranked among the top 100 magazine for 5 consecutive years in China, it’s among the most popular magazine in northern China. Modern Movie Times Magazine reached 125,000 copies in circulation on bi-weekly basis in 2009.

Music Review and Korea Drama (monthly). These are two smaller publications that were acquired in 2009. Circulation in each of these magazines is small. They are currently distributed in larger cities. We feel that there is good growth potential for both publications as we integrate them into our distribution and content channels.

Our Industry

Until 2005, there were over 2,000 independent cable operators in the PRC. While SARFT has advocated for national consolidation of cable networks, the consolidation has primarily occurred at the provincial level. The 30 provinces are highly variable in their consolidation efforts and processes.

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Our Competition

Pay-Per-View and Video-On-Demand Business

We currently have no competitors in China that offer PPV and VOD services. Although we can provide no assurances that other companies will not enter the market of providing such services, we believe that we will have a competitive advantage over any new market entrant as a result of our ongoing operational experience.

Broadband Business

We believe that local telecom carriers that offer non-cable internet services, such as DSL, represent our primary broadband internet segment competition in the PRC. An example is China Netcom, a telecom carrier in the Shandong province of China. Many of our competitors also have resources and capital resources that exceed our own.

Local telecom carriers are actively marketing broadband services on national, provincial, as well as local levels in China. Telecom carriers own “last mile access” to urban households in the form of fixed phone lines. We believe, however, that cable operators have a competitive advantage by owning last mile connections in the form of cable lines that have a larger bandwidth relative to phone lines. In urban areas that we target, a large number of households have both fixed phone line and cable television access. Many of these homes currently have telecom based internet access.

Cable operators in China must purchase internet connection bandwidth from the local telecom carriers. Since the local telecom carriers are not required to pay for internet connection bandwidth, which increases their profit margins relative to cable broadband service providers. This affords them a potential price advantage, but to date their prices remain in line with our prices.

We believe, however, that the ability for cable operators to bundle cable broadband with digital Set-top boxes combined with the quality and versatility of cable based broadband services, provides a competitive advantage. For example, voice over internet protocol telephony service (known as “VOIP”) can be provided over cable lines with limited added costs to us or the end user. We do not have plans to provide value added services such as VOIP to our customers in the near future. Instead, we plan to pursue expansion opportunities by increasing the number of geographical regions in which we are licensed to operate.

Publishing Business

There are approximately 17 entertainment newspapers and numerous entertainment magazines in Shandong province and throughout China. Competition in this sector is very strong. Management hopes to gain a competitive advantage and additional revenue by focusing on advertising by leveraging our advertising business. We will also attempt to deliver publication content electronically through our broadband division.

Our Growth Strategy

We intend to implement the following strategic plans to take advantage of industry opportunities and expand our business:

Pay-Per-View and Video-On-Demand Services. Through our recently announced acquisition of Sinotop HK., and its VIE, Sinotop Beijing, which is a party to a joint venture consisting of partnerships with two major PRC companies, we have received an exclusive and national license to deploy PPV/VOD services onto cable TV networks throughout China. Currently we have access to the largest movie library in China and we plan to acquire content from entertainment companies and studios in the U.S. and other parts of the world to deliver an integrated solution for enhanced premium content through cable providers. There are over 170 million cable television households in China and we plan to capitalize on the revenue opportunities as the government continues to mandate the switch from analog to digital cable by 2015.

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Our Customers

As of September 24, 2010, Jinan Broadband had approximately 58,000 cable internet subscribers. Shandong Publishing had, in aggregate amongst its various titles, a reader base of approximately 250,000 persons. At present, we do not have any customers for our PPV and VOD business.

All of our customers are in the PRC.

Intellectual Property

We are not a party to any royalty agreements, labor contracts or franchise agreements, and other than our right to own and operate Jinan Broadband, we do not currently own any trademarks. We intend to apply for trademarks for the regions in which we operate, such as with respect to Jinan Broadband.

Our Employees

As of September 24, 2010, we had a total of 199 full-time employees. The following table sets forth the number of our employees by function at September 24, 2010.

Function		Number of Employees
Sales and Marketing		50
Technical		84
Research and Development		15
Financial		15
Administrative		35
TOTAL		199

Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We have not experienced any work stoppages.

We are required under PRC law to make contributions to the employee benefit plans at specified percentages of the after-tax profit. In addition, we are required by the PRC law to cover employees in China with various types of social insurance. We believe that we are in material compliance with the relevant PRC laws.

Seasonality

Regulation

General Regulation of Businesses

Our PRC based operating subsidiaries and VIEs are regulated by the national and local laws of the PRC. The radio and television broadcasting industries and news print media are highly regulated in China. Local broadcasters including national, provincial and municipal radio and television broadcasters are 100% state-owned assets. SARFT regulates the radio and television broadcasting industry. In China, the radio and television broadcasting industries are designed to serve the needs of government programming first, and to make profits next. The SARFT interest group controls broadcasting assets and broadcasting contents in China.

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The MII plays a similar role to SARFT in the telecom industry. As China’s telecom industry is much more deregulated than the broadcasting industry. While China’s telecom industry has substantial financial backing, SARFT, and its regulator, the Propaganda Ministry under China’s Communist Party Central Committee, never relinquished ultimate regulatory control over content and broadcasting control.

The major internet regulatory barrier for cable operators to migrate into multiple-system operators and to be able to offer telecom services is the license barrier. Few independent cable operators in China acquired full and proper broadband connection licenses from MII. The licenses, while awarded by MII, are given on very-fragmented regional market levels. With cable operators holding the last mile to access end users, SARFT cable operators pose a competitive threat to local telecom carriers. While internet connection licenses are deregulated to even the local private sector, MII still tries to utilize the license barrier to fence off threats from cable operators that falls under the SARFT interest group.

We are required to obtain government approval from the Ministry of Commerce of the People’s Republic of China, or MOFCOM, and other government agencies in China that approve transactions such as our acquisition of Jinan Broadband. Additionally, foreign ownership of business and assets in China is not permitted without specific government approval. For this reason, we acquired only 51% of Jinan Broadband, with the remaining 49% owned by Jinan Parent and its affiliates. Similarly, Shandong Publishing was acquired through WFOE which owns 50% of the joint venture with the remaining 50% owned by Shandong Broadcast and Modern Movie. AdNet was acquired under a trustee relationship. Sinotop Beijing was acquired through out acquisition of Sinotop Hong Kong, which controls Sinotop Beijing through a series of contractual agreements. We use revenue sharing and voting control agreements among the parties so as to obtain equitable and legal ownership of our subsidiaries.

Licenses and Permits

Jinan Broadband

Through the cooperation agreement with Jinan Parent and Networks Center, we enjoy the benefits of licenses that Jinan Parent holds that allow us to roll out cable broadband services as well as to provide value-added services of radio and TV content in Shandong province, including:

Description		License/Permit
Internet Multi-media Content Transmission		License No. 1502005
Radio & Television Program Transmission & Operation Business		Permit Shandong No. 1552013
Radio & TV Program Production & Operation License		Shandong No. 46
PR China Value-added Telecom Service License		Shandong No. B2-20050002
PR China Value-added Telecom Service License		Shandong B2-20051013

Shandong Publishing

Shandong Publishing holds the following licenses:

Description		License/Permit
PRC Newspaper Publication License for Shandong Broadcast & TV Weekly		National Unified Publication CN 37-0014
PRC Magazine Publication License for View Weekly		Ruqichu Nor:1384
PRC Magazine Publication License for Modern Movie & TV Biweekly		Ruqichu No:1318
Advertising License for Shandong Broadcast & TV Weekly		3700004000093
Advertising License for View Weekly		3700004000186
Advertising License for Modern Movie & TV Biweekly		3700004000124

AdNet

AdNet, holds an ICP license issued by the Ministry of Commerce of the PRC. AdNet, among other things, is authorized to operate and provide content and advertising throughout the PRC in internet Cafés.

Through our acquisition of Sinotop Beijing, we will operate a comprehensive end-to-end solution PPV / VOD platform attempt to build alliances with some of the leading media operators in China.

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Taxation

On March 16, 2007, the National People’s Congress of China passed the EIT Law, and on November 28, 2007, the State Council of China passed its implementing rules which took effect on January 1, 2008. The EIT Law and its implementing rules impose a unified earned income tax, or EIT, rate of 25.0% on all domestic-invested enterprises and foreign invested enterprises, or FIEs, unless they qualify under certain limited exceptions. As a result, our PRC operating subsidiaries and VIEs are subject to an earned income tax of 25.0%. Before the implementation of the EIT Law, FIEs established in the PRC, unless granted preferential tax treatments by the PRC government, were generally subject to an EIT rate of 33.0%, which included a 30.0% state income tax and a 3.0% local income tax.

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 an EIT of 25% on its global income. The implementing rules define the term “de facto management bodies” as “an establishment that exercises, in substance, overall management and control over the production, business, personnel, accounting, etc., of a Chinese enterprise.” If the PRC tax authorities subsequently determine that we should be classified as a resident enterprise, then our organization’s global income will be subject to PRC income tax of 25%. For detailed discussion of PRC tax issues related to resident enterprise status, see “Risk Factors – Risks Related to Doing Business in China – Under the New Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.”

Foreign Currency Exchange

All of our sales revenue and expenses are denominated in RMB. Under the PRC foreign currency exchange regulations applicable to us, RMB is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Currently, our PRC operating subsidiaries may purchase foreign currencies for settlement of current account transactions, including payments of dividends to us, without the approval of SAFE, by complying with certain procedural requirements. Conversion of RMB for capital account items, such as direct investment, loan, security investment and repatriation of investment, however, is still subject to the approval of SAFE. In particular, if our PRC operating subsidiaries borrow foreign currency through loans from us or other foreign lenders, these loans must be registered with SAFE, and if we finance the subsidiaries by means of additional capital contributions, these capital contributions must be approved by certain government authorities, including the MOFCOM, or their respective local branches. These limitations could affect our PRC operating subsidiaries’ ability to obtain foreign exchange through debt or equity financing.

Dividend Distributions

Our revenues are earned by our PRC subsidiaries. However, PRC regulations restrict the ability of our PRC subsidiaries to make dividends and other payments to their offshore parent company. PRC legal restrictions permit payments of dividend by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Each of our PRC subsidiaries is also required under PRC laws and regulations to allocate at least 10% of our annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in such fund reaches 50% of its registered capital. These reserves are not distributable as cash dividends. Our PRC subsidiaries have the discretion to allocate a portion of their after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

In addition, under the New EIT law, the Notice of the State Administration of Taxation on Negotiated Reduction of Dividends and Interest Rates, or Notice 112, which was issued on January 29, 2008, and the Notice of the State Administration of Taxation Regarding Interpretation and Recognition of Beneficial Owners under Tax Treaties, or Notice 601, which became effective on October 27, 2009, dividends from our PRC operating subsidiaries paid to us through our subsidiaries may be subject to a withholding tax at a rate of 10%. Furthermore, the ultimate tax rate will be determined by treaty between the PRC and the tax residence of the holder of the PRC subsidiary. Dividends declared and paid from before January 1, 2008 on distributable profits are grandfathered under the EIT Law and are not subject to withholding tax.

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The Company intends on reinvesting profits, if any, and does not intend on making cash distributions of dividends in the near future.

DESCRIPTION OF PROPERTY

Our principal executive offices are located at 27 Union Square, West Suite 502, New York, New York 10003. We do not currently have a lease for the use of this office space and do not currently pay rent for the use of the space.

Since the completion of our reverse acquisition of CB Cayman, we have maintained office space at 1900 Ninth Street, 3rd Floor Boulder, Colorado 80302, under a lease with Maxim Financial Corporation, a consultant to the Company. This space was occupied previously by CB Cayman since its inception in mid 2006. This lease is for 1,000 square feet of office space and shared administrative services. The monthly lease rate is $2,000 per month. This lease may be terminated for any reason by Maxim Financial Corporation on 30 days notice.

Pursuant to our consulting agreement with it, Maxim Financial Corporation has waived its past fees owed by CB Cayman since July of 2006 and all future rental fees of the Company through December 31, 2007. We did not pay any rent to Maxim Financial Corporation in 2008 or 2009, but have accrued $48,000 related to this agreement as of December 31, 2009. We are currently in negotiations with Maxim Financial Corporation regarding this outstanding payment.

The principal address of Jinan Broadband is c/o Jinan Guangdian Jiahe Digital TV Co. Ltd., No. 32, Jing Shi Yi Road, Jinan Shandong 250014, Tel: (86531)-85652255. We paid approximately $81,000 for rent at its facilities in Jinan in 2009.

The principal address of Shandong Publishing is Qing Nian Dong Lu No. 26, Lixia District, Jinan City. We paid approximately $66,000 for rent in 2009.

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

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 effect on our business, financial condition or operating results.

MANAGEMENT

Directors and Executive Officers

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

NAME	AGE	POSITION
Shane McMahon	40	Chairman and Chief Executive Officer
Marc Urbach	37	President and Chief Financial Officer
Clive Ng	47	Co-Chairman
Weicheng Liu	53	Senior Executive Officer and Director
James Cassano	63	Director
David Zale	56	Director
Jonas Grossman	35	Director

Shane McMahon. Mr. McMahon has served as our Chairman and Chief Executive Officer since July 30, 2010. Prior to joining us, from 2000 to December 31, 2009, Mr. McMahon served in various executive level positions with World Wrestling Entertainment, Inc. (NYSE: WWE). Mr. McMahon has significant marketing and promotion experience and has been instrumental in exploiting pay-per-view programming on a global basis. Mr. McMahon also sits on the Boards of Directors of Glaucus Limited, a company organized under the laws of Ireland, DKRM Holding Limited (formerly known as Nephele Limited), a company organized under the laws of Ireland, ISM Group Limited, a company organized under the laws of England and Wales, International Sports Management Limited, a company organized under the laws of England and Wales, International Cricket Management Limited, a company organized under the laws of England and Wales, and Global Power of Literacy, a New York not-for-profit corporation. Mr. McMahon’s extensive executive experience led us to the conclusion that he should serve as a director of our Company, in light of our business and structure.

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Marc Urbach. Mr. Urbach has over twelve years of accounting, finance, and operations experience in both large and small companies. He was the Executive Vice President and Chief Financial Officer of Profile Home Inc., a privately held importer and distributor of home furnishings from September 2004 until February 2008. He additionally served on the board and was part owner of Tri-state Trading LLC, a related import company during that same time period. Mr. Urbach was a Director of Finance at Mercer Inc., a Marsh & McLennan Company from 2002 to 2004. He was a Finance Manger at Small World Media from 2000 until 2002 and held a similar position at The Walt Disney Company from 1998 to 2000. He started his career at Arthur Andersen LLP as a senior auditor from 1995 to 1998. Mr. Urbach received his Bachelor of Science in Accounting from Babson College in 1995.

Clive Ng. Mr. Ng, currently a non-executive Co-Chairman of the Company and CB Cayman, has been a director and officer of the Company since January of 2007 and of CB Cayman since August of 2006. Mr. Ng also currently serves as a Senior Advisor to Warner Music Group Inc. (NYSE: WMG). Mr. Ng has served as executive chairman of the board and President of China Cablecom Ltd. since its inception on October 6, 2006 and as a director, Executive Chairman and President of China Cablecom since October 2007. From 2000 to 2003, he was the Chief Executive Officer of Pacific Media PMC, a home shopping company. Mr. Ng co-founded TVB Superchannel Europe in 1992, which has grown to become Europe’s leading Chinese language broadcaster. He also owned a 50% stake in HongKong SuperNet, the first Hong Kong based ISP which was then sold to Pacific Internet (NASDAQ:PCNTF). Mr. Ng was Chairman and founder of Asiacontent (NASDAQ:IASIA), one of the first Asian internet companies to list in the United States, that has been a joint venture partner with NBCi, MTVi, C-NET, CBS Sportsline and DoubleClick in Asia. Mr. Ng was also one of the initial investors and founder of E*TRADE Asia, a partnership with E*TRADE Financial Corp (NYSE: ET). Mr. Ng was a founding shareholder of MTV Japan, with H&Q Asia Pacific and MTV Networks (a division of Viacom Inc). Mr. Ng’s management experience, having served as a director and officer of the Company since 2007 and of CB Cayman since August 2006, along with his extensive industry experience, as noted above, led us to the conclusion that he should serve as a director of our Company, in light of our business and structure.

Weicheng Liu. Mr. Liu was appointed as a Senior Executive Officer and as a member of our board of directors on July 30, 2010. Prior to joining us, Mr. Liu founded Sinotop Beijing and served as its sole officer and director until his resignation on July 30, 2010. Mr. Liu is currently the Chairman and CEO of Codent Networks (Shanghai ) Co. Ltd., a mobile software company in China founded by Mr. Liu, and has served in that position since 2003. Overall, Mr. Liu has almost twenty years of experience in the telecommunications and network technology industries. Mr. Liu received a degree in engineering physics from Tsinghua University and a Ph.D. from the University of Waterloo. Mr. Liu’s extensive industry experience, as noted above, along with his management experience of Sinotop Beijing, let us to the conclusion that he should serve as a director of our Company, in light of our business and structure.

James S. Cassano. Mr. Cassano was appointed as director of the Company effective as of January 11, 2008. Mr. Cassano has served as executive vice president, chief financial officer, secretary and director of Jaguar Acquisition Corporation a Delaware corporation (OTCBB: JGAC), a blank check company, since its formation in June 2005. Mr. Cassano has served as a managing director of Katalyst LLC, a company which provides certain administrative services to Jaguar Acquisition Corporation, since January 2005. In June 1998, Mr. Cassano founded New Forum Publishers, an electronic publisher of educational material for secondary schools, and served as its chairman of the board and chief executive officer until it was sold to Apex Learning, Inc., a company controlled by Warburg Pincus, in August 2003. He remained with Apex until November 2003 in transition as vice president business development and served as a consultant to the company through February 2004. In June 1995, Mr. Cassano co-founded Advantix, Inc., a high volume electronic ticketing software and transaction services company which handled event related client and customer payments, that was re-named Tickets.com and went public through an IPO in 1999. From March 1987 to June 1995, Mr. Cassano served as senior vice president and chief financial officer of the Hill Group, Inc., a privately-held engineering and consulting organization, and from February 1986 to March 1987, Mr. Cassano served as vice president of investments and acquisitions for Safeguard Scientifics, Inc., a public venture development company. From May 1973 to February 1986, Mr. Cassano served as partner and director of strategic management services (Europe) for the strategic management group of Hay Associates. Mr. Cassano received a B.S. in Aeronautics and Astronautics from Purdue University and an M.B.A. from Wharton Graduate School at the University of Pennsylvania. Mr. Cassano’s extensive executive experience, as noted above, along with his educational background, led us to the conclusion that he should serve as a director of our Company, in light of our business and structure.

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David Zale. Mr. Zale was appointed as a director of the Company effective as of January 11, 2008. Mr. Zale founded Zale Capital Management, L.P. in January 2006. Mr. Zale advises clients on investments in hedge funds and customizes hedge fund-of-funds for high net worth individuals and institutions. In addition, Mr. Zale advises clients on their total portfolio, assisting clients in developing Investment Policy Statements and executing portfolio allocations. Mr. Zale holds the Chartered Financial Analyst designation and holds a FINRA Series 7 license through USF Securities, L.P. and his Series 63 and 65 licenses through USF Advisors, LLC, a registered Investment Advisor and conducts securities transactions through these entities, both of which are otherwise unaffiliated with Zale Capital Management, L.P. Mr. Zale has had ten years of financial services experience. From July, 2003 until December, 2005, Mr. Zale served as the Managing Director for Inaltra Capital Management, Inc., an investment advisor specializing in hedge fund-of-funds, which he helped to launch. Prior to that, Mr. Zale held positions with hedge fund-of-funds related investment advisors. In addition, he has had additional experience on the sell side, ultimately leading to a position as director of research. Prior to entering the financial services industry, Mr. Zale spent over eighteen years in the jewelry industry. He is the chairman of the Investment Committee of the M.B. and Edna Zale Foundation of Dallas, and a past chairman of the Investment Committee of Central Synagogue of New York. Mr. Zale is a graduate of the University of Colorado with a degree in Political Science. Mr. Zale’s extensive financial services experience, as noted above, along with his educational background, led us to the conclusion that he should serve as a director of our Company, in light of our business and structure.

