The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto included elsewhere in this Form 10-K. All information presented herein is based on the Company's fiscal calendar. Unless otherwise stated, references in this report to particular years or quarters refer to the Company's fiscal years ended in December and the associated quarters of those fiscal years. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Background

We own and operate, through our indirect subsidiaries in the People's Republic of China ("PRC"), a cable broadband business based in the Jinan region of China (Jinan Broadband) and a television programming guide publication business joint venture (Shandong Media) in the Shandong Province of China (see Item 1 above). More recently, we acquired an internet café content provider and advertising business in the PRC (AdNet) (See "Recent Developments" in Item 1 above). Our principal activity is providing cable and wireless broadband and print based media and television programming guide services. We operate in the media segment. All references to dollar amounts herein which relate to operations or revenues from the PRC are converted to reflect RMB exchange rates to the US dollar.

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 ("Chardan Capital"), Jaguar Acquisition Corporation ("Jaguar"), and China Cablecom Holdings, Ltd ("Cablecom Holdings"), pursuant to which the parties released certain potential claims against one another, as more fully set forth in Item 1 above.

The following table provides the details of the net gain the Company recognized in 2008 as a result of the Settlement Agreement which is recorded in "Interest and other income (expense)" in the accompanying Statement of Operations:

              Fair value of Cablecom Holdings Shares   $  2,515,500
              Waiver of accrued compensation                212,054
              Warrant extensions                         (1,426,862 )


              Net Gain                                 $  1,300,692

Issuance of Shares in Lieu of Cash Interest Payments on Convertible Notes

On January 11, 2008, simultaneously with the entry into the Settlement Agreement, we entered into and consummated a subscription agreement (the "Subscription Agreement") with ten accredited investors (inclusive of Chardan Capital) with respect to the issuance of an aggregate of $4,971,250 principal amount of convertible notes ("Notes") due January 11, 2013, and Class A Warrants to purchase an aggregate of 6,628,333 shares of common stock of the Company at $.60 per share expiring on June 11, 2013 (the "January 2008 Financing").

In 2008 the Company incurred $247,000 in interest expense related to the Notes. With the consent of the Note holders, the Company issued 329,856 shares to the Note holders in lieu of cash.

The following discussion and analysis should be read in conjunction with our audited financial statements and related notes included

Results of Operations

The following table presents for the periods indicated the results of the Company's operations.

                                                     Years Ended                  Amount             %
                                           December 31,      December 31,       Increase /       Increase /
                                               2008              2007           (Decrease)       (Decrease)

Revenue                                    $   6,361,970     $   2,839,197     $  3,522,773              124 %
Cost of revenue                                3,740,381         1,657,979        2,082,402              126 %
Gross profit                                   2,621,589         1,181,218        1,440,371              122 %

Selling, general and adminstrative
expenses                                       1,923,386           954,382          969,004              102 %
Professional fees                                619,405           628,490           (9,085 )             -1 %
Depreciation and amortization                  3,037,199         1,795,501        1,241,698               69 %

Income / (loss) from operations               (2,958,401 )      (2,197,155 )       (761,246 )             35 %

Interest & other income / (expense)             (912,097 )        (404,553 )       (507,544 )            125 %

Income / (loss) before minority interest      (3,870,498 )      (2,601,708 )     (1,268,790 )             49 %

Minority interest loss in operating
subsidiaries                                     609,630           439,722          169,908               39 %

Income / (loss) before income tax             -3,260,868        -2,161,986       (1,098,882 )             51 %

Income tax benefit                               -93,997           147,955         (241,952 )           -164 %

Net income / (loss)                        $  (3,354,865 )   $  (2,014,031 )   $ (1,340,834 )             67 %

Year Ended December 31, 2008 ("2008") Compared to the Year Ended December 31, 2007 ("2007")

Revenues

Revenues for fiscal year ended 2008 were $6,362,000 as compared to $2,839,000 for 2007. The increase in revenue of approximately $3,523,000 or 124% is attributable to our Shandong Media joint venture entered into during 2008 that provided us with approximately $1,644,000 of revenues during the last two quarters of the year, and the inclusion of our Jinan Broadband operations for a full year in the 2008 period as compared to only nine months of operations in the 2007 period

Our revenues were attributed to our PRC based subsidiaries in 2008. Jinan Broadband revenue consisted of sales to our PRC based Internet consumers, cable modem consumers, business customers and other internet and cable services of $4,718,000. Shandong Media's revenue consisted of sales to publications and advertising of $1,644,000.

