Since 1949, the PRC media industry has been largely owned and controlled by the state. In recent years, economic and legislative reforms have produced significant change across the media industry in China. The strong and sustained growth of China’s economy has led to substantial development of China’s media industry. The government has reduced subsidies for state-owned media companies, causing the industry to become more commercially oriented. At the same time, deregulation permitting private entities to participate in some sectors of the industry has attracted new investment.

In 2004, China’s media industry included 314 television stations and 282 radio stations, according to the National Bureau of Statistics, and 2,199 newspaper publications and 9,074 magazines, according to the China Print Industry Research Report (2006) by Beijing Huiren Zhongtian Economic Development Co., Ltd.

China has the largest population in the world, estimated by the Population Division of the United Nations to have reached 1.3 billion in 2005. More than 97.0% of all households owned at least one television set, according to 2005 estimates by CSM Media Research. Television signals reached approximately 95.8% of the population by the end of 2005, according to the China Radio and Television Yearbook (2006). China’s radio signals reached 93.6% of the population in 2005, according to the China Radio Rating Yearbook (2005).

The Company’s television production operations create and distribute television programs, including drama series. The Company’s production studios in Beijing and Shanghai are able to manage the entire production process. For drama series, the Company often produces a pilot episode at its own expense.

The Company develops animation concepts and produces three-dimensional animation for advertisements, education and public instructions, engage in post-production for television commercials and create special visual effects for television commercials and films.

The Company’s broadcast design services consist of providing brand management services for television channels. The Company repositions television channels, which refers to the process of developing the branding and image of the television channel. To support repositioning, the Company develops content, graphics and advertisements, including “bumpers”.

The Company provides consulting and advisory services to Shanghai Camera, including the production or sourcing of the content and sourcing of advertisements.

The Company produces or sources diversified content for Shanghai Camera that is broadcast on Inner Mongolia Satellite Television. In addition, Inner Mongolia Satellite Television broadcasts financial programming from the Company’s Fortune China production studios. Inner Mongolia Satellite Television reaches 103 cities in 29 of 31 provinces across China, including Beijing, Shanghai and Guangzhou.

The Company has a strategic partnership with China Radio International’s exclusive advertising agent, under which it has the exclusive rights to sell advertising for and the right to provide content to China Radio International’s EasyFM 91.5 of Beijing and EasyFM 87.9 of Shanghai.

The Company has the exclusive rights to sell advertising for and provide management and information consulting services, including with respect to distribution, to Money Journal.

The Company creates and places advertising for television, radio, print media and campus billboards. The Company purchases the rights to be the advertising agent for certain television shows broadcast by Beijing Television Station and other television stations, and in the Beijing, Shanghai and Tianjin real estate pages of the Economic Observer, as well as other newspapers.

Total operating expenses were $18.1 million for the year ended December 31, 2006.

Selling and distribution expenses were $5.3 million for the year ended December 31, 2006.

Net income was $3.3 million for the year ended December 31, 2006.