Jonas Grossman. Mr. Grossman was appointed as a director of the Company effective as of January 11, 2008. Mr. Grossman has over nine years of experience in the financial services industry. Mr. Grossman is and has been a Partner and Head of Capital Markets of Chardan Capital, a FINRA member firm which he joined in January, 2004. In addition, Mr. Grossman founded Cornix Management LLC, a multi-strategy hedge fund in December, 2006. From April, 2001 until December, 2003, Mr. Grossman was a Vice-President at Ramius Capital Group, LLC, an international, multi-strategy hedge fund and FINRA member firm, where he also worked as Head Trader. He was a Senior Trader at Windsor Capital Advisors, LLC from June, 2000 until March, 2001 and worked as a trader making markets at Aegis Capital Corp., from February, 1999 until June, 2000. Mr. Grossman received his Bachelor of Arts in Economics from Cornell University in 1997. He has also studied at the London School of Economics and the Leonard N. Stern School of Business at New York University. Mr. Grossman’s extensive financial services experience, as noted above, along with his educational background, led us to the conclusion that he should serve as a director of our Company, in light of our business and structure.

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.

Family Relationships

There is no family relationship among any of our officers or directors.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

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been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Transactions with Related Persons, Promoters and Certain Control Persons; and Director Independence – Transactions with Related Persons,” 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.

EXECUTIVE COMPENSATION

Summary Compensation Table — Fiscal Years Ended December 31, 2009 and 2008

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods.

Name and Principal Position	Year	Salary ($)	Bonus ($)	All Other Compensation ($) (4)	Total ($)
Marc Urbach,	2009	120,000	-	14,419	134,419
President (1)	2008	102,759	-	12,016	114,775
Clive Ng,	2009	250,000	-	-	250,000
Co-Chairman (2)	2008	242,607	-	-	242,607
Pu Yue,	2009	120,000	-	-	120,000
Former Vice Chairman (3)	2008	120,000	-	-	120,000

(1)	Mr. Urbach became our President in connection with our reverse acquisition of CB Cayman in January 2007.

(2)

Mr. Ng became our Chairman in connection with our reverse acquisition of CB Cayman in January 2007. Pursuant to a settlement agreement in January 2008, Mr. Ng discharged and waived all accrued salary of $212,054 owed to him by the Company and agreed to accrue future salary until a financing is completed. We did not pay any salary to Mr. Ng in 2008 or 2009, but accrued $250,000 for each year.

(3)

Mr. Yue became our Vice Chairman in connection with our reverse acquisition of CB Cayman in January 2007. Pursuant to Mr. Yue’s employment agreement, his salary was accrued and was to be paid upon a subsequent financing. Mr. Yue was paid $60,000 in 2008 for partial payment of his employment in 2007. We accrued $120,000 per year for 2008 and 2009. We did not pay any salary to Mr. Yue in 2009. Mr. Yue resigned from his position on August 9, 2010.

(4)	All other compensation includes reimbursement for health insurance premiums and vehicle allowance.

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Employment Agreements

On July 30, 2010, we entered into employment agreements with our executive officers, including Mr. Shane McMahon, our Chairman and Chief Executive Officer, Mr. Marc Urbach, our President and Chief Financial Officer, Mr. Clive Ng, our Co-Chairman, and Mr. Weicheng Liu, our Senior Executive Officer. Under the terms of the employment agreements, Mr. McMahon is entitled to an annual salary of $250,000, Mr. Urbach is entitled to an annual salary of $215,000, Mr. Ng is entitled to an annual salary of $225,000 and Mr. Liu is entitled to an annual salary of $250,000. Each executive officer is also eligible to receive a bonus at the sole discretion of the our board of directors, and is entitled to participate in all of our benefit plans. Pursuant to the employment agreements, in the event that any executive officer is terminated without cause, he would be entitled to six months of severance pay. The employment agreements also contain customary restrictive covenants regarding non-competition relating to the pay-per-view business in the PRC, non-solicitation of employees and customers and confidentiality. The term of each employment agreement is for one year, which will automatically be extended for additional one year terms unless terminated earlier by either party.

Mr. Urbach’s prior employment agreement entered into in March 2008 provided for an annual salary of $120,000 per year. Pursuant to his prior employment agreement, we also granted Mr. Urbach options to purchase 100,000 shares of our common stock, exercisable in four equal annual installments commencing on the date of hire and on each of the first 3 anniversaries thereafter, at an exercise price equal to market value at the time of issuance.

Mr. Ng’s prior employment agreement entered into in February 2007 provided for an annual salary of $250,000 per year, however the terms also provided that such salary would be paid upon subsequent financing. On January 11, 2008, we entered into an Amendment to the Employment Agreement which provided Mr. Ng would discharge and waive all accrued salary owed to him by the Company prior to the date of said amendment and agreed to accrue future salary until a financing pursuant to a settlement agreement.

On February 24, 2007, we entered into an employment agreement with Mr. Pu Yue, our former Vice Chairman, pursuant to which we agreed to compensate Mr. Yue $120,000 per year with bonuses and increases reviewed annually. The terms also provided that such salary would be paid upon subsequent financing.

We have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or severance or change of control benefits to our named executive officer.

Outstanding Equity Awards at Year End

No equity awards were made during the year ended December 31, 2009. The following table sets forth the equity awards outstanding at December 31, 2009.

	Option Awards				Stock Awards
	Number of Securities underlying unexercised options (#) exercisable	Number of securities underlying unexercised options (#) unexercisable	Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)	Option exercise price ($)	Number of shares or units of stock that have not vested (#)	Market value of shares of units of stock that have not vested ($)	Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)	Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Marc Urbach	50,000	50,000	-	1.00	-	-	-	-

Mr. Urbach holds options to exercise 25,000 shares on March 13, 2010 and 25,000 shares on March 13, 2011.

Compensation of Directors

The table below sets forth the compensation of our directors for the fiscal year ended December 31, 2009.

Name	Fees earned or paid in cash ($)	Stock awards ($)	Option awards ($)	All other compensation ($)	Total ($)
David Zale	-	5,625	-	-	5,625
James Cassano	-	5,625	-	-	5,625
Jonas Grossman	-	5,625	-	-	5,625

Our three independent directors were each granted options in 2008 to acquire 50,000 shares at $.45 per share, becoming exercisable 50% at grant and 25% per year thereafter.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our voting stock as of September 23, 2010 (i) by each person who is known by us to beneficially own more than 5% of each class our voting stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group.

		Shares Beneficially Owned(1)
		Common Stock(2)		Series A Preferred Stock(3)		Series B Preferred Stock(4)		% Total Voting Power(5)
Name and Address of Beneficial Owner	Office, If Any	Shares	% of Class	Shares	% of Class	Shares	% of Class
Directors and Officers
Shane McMahon 295 Greenwich St., Apt. 301 New York, NY 10007	Chairman and CEO	260,000,000(6)	58.99%	7,000,000	100%	0	*	84.15%
Marc Urbach 79 Green Hill Rd Springfield, NJ 07081	President and CFO	75,000(7)	*	0	*	0	*	*
Clive Ng 1900 Ninth Street, 3rd Floor Boulder, CO 80302	Co-Chairman	24,336,248(8)	12.76%	0	*	0	*	2.73%
Weicheng Liu	Senior Executive Officer and Director	249,393,633(9)	71.38%	0	*	0	*	23.77%
James Cassano 117 Graham Way Devon, PA 19333	Director	37,500(10)	*	0	*	0	*	*
David Zale 825 Third Avenue, Suite 244 New York, NY 10022	Director	112,500(11)	*	0	*	0	*	*
Jonas Grossman 17 State Street, Suite 1600 New York, NY 10004	Director	1,328,500(12)	*	0	*	0	*	*
All officers and directors as a group (7 persons named above)		535,283,381	89.16%	7,000,000	100%	0	*	90.29%
5% Security Holders
Shane McMahon 295 Greenwich St., Apt. 301 New York, NY 10007	Chairman and CEO	260,000,000(6)	58.99%	7,000,000	100%	0	*	84.15%
Clive Ng 1900 Ninth Street, 3rd Floor Boulder, CO 80302	Co-Chairman	24,336,248(7)	12.76%	0	*	0	*	2.73%
China Broadband Partners, Ltd. 1900 Ninth Street, 3rd Floor Boulder, CO 80302		17,503,495(8)	9.18%	0	*	0	*	1.96%
Weicheng Liu	Senior Executive Officer and Director	249,393,633(9)	71.38%	0	*	0	*	23.77%
Oliveira Capital, LLC 18 Fieldstone Ct. New City, NY 10956		21,173,068(13)	9.99%	0	*	9,066,800(12)	88.31%	9.99%
Steven Oliveira 18 Fieldstone Ct. New City, NY 10956		21,173,068(13)(14)	9.99%	0	*	10,266,800(12)	100%	9.99%

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* Less than 1%

(1)

Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to our ordinary shares. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.

(2)	Based on 190,769,563 shares of common stock issued and outstanding as of September 23, 2010.

(3)

Based on 7,000,000 shares of Series A Preferred Stock issued and outstanding as of September 23, 2010. Each share of Series A Preferred Stock is convertible, at any time at the option of the holder, into ten (10) shares of common stock (subject to customary adjustments). Holders of Series A Preferred Stock vote with the holders of common stock on all matters and are entitled to ten (10) votes for each one (1) share of common stock that is issuable upon conversion of a share of Series A Preferred Stock (meaning that holders of Series A Preferred Stock are currently entitled to 100 votes per share). See “Description of Capital Stock – Series A Preferred Stock” below for more information regarding our Series A Preferred Stock.

(4)

Based on 10,266,800 shares of Series B Preferred Stock issued and outstanding as of September 23, 2010. Each share of Series B Preferred Stock is convertible, at the holder’s option, into shares of Common Stock on a ten-to-one basis; provided, however, that the holder of Series B Preferred Stock may not convert the Series B Preferred Stock into common stock to the extent that such holder would beneficially own in excess of 9.99% of the number of shares of common stock of the Company outstanding immediately after giving effect to such conversion. The holder of Series B Preferred Stock may waive the restriction on the conversion of the Series B Shares into common stock upon 61 days’ notice to the Company. In addition, the holders of Series B Preferred Stock are not entitled to vote on matters submitted to a vote of the shareholders of the Company on an as-converted basis. See “Description of Capital Stock – Series B Preferred Stock” below for more information regarding our Series B Preferred Stock.

(5)	Represents total voting power with respect to all shares of our common stock and Series A Preferred Stock.

(6)	Includes 250,000,000 shares underlying five-year warrants to purchase shares of common stock at an exercise price of $0.05 per share.

(7)	Includes 75,000 shares underlying options exercisable within 60 days at $1.00 per share. Does not include options to purchase an additional 25,000 shares at $1.00 which are not yet exercisable.

(8)	Includes 3,582,753 shares held by 88 Holdings, Inc., 3,250,000 held by BeeteeBee, Ltd. and 17,503,495 shares held by China Broadband Partners, Ltd. Mr. Ng controls and owns 100% beneficial ownership over these entities.

(9)	Includes 128,536,960 shares underlying five-year warrants to purchase shares of common stock at an exercise price of $0.05 and 30,079,375 shares underlying options exercisable at $0.05 per share.

(10)	Includes 37,500 shares underlying options exercisable within 60 days at $.45 per share. Does not include options to purchase an additional 12,500 shares at $.45 which are not yet exercisable.

(11)

Includes 50,000 shares of common stock, 25,000 shares underlying warrants to purchase shares of common stock at an exercise price of $2.00 per share, and 37,500 shares underlying options exercisable with 60 days at $.45 per share. Does not include options to purchase an additional 12,500 shares at $.45 which are not yet exercisable.

(12)

Includes 500,000 shares of common stock, 500,000 shares underlying five-year warrants to purchase shares of common stock at an exercise price of $0.05 per share, and 37,500 shares underlying options exercisable at $.45 per share that Mr. Grossman holds directly. Mr. Grossman is also an officer and part owner of Chardan Capital Markets, LLC, or Chardan Capital, and has shared voting and dispositive control over securities owned by Chardan Capital, but not over securities owned by other principals of Chardan Capital. Chardan Capital or its principals own in aggregate (i) 1,131,666 shares underlying warrants, of which Mr. Grossman disclaims beneficial ownership of 877,041 shares issuable upon conversion thereof and, (iii) 161,667 shares underlying Class A Warrants, of which Mr. Grossman disclaims beneficial ownership of 125,292 shares issuable upon conversion thereof. Does not include options to purchase an additional 12,500 shares at $.45 which are not yet exercisable.

(13)

Includes 93,334,667 shares underlying five-year warrants to purchase shares of common stock at an exercise price of $0.05, of which 90,668,000 contain provisions whereby the holder may not exercise such warrants to the extent that such holder would beneficially own in excess of 9.99% of the number of shares of common stock of the Company outstanding immediately after giving effect to such exercise; provided, however, that such holder may waive the restriction on exercise of such warrants upon 61 days’ notice to the Company. Mr. Steven Oliveira is the sole member of Oliveira Capital, LLC and has voting and dispositive over securities owned by Oliveira Capital, LLC. See Note 4 above with respect to Shares of Series B Preferred Stock and the restrictions on conversion thereof.

(14)

Includes 141,334,667 shares underlying five-year warrants to purchase shares of common stock at an exercise price of $0.05, of which 138,668,000 contain provisions whereby the holder may not exercise such warrants to the extent that such holder would beneficially own in excess of 9.99% of the number of shares of common stock of the Company outstanding immediately after giving effect to such exercise; provided, however, that such holder may waive the restriction on exercise of such warrants upon 61 days’ notice to the Company. See Note 4 above with respect to Shares of Series B Preferred Stock and the restrictions on conversion thereof.

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Changes in Control

We do not currently have any arrangements which if consummated may result in a change of control of our Company.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN

CONTROL PERSONS; DIRECTOR INDEPENDENCE

Transactions with Related Persons

The following includes a summary of transactions since the beginning of our 2009 fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

The Company has a loan receivable for $290,000 as of December 31, 2009 from a related party, Music Magazine. The loan is unsecured, interest free and has no fixed repayment terms. Music Magazine is an affiliate of Modern Movie.

During the year ended December 31, 2009, Jinan Broadband paid $2,643,204 to Jinan Parent. At December 31, 2009, $152,000 remains due to Jinan Parent. This amount represents the remaining balance due from the initial acquisition which is unsecured, interest free and has no fixed repayment terms.

As of December 31, 2009, amounts due from shareholders include $109,000 from Shandong Broadcast and $60,000 from Modern Movie. Both companies are our partners in our Shandong Publishing joint venture company. The amount due from Shandong Broadcast is unsecured, interest free and has no fixed repayment terms. The amount due from Modern Movie is unsecured, interest free and is due on December 31, 2010. During the year ended December 31, 2009, we advanced approximately $650,000 to these companies and also received repayments of $481,000.

On January 11, 2008, we entered into a settlement agreement, or the Settlement Agreement, which was negotiated by the Company, its advisors and management and certain shareholders, for purposes of facilitating our business plan and expediting and facilitating our financing activities and avoiding disputes between management and certain investors and consultants concerning possible claims that such investors suggested might be brought against these principals for their activities in forming and operating China Cablecom and its entry into a merger agreement as being violative of their employment agreements with the Company. The Settlement Agreement provided, subject to the terms thereof, for general mutual releases of all executives and management and their affiliated entities and also provided for the modification of employment agreements of both, Mr. Clive Ng, our Co-Chairman and Mr. Pu Yue, our former Vice Chairman. In connection with the Settlement Agreement, we received 390,000 shares of China Cablecom from Mr. Clive Ng, our Co-Chairman. The value of the shares declined substantially, and may continue to fluctuate and decline further. During the year ended December 31, 2009, we sold 236,665 shares for total net proceeds of $175,000 and recorded a net loss on the sales of approximately $15,000. As of December 31, 2009, we hold 81,455 shares of China Cablecom. The fair value of the remaining 81,455 shares at December 31, 2009 is approximately $47,000.

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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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

SELLING STOCKHOLDERS

This prospectus relates to the resale by the selling stockholders named below from time to time of up to a total of 129,018,000 shares of our common stock that were issued or are issuable to selling stockholders pursuant to transactions exempt from registration under the Securities Act. All of the common stock offered by this prospectus is being offered by the selling stockholders for their own accounts.

On July 30, 2010, we closed a financing with several accredited investors, pursuant to which we issued 62,500,000 units for an aggregate purchase price of $3.125 million, or $0.05 per unit. Each unit consists of one share of common stock and a warrant for the purchase of one share of common stock. The warrants entitle the investors the right, for a period of five years, to purchase shares of our common stock at an exercise price of $0.05. The warrants may not be exercised on a cashless basis. The warrants contain customary anti-dilution protection, provided that the anti-dilution provisions of the warrant do not contain any provisions which would result in a non-cash charge to our earnings. In addition, we are able to redeem the warrants if (i) the closing price of our common stock equals or exceeds $0.125 per share for twenty consecutive trading days and (ii) there is an effective registration statement covering the shares of common stock underlying the warrants on file with the SEC (or all such shares of common stock may be sold pursuant to Rule 144 of the Securities Act without restriction).

Pursuant to a registration rights agreement that we entered into with the investors, we agreed to use our commercially reasonable efforts to file with the SEC, on or before the 45th day following the closing date, a registration statement covering the resale of all of the shares of common stock, including the shares of common stock underlying the warrants. We agreed to use commercially reasonable efforts to have the registration statement declared effective by the SEC as soon as practicable, but in no event later than the 180th day following the closing date.

In connection with the July 30, 2010 private placement, we paid to Chardan Capital Markets LLC, for services lead placement agent, a cash fee equal to 10% of the aggregate purchase price of the offering and warrants for the purchase an aggregate of 4,018,000 shares of common stock. The warrants are identical to the warrants issued to the investors in the private placement except that they may be exercised on a cashless basis.

Selling Stockholders

The following table sets forth certain information regarding the selling stockholders and the shares offered by them in this prospectus. Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a selling stockholder and the percentage of ownership of that selling stockholder, shares of common stock underlying shares of convertible preferred stock, options or warrants held by that selling stockholder that are convertible or exercisable, as the case may be, within 60 days are included. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other selling stockholder. Each selling stockholder’s percentage of ownership in the following table is based upon 190,769,563 shares of common stock outstanding as of September 23, 2010.

All information with respect to share ownership has been furnished by the selling stockholders. The shares being offered are being registered to permit public secondary trading of the shares and each selling stockholder may offer all or part of the shares owned for resale from time to time. In addition, none of the selling stockholders has any family relationships with our officers, directors or controlling stockholders. Furthermore, no selling stockholder is a registered broker-dealer or an affiliate of a registered broker-dealer, except as noted below. Each registered broker-dealer or affiliate of a registered broker-dealer noted below certified to us that it had (i) purchased the securities covered by this Prospectus in the ordinary course of business and (ii) at the time of the purchase of such securities, had no agreements or understandings, directly or indirectly, with any person to distribute the securities.

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For additional information, refer to “Security Ownership of Certain Beneficial Owners and Management” above.

The term “selling stockholders” also includes any transferees, pledges, donees, or other successors in interest to the selling stockholders named in the table below. To our knowledge, subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such person’s name. We will file a supplement to this prospectus (or a post-effective amendment hereto, if necessary) to name successors to any named selling stockholders who are able to use this prospectus to resell the securities registered hereby.