We expect that our revenues will increase as we continue to grow our businesses. In addition, we expect in increase in gross revenues as a result of our recent acquisition of AdNet which, at the time of acquisition, operates in over 2,000 internet cafés.

Gross Profit

Our gross profit in 2008 was $2,622,000, marking an increase from $1,181,000 in 2007. The increase in gross profit of approximately $1,141,000 or 122% is attributable to our Shandong Media joint venture and the inclusion of our Jinan Broadband operations for a full year in the 2008 period as compared to only nine months of operations in the 2007 period.

Gross profit as a percentage of revenue was 41.2% for 2008 as compared to 41.6% for 2007.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses in 2008 totaled $1,923,000 as compared to $954,000 in 2007. The increase in selling, general and administrative expenses of $969,000 or 102% is primarily attributable to our Shandong Media joint venture entered into during 2008 and the inclusion of our Jinan Broadband operations for a full year in the 2008 period as compared to only nine months of operations in the 2007 period.

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

Professional Fees

The following contains a list of our professional fees incurred during 2008 and
2007.


               2008          2007
Accounting   $ 259,000     $ 250,000
Consulting   $ 147,000     $ 223,000
Legal        $ 214,000     $ 156,000
Total        $ 619,000     $ 629,000

The professional fees are generally related to public company reporting and governance expenses, and the Broadband Acquisition in 2007. In 2008 significant additional costs were incurred primarily for services performed relating to the Settlement Agreement and related transactions, the January 2008 note financing and the Shandong Media joint venture.

We expect our costs for professional services to remain significant, but to decrease as a percentage of our overall revenues as we continue to acquire new entities and create synergistic partnerships as we implement our strategy as set forth above for public company reporting and corporate governance expenses.

Depreciation and Amortization


                   2008            2007
Depreciation:   $ 2,800,000     $ 1,718,000
Amortization:   $   237,000     $    77,000
Total           $ 3,037,000     $ 1,795,000

The increase in depreciation expenses of $1,082,000 is primarily attributable to our inclusion of Jinan Broadband operations for a full year in the 2008 period as compared to only nine months of consolidated operations in the 2007 period. Depreciation expense during 2008 relates to the depreciation on the approximately $13.7 million of property, plant and equipment, at our Jinan Broadband subsidiary.

The increase in amortization of $160,000 is attributable to (1) a full year in 2008 of our Jinan Broadband service contract amortization compared to only nine months in 2007, (2) amortization related to our Shandong Media intangible asset acquired in 2008 and (3) the amortization of debt issuance costs associated with the Convertible Note in 2008.

Interest and Other Income (Expense), net

We recorded a net loss amount of approximately $912,000, in interest and other income (expense), net, during 2008. This amount consisted primarily of:

· the net gain on the Settlement Agreement in the amount of approximately $1,301,000,

· the loss on marketable equity securities write-down related to our Cablecom Holdings shares in the amount of $1,797,000,

· interest expense related to the 5% Convertible Notes issued on January 11, 2008 in the amount of approximately $303,000,

· the loss on the sale of marketable equity securities in the amount of $103,000.

We expect to continue to incur interest expenses in connection with our issuance of our $4,971,250 principal amount of Notes issued in January 2008 which compounds monthly at the annual rate of five percent (5%) with the maturity date on January 11, 2013.

49% of the operating loss of our Jinan Broadband subsidiary is allocated to Jinan Parent, the 49% co-owner of this business. During 2008, $588,000 of our operating losses were allocated to Jinan Parent and $440,000 was allocated in 2007.

50% of the operating loss of our Shandong Media joint venture is allocated to our 50% Shandong Newspaper joint venture partner. We consolidated the results of Shandong Media effective July 1, 2008. During 2008 $22,000 (for 6 months of operations) of our operating loss from Shandong Media was allocated to Shandong Newspaper.

