SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(State or other jurisdiction ofincorporation or organization)

~~(Former name, former address and former fiscal year if changed since last report)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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 “larger accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: ~~190,769,563~~660,968,748 shares as of ~~August 18, 2010.~~ May 20, 2011.

~~QUARTERLY~~QUARTERLY REPORT ON FORM 10-Q

OF ~~CHINA BROADBAND,~~YOU ON DEMAND HOLDINGS, INC.

FOR THE PERIOD ENDED ~~JUNE 30, 2010~~MARCH 31, 2011

TABLE OF CONTENTS

PART I	-	FINANCIAL INFORMATION	3

Item 1.		Financial Statements	31
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	1816
Item 3		Quantitative and Qualitative Disclosures About Market Risk	2623
Item 4.		Controls and Procedures	2623

PART II	-	OTHER INFORMATION	27

Item 1.		Legal Proceedings	27 24
Item 1A.		Risk Factors	27 24
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	27 24
Item 3.		Defaults Upon Senior Securities	27 24
Item 4.		Removed and Reserved	27 24
Item 5.		Other Information	27 24
Item 6.		Exhibits	27 24
Signatures			2825

References

Except as otherwise indicated by the context, references in this report to (i) the “Company,” “we,” “us,” and “our” are to the combined business of YOU On Demand Holdings, Inc. (formerly China Broadband, Inc.), a Nevada corporation, and its consolidated subsidiaries; (ii) “Broadband Cayman” are to our wholly-owned subsidiary China Broadband, Ltd., a Cayman Islands company; (iii) “WFOE” are to our wholly-owned subsidiary Beijing China Broadband Network Technology Co., Ltd., a PRC company; (iv) “Jinan Broadband” are to our 51% owned subsidiary Jinan Guangdian Jia He Broadband Co. Ltd, a PRC company; (v) “Shandong Media” are to our 50% joint venture Shandong Lushi Media Co., Ltd., a PRC company; (vi) “AdNet” are to our wholly-owned subsidiary Wanshi Wangjing Media Technologies (Beijing) Co., Ltd. (a/k/a AdNet Media Technologies (Beijing) Co., Ltd.), a PRC company; (vii) “Sinotop Beijing” refers to Beijing Sino Top Scope Technology Co., Ltd, a PRC company controlled by Sinotop HK through contractual arrangements; (ix) “Sinotop HK” refers to Sinotop Group Limited, a Hong Kong company wholly-owned by CB Cayman; (x) “SEC” are to the United States Securities and Exchange Commission; ~~(viii)~~(xi) “Securities Act” are to Securities Act of 1933, as amended; ~~(ix)~~(xii) “Exchange Act” are to the Securities Exchange Act of 1934, as amended; ~~(x)~~(xiii) “PRC” and “China” are to People’s Republic of China; ~~(xii)~~(xiv) “Renminbi” and “RMB” are to the legal currency of China; ~~and (xiii)~~(xv) “U.S. dollar,” “$” and “US$” are to United States ~~dollars.~~dollars; and (xvi) “VIEs” refers to our variable interest entities, including Jinan Broadband, Shandong Publishing and Sinotop Beijing.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

YOU ON DEMAND HOLDINGS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

	Page
Consolidated Balance Sheets	2
Unaudited Consolidated Statements of Operations	3
Unaudited Consolidated Statement of Changes in Stockholders’ Equity	4
Unaudited Consolidated Statements of Cash Flows	5
Notes to Unaudited Consolidated Financial Statements	6

Table of Contents

YOU On Demand Holdings, Inc. and Subsidiaries

(Formerly China Broadband, Inc. ~~and Subsidiaries~~)

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2011			2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	4,645,898		$	6,584,396
Marketable equity securities, available for sale		7,203			9,433
Accounts receivable, net		324,497			220,926
Inventory		385,321			428,280
Prepaid expenses		779,577			756,461
Loan receivable from related party		306,462			304,529
Amounts due from shareholders		396,819			184,086
Other current assets		588,961			597,362
Total current assets		7,434,738			9,085,473

Property and equipment, net		4,491,905			4,463,920
Intangible assets, net		8,091,171			8,592,244
Goodwill		6,105,478			6,105,478
Amount due from non-controlling interest		1,522,048			1,512,448
Investment in equity investment		571,315			574,486
Other assets		456,041			299,163
Total assets	$	28,672,696		$	30,633,212

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,902,477		$	1,620,481
Accrued expenses and liabilities		1,042,822			804,341
Deferred revenue		1,708,724			1,711,796
Loan payable		398,960			398,960
Payable to Jinan Parent		138,672			137,797
Other current liabilities		734,987			792,413
Total current liabilities		5,926,642			5,465,788

Contingent purchase consideration liability		3,323,496			3,362,105
Deferred tax liability and uncertain tax position liability		1,104,903			1,180,323
Total liabilities		10,355,041			10,008,216