Name	Beneficial Ownership Before the Offering	Shares of Common Stock Included in Prospectus	Beneficial Ownership After the Offering (1)	Percentage of Common Stoc Owned After Offering(2)
Shane McMahon (3)	330,000,000	20,000,000	310,000,000	61.90%
Evan Genack (4)	10,000,000	10,000,000	0	*
Chestnut Ridge Partners, LP (5)	8,000,000	8,000,000	0	*
Bantry Bay Ventures, LLC (6)	6,000,000	6,000,000	0	*
Neil and Irene Danics (7)	6,000,000	6,000,000	0	*
Hammerman Capital Partners, LP (8)	3,000,000	3,000,000	0	*
Harry and Charlotte Katz (9)	2,000,000	2,000,000	0	*
Myron P. Sardo Jr. (10)	2,000,000	2,000,000	0	*
David Alfred (11)	1,200,000	1,200,000	0	*
Steven Urbach (12)	1,000,000	1,000,000	0	*
Kerry Propper (13)	1,000,000	1,000,000	0	*
Jonas Grossman (14)	1,328,500	1,000,000	328,500	*
Jensco LLC (15)	1,000,000	1,000,000	0	*
Jeffrey Grodko (16)	1,000,000	1,000,000	0	*
Edward Lowy (17)	1,000,000	1,000,000	0	*
Jordan Podell (18)	800,000	800,000	0	*
Michael Bernstein (19)	800,000	800,000	0	*
Keith Sazer (20)	800,000	800,000	0	*
William Lafferty (21)	600,000	600,000	0	*
George Kaufman (22)	400,000	400,000	0	*
Shai Gerson (23)	400,000	400,000	0	*
Paul and Shira Chait (24)	400,000	400,000	0	*
Jason Finkelstein (25)	400,000	400,000	0	*
Matthew Weisbarth (26)	200,000	200,000	0	*
Matthew Applebaum (27)	200,000	200,000	0	*
James Meagher (28)	200,000	200,000	0	*
Ethan Rapp (29)	200,000	200,000	0	*
Jonathan Jay Friedman (30)	200,000	200,000	0	*
Brian Snerson (31)	200,000	200,000	0	*
Barry and Romy Rabkin (32)	20,000,000	20,000,000	0	*
Ajax Partners (33)	10,000,000	10,000,000	0	*
Gregory Tagaris (34)	10,000,000	10,000,000	0	*
XEL, Inc. (35)	8,000,000	8,000,000	0	*
Daniel M Foley (36)	2,000,000	2,000,000	0	*
MZ Trading LLC (37)	2,000,000	2,000,000	0	*
Scott J Koppelman (38)	1,000,000	1,000,000	0	*
Daniel Gardella (39)	1,000,000	1,000,000	0	*
Nicholas and Kara DiFalco (40)	1,000,000	1,000,000	0	*
Chardan Capital Markets LLC (41)	2,872,160	2,825,000	47,160	*
National Securities Corporation (42)	836,000	836,000	0	*
Maxim Group LLC (43)	225,000	275,000	0	*
Jonathan Rich (44)	132,000	132,000	0	*

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* Less than 1%

(1) Assumes that all securities offered are sold.

(2) As of September 23, 2010, a total of 190,769,563 shares of our common stock are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.

(3) Included in this prospectus are 10,000,000 shares of common stock and 10,000,000 shares underlying a warrant to purchase shares of common stock. Mr. McMahon also beneficially owns 7,000,000 shares of Series A Preferred Stock, currently convertible into 70,000,000 shares of common stock, and 240,000,000 shares underlying five-year warrants to purchase shares of common stock at an exercise price of $0.05 per share. These additional securities are not included in this prospectus.

(4) Includes 5,000,000 shares of common stock and 5,000,000 shares underlying a warrant to purchase shares of common stock.

(5) Includes 4,000,000 shares of common stock and 4,000,000 shares underlying a warrant to purchase shares of common stock. Ken Holz is the chief financial officer of Chestnut Ridge Capital, LLC, the general partner of Chestnut Ridge Partners, LP, and has voting and dispositive control over securities held by it. Mr. Holz disclaims beneficial ownership of the shares held by Chestnut Ridge Partners, LP.

(6) Includes 3,000,000 shares of common stock and 3,000,000 shares underlying a warrant to purchase shares of common stock. Eric Zachs is the managing partner of Bantry Bay Ventures, LLC and has voting and dispositive control over securities held by it.

(7) Includes 3,000,000 shares of common stock and 3,000,000 shares underlying a warrant to purchase shares of common stock.

(8) Includes 1,500,000 shares of common stock and 1,500,000 shares underlying a warrant to purchase shares of common stock. Jason Hammerman is the managing member of Hammerman Capital Partners, LP and has voting and dispositive control over securities held by it.

(9) Includes 1,000,000 shares of common stock and 1,000,000 shares underlying a warrant to purchase shares of common stock.

(10) Includes 1,000,000 shares of common stock and 1,000,000 shares underlying a warrant to purchase shares of common stock.

(11) Includes 600,000 shares of common stock and 600,000 shares underlying a warrant to purchase shares of common stock.

(12) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(13) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(14) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(15) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock. Richard Blakeman is the managing member of Jensco LLC and has voting and dispositive control over securities held by it.

(16) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(17) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(18) Includes 400,000 shares of common stock and 400,000 shares underlying a warrant to purchase shares of common stock.

(19) Includes 400,000 shares of common stock and 400,000 shares underlying a warrant to purchase shares of common stock.

(20) Includes 400,000 shares of common stock and 400,000 shares underlying a warrant to purchase shares of common stock.

(21) Includes 300,000 shares of common stock and 300,000 shares underlying a warrant to purchase shares of common stock.

(22) Includes 200,000 shares of common stock and 200,000 shares underlying a warrant to purchase shares of common stock.

(23) Includes 200,000 shares of common stock and 200,000 shares underlying a warrant to purchase shares of common stock.

(24) Includes 200,000 shares of common stock and 200,000 shares underlying a warrant to purchase shares of common stock.

(25) Includes 200,000 shares of common stock and 200,000 shares underlying a warrant to purchase shares of common stock.

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(26) Includes 100,000 shares of common stock and 100,000 shares underlying a warrant to purchase shares of common stock.

(27) Includes 100,000 shares of common stock and 100,000 shares underlying a warrant to purchase shares of common stock.

(28) Includes 100,000 shares of common stock and 100,000 shares underlying a warrant to purchase shares of common stock.

(29) Includes 100,000 shares of common stock and 100,000 shares underlying a warrant to purchase shares of common stock.

(30) Includes 100,000 shares of common stock and 100,000 shares underlying a warrant to purchase shares of common stock.

(31) Includes 100,000 shares of common stock and 100,000 shares underlying a warrant to purchase shares of common stock.

(32) Includes 10,000,000 shares of common stock and 10,000,000 shares underlying a warrant to purchase shares of common stock.

(33) Includes 5,000,000 shares of common stock and 5,000,000 shares underlying a warrant to purchase shares of common stock.

(34) Includes 5,000,000 shares of common stock and 5,000,000 shares underlying a warrant to purchase shares of common stock.

(35) Includes 4,000,000 shares of common stock and 4,000,000 shares underlying a warrant to purchase shares of common stock. Alexander Pomper is the president of XEL, Inc. and has voting and dispositive control over securities held by it.

(36) Includes 1,000,000 shares of common stock and 1,000,000 shares underlying a warrant to purchase shares of common stock.

(37) Includes 1,000,000 shares of common stock and 1,000,000 shares underlying a warrant to purchase shares of common stock. Mark Zeitchick is the managing member of MZ Trading LLC and has voting and dispositive control over securities held by it.

(38) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(39) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(40) Includes 500,000 shares of common stock and 500,000 shares underlying a warrant to purchase shares of common stock.

(41) Includes 2,825,000 shares underlying warrants to purchase shares of common stock.

(42) Includes 836,000 shares [same as above]

(43) Includes 225,000 shares [same as above]

(44) Includes 132,000 shares [same as above]

DESCRIPTION OF CAPITAL STOCK

Common Stock

We are authorized to issue up to 1,500,000,000 shares of common stock, par value $0.001 per share. Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters. Our bylaws provide that elections for directors shall be by a plurality of votes. Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock. Upon our liquidation, dissolution or winding up, and after payment of creditors and preferred stockholders, if any, our assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock.

The holders of shares of our common stock are entitled to dividends out of funds legally available when and as declared by our board of directors. Our board of directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. Should we decide in the future to pay dividends, as a holding company, our ability to do so and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary and other holdings and investments. In addition, our operating subsidiary, from time to time, may be subject to restrictions on its 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. In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive, ratably, the net assets available to stockholders after payment of all creditors.

All of the issued and outstanding shares of our common stock are duly authorized, validly issued, fully paid and non-assessable. To the extent that additional shares of our common stock are issued, the relative interests of existing stockholders will be diluted.

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Preferred Stock

We are authorized to issue up to 50,000,000 shares of preferred stock, par value $0.001 per share, in one or more classes or series within a class as may be determined by our board of directors, who may establish, from time to time, the number of shares to be included in each class or series, may fix the designation, powers, preferences and rights of the shares of each such class or series and any qualifications, limitations or restrictions thereof. Any preferred stock so issued by the board of directors may rank senior to the common stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up of us, or both. Moreover, under certain circumstances, the issuance of preferred stock or the existence of the unissued preferred stock might tend to discourage or render more difficult a merger or other change of control.

Series A Preferred Stock

On July 30, 2010, we filed a Certificate of Designation with the Secretary of State of Nevada establishing a new series of our preferred stock designated as “Series A Preferred Stock.” A summary of the Certificate of Designation is set forth below:

Ranking. With respect to rights upon liquidation, winding-up or dissolution, the Series A Preferred Stock ranks senior to our common stock and pari passu with any other series of our preferred stock established by our board of directors.

Voting. The holders of the Series A Preferred Stock are entitled to ten (10) votes for each one (1) share of common stock that is issuable upon conversion of a share of Series A Preferred Stock. Except as required by law, all shares of Series A Preferred Stock and all shares of common stock shall vote together as a single class.

Conversion. Each share of Series A Preferred Stock is convertible, at any time at the option of the holder, into ten (10) fully paid and nonassessable shares of common stock, subject to adjustment as provided in the Certificate of Designation.

Dividends. The Series A Preferred Stock is only entitled to receive dividends when and if declared by our board of directors.

Liquidation. Upon the occurrence of a liquidation event, the holders of the Series A Preferred Stock then outstanding will be entitled to receive, out of the assets of the Company available for distribution to its stockholders, an amount equal to $0.50 per share, as may be adjusted from time to time, plus all accrued, but unpaid dividends, before any payment shall be made or any assets distributed to the holders of common stock or any other class or series of stock issued by the Company not designated as ranking senior to or pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments upon a liquidation event. For purposes of the Certificate of Designation, a “liquidation event” means any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, and upon the election of the holders of a majority of the then outstanding Series A Preferred Stock shall be deemed to be occasioned by, or to include, (i) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, consolidation, or other transaction in which control of the Company is transferred, but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company) unless the Company’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity or (ii) a sale of all or substantially all of the assets of the Company.

As of September 23, 2010, there were 7,000,000 shares of Series A Preferred Stock issued and outstanding.

Series B Preferred Stock

On July 30, 2010, we filed a Certificate of Designation with the Secretary of State of Nevada establishing a new series of our preferred stock designated as “Series B Preferred Stock.” A summary of the Certificate of Designation is set forth below:

Ranking. With respect to rights upon liquidation, winding-up or dissolution, the Series B Preferred Stock ranks senior to our common stock and pari passu with any other series of our preferred stock established by our board of directors.

Voting. Except as with respect to amendments to the Certificate of Designation or for any other matters brought before the holders of Series B Preferred Stock for a vote of the holders of Series B Preferred Stock as a separate class, the holders of Series B Preferred Stock are not entitled to vote on matters submitted to a vote of the stockholders of the Company.

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Conversion. Each share of Series B Preferred Stock is convertible, at any time at the option of the holder, into ten (10) fully paid and nonassessable shares of common stock, subject to adjustment as provided in the Certificate of Designation.

Dividends. The Series B Preferred Stock is only entitled to receive dividends when and if declared by our board of directors.

Liquidation. Upon the occurrence of a liquidation event, the holders of the Series B Preferred Stock then outstanding will be entitled to receive, out of the assets of the Company available for distribution to its stockholders, an amount equal to $0.50 per share, as may be adjusted from time to time, plus all accrued, but unpaid dividends, before any payment shall be made or any assets distributed to the holders of common stock or any other class or series of stock issued by the Company not designated as ranking senior to or pari passu with the Series B Preferred Stock in respect of the right to participate in distributions or payments upon a liquidation event. For purposes of the Certificate of Designation, a “liquidation event” means any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, and upon the election of the holders of a majority of the then outstanding Series B Preferred Stock shall be deemed to be occasioned by, or to include, (i) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, consolidation, or other transaction in which control of the Company is transferred, but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company) unless the Company’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity or (ii) a sale of all or substantially all of the assets of the Company.

As of September 23, 2010, there were 10,266,800 shares of Series B Preferred Stock issued and outstanding.

Warrants

Anti-takeover Effects of Our Articles of Incorporation and Bylaws

Our articles of incorporation and bylaws contain certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of the Company or changing its board of directors and management. According to our bylaws and articles of incorporation, neither the holders of our common stock nor the holders of our preferred stock have cumulative voting rights in the election of our directors. The combination of the present ownership by a few stockholders of a significant portion of our issued and outstanding common stock and lack of cumulative voting makes it more difficult for other stockholders to replace our board of directors or for a third party to obtain control of the Company by replacing its board of directors.

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Anti-takeover Effects of Nevada Law

Business Combinations

The “business combination” provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, prohibit a Nevada corporation with at least 200 stockholders from engaging in various “combination” transactions with any interested stockholder: for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the interested stockholder obtained such status; or after the expiration of the three-year period, unless:

the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders, or

if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.

A “combination” is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, with an "interested stockholder" having: (a) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) 10% or more of the earning power or net income of the corporation.

In general, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation's voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Our Articles of Incorporation state that we have elected not to be governed by the “business combination” provisions, therefore such provisions currently do not apply to us.

Control Share Acquisitions

The “control share” provisions of Sections 78.378 to 78.3793, inclusive, of the NRS, which apply only to Nevada corporations with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada, prohibit an acquirer, under certain circumstances, from voting its shares of a target corporation's stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation's disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Once an acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof become “control shares” and such control shares are deprived of the right to vote until disinterested stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures established for dissenters’ rights.

Our Articles of Incorporation state that we have elected not to be governed by the “control share” provisions, therefore, they currently do not apply to us.

Transfer Agent and Registrar

Our independent stock transfer agent is Transfer Online, Inc., 512 SE Salmon Street, Portland, OR 97214. Their telephone number is (503) 227-2950.

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SHARES ELIGIBLE FOR FUTURE SALE

As of September 23, 2010, there were 190,769,563 shares of our common stock outstanding.

Shares Covered by this Prospectus

All of the 129,018,000 shares being registered in this offering may be sold without restriction under the Securities Act of 1933.

Rule 144

The SEC has recently adopted amendments to Rule 144 which became effective on February 15, 2008 and apply to securities acquired both before and after that date. Under these amendments, a person who has beneficially owned restricted shares of our common stock or warrants for at least six months would be entitled to sell their securities provided that (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale, (2) we are subject to the Exchange Act reporting requirements for at least 90 days before the sale and (3) if the sale occurs prior to satisfaction of a one-year holding period, we provide current information at the time of sale.

Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

1% of the total number of securities of the same class then outstanding, which will equal approximately 1,907,696 shares immediately after this offering; or

the average weekly trading volume of such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale.

However, since we anticipate that our shares will be quoted on the OTCQB Market, which is not an “automated quotation system,” our stockholders will not be able to rely on the market-based volume limitation described in the second bullet above. If, in the future, our securities are listed on an exchange or quoted on NASDAQ, then our stockholders would be able to rely on the market-based volume limitation. Unless and until our stock is so listed or quoted, our stockholders can only rely on the percentage based volume limitation described in the first bullet above.

Such sales by affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144. The selling stockholders will not be governed by the foregoing restrictions when selling their shares pursuant to this prospectus.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Historically, the SEC staff has taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition, however, if the following conditions are met:

the issuer of the securities that was formerly a shell company has ceased to be a shell company;

the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and

at least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company.

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As a result, it is likely that pursuant to Rule 144 our stockholders, who were stockholders prior to our reverse acquisition of CB Cayman, are able to sell their shares of our common stock from and after January 23, 2008 (the one year anniversary of our filing of current comprehensive disclosure following our reverse acquisition of CB Cayman) without registration.

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

an exchange distribution in accordance with the rules of the applicable exchange;

privately negotiated transactions;

to cover short sales made after the date that this registration statement is declared effective by the Commission;

broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

a combination of any such methods of sale; and

any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon the Company being notified in writing by a selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a selling stockholder that a donee or pledgee intends to sell more than 500 shares of common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

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The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of securities will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such selling stockholder’s business and, at the time of its purchase of such securities such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company has advised each selling stockholder that it may not use shares registered on this registration statement to cover short sales of common stock made prior to the date on which this registration statement shall have been declared effective by the SEC. If a selling stockholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholders in connection with resales of their respective shares under this registration statement.

The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the common stock. The Company has agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon for us by Lewis and Roca LLP, Las Vegas, NV.

EXPERTS

The financial statements included in this prospectus and in the registration statement have been audited by UHY LLP, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance on such report, given the authority of said firm as an expert in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered in this offering. This prospectus does not contain all of the information set forth in the registration statement. For further information with respect to us and the common stock offered in this offering, we refer you to the registration statement and to the attached exhibits. With respect to each such document filed as an exhibit to the registration statement, we refer you to the exhibit for a more complete description of the matters involved.

You may inspect our registration statement and the attached exhibits and schedules without charge at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any part of our registration statement from the SEC upon payment of prescribed fees. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330.

Our SEC filings, including the registration statement and the exhibits filed with the registration statement, are also available from the SEC’s website at www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

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CHINA BROADBAND, INC.

CONSOLIDATED FINANCIAL STATEMENTS

	Page

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009	F-2
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Loss	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-7

AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED DECEMBER 31, 2009 and 2008	F-18
Report of Independent Registered Public Accounting Firm	F-18
Consolidated Balance Sheets	F-19
Consolidated Statements of Operations	F-20
Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Loss	F-21
Consolidated Statements of Cash Flows	F-22
Notes to Consolidated Financial Statements	F-23

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,606,943		$	2,190,494
Marketable equity securities, available for sale		47,875			47,244
Accounts receivable, net		175,416			213,713
Inventory		441,722			455,492
Prepaid expense		518,602			237,704
Loan receivable from related party		291,191			289,974
Amounts due from shareholders		695,758			168,907
Other current assets		67,733			78,478
Total current assets		3,845,240			3,682,006

Property and equipment, net		5,486,242			7,362,641
Intangible assets, net		3,158,624			4,294,614
Other assets		384,008			430,561
Total assets	$	12,874,114		$	15,769,822

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,826,861		$	1,350,076
Accrued expenses		1,893,027			1,839,272
Deferred revenue		1,512,882			1,637,283
Deferred tax liability		281,626			281,626
Convertible notes payable		454,916			304,853
Warrant liabilities		755,404			819,150
Loan payable		398,960			398,960
Loan payable to beneficial owner		20,000			-
Payable to Shandong Media		-			145,679
Payable to Jinan Parent		133,814			152,268
Other current liabilities		480,599			378,847
Total current liabilities		7,758,089			7,308,014

Convertible notes payable		4,715,331			4,665,306
Deferred tax liability and uncertain tax position liability		194,467			454,578
Total liabilities		12,667,887			12,427,898

Commitments and Contingencies

Shareholders' equity
Preferred stock, $.001 par value; 5,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $.001 par value; 95,000,000 shares authorized, 65,414,515 and 64,761,396 issued and outstanding		65,415			64,762
Additional paid-in capital		15,150,032			14,901,493
Accumulated deficit		(19,438,701	)		(17,215,041	)
Accumulated other comprehensive income		750,263			331,283
Total China Broadband shareholders' deficit		(3,472,991	)		(1,917,503	)
Noncontrolling interests		3,679,218			5,259,427

Total shareholders' equity		206,227			3,341,924

Total liabilities and shareholders' equity	$	12,874,114		$	15,769,822

See notes to consolidated financial statements.

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
				(Restated)						(Restated)

Revenue	$	1,817,306		$	1,989,517		$	3,692,987		$	3,938,927
Cost of revenue		1,035,276			1,102,915			2,109,084			2,276,796
Gross profit		782,030			886,602			1,583,903			1,662,131

Selling, general and adminstrative expenses		616,133			740,878			1,339,403			1,458,806
Professional fees		381,271			181,901			550,036			292,397
Depreciation and amortization		957,314			904,824			1,902,758			1,736,131

Loss from operations		(1,172,688	)		(941,001	)		(2,208,294	)		(1,825,203	)

Interest & other income / (expense)
Interest income		929			1,926			2,290			5,384
Interest expense		(182,313	)		(89,664	)		(273,548	)		(177,048	)
Change in fair value of warrant liabilities		21,932			(626,978	)		63,746			(1,240,787	)
Gain (loss) on sale of securities		1,350			(10,283	)		1,350			(30,635	)
Impairment of intangibles		(900,000	)		-			(900,000	)		-
Impairment of equipment		(750,000	)		-			(750,000	)		-
Other		(1,298	)		53			476			(275	)

Net loss before income taxes and noncontrolling interest		(2,982,088	)		(1,665,947	)		(4,063,980	)		(3,268,564	)

Income tax benefit		246,383			14,680			260,111			29,360

Net loss, net of tax		(2,735,705	)		(1,651,267	)		(3,803,869	)		(3,239,204	)

Plus: Net loss attributable to noncontrolling interests		1,316,554			138,657			1,580,209			384,246

Net loss attributable to China Broadband shareholders	$	(1,419,151	)	$	(1,512,610	)	$	(2,223,660	)	$	(2,854,958	)

Net income (loss) per share
Basic	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.05	)
Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.05	)

Weighted average shares outstanding
Basic		65,089,760			62,621,651			64,926,485			56,290,826
Diluted		65,089,760			62,621,651			64,926,485			56,290,826

See notes to consolidated financial statements.