The following table breaks down the results of operations for 2008 and 2007 between our operating companies and our non-operating companies.

† The operating companies include Jinan Broadband and Shandong Media

† Includes a full year of operations of our Jinan Broadband company in 2008 as compared to only 9 months in 2007

† Includes 6 months of operations of our Shandong Media company in 2008 as compared to no operations in 2007

                                                     Year Ended                                                         Year Ended
                                                December 31, 2008                                                     December 31, 2007
                                             % of                                                                % of
                                            Total                                                               Total
                          Operating        Revenue        Non-Operating         Total          Operating       Revenue        Non-Operating         Total

Revenue                  $  6,361,970                    $             -     $  6,361,970     $ 2,839,197                    $             -     $  2,839,197
Cost of revenue             3,740,381                                  -        3,740,381       1,657,979                                  -        1,657,979
Gross profit                2,621,589           41.2 %                 -        2,621,589       1,181,218           41.6 %                 -        1,181,218

Selling, general and
adminstrative expenses      1,100,667           17.3 %           822,719        1,923,386         367,837           13.0 %           586,545          954,382
Professional fees              24,808            0.4 %           594,597          619,405               -            0.0 %           628,490          628,490
Depreciation and
amortization                2,800,815           44.0 %           236,384        3,037,199       1,718,277           60.5 %            77,226        1,795,503

Income / (loss) from
operations                 (1,304,701 )        -20.5 %        (1,653,700 )     (2,958,401 )      (904,896 )        -31.9 %        (1,292,261 )     (2,197,157 )
Interest & other
income / (expense)
  Settlement gain                   -                          1,300,692        1,300,692               -                                  -                -
  Interest income /
(expense), net                 24,218                           (326,988 )       (302,770 )         8,441                             (2,006 )          6,435
  Gain (loss) on sale
of securities                       -                           (102,505 )       (102,505 )             -                                  -                -
  Loss on securities
write-down                          -                         (1,797,378 )     (1,797,378 )             -                                  -                -
  Other                          (122 )                          (10,014 )        (10,136 )          (936 )                         (410,053 )       (410,989 )

Income / (loss) before
minority interest          (1,280,605 )                       (2,589,893 )     (3,870,498 )      (897,391 )                       (1,704,320 )     (2,601,711 )

Minority interest loss
in operating
subsidiaries                        -                            609,630          609,630               -                            439,722          439,722

Income / (loss) before
income tax                 (1,280,605 )        -20.1 %        (1,980,263 )     (3,260,868 )      -897,391          -31.6 %        -1,264,598       -2,161,989

Income tax benefit /
(expense)                           -            0.0 %           (93,997 )        (93,997 )             -                            147,955          147,955

Net income / (loss)      $ (1,280,605 )        -20.1 %   $    (2,074,260 )   $ (3,354,865 )   $  (897,391 )        -31.6 %   $    (1,116,643 )   $ (2,014,034 )

Liquidity and Capital Resources

As of December 31, 2008 we had $4,426,000 of cash on hand and a working capital deficit of $675,000. As of December 31, 2008, we had total current liabilities of $6,569,000. Given our current commitments and working capital deficit, we cannot support our operations for the next 12 months without additional capital.

On January 11, 2008 we entered into and consummated a subscription agreement with ten accredited investors with respect to the issuance of an aggregate of $4,971,250 principal amount of Notes due January 11, 2013, and Class A Warrants to purchase an aggregate of 6,628,333 shares of common stock of the Company at $.60 per share expiring on June 11, 2013.

During 2008 the Company incurred $345,000 in interest expense related to these notes. Based on a predetermined presumed value of $.75 per share as set forth in the Subscription Agreement and related documents with the consent of the Note holders, the Company issued 329,856 shares to the Note holders in lieu of cash of approximately $247,000 for interest accrued in 2008. Additional interest expense of $98,000 was recorded for the warrants.

In April 2008 we received 390,000 Cablecom Holdings Shares that were part of the Settlement Agreement described above and recorded, as a portion of the settlement gain, $2,515,000 upon receipt of the shares. During 2008 the Company sold 71,880 of the Cablecom Holdings Shares on the open market and received gross proceeds of $361,000 and recorded a net loss on the sales of approximately $103,000.

As a result of a significant decline in the price of the Cablecom Holdings Shares we recorded an other than temporary impairment loss of approximately $1.8 million on these shares in interest and other income (expense) in 2008. The fair value of the remaining 236,806 Cablecom shares at March 20, 2009 approximates $69,000.

Cash Flows

The following sets forth a summary of the Company's cash flows for 2008 and
2007:

                                                                Years Ended
                                                      December 31,      December 31,
                                                          2008              2007
Net cash provided by (used in) operating activities   $   1,286,000     $   1,129,000
Net cash provided by (used in) investing activities      (1,700,000 )      (2,443,000 )
Net cash provided by (used in) financing activities       4,232,000         1,351,000
Effect of exchange rate changes on cash                     135,000           332,000

Operating activities for 2008 and 2007, after adding back non-cash items, provided cash of approximately $448,000 and $72,000, respectively. During such period other changes in working capital provided cash of approximately $983,000 and $1,057,000, respectively, resulting in cash being provided by operating activities of $1,432,000 and $1,129,000, respectively.

Investing activities for 2008 and 2007 used cash of $1,700,000 and $2,443,000, respectively. The 2008 amounts consisted of additions to property and equipment in the amount of $2,061,000 offset by the proceeds from the sale of Cablecom Holding shares in the amount of $361,000. The 2007 amounts consisted solely of additions to property and equipment.

Financing activities for 2008 and 2007 provided cash of $4,232,000 and $1,351,000, respectively. For 2008, this amount consisted of proceeds from the issuance of convertible notes of $4,850,000 partially offset by $105,000 of payments related to issuance costs associated with the convertible notes and an increase in the payable to Jinan Parent in the amount of $513,000. For 2007, this amount consisted of proceeds from the private placement of $4,000,000 partially offset by $421,000 of payments related to issuance costs associated with the private placement offering and a decrease in the payable to Jinan Parent in the amount of $2,228,000.

Our WOFE, Jinan Broadband subsidiary and Shandong Media joint venture are located in China. All of their operations are conducted in the local currency of the Chinese Yuan also known as Renminbi or RMB. The effect of exchange rates on cash between the Chinese Yuan and the United States dollar, provided (used) cash of $(11,000) and $332,000 during 2008 and 2007, respectively.

Need for Additional Capital

We have raised approximately $4.8 million (net of cost of capital and expenses) in order to fund our second payment for our purchase of Jinan Broadband, which payment was due in January of 2008 and to acquire Shandong Newspaper and cover the cost of interim operations. We made the second and last payment for Jinan Broadband in March of 2008 and incurred no penalty for making this payment in March.

In 2008 we used approximately $1.4 million to fund our first payment under the Shandong Newspaper Cooperation Agreement to Shandong Media. Management will need to raise additional funds to satisfy the second payment to Shandong Media in October 2009 (see below).

Management does not believe that the Company has sufficient capital to sustain its operations without raising additional capital. Pursuant to the Settlement Agreement, we received 390,000 shares of Cablecom Holdings Shares from Mr. Ng, in April 2008of which 260,000 are subject to lock-up provisions that expire within the next 12 months. In 2008 the Company sold 71,880 of the Cablecom Holdings Shares on the open market and received gross proceeds of $361,000. In 2008 the value of the Cablecom Holding Shares decreased approximately $1.8 million resulting in a value for these shares of approximately $254,000 at December 31, 2008. The Cablecom Holding Shares may continue to fluctuate and may decline further. In January and February of 2009 an additional 81,314 shares were sold for total proceeds of $52,736.

Our first purchase of this nature was the completion of our acquisition of Shandong Newspaper in a Joint Venture. Shandong Newspaper's business includes three main magazines: Shandong Broadcast & TV Weekly (Newspaper), TV Weekly Magazine and Modern Movie Times Magazine (Bi-Weekly). We intend to invest our acquisition cost in this Joint Venture to increase sales and advertising revenues of its periodicals in order to become profitable, and to cross market with our other asset, Jinan Broadband. No assurance can be made that we will be able to raise capital if and as needed.