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSS

for the Periods Ended June 30, 2010 (Unaudited) and December 31, 2009

	Common Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income(loss)			China Broadband Shareholders' (Deficit)/Equity			Noncontrolling Interest			Total Equity			Comprehensive Loss

Balance December 31, 2008		50,585,455	$	50,586	$	13,372,359		$	(12,200,289	)	$	320,858		$	1,543,514		$	6,637,631		$	8,181,145

Cumulative effect of accounting change for warrants - reclassification of warrants to warrant liabilities		-		-		(731,496	)		424,373			-			(307,123	)		-			(307,123	)

Shandong Media valuation adjustment		-		-		-			-			-			-			(275,448	)		(275,448	)

Shares issued as payment for convertible note interest		921,043		921		259,637			-			-			260,558			-			260,558

Stock option compensation expense		-		-		33,656			-			-			33,656			-			33,656

Shares issued for AdNet acquisition		11,254,898		11,255		1,676,980			-			-			1,688,235			-			1,688,235

Costs related to stock issued for AdNet acquisition		-		-		(3,622	)		-			-			(3,622	)					(3,622	)

Shares issued for cash		2,000,000		2,000		298,000			-			-			300,000			-			300,000

Costs related to stock issued for cash		-		-		(4,021	)		-			-			(4,021	)		-			(4,021	)

Comprehensive loss:
Net loss		-		-		-			(5,439,125	)		-			(5,439,125	)		(1,102,756	)		(6,541,881	)	$	(5,439,125	)
Foreign currency translation adjustments		-		-		-			-			28,345			28,345			-			28,345			28,345

Unrealized loss on marketable equity securities		-		-		-			-			(17,920	)		(17,920	)		-			(17,920	)		(17,920	)

Balance December 31, 2009		64,761,396	$	64,762	$	14,901,493		$	(17,215,041	)	$	331,283		$	(1,917,503	)	$	5,259,427		$	3,341,924		$	(5,428,700	)

Shares issued as payment for convertible note interest		653,119		653		131,982			-			-			132,635			-			132,635

Stock option compensation expense		-		-		26,557			-			-			26,557			-			26,557

Interest expense related to discount and beneficial convertible features in connection with convertible note and warrants issuance		-		-		90,000			-			-			90,000			-			90,000

Comprehensive loss:
Net loss		-		-		-			(2,223,660	)		-			(2,223,660	)		(1,580,209	)		(3,803,869	)	$	(2,223,660	)
Foreign currency translation adjustments		-		-		-			-			410,349			410,349			-			410,349			410,349

Unrealized gain on marketable equity securities		-		-		-			-			8,631			8,631			-			8,631			8,631

Balance June 30, 2010		65,414,515	$	65,415	$	15,150,032		$	(19,438,701	)	$	750,263		$	(3,472,991	)	$	3,679,218		$	206,227		$	(1,804,680	)

See notes to consolidated financial statements.

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30, 2010			June 30, 2009
				(Restated)
Cash flows from operating
Net loss	$	(3,803,869	)	$	(3,239,204	)
Adjustments to reconcile net loss to net cash provided by operating activities
Stock compensation expense		159,193			160,111
Interest expense related to discount and beneficial convertible features in connection with convertible note and warrant issuance		90,000			-
Depreciation and amortization		1,902,758			1,528,029
Noncash interest expense - original issue discount		50,025			50,025
Deferred income tax		(260,111	)		(29,360	)
(Gain) loss on sale of marketable equity securities		(1,350	)		30,626
Change in fair value of warrant liabilities		(63,746	)		1,240,787
Adjustment to foreign currency translation account		378,332			-
Impairment charge to Shandong Media intangibles		900,000			-
Impairment charge to Jinan equipment		750,000			-
Change in assets and liabilities, net of amounts assumed in AdNet acquisition,
Accounts receivable		39,573			(98,078	)
Inventory		15,684			88,973
Prepaid expenses and other assets		(268,862	)		(69,244	)
Accounts payable and accrued expenses		494,733			460,686
Deferred revenue		(126,461	)		42,766
Other		-			(2	)
Net cash provided by operating activities		255,899			166,115

Cash flows from investing activities:
Cash acquired in AdNet acquisition		-			17,568
Proceeds from sale of marketable equity securities		9,350			78,706
Acquisition of property and equipment		(468,887	)		(236,515	)
Loan to Sinotop Group Ltd		(580,000	)		-
Loans to Shandong Media shareholders		(526,141	)		(552,140	)
Net cash used in investing activities		(1,565,678	)		(692,381	)

Cash flows from financing activities
Proceeds from sale of equity securities		-			300,000
Proceeds from issuance of convertible notes payable		750,000			304,853
Legal fees associated with AdNet acquisition and share issuance		-			(7,643	)
Payments to Jinan Parent		(18,454	)		(2,643,373	)
Net cash provided by (used in) financing activities		731,546			(2,046,163	)

Effect of exchange rate changes on cash		(5,318	)		21,720

Net decrease in cash and cash equivalents		(583,551	)		(2,550,709	)
Cash and cash equivalents at beginning of period		2,190,494			4,425,529

Cash and cash equivalents at end of period	$	1,606,943		$	1,874,820

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30, 2010		June 30, 2009
			(Restated)

Supplemental Cash Flow Information:

Cash paid for taxes	$	-	$	-
Cash paid for interest	$	824	$	552
Value assigned to shares as payment for interest expense	$	132,635	$	126,455
Shandong Media valuation adjustment	$	-	$	275,448
Repayment of convertible notes payable by assignment of Sinotop Group Ltd note receivable	$	580,000	$	-

Cumulative effect of change in accounting principle upon adoption of new accounting pronouncement on January 1, 2009, reclassification of warrants from equity to warrant liabilities	$	-	$	424,373

See notes to consolidated financial statements.

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CHINA BROADBAND, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation

China Broadband, Inc., a Nevada corporation (“China Broadband”, “we”, “us”, or “the Company”) owns and operates in the media segment through its subsidiaries in the People’s Republic of China (“PRC” or “China”) (1) a cable broadband business, Beijing China Broadband Network Technology Co. Ltd ( “Jinan Broadband”) and (2) a print based media and television programming guide publication, Shandong Lushi Media Co., Ltd. ( “Shandong Media”).

(1) We provide cable and wireless broadband services, principally internet services, Internet Protocol Point wholesale services, related network equipment rental and sales, and fiber network construction and maintenance through our variable interest entity (“VIE”), Jinan Broadband, based in the Jinan region of China.

(2) We operate a print based media and television programming guide publication business through our VIE, Shandong Media, a joint venture based in the Shandong Province of China.

We acquired AdNet Media Technologies (Beijing) Co. Ltd (“AdNet”) during the first half of 2009. Due to the shift of our business model to the pay-per-view (“PPV”) and video-on-demand (“VOD”) business, as of December 31, 2009 we permanently suspended day to day operations of AdNet. We have maintained our technology and other assets of AdNet for future use in our new PPV business.

The unaudited consolidated financial statements include the accounts of China Broadband, Inc. and (a) its wholly-owned subsidiary, China Broadband Cayman, (b) Beijing China Broadband Network Technology Co, Ltd. (WFOE), a wholly-owned subsidiary of China Broadband Cayman, and (c) four entities located in the PRC: Jinan Zhong Kuan, Jinan Broadband, Shandong Media and AdNet, which are controlled by the Company through contractual arrangements, as if they are wholly-owned subsidiaries of the Company. All material intercompany transactions and balances are eliminated in consolidation.

In the opinion of management, our Financial Statements reflect all adjustments, which are of a normal, recurring nature, necessary for a fair statement of the results for the periods presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and with the instructions to Form 10-Q in Article 10 of SEC Regulation S-X. The results of operations for the interim periods presented are not necessarily indicative of results for the full year.

Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

The information presented in the accompanying condensed consolidated balance sheet as of December 31, 2009 has been derived from the Company’s audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. All other information has been derived from the Company’s unaudited condensed consolidated financial statements for the three months and six months ended June 30, 2010.

2.	Restatement

The financial statements for the three months and six months ended June 30, 2009 have been restated for the reasons described below and the accompanying financial statements for the three months and six months ended June 30, 2009 include the following changes.

Reclassified certain warrants from shareholders’ equity to liabilities in accordance with EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock” (FASB ASC 815-40-15-5) ("ASC 815”). ASC 815 became effective and should have been adopted by the Company as of January 1, 2009 by classifying certain warrants as liabilities measured at fair value with changes in fair value recognized in earnings each reporting period and recording a cumulative-effect adjustment to the opening balance of accumulated deficit. The cumulative-effect adjustment at January 1, 2009 was as follows:

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		Additional Paid-in Capital				Accumulated Deficit				Warrant Liabilities
Warrants		$	(731,000	)		$	424,000			$	307,000

For the three months and six months ended June 30, 2009, the adoption of ASC 815 had the effect of increasing warrant liabilities and net loss by approximately $627,000 and $1,241,000, respectively.

Corrected an error related to the valuation of our Shandong Media intangibles which include our publication rights, operating permits and customer relationships and minor changes to the valuation of property and equipment. The correction resulted in a decrease to the value of our intangible assets and property and equipment by reclassifying approximately $275,000 from non-controlling interest.

Adjusted the original purchase accounting for our AdNet acquisition. Our AdNet intangible asset was decreased by approximately $1,150,000 and approximately $1,239,000 was recorded to goodwill, $100,000 was recorded to amount due from former AdNet shareholders and approximately $189,000 was recorded to deferred tax liability. In addition, amortization expense of approximately $63,000 was recorded for the three months and six months ended June 30, 2009.

Reclassified legal costs for approximately $8,000 related to stock issued for our AdNet acquisition and related to stock issued for cash to additional paid in capital.

3.	Accounting Policy Changes

4.	Going Concern and Management’s Plans

The Company has incurred significant continuing losses during 2010 and has a working capital deficit at June 30, 2010 and has relied on debt and equity financings to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. As of June 30, 2010, the Company had limited cash resources and management continued its efforts to raise additional funds through debt or equity offerings. The Company's independent registered public accounting firm's report of the financial statements for the year ended December 31, 2009, contained an explanatory paragraph regarding the Company's ability to continue as a going concern.

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Management has raised additional funds through an equity offering and will continue to seek funds to merge with or acquire other companies. See Note 21 “Subsequent Events” below.

5.	Shandong Media Joint Venture - Cooperation Agreement Additional Payment

In connection with the Shandong Newspaper Cooperation Agreement, based on certain financial performance we were required to make an additional payment of 5 million RMB (approximately US $730,000). In 2008 we recorded the additional payment due as an increase to our Shandong Media noncontrolling interest account. We are currently in discussions with Shandong Broadcast & TV Weekly Press and Modern Movie & TV Biweekly Press with regards to this payment.

6.	Variable Interest Entities

Financial accounting standards require the “primary beneficiary” of a VIE to include the VIE’s assets, liabilities and operating results in its consolidated financial statements. In general, a VIE is a corporation, partnership, limited-liability company, trust or any other legal structure used to conduct activities or hold assets that either (a) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (b) has a group of equity owners that are unable to make significant decisions about its activities, or (c) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations.

Our consolidated VIEs were recorded at fair value on the date we became the primary beneficiary. Our VIEs are Jinan Broadband and Shandong Media.

7.	Fair Value Measurements

Accounting standards require the categorization of financial assets and liabilities, based on the inputs to the valuation technique, into a three-level fair value hierarchy. The various levels of the fair value hierarchy are described as follows:

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.

Level 2 — Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.

Level 3 — Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Accounting standards require the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis at June 30, 2010 and December 31, 2009:

	June 30, 2010
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Available-for-sale securities	$	47,875	$	-	$	-	$	47,875
Liabilities
Fair value of warrants	$	-	$	-	$	755,404	$	755,404

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	December 31, 2009
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Available-for-sale securities	$	47,244	$	-	$	-	$	47,244
Liabilities
Fair value of warrants	$	-	$	-	$	819,150	$	819,150

8.	Related Party Transactions

Loan Receivable

As of June 30, 2010, the Company advanced an aggregate of approximately $291,000 in the form of a loan to Music Magazine to fund its operations. The loan is unsecured, interest free and is due on December 31, 2010. Music Magazine is an affiliate of Modern Movie & TV Biweekly Press, our partner in our Shandong Media joint venture company.

Amounts due from Shareholders

As of June 30, 2010, amounts due from shareholders include approximately $92,000 advanced to Shandong Broadcast & TV Weekly Press and approximately $604,000 advanced to Modern Movie & TV Biweekly Press. Both companies are our partners in our Shandong Media joint venture company. The amount due from Shandong Broadcast & TV Weekly Press is unsecured, interest free and has no fixed repayment terms. The amount due from Modern Movie & TV Biweekly Press is unsecured, interest free and is due on December 31, 2010. During the 6 months ended June 30, 2010, we received repayments of approximately $17,000 from Shandong Broadcast and TV Weekly Press and advanced approximately $543,000 net amount to Modern Movie & TV Biweekly Press.

Payable to Jinan Parent

During the six months ended June 30, 2010, our payable to Jinan Parent decreased approximately $18,000. At June 30, 2010, approximately $134,000 remains due to Jinan Parent. The advance is unsecured, interest free and has no fixed repayment terms.

Loan Payable to Beneficial Owner

On March 9, 2010, China Broadband Cayman entered into a Note Purchase Agreement and a non-binding Letter of Intent, or the LOI with Sinotop Group Ltd., a Hong Kong corporation, or Sinotop Hong Kong. Through a series of contractual arrangements referred to herein as “VIE Contracts”, Sinotop Hong Kong controls Beijing Sino Top Scope Technology Co., Ltd., or Sinotop Beijing. Sinotop Beijing, a corporation established in the PRC is, in turn, a party to a joint venture with two other PRC companies to provide integrated value-added service solutions for the delivery of PPV, VOD, and enhanced premium content for cable providers.

Pursuant to the Note Purchase Agreement, on March 9, 2010, China Broadband Cayman acquired a Convertible Promissory Note, or Note from Sinotop Hong Kong in consideration of China Broadband Cayman’s US$580,000 loan to Sinotop Hong Kong.

On March 9, 2010, a significant beneficial owner of the Company’s securities, Oliveira Capital LLC, advanced $600,000 to China Broadband Cayman in order to make the loan to Sinotop Hong Kong as described above.

On June 24, 2010, the Company repaid $580,000 of the $600,000 loan by assigning the Company’s Convertible Promissory Note from Sinotop Hong Kong in the amount or $580,000 to Oliveira Capital. As of June 30, 2010, $20,000 remains payable to Oliveira Capital.

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On July 30, 2010, Oliveira Capital LLC agreed to (i) cancel the remaining $20,000 of the March 9, 2010 loan and (ii) assign the $580,000 note of Sinotop Hong Kong to the Company, in exchange for (x) 1,200,000 shares of Series B Preferred Stock of the Company and (y) warrants to purchase of 36,000,000 shares of the Company’s common stock. See Note 21 “Subsequent Events” below.

9.	Property and Equipment

During the second quarter of 2010, based on our best estimate, the Company recorded an impairment reserve of $750,000 related to the equipment at our Jinan Broadband subsidiary. In July 2010, the equipment was taken out of service due to changes in customer needs. The net book value of the equipment is $1,483,000. During the next quarter, the Company will evaluate whether there are other uses for the equipment or whether the equipment can be sold. Further, we will be able to better determine the net realizable value of the equipment.

Property and equipment at June 30, 2010 and December 31, 2009 consisted of the following:

	June 30, 2010			December 31, 2009

Furniture and office equipment	$	1,016,000		$	984,000
Headend facilities and machinery		14,672,000			14,172,000
Vehicles		30,000			30,000
Total property and equipment		15,718,000			15,186,000
Less: accumulated depreciation		(9,482,000	)		(7,823,000	)
Less: impairment charge		(750,000	)		-
Net carrying value	$	5,486,000		$	7,363,000

Depreciation expense	$	1,620,000		$	1,509,000

10.	Intangible Assets

In the first quarter of 2009 the Company decreased the value of our intangible assets by reclassifying approximately $279,000 from noncontrolling interest. The reclassification was made to correct an error related to the valuation of our Shandong Media intangibles which includes our publication rights, operating permits and customer relationships. The Company assessed the impact of this adjustment on all prior periods and determined that the effect of this adjustment did not result in a material misstatement to any previously issued annual or quarterly financial statements.

Determining the fair value of a reporting unit requires the use of significant estimates and assumptions, including revenue growth rates, discount rates and future market conditions, among others. Long-lived assets are reviewed for impairment whenever events, such as significant changes in the business climate, changes in product and service offerings, or other circumstances indicate that the carrying amount may not be recoverable. Our Shandong Media joint venture has sustained consistent losses. In accordance with SFAS 144 we prepared an analysis and accordingly recorded an impairment charge of $900,000 to our Shandong Media intangibles which include publication rights, operating permits and customer relationships during the second quarter of 2010.

The Company amortizes its service agreement, publication rights, operating permits, customer relationships and software technology that have finite lives. Our service agreement, publication rights and operating permits are amortized over 20 years. Customer relationships are amortized over 10 years and our software technology is amortized over 3 years.

We have intangible assets relating to the acquisition of our Jinan Broadband subsidiary, Shandong Media joint venture and AdNet Media acquisition.

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	Balance at December 31, 2009		Additions		Amortization / Impairment Charge			Other Changes		Balance at June 30, 2010
Amortized intangible assets:
Service agreement	$	1,483,762	$	-	$	(43,360	)	$	-	$	1,440,402
Publication rights		824,812		-		(354,116	)		-		470,696
Customer relationships		183,730		-		(82,307	)		-		101,423
Operating permits		1,234,583		-		(530,045	)		-		704,538
Software technology		567,727		-		(126,162	)		-		441,565
Total amortized intangible assets	$	4,294,614	$	-	$	(1,135,990	)	$	-	$	3,158,624

	Balance at December 31, 2008		Additions		Amortization/Impairment Charge			Other Changes			Balance at December 31, 2009
Amortized intangible assets:
Service agreement	$	1,570,482	$	-	$	(86,720	)	$	-		$	1,483,762
Publication rights		968,977		-		(42,250	)		(101,915	)		824,812
Customer relationships		228,933		-		(20,491	)		(24,712	)		183,730
Operating permits		1,450,366		-		(63,236	)		(152,547	)		1,234,583
Software technology		-		756,969		(189,242	)		-			567,727
Total amortized intangible assets	$	4,218,758	$	756,969	$	(401,939	)	$	(279,174	)	$	4,294,614

Unamortized intangible assets:
Goodwill	$	-	$	1,239,291	$	(1,239,291	)	$	-		$	-

In accordance with ASC 250, we recorded amortization expense related to our intangible assets of $235,990 and $180,525 for the six months ended June 30, 2010 and 2009, respectively.