The amount and timing of our future capital requirements will depend upon many factors, including the number and size of opportunities available to us, the level of funding received by us, anticipated private placements of our common stock, the level of funding obtained through other financing sources, and the timing of such funding. In the event we are unable to raise additional capital we will not be able to sustain any growth or continue to operate.

Dividends

We intend to retain any future earnings to finance the expansion of our business and any necessary capital expenditures, and for general corporate purposes. Moreover, even if we are profitable as a result of our PRC based operations and subsidiaries, PRC regulations prevent the payment of dividends absent compliance with certain rules and obtaining appropriate government consents, which we believe will not happen in the near future, if ever.

Financial Commitments

The Company pays approximately $73,000 (500,000 RMB) annually for rent at its facilities in Jinan, China, renewable on an annual basis. The Company paid approximately $47,000 (RMB 325,000) for 6 months rent in 2008 for its Shandong Media facility, renewable on an annual basis at $94,000.

The company utilizes approximately 1,000 square feet of space from Maxim Financial Corporation for its corporate headquarters for a monthly rental fee of $2,000. Maxim Financial Corporation provided consulting services to the Company during the years ended December 31, 2007 and 2006 and has agreed to discharge all rental costs under the terms of its consulting agreement with the Company through December 2007. In addition, Maxim Financial Corporation has agreed to defer all monthly rental payments beginning January 2008 until the Company's next capital raise subsequent to January 2008.

Recent Developments

In April of 2009 we completed our acquisition of AdNet, an internet café content and adverting provider. Additional specific information relating to this acquisition can be found in Item 1, above.

Recent Financings

2007 Equity Financing

Simultaneously with the closing of our acquisition of China Broadband Cayman, and as a necessary condition thereto in order to fund our first payment for the acquisition of the broadband business in China, we conducted the first closing of our private offering pursuant to which we entered into subscription agreements with investors for the sale of 6,000,000 shares of common stock and 3,000,000 Redeemable Common Stock Purchase Warrants, exercisable at $2.00 per share (the "Warrants"). This offering was conducted through WestPark Capital, Inc. as placement agent, on a "best efforts, $3,000,000 minimum, $4,000,000 maximum" basis. During the six months ended June 30, 2007 we raised an additional $1,000,000 such that we sold the aggregate maximum of $4,000,000 in this offering consisting of an aggregate of 8,000,000 shares and 4,000,000 warrants to accredited investors. Placement fees and expenses paid during the year ended December 31, 2007 in connection with the offering were approximately $420,500.

We used $2,572,000 of the proceeds of this offering from the first closing (inclusive of expenses) to pay the first installment of our acquisition of a 51% interest in the China based broadband cable internet business. This business acquisition is our only operating business as of April 1, 2007. We granted the investors registration rights in connection with this offering and compensated WestPark Capital, Inc., our placement agent, with a placement agent fee consisting of $320,000 plus expenses, and issued to them 640,000 warrants to purchase common stock at $.60 per share.

Simultaneously with the closing of our acquisition of China Broadband Cayman pursuant to the Broadband Acquisition, we consummated a $4,000,000 equity financing wherein we sold an aggregate of 8,000,000 shares of common stock and 4,000,000 warrants to purchase common stock at $2.00 per share. Additional information relating to this financing is provided in Section 1 above in the subsection titled "Overview of Holding Company" at the end of the Business section above.

The material terms of the Broadband Acquisition, resulting in our becoming an operating entity in 2007, were that:

· We acquired all of the shares of China Broadband Cayman from its four shareholders (the "Broadband Shareholders") in exchange for 37,865,506 shares of our common stock, resulting in China Broadband Cayman becoming our wholly owned subsidiary and its Broadband Shareholders owning over 78% of our common stock;

· We funded, with the proceeds of our simultaneous $4,000,000 equity financing, the first of two payments of the acquisition of the 51% interest in Jinan Broadband of approximately $2,572,125 including expenses, the second payment of which was made in March 2008;

· We assumed liabilities of China Broadband Cayman under the $325,000 principal . . .