The following table outlines the amortization expense for the next five years and thereafter:

Years ending December 31,	Jinan Broadband		Shandong Media		AdNet Media		Total
2010 (six months)	$	43,360	$	88,985	$	126,162	$	258,507
2011		86,720		177,969		252,323		517,012
2012		86,720		177,969		63,081		327,770
2013		86,720		177,969		-		264,689
2014		86,720		177,969		-		264,689
Thereafter		1,050,161		475,796		-		1,525,957
Total amortization to be recognized	$	1,440,401	$	1,276,657	$	441,566	$	3,158,624

11.	Accrued Expenses

Accrued expenses at June 30, 2010 and December 31, 2009 consist of the following:

	June 30, 2010		December 31, 2009

Accrued expenses	$	860,000	$	1,053,000
Accrued payroll		1,033,000		786,000
	$	1,893,000	$	1,839,000

12.	Convertible Notes

On April 14, 2010, we entered into a convertible promissory note with a private investor for a loan amount of $150,000. Interest was payable at an annual rate equal to the applicable federal rate on the date of issuance. The principal and accrued interest on the Note was paid in connection with the closing of the financings on July 30, 2010 (see Note 21 “Subsequent Event” below). Under the terms of the Note, the Company granted the Payee a 5-year warrant to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $.05 per share. The Company recorded interest expense of $90,000 during the six months ended June 30, 2010 related to discount and beneficial convertible features in connection with convertible note and warrants issuance.

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In 2009, we completed a private placement transaction and sold 5% Convertible Promissory Notes, or the 2009 Notes, for gross proceeds of approximately $305,000 and an aggregate of 2,000,000 shares of our common stock at a purchase price of $.15 per share, for aggregate proceeds of $300,000. The Notes accrue interest at 5% per year payable quarterly in cash or stock, are initially convertible at $.20 per share, and initially became due and payable in full on May 27, 2010. Simultaneous with the closing of the financings on July 30, 2010 (see Note 21 “Subsequent Events” below), and pursuant to a Waiver and Agreement to Convert, dated May 20, 2010, the note holders agreed to convert 100% of the outstanding principal and interest owing on such notes into shares of common stock and warrants. The Company did not pay any placement agent or similar fees in connection with the Note Offering.

In connection with the 2009 private placement, we entered into a waiver letter with all the holders of January 2008 Notes, pursuant to which, among other things, the conversion price of the January 2008 Notes were reduced from $.75 per share to (i) $.20 per share for existing note holders that invested in the 2009 private placement and (ii) $.25 per share for those that did not participate. All of the existing note holders waived certain anti dilution adjustments contained in the January 2008 Notes and the Class A Warrants in exchange for the above changes.

On January 11, 2008, we completed a private placement transaction and sold an aggregate of $4,971,250 principal amount of notes due January 11, 2013, or the January 2008 Notes, and Class A Warrants to purchase an aggregate of 6,628,333 shares of our common stock, at $.60 per share and expiring on June 11, 2013. The conversion price of these January 2008 Notes was originally $.75 per share and, in June of 2009 in connection with a subsequent financing with these investors, reduced to $.20 per share (see waiver letters under “Private Financings, June 2009” above). One investor had his conversion price reduced to $.25 per share. We recorded a $504,661 original issue discount related to the Notes. We calculate the interest at 5% annually and issue shares for interest payments on a quarterly basis. We recorded amortization of original issue discount as interest expense of $50,025 for each of the six months ended June 30, 2010 and 2009. Simultaneous with the closing of the financings on July 30, 2010 (see Note 21 “Subsequent Events” below), and pursuant to a Waiver and Agreement to Convert, dated May 20, 2010, the note holders agreed to convert 100% of the outstanding principal and interest owing on such notes into shares of common stock and warrants.

The convertible notes due are as follows:

	June 30, 2010			December 31, 2009
Convertible notes, noncurrent	$	4,971,250		$	4,971,250
Less: Original issue discount		(255,919	)		(305,944	)
	$	4,715,331		$	4,665,306

Convertible notes, current	$	454.916		$	304,853

13.	Warrant Liabilities

In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. Under the authoritative guidance, effective January 1, 2009, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. Certain warrants issued by the Company, do not have fixed settlement provisions because their exercise prices may be lowered if the Company issues securities at lower prices in the future. The Company was required to include the reset provisions in order to protect the holders from potential dilution associated with future financings. The warrants have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

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The warrant liabilities were valued using The Black-Scholes Merton model which incorporates the following assumptions:

	June 30, 2010	December 31, 2009
Risk-free interest rate	1.17%	1.50%
Expected volatility	295.69%	309.62%
Expected life (in years)	2.95 years	3.4 years
Expected dividend yield	0	0

The FASB authoritative guidance was adopted as of January 2009 and is reported as a cumulative change in accounting principle. The cumulative effect on the accounting for the warrants at January 1, 2009 was as follows:

		Additional Paid-in Capital				Accumulated Deficit				Warrant Liabilities
Warrants		$	(731,496	)		$	424,373			$	307,123

The warrants were originally recorded at their relative fair value as an increase in additional paid-in capital. The decrease in the accumulated deficit includes gains resulting from decreases in the fair value of the warrant liabilities through December 31, 2008. The warrant liability amount reflects the fair value of the derivative instrument from issuance date as of the January 1, 2009 date of implementation.

14.	Net Loss Per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted average number of outstanding common shares during the period. Diluted net loss per common share includes the weighted average dilutive effect of stock options and warrants.

Potential common shares outstanding as of June 30, 2010 and 2009:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Warrants		17,874,800		16,874,800		17,874,800		16,874,800
Options		317,500		317,500		317,500		317,500

For each of the three month and six month periods ended June 30, 2010 and 2009, the number of securities not included in the diluted EPS because the effect would have been anti-dilutive was 18,192,300 and 17,192,300, respectively.

15.	Comprehensive Loss

During the second quarter of 2010, the Company received payments in full satisfaction of the amounts due from non-controlling interests. Subsequently, the Company made certain balance sheet reclassifications to correct an error related to the original purchase accounting for our Shandong Media Joint Venture. The reclassification had the effect of increasing foreign currency translation by approximately $378,000. The Company assessed the impact of this adjustment on the current period and all prior periods and determined that the effect of this adjustment was not material to the full year 2008 or 2009, and that reclassification did not result in a material misstatement to any previously issued annual or quarterly financial statements.

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Comprehensive loss for the periods ended June 30, 2010 and 2009 is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net loss attributable to shareholders	$	(1,419,151	)	$	(1,512,610	)	$	(2,223,660	)	$	(2,854,958	)
Other comprehensive income (loss):
Currency translation adjustment		390,732			923			410,349			21,721
Unrealized gain (loss) on marketable equity securities		(67,937	)		48,869			8,631			(36,291	)
Comprehensive loss	$	(1,096,356	)	$	(1,462,818	)	$	(1,804,680	)	$	(2,869,528	)

16.	Interest Expense and Share Issuance

In connection with the Convertible Notes issued in January 2008 and June 2009, during the six months ended June 30, 2010 and 2009 the Company incurred $183,000 and $176,000, respectively, for interest expense related to these Notes.

As set forth in the related documents and with the consent of the Note holders, we issued 653,119 and 260,703 shares to the Note holders as payment for convertible note interest of approximately $133,000 and $126,000 for the six months ended June 30, 2010 and 2009, respectively.

In connection with the Convertible Note issued April 2010 we recorded interest expense of $90,000 related to discount and beneficial convertible features in connection with the convertible note and warrants issuance.

17.	Stock Based Compensation

Through June 30, 2010, we have issued 317,500 options to purchase shares of our common stock.

The following table provides the details of the total stock based compensation during the three and six month periods ended June 30, 2010 and 2009:

	Three Months Ended				Six Months Ended
	June 30, 2010		June 30, 2009		June 30, 2010		June 30, 2009
Stock option amortization	$	18,000	$	18,000	$	27,000	$	27,000
Warrant amortization		-		-		-		7,000
Stock issued as payment for interest		67,000		64,000		132,000		126,000
	$	85,000	$	82,000	$	159,000	$	160,000

The Company accounts for its stock option awards pursuant to the provisions of ASC 718, Stock Compensation and recorded a charge of $27,000 during both six month periods ended June 30, 2010 and 2009 in connection with stock option compensation.

There were no stock options issued during the six month periods ended June 30, 2010 and 2009. As of June 30, 2010, there were 317,500 options outstanding with 292,500 options exercisable at a weighted average exercise price of $0.63 with a weighted average remaining life of 4.5 years.

As of June 30, 2010 the Company had total unrecognized compensation expense related to options granted of $8,000 which will be recognized over a remaining service period of .75 years.

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18.

Warrants

In connection with the Company’s Share Exchange, capital raising efforts in 2007, the Company’s January 2008 Financing of Convertible Notes and Class A Warrants and the April 2010 Convertible Note, the Company issued warrants to investors and service providers to purchase common stock of the Company. As of June 30, 2010, the weighted average exercise price was $.88 and the weighted average remaining life was 3.0 years. The following table outlines the warrants outstanding as of June 30, 2010:

Name	Number of Warrants Issued		Exercise Price		Expiration Date
Share Exchange Consulting Warrants		4,474,800	$	0.60	1/11/2013
2007 Private Placement Broker Warrants		640,000	$	0.60	1/11/2013
2007 Private Placement Investor Warrants		4,000,000	$	2.00	1/11/2013
January 2008 Financing Class A Warrants		6,628,333	$	0.60	6/11/2013
January 2008 Financing Broker Warrants		1,131,667	$	0.50	6/11/2013
April 2010 Financing Investor Warrants		1,000,000	$	0.05	4/14/2015
		17,874,800

19.	Income Taxes

Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The income tax benefit for the six month periods ended June 30, 2010 and 2009 results primarily from changes in calculated deferred taxes, particularly liabilities associated with intangible assets. The Company recorded approximately $260,000 income tax benefit during the six months ended June 30, 2010 primarily due to the recognition of the impairment charge related to the Shandong Media intangibles. Deferred tax assets associated with net operating losses have a full valuation allowance recorded against them.

The Company’s current management does not believe that China Broadband, Inc. has filed United States corporate income tax returns for several years prior to the January 23, 2007 merger transaction and accompanying change in management. Management believes that because of the lack of taxable income there will be no material penalties resulting from any previous non-compliance.

The estimation of the income tax effect of any future repatriation of the Company’s share of any profits generated by its interests in Jinan Broadband, Shandong Media and AdNet is not practicable. This is because it may involve additional Chinese taxation on the distributions, or sale proceeds, to the extent that they are in excess of the investments made, but with credits for some or all of the Chinese taxes against U.S. taxes, plus the utilization of operating losses of the WFOE. All of the foregoing would be subject to various tax-planning strategies.

The Company has not recognized deferred tax assets relating to the excess of its income tax bases in its non-U.S. subsidiaries over their financial statement carrying value because the Company expects to hold the investments and reinvest future earnings indefinitely.

The Company’s income tax benefit for the six months ended June 30, 2010 and 2009 each consisted entirely of foreign deferred taxes arising from net operating loss carryforwards.

The Company’s United States income tax returns are subject to examination by the Internal Revenue Service (“IRS”) for at least 2006 and later years. Because of the uncertainty regarding the filing of tax returns for earlier years it is possible that the Company is subject to examination by the IRS for earlier years. All of the Chinese tax returns for the Chinese operating companies are subject to examination by the Chinese tax authorities for all periods from the companies’ inceptions in 2007, 2008 and 2009 as applicable.

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20.	Non-Controlling Interests

In December 2007, the FASB issued authoritative guidance which establishes reporting standards that require companies to more clearly identify in the financial statements and disclose the impact of noncontrolling interests in a consolidated subsidiary on the consolidated financial statements. Noncontrolling interests are now classified as equity in the financial statements. The consolidated income statement is presented by requiring net income to include net income for both the parent and the noncontrolling interests, with disclosure of both amounts on the consolidated statements of income. The calculation of earnings per share continues to be based on income amounts attributable to the parent. Prior period amounts related to noncontrolling interests have been reclassified to conform to the current period presentation. The Company adopted this guidance on January 1, 2009.

During the second quarter of 2010, the Company made certain adjustments to correct an error related to an under-allocation of amortization expense to Non-controlling Interests in prior periods. The adjustment related to prior allocations of amortization expense for certain intangible assets of both Jinan Broadband and Shandong Media had the effect of increasing the Net Loss Attributable to Non-Controlling Interests in the three and six month periods ended June 30, 2010 by approximately $277,000. The Company assessed the impact of this adjustment on the current period and all prior periods and determined that the effect of this adjustment did not result in a material misstatement to the current periods or any previously issued annual or quarterly financial statements.

21.	Subsequent Events

On July 30, 2010, we acquired, through our subsidiary China Broadband Cayman, Sinotop Group Limited, a Hong Kong corporation, or Sinotop Hong Kong. Through a series of contractual arrangements referred to herein as “VIE Contracts”, Sinotop Hong Kong controls Beijing Sino Top Scope Technology Co., Ltd., or Sinotop Beijing. Sinotop Beijing, a corporation established in the PRC is, in turn, a party to a joint venture with two other PRC companies to provide integrated value-added service solutions for the delivery of pay-per-view (“PPV”), video-on-demand (“VOD”), and enhanced premium content for cable providers.

Also on July 30, 2010, in connection with the acquisition of Sinotop Hong Kong, we closed financings with several accredited investors and sold, in the aggregate, $9,625,000 of securities and, specifically, sold (i) $3.125 million of common units, at a per unit price of $0.05, with each common unit consisting of one share of common stock and a warrant for the purchase of one share of common stock at an exercise price of $0.05, (ii) $3.5 million of Series A units, at a per unit price of $0.50, with each Series A unit consisting of one share of Series A Preferred Stock (convertible into ten shares of common stock) and a warrant to purchase 34.2857 shares of common stock at an exercise price of $0.05, and (iii) $3.0 million of Series B units, at a per unit price of $0.50, with each Series B unit consisting of one share of Series B Preferred Stock (convertible into ten shares of common stock) and a warrant to purchase ten shares of common stock. Accordingly, the Company issued 62,500,000 shares of Common Stock, 7,000,000 shares of Series A Preferred Stock, 6,000,000 shares of Series B Preferred Stock in connection with the Financings, and warrants to purchase an aggregate of 362,500,000 shares of Common Stock. The proceeds of the financings will be used to fund our value added service platform and for general working capital purposes.

Simultaneous with the closing of the financings above, and pursuant to (i) a Waiver and Agreement to Convert, dated May 20, 2010, with the holders of an aggregate of $4,971,250 in principal amount of notes of the Company, dated January 11, 2008, and (ii) a Waiver and Agreement to Convert, dated May 20, 2010, with the holders of an aggregate of $304,902 in principal amount of notes of the Company, dated June 30, 2009, the holders of such notes agreed to convert 100% of the outstanding principal and interest owing on such notes into an aggregate of 62,855,048 shares of Common Stock, 4,266,800 shares of Series B Preferred Stock and warrants for the purchase of an aggregate of 105,523,048 shares of Common Stock, as set forth in the respective waivers.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

China Broadband, Inc. and subsidiaries

We have audited the accompanying consolidated balance sheets of China Broadband, Inc. and subsidiaries (the “Company”) as of December 31, 2009 and 2008 and the related consolidated statements of operations, changes in shareholders’ equity and comprehensive loss and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor are we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China Broadband, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 14 to the consolidated financial statements, the Company adopted ASC Topic 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity” (effective January 1, 2009) as it relates to the Company’s warrants.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred significant losses during 2009 and 2008, has a working capital deficit at December 31, 2009 and has relied on debt and equity financings to fund their operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ UHY LLP

April 15, 2010

Albany, New York

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

December 31, 2009 and 2008

	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	2,190,494		$	4,425,529
Marketable equity securities, available for sale		47,244			254,496
Accounts receivable, net		213,713			136,709
Inventory		455,492			877,309
Prepaid expense		237,704			46,380
Loan receivable from related party		289,974			268,449
Amounts due from shareholders		168,907			64,394
Other current assets		78,478			88,883
Total current assets		3,682,006			6,162,149

Property and equipment, net		7,362,641			9,299,473
Intangible assets, net		4,294,614			4,218,758
Other assets		430,561			424,462

Total assets	$	15,769,822		$	20,104,842

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,350,076		$	1,237,251
Accrued expenses		1,839,272			936,134
Deferred revenue		1,637,283			1,382,103
Deferred tax liability		281,626			-
Convertible notes payable		304,853			-
Warrant liabilities		819,150			-
Loan payable		398,960			-
Payable to Shandong Media		145,679			145,679
Payable to Jinan Parent		152,268			2,795,472
Other current liabilities		378,847			72,013
Total current liabilities		7,308,014			6,568,652

Convertible notes payable		4,665,306			4,564,427
Deferred tax liability and uncertain tax position liability		454,578			790,617
Total liabilities		12,427,898			11,923,696

Committments and Contingencies

Shareholders' equity
Preferred stock, $.001 par value; 5,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $.001 par value; 95,000,000 shares authorized, 64,761,396 and 50,585,455 issued and outstanding		64,762			50,586
Additional paid-in capital		14,901,493			13,372,358
Accumulated deficit		(17,215,041	)		(12,200,287	)
Accumulated other comprehensive income		331,283			320,858
Total China Broadband shareholders' (deficit) equity		(1,917,503	)		1,543,515
Noncontrolling interests		5,259,427			6,637,631

Total shareholders’ equity		3,341,924			8,181,146

Total liabilities and shareholders' equity	$	15,769,822		$	20,104,842

See notes to consolidated financial statements.

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2009 and 2008

	2009			2008

Revenue	$	8,443,088		$	6,361,970
Cost of revenue		5,661,502			3,740,381
Gross profit		2,781,586			2,621,589

Selling, general and adminstrative expenses		3,227,625			1,923,386
Professional fees		641,334			619,405
Depreciation and amortization		3,564,334			3,037,199

Loss from operations		(4,651,707	)		(2,958,401	)

Interest & other income / (expense)
Settlement gain		-			1,300,692
Interest income		8,354			43,183
Interest expense		(362,424	)		(345,953	)
Change in fair value of warrant liabilities		(512,027	)		-
Loss on sale and write-down of marketable equity securities		(14,828	)		(1,899,883	)
Goodwill impairment		(1,239,291	)		-
Other		(13,613	)		(10,136	)

Loss before income taxes and non-controlling interest		(6,785,536	)		(3,870,498	)

Income tax benefit (expense)		243,655			(93,997	)

Net loss, net of tax		(6,541,881	)		(3,964,495	)

Plus: Net loss attributable to noncontrolling interests		1,102,756			609,630

Net loss attributable to China Broadband shareholders	$	(5,439,125	)	$	(3,354,865	)

Net loss per share
Basic	$	(0.09	)	$	(0.07	)
Diluted	$	(0.09	)	$	(0.07	)

Weighted average shares outstanding
Basic		60,334,180			50,332,705
Diluted		60,334,180			50,332,705

See notes to consolidated financial statements.

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSS

Years Ended December 31, 2009 and 2008

	Common Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income(loss)			China Broadband Shareholders' (Deficit)/Equity			Noncontrolling Interest			Total Shareholders’ Equity			Comprehensive Loss

Balance December 31, 2007		50,048,000	$	50,048	$	10,485,874		$	(8,845,424	)	$	331,764		$	2,022,262		$	4,879,802		$	6,902,064

Warrant valuation associated with convertible notes payable & other		-		-		745,694			-			-			745,694			-			745,694

Option valuation associated with employment agreeement		-		-		44,898			-			-			44,898			-			44,898

Shares issued for penalty of non-registration		207,599		208		421,970			-			-			422,178			-			422,178

Warrant valuation associated with extension from settlement agreement		-		-		1,426,862			-			-			1,426,862			-			1,426,862

Shares issued as payment for convertible note interest		329,856		330		247,061			-			-			247,391			-			247,391

Shandong Media joint venture		-		-		-			-			-			-			2,367,459			2,367,459

Comprehensive loss:
Net loss		-		-		-			(3,354,865	)		-			(3,354,865	)		(609,630	)		(3,964,495	)		(3,354,865	)
Foreign currency translation adjustments		-		-		-			-			(10,906	)		(10,906	)		-			(10,906	)		(10,906	)

Balance December 31, 2008		50,585,455	$	50,586	$	13,372,359		$	(12,200,289	)	$	320,858		$	1,543,514		$	6,637,631		$	8,181,145		$	(3,365,771	)

Cumulative effect of accounting change for warrants - Reclassification of warrants to warrant liabilities		-		-		(731,496	)		424,373			-			(307,123	)		-			(307,123	)

Shandong Media valuation adjustment		-		-		-			-			-			-			(275,448	)		(275,448	)

Shares issued as payment for convertible note interest		921,043		921		259,637			-			-			260,558			-			260,558

Stock option compensation expense		-		-		33,656			-			-			33,656			-			33,656

Shares issued for AdNet acquisition		11,254,898		11,255		1,676,980			-			-			1,688,235			-			1,688,235

Costs related to stock issued for AdNet acquisition		-		-		(3,622	)		-			-			(3,622	)					(3,622	)

Shares issued for cash		2,000,000		2,000		298,000			-			-			300,000			-			300,000

Costs related to stock issued for cash		-		-		(4,021	)								(4,021	)		-			(4,021	)

Comprehensive loss:
Net loss		-		-		-			(5,439,125	)		-			(5,439,125	)		(1,102,756	)		(6,541,881	)	$	(5,439,125	)
Foreign currency translation adjustments		-		-		-			-			28,345			28,345			-			28,345			28,345
Unrealized loss on marketable equity securities		-		-		-			-			(17,920	)		(17,920	)		-			(17,920	)		(17,920	)

Balance December 31, 2009		64,761,396	$	64,762	$	14,901,493		$	(17,215,041	)	$	331,283		$	(1,917,503	)	$	5,259,427		$	3,341,924		$	(5,428,700	)

See notes to consolidated financial statements.

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China Broadband, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2009 and 2008

	2009			2008
Cash flows from operating
Net loss	$	(6,541,881	)	$	(3,964,494	)
Adjustments to reconcile net loss to net cash provided by operating activities
Stock compensation expense and shares issued as payment for interest		294,213			318,818
Depreciation and amortization		3,578,309			3,369,930
Noncash interest expense - original issue discount		100,879			97,838
Deferred income tax		(243,655	)		423,945
Loss on sale and write-down of marketable equity securities		14,828			1,899,883
Goodwill impairment		1,239,291			-
Change in fair value of warrant liabilities		512,027			-
Settlement gain		-			(1,300,692	)
Change in assets and liabilities, net of amounts assumed in AdNet acquisition:
Accounts receivable		(77,004	)		(54	)
Inventory		421,817			(234,996	)
Prepaid expenses and other assets		(161,984	)		213,177
Accounts payable and accrued expenses		1,459,487			1,187,894
Deferred revenue		255,180			129,790
Other		-			(467,331	)
Net cash provided by operating activities		851,507			1,673,708

Cash flows from investing activities:
Cash acquired in AdNet acquisition		17,568			-
Proceeds from sale of marketable equity securities		174,504			361,121
Acquisition of property and equipment		(1,134,926	)		(2,061,401	)
Loan to Shandong Media shareholder		(104,513	)		(242,155	)
Loan to related party		(21,525	)		-
Net cash used in investing activities		(1,068,892	)		(1,942,435	)

Cash flows from financing activities
Proceeds from sale of equity securities		300,000			-
Proceeds from issuance of convertible notes payable		304,853			4,850,000
Legal fees associated with AdNet acquisition and share issuance		(7,643	)		-
Issuance costs associated with private placement and convertible notes		-			(104,500	)
Payments to Jinan Parent		(2,643,204	)		(512,971	)
Net cash (used in) provided by financing activities		(2,045,994	)		4,232,529

Effect of exchange rate changes on cash and cash equivalents		28,344			(10,903	)

Net (decrease) increase in cash and cash equivalents		(2,235,035	)		3,952,899
Cash and cash equivalents at beginning of period		4,425,529			472,670

Cash and cash equivalents at end of period	$	2,190,494		$	4,425,569

Supplemental Cash Flow Information:

Cash paid for taxes	$	-		$	-
Cash paid for interest	$	946		$	724
Value assigned to shares issued as penalty for non-registration of 7% convertible notes	$	-		$	12,125
Value assigned to shares as payment for interest expense	$	260,558		$	247,391
Convertible notes issued as payment for debt issuance costs	$	-		$	121,250

Cumulative effect of change in accounting principle upon adoption of new accounting pronouncement on January 1, 2009, reclassification of warrants from equity to warrant liabilities	$	424,373		$	-

See notes to consolidated financial statements.

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CHINA BROADBAND, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation

China Broadband, Inc., a Nevada corporation (“China Broadband”, “we,” “us,” or “the Company”), owns and operates in the media segment through its subsidiaries in the People’s Republic of China (“PRC” or “China”) (1) a cable broadband business, Beijing China Broadband Network Technology Co. Ltd (referred to as Jinan Broadband) and (2) a print based media and television programming guide publication, Shandong Lushi Media Co., Ltd. (referred to as Shandong Media). We have also recently acquired and are developing to a limited extent, an internet café advertising and content provider business in China.

(1) We provide cable and wireless broadband services, principally internet services, Internet Protocol Point wholesale services, related network equipment rental and sales, and fiber network construction and maintenance through its Jinan Broadband subsidiary based in the Jinan region of China.

(2) We operate a print based media and television programming guide publication business through our Shandong Newspaper joint venture based in the Shandong Province of China, effective as of July 1, 2008. The results of which are included in our financial statements as of July 2008.

Our subsidiary AdNet, which was acquired during the first half of 2009, holds an Internet Content Provider (“ICP”), license with rights to provide delivery of multimedia advertising content to internet cafés in the PRC. AdNet is licensed to operate in 28 provinces in the PRC with servers in five data centers including Wuhan, Wenzhou, Yantai, Yunan and with a master distribution server in Tongshan.

2.	Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of China Broadband, Inc. and its wholly-owned subsidiaries, China Broadband Cayman, Beijing China Broadband Network Technology Co, Ltd. (WFOE), Jinan Broadband and Shandong Media. All material intercompany transactions and balances are eliminated in consolidation.

Accounting Method

The Company's policy is to use the accrual method of accounting to prepare and present financial statements, which conform to generally accepted accounting principles (GAAP). The Company has elected a December 31, year-end.

Reportable Segment

The Company operates under one reportable business segment, media, for which segment disclosure is consistent with the management decision-making process that determines the allocation of resources and the measuring of performance.

Estimates

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

Accounts Receivable

Accounts receivable are recognized and carried at original invoiced amount less an allowance for any uncollectible accounts. For 2009, the Company estimated the amount of uncollectible accounts receivable to be $90,000 and accordingly recorded a charge to bad debt expense.

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Inventory

Inventories, consisting of cables, fiber, connecting material, power supplies and spare parts are stated at the lower of cost or market value. Cost is determined using the weighted average method.

Marketable Equity Securites

The Company holds investments in certain “available-for-sale” marketable equity securities all of which consist of the Cablecom Holdings Shares. The Cablecom Holding Shares are classified as available-for-sale securities and are carried at estimated fair value, based on available information. In 2008 the Company recognized an other than temporary loss of $1,797,000 in interest and other income (expense).

During 2009 and 2008, the Company sold 236,665 and 71,880 Cablecom Holding Shares for gross proceeds of approximately $174,000 and $361,000, respectively. The Company recognized a net loss from the sale of these securities of approximately $15,000 and $103,000, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Expenditures for major renewals and betterments, which extend the original estimated economic useful lives or applicable assets, are capitalized. Expenditures for normal repairs and maintenance are charged to expense as incurred. The costs and related accumulated depreciation of assets sold or retired are removed from the accounts, any gain or loss thereon is reflected in operations. Depreciation is provided for on the straight-line basis over the estimated useful lives of the respective assets over a period of five years.

Impairment of Long-Lived Assets

Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets.

Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.

Intangible Assets

The Company follows FASB ASC 350, Intangibles-Goodwill and Other, (ASC 350). ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. ASC 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events indicate the carrying amount may not be recoverable.

In accordance with ASC 350, goodwill is allocated to reporting units, which are either the operating segment or one reporting level below the operating segment.

On an annual basis, we must test goodwill and other indefinite life intangible assets for impairment. To determine the fair value of these intangible assets, there are many assumptions and estimates used that directly impact the results of the testing. In making these assumptions and estimates, we will use set criteria that are reviewed and approved by various levels of management, and we will estimate the fair value of our reporting units by using discounted cash flow analyses and other valuation methods. At December 31, 2009 we recorded a goodwill impairment charge of $1,239,291 related to goodwill from our AdNet Acquisition.

Income Taxes

The Company is subject to a 5% business tax on the business income of our Jinan Broadband subsidiary. The Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A tax valuation allowance is established, as needed to reduce net deferred tax assets to the amount expected to be realized. The Company also follows applicable guidance for accounting for uncertainty in income taxes.

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The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in our consolidated statements of operation. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

Revenue Recognition

Revenue is recorded as services are provided to customers. The Company generally recognizes all revenues in the period in which the service is rendered, provided that persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. The Company records deferred revenue for payments received from customers for the performance of future services and recognizes the associated revenue in the period that the services are performed. Provision for discounts and rebates to customers and other adjustments, if any, are provided for in the same period the related sales are recorded.

Net Loss Per Share

Basic and Diluted net loss per share have been computed by dividing the net loss by the weighted average number of common shares outstanding. The assumed exercise of dilutive warrants, less the number of treasury shares assumed to be purchased from the proceeds of such exercises using the average market price of the Company’s common stock during each respective period, have been excluded from the calculation of diluted net loss per share as their effect would be antidilutive.

Foreign Currency Translation

The Company’s Jinan Broadband subsidiary and Shandong Media joint venture located in China uses its local currency (RMB) as its functional currency. Translation adjustments are reported as other comprehensive income or expenses and accumulated as other comprehensive income in the equity section of the balance sheet. The financial information is translated into U.S. Dollars at prevailing or current rates respectively, except for revenue and expenses which are translated at average current rates during the reporting period.

Exchange gains and losses resulting from accumulated losses are reported as a separate component of stockholders’ equity and are included in Comprehensive Loss.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of accounts receivable.

The Company generally requires advance payments on the provision of internet services. Other concentrations of credit risk are limited due to the large customer base in Jinan, a sub-provincial city of Shandong province in the People’s Republic of China.

Fair value of Financial Instruments

The fair values of accounts receivable, prepaid expenses and accounts payable and accrued expenses are estimated to approximate the carrying values at December 31, 2009 due to the short maturities of such instruments.

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Stock-Based Compensation

The Company awards stock options and other equity-based instruments to its employees, directors and consultants. and (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date and is recognized on a straight-line basis over the requisite service period, which generally equals the vesting period. All of the Company’s stock-based compensation is based on grants of equity instruments and no liability awards have been granted.

Warrant Liability

Effective January 1,2009, we adopted the provisions of FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”) (previously ElTF 07-5, “Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock”). As a result of adopting ASC 815, warrants to purchase the Company's common stock previously treated as equity pursuant to the derivative treatment exemption were no longer afforded equity treatment as there was a down-round protection (full-ratchet down round protection). As a result, the warrants are not considered indexed to the Company's own stock, and as such, all future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expire.

As such, effective January 1, 2009, the Company reclassified the fair value of these warrants from equity to liability, as if these warrants were treated as a derivative liability since their issuance in 2008.

Reclassifications

Certain prior year amounts have been reclassified to conform to the manner of presentation in the current year.

Recent Accounting Pronouncements

ASC 105. In June 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”, (“SFAS No. 168”) “— a replacement of FASB Statement No. 162. SFAS No. 168 is the new source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This statement was incorporated into ASC 105, Generally Accepted Accounting Principles under the new FASB codification which became effective on July 1, 2009. The new Codification supersedes all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. The Company has included the references to the Codification, as appropriate, in these consolidated financial statements. Adoption of this statement did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

ASC 805. FASB Statement No. 141(R) Business Combinations was issued in December 2007. This statement was incorporated into ASC 805, Business Combinations, under the new FASB codification. ASC 805 requires that upon initially obtaining control, an acquirer should recognize 100% of the fair values of acquired assets, including goodwill and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100% of its target. Additionally, contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. This statement also modifies the recognition for pre-acquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. This statement amends ASC 740-10, Income Taxes (“ASC 740”) to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. ASC 805 is effective for fiscal years beginning after December 15, 2008. The Company adopted this statement on January 1, 2009 and accounted for its acquisition in 2009 in accordance with the provisions of ASC 805.

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ASC 810. In December 2007, the FASB issued FASB Statement No. 160, Non-controlling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, which is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. SFAS No. 160 was incorporated into ASC 810, Consolidation (“ASC 810”) and requires companies to present minority interest separately within the equity section of the balance sheet. The Company adopted this statement as of January 1, 2009 and it did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

ASC 855. In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events (“SFAS No. 165”). The statement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but prior to the issuance of financial statements. This statement was incorporated into ASC 855, Subsequent Events (“ASC 855”). This statement was effective for interim or annual reporting periods after June 15, 2009. ASC 855 sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements as well as the circumstances under which the entity would recognize them and the related disclosures an entity should make. This statement became effective for the Company’s financial statements as of June 30, 2009.

ASC 810. In June 2009, the FASB issued FASB Statement No. 167, Amendments to FASB Interpretation No. 46 (R) (“SFAS No. 167”), which amended the consolidation guidance for variable-interest entities. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. This Statement is effective for financial statements issued for fiscal years periods beginning after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company will adopt these provisions on January 1, 2010 and the adoption will not have an impact on the Company’s financial statements..

ASC 275 and ASC 350. In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, Determination of the Useful Lives of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of an intangible asset. Under the new codification this FSP was incorporated into two different ASC’s, ASC 275, Risks and Uncertainties (“ACS 275”) and ASC 350, Intangibles — Goodwill and Other (“ASC 350”). This interpretation was effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The Company adopted this FSP on January 1, 2009, and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition, and did not require additional disclosures related to existing intangible assets.

ASC 820. On February 12, 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”), which delayed the effective date of SFAS No. 157 Fair Value Measurements, for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008. Under the new codification the FSP was incorporated into ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). The Company adopted this ASC update on January 1, 2009 and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.

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The second ASC update Staff Position, FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP 115-2 and FSP 124-2”), changes the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of an impairment charge to be recorded in earnings. The Company adopted this update during the second quarter of 2009 and it did not have a material impact on the Company’s consolidated results of operations, cash flows or financial condition, and did not require additional disclosures.

The third ASC update, Staff Position, FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP FAS 107-1 and APB 28-1”) increases the frequency of fair value disclosures from annual only to quarterly. All three updates are effective for interim periods ending after June 15, 2009, with the option to early adopt for interim periods ending after March 15, 2009. ASC update FSP FAS 107-1 and APB 28-1 became effective for the Company’s financial statements as of June 30, 2009.

ASC 260. In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). Under the new FASB codification this FSP was incorporated into ASC 260, Earnings Per Share (“ASC 260”). ASC 260 clarifies that unvested share-based payment awards that entitle holders to receive non-forfeitable dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and should be included in the computation of earnings per share (“EPS”) pursuant to the two-class method. The Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this FSP will not have an effect on the Company's financial reporting.

ASU 2009-05. The FASB issued Accounting Standards Update (“ASU”) No. 2009-05 which provides additional guidance on how companies should measure liabilities at fair value and confirmed practices that have evolved when measuring fair value such as the use of quoted prices for a liability when traded as an asset. While reaffirming the existing definition of fair value, the ASU reintroduces the concept of entry value into the determination of fair value. Entry value is the amount an entity would receive to enter into an identical liability. Under the new guidance, the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. The effective date of this ASU is the first reporting period (including interim periods) after August 26, 2009. Early application is permitted for financial statements for earlier periods that have not yet been issued. The adoption of these provisions did not have an effect on the Company’s financial reporting.

ASU 2010-06. The FASB issued ASU No. 2010-06 which provides improvements to disclosure requirements related to fair value measurements. New disclosures are required for significant transfers in and out of Level 1 and Level 2 fair value measurements, disaggregation regarding classes of assets and liabilities, valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 or Level 3. These disclosures are effective for the interim and annual reporting periods beginning after December 15, 2009. Additional new disclosures regarding the purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements are effective for fiscal years beginning after December 15, 2010 beginning with the first interim period. The adoption of these provisions did not have an effect on the Company’s financial reporting.

In May 2008, the FASB issued ASC 470-20, Debt with Conversion and Other Options (ASC 470-20). ASC 470-20 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The FSP includes guidance that convertible debt instruments that may be settled in cash upon conversion should be separated between the liability and equity components, with each component being accounted for in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods.. Adoption of this statement did not have an impact on the Company’s consolidated results of operations, cash flows or financial condition.

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Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

3.	Going Concern and Management’s Plans

The Company has incurred significant losses during 2008 and 2009 and has a working capital deficit at December 31, 2009 and has relied on debt and equity financings to fund operations. These conditions raise susbstantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. The Company has limited cash resources and management continues its efforts to raise additional funds through debt or equity offerings. The Company continues to evaluate what type of offering the Company will use, how much capital the Company will raise and which company it will merge with or acquire. There is no guarantee that the Company will be able to raise any capital through any type of offerings or merge with or acquire any other companies.

4.	Acquisition of AdNet

Effective as of April 7, 2009, China Broadband, through its wholly owned subsidiary China Broadband, Ltd., a Cayman Islands company (“China Broadband Cayman”) completed the acquisition (the “AdNet Acquisition”) of Wanshi Wangjing Media Technologies (Beijing) Co., Ltd., a/k/a Adnet Media Technologies (Beijing) Co., Ltd., a recently organized development stage PRC based company (“AdNet”) pursuant to a Share Issuance Agreement (the “AdNet Agreement”) between the Company, China Broadband Cayman, AdNet and its 10 shareholders (inclusive of its two executives, Ms. Priscilla Lu and Mr. Wang Yingqinee Michael Wang).

Pursuant to the terms of the AdNet Agreement, among other provisions, China Broadband issued 11,254,898 shares of its common stock, par value, $.001 per share (the “Broadband Shares”) to the AdNet shareholders, in exchange for 100% of the equity ownership of AdNet (the “AdNet Shares”) and cash consideration of $100,000. The acquisition of AdNet resulted in the ownership by AdNet shareholders of 15% of China Broadband’s common stock on a fully diluted basis (exclusive of certain notes and warrants).

The fair value of the Broadband Shares issued in the AdNet Acquisition totaled $1,688,235. The fair value of these shares was determined to be $.15 per share based on the sale of shares sold at $.15 per share in the private equity transactions that occurred in the same period.

The purchase price has been allocated to each major class of identifiable assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition. The Company initially recorded a $1,900,000 intangible asset related to the AdNet Acquisition. Since then we have completed our valuation and the following represents the allocation of the purchase price.

Adnet
Cash	$	17,568
Due from former AdNet shareholders		100,000
Property and equipment		6,986
Other assets		18,935
Software technology		756,969
Loan payable		(199,358	)
Accounts payable		(5,478	)
Accrued expenses		(53,229	)
Other current liabilities		(4,207	)
Deferred tax liability		(189,242	)
Net identifiable assets and liabilities	$	448,944
Goodwill		1,239,291
Consideration paid	$	1,688,235

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The purchase price allocation for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values.

AdNet holds an Internet Content Provider (“ICP”) license with the rights to provide delivery of multimedia advertising content to internet cafés in China. AdNet is licensed to operate in 28 provinces in the PRC with servers in five data centers including Wuhan, Wenzhou, Yantai, Yunan and with a master distribution server in Tongshan. Due to the shift of our business model to the PPV / VOD business, as of December 31, 2009 we temporarily suspended day to day operations of AdNet. We have maintained our licenses, contracts, technology and other assets for future use in our new PPV business. Consequently, we recorded an impairment charge to goodwill of $1,239,291.

5.	Shandong Media Joint Venture - Cooperation Agreement and Additional Payment

On March 7, 2008, through our WFOE in the PRC, we entered into a Cooperation Agreement (the "Shandong Newspaper Cooperation Agreement") by and among our WFOE subsidiary, Shandong Broadcast & TV Weekly Press and Modern Movie & TV Biweekly Press, each PRC companies (collectively "Shandong Newspaper"). The Shandong Newspaper Cooperation Agreement provided for, among other terms, the creation of a joint venture entity in the PRC, Shandong Lushi Media Co., Ltd. (referred to herein as "Shandong Media") that would own and operate Shandong Newspaper's television program guide, newspaper and magazine publishing business in the Shandong region of the PRC (the "Shandong Newspaper Business") which businesses were previously owned and operated by the Shandong Newspaper entities pursuant to exclusive licenses.

Under the terms of the Shandong Newspaper Cooperation Agreement and related pledge and trust documents, the Shandong Newspaper entities mentioned above contributed their entire Shandong Newspaper Business and transferred certain employees, to Shandong Media in exchange for a 50% stake in Shandong Media, with the other 50% of Shandong Media to be owned by our WFOE in the PRC in the second quarter of 2008 with the joint venture becoming operational in July of 2008. In exchange therefore, the Cooperation Agreement provided for total initial consideration from us of approximately $1.5 million (approximately 10 million RMB) which was contributed to Shandong Media as working and acquisition capital. As part of the transaction, and to facilitate our subsidiary’s ownership and control over Shandong Newspaper under PRC law, through our WFOE in the PRC, we loaned Shandong Media said funds pursuant to a loan agreement and equity option agreement, and a majority of the shares of Shandong Newspaper are held on our behalf by Pu Yue, our CFO, as trustee on behalf of the Company pursuant to a pledge agreement and trustee agreement. The results of the Shandong Newspaper Business have been consolidated with the Company’s consolidated financial statements as of July 1, 2008.

Based on certain financial performance we were required to make an additional payment of 5 million RMB (approximately US $730,000). In 2008 we recorded the additional payment due as an increase to our Shandong noncontrolling interest account. The due date of the additional payment has been extended to May 31, 2010.

In order to facilitate the transfer of equitable ownership and control of Shandong Media, this acquisition was completed in accordance with a pledge and loan agreement, pursuant to which all of the shares of Shandong Media which we acquired are held in trust on our behalf by Pu Yue, our CFO as nominee holder, as security for a loan to Shandong Media’s parent seller.

6.	Variable Interest Entities

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Our consolidated VIEs were recorded at fair value on the date we became the primary beneficiary. Our VIEs at December 31, 2009 include Jinan Broadband and Shandong Media.

7.	Fair Value Measurements

Level 1 — Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that we have the ability to access.

The following table presents the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31:

	2009
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Available-for-sale securities	$	47,244	$	-	$	-	$	47,244
Liabilities
Fair value of warrants	$	-	$	-	$	819,150	$	819,150

	2008
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Available-for-sale securities	$	254,496	$	-	$	-	$	254,496

8.	Related Party Transactions

Loan Receivable

During 2009, the Company advanced and aggregate of approximately $290,000 in the form of a loan to Music Magazine to fund its operations. The loan is unsecured, interest free and is due on December 31, 2010. Music Magazine is related through Modern Movie Times Magazine.

Amounts due from Shareholders

Amounts due from shareholders include $109,000 advanced to Shandong Broadcast & TV Weekly Press and $60,000 advanced to Modern Movie & TV Biweekly Press. Both companies are our partners in our Shandong Media joint venture company. The amount due from Shandong Broadcast & TV Weekly Press is unsecured, interest free and has no fixed repayment terms. The amount due from Modern Movie & TV Biweekly Press is unsecured, interest free and is due on December 31, 2010. During the year ended December 31, 2009, we advanced approximately $650,000 to these companies and also received repayments of $481,000.

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Payable to Jinan Parent

During the fiscal year ended 2009, Jinan Broadband paid $2,643,000 to Jinan Parent. At December 31, 2009, $152,000 remains due to Jinan Parent. This amount represents the remaining balance due from the initial acquisition which is unsecured, interest free and has no fixed repayment terms.

9.	Property and Equipment

Property and equipment at December 31, 2009 and 2008 consisted of the following:

	2009			2008

Furniture and office equipment	$	984,000		$	835,000
Headend facilities and machinery		14,172,000			13,177,000
Vehicles		30,000			27,000
Total property and equipment		15,186,000			14,039,000
Less: accumulated depreciation		(7,823,000	)		(4,740,000	)
Net carrying value	$	7,363,000		$	9,299,000

Depreciation expense	$	3,068,000		$	2,800,000

10.	Goodwill and Other Intangible Assets

In the fourth quarter of 2009 the Company decreased the value of our intangible assets by reclassifying approximately $279,000 from noncontrolling interest. The reclassification was made to correct an error related to the valuation of our Shandong Media intangibles which includes our publication rights, operating permits and customer relationships. The Company assessed the impact of this adjustment on the current year and all prior periods and determined that the effect of this adjustment was not material to the full year 2009 results and did not result in a material misstatement to any previously issued annual or quarterly financial statements.

In 2008 we made an adjustment to the original purchase price allocation of our Jinan service agreement which was permitted under ASC 805, to adjust the deferred taxes related to the service agreement for approximately $324,000.

We have intangible assets relating to the acquisition of our Jinan Broadband subsidiary, Shandong Media joint venture and AdNet Media acquisition.

	Balance at December 31, 2008		Additions		Amortizaton / Impairment Charge			Other Changes			Balance at December 31, 2009
Amortized intangible assets:
Service agreement	$	1,570,482	$	-	$	(86,720	)	$	-		$	1,483,762
Publication rights		968,977		-		(42,250	)		(101,915	)		824,812
Customer relationships		228,933		-		(20,491	)		(24,712	)		183,730
Operating permits		1,450,366		-		(63,236	)		(152,547	)		1,234,583
Software technology		-		756,969		(189,242	)		-			567,727
Total amortized intangible assets	$	4,218,758	$	756,969	$	(401,939	)	$	(279,174	)	$	4,294,614

Unamortized intangible assets:
Goodwill	$	-	$	1,239,291	$	(1,239,291	)	$	-		$	-

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	Balance at December 31, 2007		Additions		Amortizaton / Impairment Charge			Other Changes			Balance at December 31, 2008
Amortized intangible assets:
Service agreement	$	1,981,307	$	-	$	(86,719	)	$	(324,106	)	$	1,570,482
Publication rights		-		993,823		(24,846	)		-			968,977
Customer relationships		-		240,982		(12,049	)		-			228,933
Operating permits		-		1,487,555		(37,189	)		-			1,450,366

Total amortized intangible assets	$	1,981,307	$	2,722,360	$	(160,803	)	$	(324,106	)	$	4,218,758

In accordance with ASC 250, we recorded amortization expense of approximately $402,000 in 2009. In 2008, we recorded amortization expense of approximately $161,000 related to our intangible assets.

The following table outlines the amortization expense for the next five years and thereafter:

	Jinan Broadband		Shandong Media		AdNet Media		Total
2010	$	86,720	$	132,934	$	252,323	$	471,977
2011		86,720		132,934		252,323		471,977
2012		86,720		132,934		63,081		282,735
2013		86,720		132,934		-		219,654
2014		86,720		132,934		-		219,654
Thereafter		1,050,161		1,578,455		-		2,628,616
Total amortization to be recognized	$	1,483,762	$	2,243,125	$	567,727	$	4,294,614

The Company initially recorded a $1,900,000 intangible asset related to the AdNet Acquisition. After completion of our purchase accounting for the AdNet acquisition, we recorded $1,239,291 to goodwill and $756,969 to software technology. For reasons noted in footnote 4 above, we recorded an impairment charge to goodwill of $1,239,291 as of December 31, 2009.

11.	Accrued Expenses

Accrued expenses at December 31, 2009 and 2008 consist of the following:

	2009		2008
Accrued expenses	$	1,053,000	$	543,000
Accrued payroll		786,000		393,000
	$	1,839,000	$	936,000

12.	Private Financings, June 2009

During the year ended December 31, 2009, we completed a private placement transaction and sold 5% Convertible Promissory Notes, or the 2009 Notes, for gross proceeds of approximately $305,000 and an aggregate of 2,000,000 shares of our common stock at a purchase price of $.15 per share, for aggregate proceeds of $300,000. The Notes accrue interest at 5% per year payable quarterly in cash or stock, are initially convertible at $.20 per share, and become due and payable in full on May 27, 2010. The Company did not pay any placement agent or similar fees in connection with the Note Offering.

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13.	Convertible Notes, January 2008

On January 11, 2008, we completed a private placement transaction and sold an aggregate of $4,971,250 principal amount of notes due January 11, 2013, or the January 2008 Notes, and Class A Warrants to purchase an aggregate of 6,628,333 shares of our common stock, at $.60 per share and expiring on June 11, 2013. The conversion price of these January 2008 Notes was originally $.75 per share and, in June of 2009 in connection with a subsequent financing with these investors, reduced to $.20 per share (see “Private Financings; June 2009 – Waiver Letters” above). One investor had his conversion price reduced to $.25 per share. We recorded a $504,661 original issue discount related to the Notes. We calculate the interest at 5% annually and issued shares for interest payments on a quarterly basis. We recorded amortization of original issue discount as interest expense of $100,879 and $97,838 for the years ended December 31, 2009 and 2008, respectively.

The convertible notes due are as follows at Decmeber 31:

		2009			2008
Convertible notes	$	4,971,250		$	4,971,250
Less: Original issue discount		(305,944	)		(406,823	)
	$	4,665,306		$	4,564,427

14.	Warrant Liability

In June 2008, the FASB issued authoritative guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. Under the authoritative guidance, effective January 1, 2009, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. Certain issued by the Company , do not have fixed settlement provisions because their exercise prices may be lowered if the Company issues securities at lower prices in the future. The Company was required to include the reset provisions in order to protect the holders from potential dilution associated with future financings. The warrants have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The derivative liabilities were valued using The Black-ScholesMerton model which incorporates the following assumptions:

	December 31, 2009			January 1, 2009
Risk-free interest rate		1.50	%		1.30	%
Expected volatility		309.62	%		311.69	%
Expected life (in years)	3.4 years			4.4 years
Expected dividend yield	0			0

The FASB authoritative guidance was adopted as of January 2009 and is reported as a cumulative change in accounting principles. The cumulative effect on the accounting for the warrants at January 1, 2009 was as follows:

		Additional Paid-in Capital				Accumulated Deficit				Derivative Liability
Warrants		$	(731,496	)		$	(424,373	)		$	307,123

The warrants were originally recorded at their relative fair value as an increase in additional paid-in capital. The decrease in the accumulated deficit includes gains resulting from decreases in the fair value of the derivative liabilities through December 31, 2008. The derivative liability amount reflects the fair value of the derivative instrument from issuance date as of the January 1, 2009 date of implementation.

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15.	Net Loss Per Common Share

Potential common shares outstanding as of December 31, 2009 and 2008:

Warrants			16,874,800
Options			317,500

For the year ended December 31, 2009 and 2008, the number of securities not included in the diluted EPS because the effect would have been anti-dilutive was 17,192,300.

16.	Comprehensive Income/(Loss)

Comprehensive income/(loss) consists of the following:

	2009			2008
Net loss attributable to shareholders	$	(5,439,125	)	$	(3,354,865	)
Other comprehensive income (loss):
Foreign currency translation adjustment		28,345			(10,906	)
Unrealized loss on marketable equity securities		(17,920	)		-
Comprehensive loss	$	(5,428,700	)	$	(3,365,771	)

17.	Settlement Agreement

On January 11, 2008, the Company entered into a Settlement Agreement (the “Settlement Agreement”) by and among the Company and its subsidiaries, Stephen P. Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I. Lev, Wellfleet Partners, Inc., Pu Yue, Clive Ng, Chardan Capital Markets, LLC, Jaguar Acquisition Corporation, and China Cablecom Holdings, Ltd, pursuant to which the parties released certain potential claims against one another.

The following represents the details of the net gain the Company recognized as a result of the Settlement Agreement during the fiscal year ended December 31, 2008 which is classified within “Interest and other income (expense)” in the accompaning Statement of Operations:

Fair value of Cablecom Holding Shares received	$	2,515,500
Waiver of accrued compensation		212,054
Warrant extensions		(1,426,862	)

Net gain	$	1,300,692

18.	Interest Expense and Share Issuance

In connection with the Convertible Notes issued in January 2008 and June 2009 as described above in Notes 12 and 13, during the fiscal years ended December 31, 2009 and 2008 the Company incurred $362,000 and $346,000 in interest expense related to these Notes and Warrants, respectively.

As set forth in the related documents and with the consent of the Note holders, we issued 921,040 and 329,856 shares to the Note holders in lieu of cash of approximately $260,000 and $247,000 for interest in the fiscal years ended December 31, 2009 and 2008, respectively.

19.	Stock Based Compensation

In March 2008, the board of directors of the company approved the China Broadband, Inc. 2008 Stock Incentive Plan (the “Plan”), pursuant to which options or other similar securities may be granted. Qualified or Non-qualified Options to purchase up to 2,500,000 shares of the Company’s common stock may be issued under the Plan. The Plan may also be administered by an independent committee of the board of directors. Through December 31, 2009, 317,500 options have been issued under the plan and 2,182,500 shares remain available to be issued.

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The following table provides the details of the total stock based compensation for the fiscal years ended December 31, 2009 and 2008:

	Year Ended
	December 31, 2009		December 31, 2008
Stock option amortization	$	33,656	$	44,898
Warrant amortization		-		14,198
Stock issued in lieu of interest		260,558		247,391
Stock issued as nonregistration penalty		-		12,125
	$	294,214	$	318,612

The Company accounts for its stock option awards pursuant to the provisions of ASC 718, Stock Compensation.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period. The Black-Scholes model incorporates the following assumptions:

Expected volatility - the Company estimates the volatility of common stock at the date of grant using historical volatility.

Expected term - the Company estimates the expected term of options granted based on a combination of vesting schedules, term of the option and historical experience.

Risk-free interest rate - the Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.

Dividends - the Company uses an expected dividend yield of zero. The Company intends to retain any earnings to fund future operations and, therefore, does not anticipate paying any cash dividends in the foreseeable future.

The following table outlines the assumptions used in the Black-Scholes option-pricing model for the year ended December 31, 2008:

	2008
Risk free interest rate		3.53	%
Volatility		188.76	%
Dividend yield		-
Expected option life	4 years

We issued 317,500 stock options in 2008 and no stock options were issued in 2009. As of December 31, 2009, there were 317,500 options outstanding with 230,000 options exercisable at a weighted average exercise price of $0.61 with a weighted average remaining life of 5.0 years.

As of December 31, 2009 the Company had total unrecognized compensation expense related to options granted of $35,000 which will be recognized over a remaining service period of 2 years.

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20.

Warrants

In connection with the Company’s Share Exchange, capital raising efforts in 2007 and the Company’s January 2008 Financing of Convertible Notes and Class A Warrants, the Company issued warrants to investors and service providers to purchase common stock of the Company. The following table outlines the warrants outstanding as of December 31, 2009 and 2008:

Name	Number of Warrants Issued		Exercise Price		Expiration Date

Share Exchange Consulting Warrants		4,474,800	$	0.60	1/11/2013
2007 Private Placement Broker Warrants		640,000	$	0.60	1/11/2013
2007 Private Placement Investor Warrants		4,000,000	$	2.00	1/11/2013
January 2008 Financing Class A Warrants		6,628,333	$	0.60	6/11/2013
January 2008 Financing Broker Warrants		1,131,667	$	0.50	6/11/2013

		16,874,800

21.	Income Taxes

Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. The income tax benefit for the years ended December 31, 2009 and 2008 results from changes in calculated deferred taxes, particularly liabilities associated with intangible assets. Deferred tax assets associated with net operating losses have a full valuation allowance recorded against them.

Management believes that it has $6,706,453 of pre-exchange transaction net operating loss carryovers that expire in various years through 2025. Since Management has not been able to determine whether income tax returns were filed prior to the January 23, 2007 merger transaction and may not be able to recreate the records to file them if they have not they may be unable to claim the net operating loss carryovers. In addition, even if the net operating loss carryovers were to be properly established, the future use of any pre-exchange transaction net operating loss carryovers will be significantly limited under section 382 of the internal revenue code because of the change of control in January 2007 as well as by previous changes in the control of the Corporate entity. The extent of these limitations has not yet been determined.

As of December 31, 2009 the Company has available additional U.S. net operating loss carryovers of $1,439,883 which equals $3,168,207 shown on the tax returns less $1,728,324 resulting from the nonrecognition for financial reporting purposes of the tax benefits of certain a tax position taken by the Company because of the uncertainty of the position being sustained. The net operating loss carryovers expire in the years 2027 through 2029. The nonrecognition of the tax benefits, while reducing the net operating loss carryovers, gives rise to a capital loss carryover of $1,255,495 and an AMT credit of $17,602. Jinan Broadband, Shandong Media and AdNet Media have the following estimated Chinese net operating loss carryovers at December 31, 2009 with the expiration dates as shown:

Expiring	Jinan Broadband		Shandong Media		AdNet Media		Total

2012	$	373,572	$	-	$	-	$	373,572
2013		406,885		86,199		-		493,084
2014		1,087,565		174,576		423,319		1,685,460
	$	1,868,022	$	260,775	$	423,319	$	2,552,116

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The estimation of the income tax effect of any future repatriation of the Company’s 51% share of any profits generated by its interests in Jinan Broadband, Shandong Media and AdNet is not practicable. This is because it may involve additional Chinese taxation on the distributions, or sale proceeds, to the extent that they are in excess of the investments made, but with credits for some or all of the Chinese taxes against U.S. taxes, plus the utilization of operating losses of the WFOE. All of the foregoing would be subject to various tax-planning strategies.

China Broadband Ltd. is not subject to Cayman Islands taxation.

The Company’s income tax benefit for the year ended December 31, 2009 consisted entirely of foreign deferred taxes arising from net operating loss carryforwards.

The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits:

Balance, beginnning of year	$	-
Increase from prior years' tax positions		18,577
Balance, end of year	$	18,577

The Company's deferred tax assets and liabilities at December 31, 2009 and 2008 consisted of:

	2009			2008
Deferred tax assets
U.S. NOL - pre-stock exchange transaction	$	2,280,194		$	2,280,194
U.S. NOL - subsequent to stock exchange transaction		489,560			510,082
Foreign NOL		674,694			219,379
Deferred revenue		393,114			345,526
Fixed assets cost basis		613,727			409,876
Accrued payroll		259,596			133,716
Nonqualified options		9,214			-
Marketable securities		144,705			-
AMT credit		17,952			-
Capital loss carryover		426,855			-
Total deferred tax assets		5,309,611			3,898,773
Less: valuation allowance		(4,912,026	)		(3,649,485	)
Deferred tax liability - intangible assets		(1,115,212	)		(1,039,905	)
Net deferred tax liability	$	(717,627	)	$	(790,617	)

The deferred tax valuation allowance increased $1,262,541 and $899, 352 during the years ended December 31, 2009 and 2008, respectively.

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A reconciliation of the expected income tax derived by the application of the 34% U.S. corporate income tax rate to the Company's loss before income tax benefit is as follows:

	2009			2008
Net loss before income taxes	$	(6,785,536	)	$	3,870,498

Expected income tax benefit at 34%		(2,307,082	)		(1,315,973	)

Nondeductible expenses		651,508			273
Rate-differential on foreign income invested indefinitely		316,498			135,132
WFOE NOL not recognized for indefinite reversal		9,741			12,681
Depreciation of fixed assets and amortization of intangible assets		-			123,779
Deferred revenue		-			(345,526	)
Stock options and warrants		-			(26,830	)
Write-down in value of available for sale securities		-			611,109
Increase in valuation allowance		1,262,541			899,352
Change in estimates		(195,438	)		-
Unrecognized tax benefits		18,577			-
Income tax expense (benefit)	$	(243,655	)	$	93,997

22.	Reclassifications

Certain prior year information has been reclassified to be comparable with the current year presentation, principally due to the adoption of ASC 810, Consolidation.

In presenting the Company’s consolidated balance sheet at December 31, 2008, and statement of cash flows for the year ended December 31, 2008, the Company presented $268,449 loan receivable from related party and $64,394 amounts due from shareholders as other long term assets and $242,155 as operating cash flows. In presenting the Company’s consolidated balance sheet at December 31, 2009, and statement of cash flows for the year ended December 31, 2009, the Company has reclassified the loan receivable from related party and amounts due from shareholders as current assets and their cash flows as investing cash flows in the accompanying December 31, 2009 financial statements.

23.	Non-Controlling Interests

24.	Subsequent Events

On March 9, 2010, China Broadband Cayman entered into a note purchase agreement and a non-binding Letter of Intent, or the LOI with Sinotop Group Ltd., a Hong Kong corporation, or Sinotop Hong Kong. Through a series of contractual arrangements referred to herein as “VIE Contracts”, Sinotop Hong Kong controls Beijing Sino Top Scope Technology Co., Ltd., or Sinotop Beijing. Sinotop Beijing, a corporation established in the PRC is, in turn, a party to a joint venture with two other PRC companies to provide integrated value-added service solutions for the delivery of pay-per-view (“PPV”), video-on-demand (“VOD”), and enhanced premium content for cable providers.

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The LOI summarizes the proposed terms of the acquisition by CB Cayman of 100% of the outstanding capital stock of Sinotop Hong Kong from its sole stockholder in consideration for a percentage of China Broadband to be determined in the definitive agreement. Among other customary closing conditions, the acquisition is contingent upon the (1) the drafting and negotiation of definitive agreements that cover the matters discussed in the LOI, (2) the funding of the Note (as defined below), which has already occurred, (3) the contribution by CB Cayman of at least $5,000,000 to the capital of Sinotop Hong Kong (or the purchase by CB Cayman of newly issued shares of Sinotop Hong Kong in consideration for the same amount), and (4) the absence of any debts, obligations or encumbrances on the equity or assets of Sinotop Hong Kong and the WFOE other than the Note and the VIE Contracts. The LOI contains a binding exclusivity provision that prohibits Sinotop Hong Kong and Sinotop Hong Kong’s sole stockholder from soliciting, initiating, entertaining, participating in any discussions or negotiations concerning, or making or accepting any offer or proposed transaction with any third party with regard to, any of the transactions contemplated by the LOI or any similar transaction. This transaction has not been consummated yet and we are dependent on our ability to raise capital in order to complete this transaction.

Pursuant to the Note Purchase Agreement, on March 9, 2010, CB Cayman acquired a Convertible Promissory Note, or Note from Sinotop Hong Kong in consideration of CB Cayman’s loan to Sinotop Hong Kong under the Note in the amount of $580,000 as contemplated by the LOI.

The Note accrues interest at a simple annual rate of 5% and is due on the date, or the Maturity Date that is the earlier of the fifth anniversary of the date of issuance of the Note or the day following a change of control (as described in the Note). The outstanding principal amount of the Note along with all accrued interest is convertible into common shares of Sinotop Hong Kong upon the occurrence of (1) Sinotop Hong Kong consummating a financing transaction, or Financing, resulting in aggregate gross proceeds of at least $1 million, in which case the Note would automatically be converted into ordinary shares of Sinotop Hong Kong at a price equal to 70% of the price per share paid by investors in such Financing, or (2) a change of control of Sinotop Hong Kong (as described in the Note), in which case the Note would automatically be converted into ordinary shares that represent 50% of the issued and outstanding capital stock of Sinotop Hong Kong. The outstanding principal amount of the Note and all accrued interest thereon may also be converted at the option of CB Cayman at any time after the Maturity Date or an event of default into ordinary shares of Sinotop Hong Kong representing 50% of the issued and outstanding voting capital stock of Sinotop Hong Kong. The Note may not be prepaid prior to the Maturity Date without the consent of the holder of the Note. The Note contains customary events of default.

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125,000,000 Shares

CHINA BROADBAND, INC.

Common Stock

For the 90 days following the effectiveness of this prospectus and ending on ____________, 2010, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS

, 2010

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PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. All amounts, other than the SEC registration fee, are estimates. We will pay all these expenses.

	Amount to be paid
SEC Registration Fee	$	445
Printing Fees and Expenses		2,500	*
Legal Fees and Expenses		50,000	*
Accounting Fees and Expenses		50,000	*
Blue Sky Fees and Expenses		5,000	*
Transfer Agent and Registrar Fees		2,000	*
Miscellaneous		1,500	*
Total	$	111,445	*

*Estimated amount

Item 14. Indemnification of Directors and Officers

Our bylaws provide for the indemnification of our present and prior directors and officers or any person who may have served at our request as a director or officer of another corporation in which we own shares of capital stock or of which we are a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any actions, suits or proceedings in which they, or any of them, are made parties, or a party, by reason of being or having been director(s) or officer(s) of us or of such other corporation, in the absence of negligence or misconduct in the performance of their duties. This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.

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

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

Item 15. Recent Sales of Unregistered Securities

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In instances described above where we issued securities in reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the Securities Act. These stockholders who received the securities in such instances made representations in substance that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (e) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Management made the determination that the investors in instances where we relied on Regulation D are accredited investors (as defined in Regulation D) based upon management’s inquiry into their sophistication and net worth. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.

In instances described above where we indicate that we relied upon Section 4(2) of the Securities Act in issuing securities, our reliance was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offeree and us.

Item 16. Exhibits.

Exhibit No.		Description
2.1		Share Exchange Agreement, dated as of January 23, 2007, by and among the Company, China Broadband, Ltd. and its shareholders. [incorporated by reference to Exhibit 2.1 to the Company’s Annual Report on Form 10-KSB filed May 25, 2007]
3.1*		Articles of Incorporation of the Company, as amended to date.
3.2		Amended and Restated Bylaws of the Company. [incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
3.3		Certificate of Designation of Series A Preferred Stock [incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
3.4		Certificate of Designation of Series B Preferred Stock [incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.1		Form of Warrant issued pursuant to the Securities Purchase Agreement dated May 20, 2010 [incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.2		Form of Warrant issued on July 30, 2010 to Shane McMahon. [incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.3		Form of Warrant issued on July 30, 2010 to Steven Oliveira. [incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]

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Exhibit No.		Description
4.4		Form of Registration Rights Agreement, dated July 30, 2010, pursuant to the Securities Purchase Agreement dated May 20, 2010. [incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.5		Registration Rights Agreement, dated July 30, 2010, between the Company and Shane McMahon. [incorporated by reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.6		Registration Rights Agreement, dated July 30, 2010, between the Company and Steven Oliveira. [incorporated by reference to Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.7		Form of Note Purchase Agreement, dated June 30, 2009, among the Company and certain investors. [Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
4.8		Form of 5% Convertible Promissory Note, issued as of June 30, 2009. [Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
4.9		Form of 5% Convertible Promissory Note, issued as of January 11, 2008. [Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
4.10		Form of Class A Warrant, issued as of January 11, 2008. [Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
4.11		Form of Broker’s Common Stock Warrant, issued as of January 11, 2008. [Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
4.12		Form of Warrant Amendment, dated March 2008 [Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 8, 2008]
4.13		Form of 7% Convertible Promissory Note issued by China Broadband, Ltd. and assumed by the Company. [incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed March 20, 2007]
4.14		Form of Warrant, issued as of January 23, 2007. [incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed March 20, 2007]
4.15		Form of Warrant, issued as of January 23, 2007 to Maxim Financial Corporation. [incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed March 20, 2007]
4.16		Form of Warrant, issued as of January 23, 2007 to BCGU, LLC. [incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-KSB filed May 25, 2007]
4.17		Form of Registration Rights Agreement, dated as of January 23, 2007 [incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 20, 2007]
5*		Opinion of Lewis and Roca LLP as to the legality of the shares.
10.1		Form of Securities Purchase Agreement dated May 20, 2010. [incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.2		Form of Series A Securities Purchase Agreement, dated May 20, 2010. [incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.3		First Amendment to Series A Securities Purchase Agreement, dated July 30, 2010. [incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.4		Form of Series B Securities Purchase Agreement dated May 20, 2010. [incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.5		Form of Waiver and Agreement to Convert, dated May 20, 2010. [incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.6		Form of Waiver and Agreement to Convert, dated May 20, 2010. [incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]

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Exhibit No.		Description
10.7		Loan Cancellation Agreement, dated May 20, 2010, between the Company and Steven Oliveira [incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.8		Loan Cancellation and Note Assignment Agreement, dated June 24, 2010, between the Company and Chardan SPAC Asset Management LLC. [incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.9		Form of Stock Purchase Agreement, dated as of June 30, 2009, among the Company and certain investors [Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
10.10		Form of Waiver Letter, dated as of June 30, 2009, between the Company and certain existing note holders [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
10.11		Form of Subscription Agreement, dated as of January 11, 2008, between the Company and certain investors. [Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.12		Form of Funds Escrow Agreement, dated January 11, 2008, by and among the Company, Grushko and Mittman, P.C., and investors. [Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.13		Settlement Agreement, dated January 11, 2008, by and among the Company, China Broadband Ltd., Stephen Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I Lev, Wellfleet Partners, Inc., Pu Yue, Clive Ng, Chardan Capital Markets, LLC, Jaguar Acquisition Corporation, and China Cablecom Holdings, Ltd. [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.14		Form of Subscription and Release Agreement, dated March 2008 [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 8, 2008]
10.15		Form of Release Agreement, dated March 2008 [Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 8, 2008]
10.16		Form of Subscription Agreement, dated January 23, 2007, by and among the Company and certain investors. [incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 20, 2007]
10.17		Ordinary Share Purchase Agreement, dated July 30, 2010, among the Company, China Broadband Ltd. and Weicheng Liu. [incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.18		Cooperation Agreement dated as of December 26, 2006 between China Broadband, Ltd. and Jianan Guangdian Jiahe Digital Television Co., Ltd. [incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 20, 2007]
10.19		Exclusive Service Agreement, dated December, 2006, by and among Beijing China Broadband Network Technology Co., Ltd., Jinan Guangdian Jiahe Digital Television Co., Ltd. and Jinan Broadcast &Televison Information Network Center. [incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed June 11, 2007]
10.20		Cooperation Agreement, dated March 7, 2008, by and among Ji’Nan Zhongkuan Dian Guang Information Technology Co., Shandong Broadcast & TV Weekly Press and Modern Movie & TV Biweekly Press. [incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 13, 2008]
10.21		Share Issuance Agreement, dated April 7, 2009 between the Company, China Broadband, Ltd., Waanshi Wangjing Media Technologies (Beijing) Co., Ltd. and its shareholders. [incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 14, 2009]
10.22		Loan Agreement, dated as of April 7, 2009, between China Broadband, Ltd. and Wangjing Media Technologies (Beijing) Co., Ltd. [incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed April 15, 2010]

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Exhibit No.		Description
10.23		Equity Option Agreement, dated as of April 7, 2009, between China Broadband, Ltd. and Wangjing Media Technologies (Beijing) Co., Ltd. [incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.24		Pledge Agreement, dated as of April 7, 2009, between China Broadband, Ltd. and Wangjing Media Technologies (Beijing) Co., Ltd. [incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.25		Trustee Appointment Letter, dated as of April 7, 2009, by China Broadband, Ltd., appointing Mr. Wang Yingqi as trustee on its behalf [incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.26		Employment Agreement, dated July 30, 2010 between the Company and Shane McMahon. [incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.27		Employment Agreement, dated July 30, 2010 between the Company and Marc Urbach. [incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.28		Employment Agreement, dated July 30, 2010 between the Company and Clive Ng. [incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.29		Employment Agreement, dated July 30, 2010 between the Company and Weicheng Liu. [incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.30		Employment Agreement Amendment, dated January 11, 2008, between China Broadband, Ltd. and Pu Yue. [Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.31		Consulting Agreement, dated January 24, 2007, between the Company and Maxim Financial Corporation. [incorporated by reference to Exhibit 10.9 to the Company’s Amended Current Report on Form 8-K/A filed June 4, 2007]
21.1*		Subsidiaries of the Company
23.1*		Consent of UHY LLP
23.2*		Consent Lewis and Roca LLP, included in Exhibit 5
24*		Power of Attorney (included on the signature page of this registration statement)
99.1		China Broadband, Inc. 2008 Stock Incentive Plan. [incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed March 13, 2008]
99.2		China Broadband, Inc. Audit Committee Charter [incorporated by reference to Exhibit 99.2 to the Company’s Annual Report on Form 10-K filed April 15, 2009]
99.3		China Broadband, Inc. Nominating and Corporate Governance Committee Charter [incorporated by reference to Exhibit 99.3 to the Company’s Annual Report on Form 10-K filed April 15, 2009]
99.4		China Broadband, Inc. Compensation Committee Charter [incorporated by reference to Exhibit 99.4 to the Company’s Annual Report on Form 10-K filed April 15, 2009]

*Filed herewith

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Item 17. Undertakings

The undersigned registrant hereby undertakes to:

File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

(a) Include any prospectus required by Section 10(a)(3) of the Securities Act, and

(b) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement, and

For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

For determining liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant 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 registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 7th day of October, 2010.

	CHINA BROADBAND, INC.

	By:	/s/ Shane McMahon
		Shane McMahon Chief Executive Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below constitutes and appoints Shane McMahon and Marc Urbach, and each of them individually, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

SIGNATURE	TITLE	DATE

/s/ Shane McMahon	Chairman and Chief Executive Officer (Principal Executive Officer)	October 7, 2010
Shane McMahon

/s/ Marc Urbach	Chief Financial Officer (Principal Financial and Accounting Officer)	October 7, 2010
Marc Urbach

/s/ Clive Ng	Co-Chairman	October 7, 2010
Clive Ng

/s/ Weicheng Liu	Director	October 7, 2010
Weicheng Liu

/s/ James Cassano	Director	October 7, 2010
James Cassano

/s/ David Zale	Director	October 7, 2010
David Zale

/s/ Jonas Grossman	Director	October 7, 2010
Jonas Grossman

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EXHIBIT INDEX

Exhibit No.		Description
2.1		Share Exchange Agreement, dated as of January 23, 2007, by and among the Company, China Broadband, Ltd. and its shareholders. [incorporated by reference to Exhibit 2.1 to the Company’s Annual Report on Form 10-KSB filed May 25, 2007]
3.1*		Articles of Incorporation of the Company, as amended to date.
3.2		Amended and Restated Bylaws of the Company. [incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
3.3		Certificate of Designation of Series A Preferred Stock [incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
3.4		Certificate of Designation of Series B Preferred Stock [incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.1		Form of Warrant issued pursuant to the Securities Purchase Agreement dated May 20, 2010 [incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.2		Form of Warrant issued on July 30, 2010 to Shane McMahon. [incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.3		Form of Warrant issued on July 30, 2010 to Steven Oliveira. [incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.4		Form of Registration Rights Agreement, dated July 30, 2010, pursuant to the Securities Purchase Agreement dated May 20, 2010. [incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.5		Registration Rights Agreement, dated July 30, 2010, between the Company and Shane McMahon. [incorporated by reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.6		Registration Rights Agreement, dated July 30, 2010, between the Company and Steven Oliveira. [incorporated by reference to Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
4.7		Form of Note Purchase Agreement, dated June 30, 2009, among the Company and certain investors. [Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
4.8		Form of 5% Convertible Promissory Note, issued as of June 30, 2009. [Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
4.9		Form of 5% Convertible Promissory Note, issued as of January 11, 2008. [Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
4.10		Form of Class A Warrant, issued as of January 11, 2008. [Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
4.11		Form of Broker’s Common Stock Warrant, issued as of January 11, 2008. [Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
4.12		Form of Warrant Amendment, dated March 2008 [Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 8, 2008]
4.13		Form of 7% Convertible Promissory Note issued by China Broadband, Ltd. and assumed by the Company. [incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed March 20, 2007]

Table of Contents

Exhibit No.		Description
4.14		Form of Warrant, issued as of January 23, 2007. [incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed March 20, 2007]
4.15		Form of Warrant, issued as of January 23, 2007 to Maxim Financial Corporation. [incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed March 20, 2007]
4.16		Form of Warrant, issued as of January 23, 2007 to BCGU, LLC. [incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-KSB filed May 25, 2007]
4.17		Form of Registration Rights Agreement, dated as of January 23, 2007 [incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 20, 2007]
5*		Opinion of Lewis and Roca LLP as to the legality of the shares.
10.1		Form of Securities Purchase Agreement dated May 20, 2010. [incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.2		Form of Series A Securities Purchase Agreement, dated May 20, 2010. [incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.3		First Amendment to Series A Securities Purchase Agreement, dated July 30, 2010. [incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.4		Form of Series B Securities Purchase Agreement dated May 20, 2010. [incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.5		Form of Waiver and Agreement to Convert, dated May 20, 2010. [incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.6		Form of Waiver and Agreement to Convert, dated May 20, 2010. [incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.7		Loan Cancellation Agreement, dated May 20, 2010, between the Company and Steven Oliveira [incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.8		Loan Cancellation and Note Assignment Agreement, dated June 24, 2010, between the Company and Chardan SPAC Asset Management LLC. [incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.9		Form of Stock Purchase Agreement, dated as of June 30, 2009, among the Company and certain investors [Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
10.10		Form of Waiver Letter, dated as of June 30, 2009, between the Company and certain existing note holders [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 6, 2009]
10.11		Form of Subscription Agreement, dated as of January 11, 2008, between the Company and certain investors. [Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.12		Form of Funds Escrow Agreement, dated January 11, 2008, by and among the Company, Grushko and Mittman, P.C., and investors. [Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.13		Settlement Agreement, dated January 11, 2008, by and among the Company, China Broadband Ltd., Stephen Cherner, Maxim Financial Corporation, Mark L. Baum, BCGU, LLC, Mark I Lev, Wellfleet Partners, Inc., Pu Yue, Clive Ng, Chardan Capital Markets, LLC, Jaguar Acquisition Corporation, and China Cablecom Holdings, Ltd. [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 17, 2008]

Table of Contents

Exhibit No.		Description
10.14		Form of Subscription and Release Agreement, dated March 2008 [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 8, 2008]
10.15		Form of Release Agreement, dated March 2008 [Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 8, 2008]
10.16		Form of Subscription Agreement, dated January 23, 2007, by and among the Company and certain investors. [incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 20, 2007]
10.17		Ordinary Share Purchase Agreement, dated July 30, 2010, among the Company, China Broadband Ltd. and Weicheng Liu. [incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.18		Cooperation Agreement dated as of December 26, 2006 between China Broadband, Ltd. and Jianan Guangdian Jiahe Digital Television Co., Ltd. [incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 20, 2007]
10.19		Exclusive Service Agreement, dated December, 2006, by and among Beijing China Broadband Network Technology Co., Ltd., Jinan Guangdian Jiahe Digital Television Co., Ltd. and Jinan Broadcast &Televison Information Network Center. [incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed June 11, 2007]
10.20		Cooperation Agreement, dated March 7, 2008, by and among Ji’Nan Zhongkuan Dian Guang Information Technology Co., Shandong Broadcast & TV Weekly Press and Modern Movie & TV Biweekly Press. [incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 13, 2008]
10.21		Share Issuance Agreement, dated April 7, 2009 between the Company, China Broadband, Ltd., Waanshi Wangjing Media Technologies (Beijing) Co., Ltd. and its shareholders. [incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 14, 2009]
10.22		Loan Agreement, dated as of April 7, 2009, between China Broadband, Ltd. and Wangjing Media Technologies (Beijing) Co., Ltd. [incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.23		Equity Option Agreement, dated as of April 7, 2009, between China Broadband, Ltd. and Wangjing Media Technologies (Beijing) Co., Ltd. [incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.24		Pledge Agreement, dated as of April 7, 2009, between China Broadband, Ltd. and Wangjing Media Technologies (Beijing) Co., Ltd. [incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.25		Trustee Appointment Letter, dated as of April 7, 2009, by China Broadband, Ltd., appointing Mr. Wang Yingqi as trustee on its behalf [incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K filed April 15, 2010]
10.26		Employment Agreement, dated July 30, 2010 between the Company and Shane McMahon. [incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.27		Employment Agreement, dated July 30, 2010 between the Company and Marc Urbach. [incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.28		Employment Agreement, dated July 30, 2010 between the Company and Clive Ng. [incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]
10.29		Employment Agreement, dated July 30, 2010 between the Company and Weicheng Liu. [incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed August 23, 2010]

Table of Contents

Exhibit No.		Description
10.30		Employment Agreement Amendment, dated January 11, 2008, between China Broadband, Ltd. and Pu Yue. [Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on January 17, 2008]
10.31		Consulting Agreement, dated January 24, 2007, between the Company and Maxim Financial Corporation. [incorporated by reference to Exhibit 10.9 to the Company’s Amended Current Report on Form 8-K/A filed June 4, 2007]
21.1*		Subsidiaries of the Company
23.1*		Consent of UHY LLP
23.2*		Consent Lewis and Roca LLP, included in Exhibit 5
24*		Power of Attorney (included on the signature page of this registration statement)
99.1		China Broadband, Inc. 2008 Stock Incentive Plan. [incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed March 13, 2008]
99.2		China Broadband, Inc. Audit Committee Charter [incorporated by reference to Exhibit 99.2 to the Company’s Annual Report on Form 10-K filed April 15, 2009]
99.3		China Broadband, Inc. Nominating and Corporate Governance Committee Charter [incorporated by reference to Exhibit 99.3 to the Company’s Annual Report on Form 10-K filed April 15, 2009]
99.4		China Broadband, Inc. Compensation Committee Charter [incorporated by reference to Exhibit 99.4 to the Company’s Annual Report on Form 10-K filed April 15, 2009]

Attached files

IDEANOMICS, INC. Reports

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