Commitments and Contingencies

Convertible reedeemable preferred stock, $.001 par value; 50,000,000 shares authorized
Series A - 7,000,000 shares issued and outstanding, liquidation preference of $3,500,000		1,261,995			1,261,995
Series B - 10,266,800 shares issued and outstanding, liquidation preference of $5,133,400		3,950,358			3,950,358

Shareholders' equity
Common stock, $.001 par value; 1,500,000,000 shares authorized, 660,968,748 and 660,768,748 issued and outstanding		660,969			660,769
Additional paid-in capital		42,410,931			42,255,089
Accumulated deficit		(34,660,930	)		(32,434,324	)
Accumulated other comprehensive income		252,023			246,983
Total YOU On Demand shareholders' equity (deficit)		8,662,993			10,728,517
Noncontrolling interests		4,442,309			4,684,126

Total shareholders' equity		13,105,302			15,412,643

Total liabilities and shareholders' equity	$	28,672,696		$	30,633,212

See notes to consolidated financial statements.

Table of Contents

June 30, December 31,
2010 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

YOU On Demand Holdings, Inc. and Subsidiaries

(Formerly China Broadband, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	March 31,			March 31,
	2011 (unaudited)			2010 (unaudited)

Revenue	$	1,697,924		$	1,875,681
Cost of revenue		1,250,070			1,073,808
Gross profit		447,854			801,873

Selling, general and adminstrative expenses		1,812,688			723,270
Professional fees		317,680			168,765
Depreciation and amortization		1,074,327			945,444

Loss from operations		(2,756,841	)		(1,035,606	)

Interest & other income / (expense)
Interest income		2,938			3,109
Interest expense		(555	)		(91,235	)
Change in fair value of warrant liabilities		-			41,814
Change in fair value of contingent consideration		38,609			-
Loss on equity investment		(6,798	)		-
Other		(4	)		26

Net loss before income taxes and noncontrolling interest		(2,722,651	)		(1,081,892	)

Income tax benefit		75,420			13,728

Net loss, net of tax		(2,647,231	)		(1,068,164	)

Plus: Net loss attributable to noncontrolling interests		420,625			263,655

Net loss attributable to YOU On Demand shareholders	$	(2,226,606	)	$	(804,509	)


Net loss per share
Basic	$	-		$	(0.01	)
Diluted	$	-		$	(0.01	)

Weighted average shares outstanding
Basic		660,813,189			64,765,004
Diluted		660,813,189			64,765,004

See notes to consolidated financial statements.

Table of Contents

~~China Broadband, Inc. and Subsidiaries~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited)~~

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 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.~~

~~China Broadband,~~YOU On Demand Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSS

~~for~~For the Periods Ended ~~June 30, 2010~~March 31, 2011 (Unaudited) and December 31, ~~2009~~2010

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

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		-		-		503,372			-			-			503,372			-			503,372

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

Common shares issued for services		5,100,000		5,100		249,900			-			-			255,000			-			255,000

Other adjustment		-		-		22,126			-			-			22,126			-			22,126


Common shares issued for cash		62,500,000		62,500		1,997,164			-			-			2,059,664			-			2,059,664

Beneficial conversion feature of Series A and Series B preferred stock issued		-		-		2,315,309			-			-			2,315,309			-			2,315,309

Warrants issued with common stock, Series A and Series B preferred stock		-		-		4,486,383			-			-			4,486,383			-			4,486,383

Common shares and warrants issued and costs related to the conversion of convertible notes		62,855,048		62,855		9,786,038			-			-			9,848,893			-			9,848,893

Warrants issued to placement agent		-		-		135,774			-			-			135,774			-			135,774

Issuance costs related to the issuance of shares and warrants		-		-		(632,503	)		-			-			(632,503	)		-			(632,503	)

Warrant liability reclassified to equity		-		-		150,017			-			-			150,017			-			150,017

Shares issued for Sinotop Group Ltd acquisition		90,859,389		90,859		4,452,110			-			-			4,542,969			-			4,542,969

Warrants and options issued for Sinotop Group Ltd acquisition		-		-		4,039,964			-			-			4,039,964			-			4,039,964

Sinotop Beijing joint venture		-		-		-			-			-			-			1,492,961			1,492,961

Shares issued in warrant exchange		374,039,793		374,040		(374,040	)		-			-			-			-			-

Comprehensive loss:
Net loss		-		-		-			(15,219,283	)		-			(15,219,283	)		(2,616,032	)		(17,835,315	)		(15,219,283	)
Foreign currency translation adjustments		-		-		-			-			(70,489	)		(70,489	)		547,770			477,281			477,281

Unrealized gain on marketable equity securities		-		-		-			-			(13,811	)		(13,811	)		-			(13,811	)		(13,811	)
Balance December 31, 2010		660,768,745	$	660,769	$	42,255,089		$	(32,434,324	)	$	246,983		$	10,728,517		$	4,684,126		$	15,412,643		$	(14,755,813	)


Common shares issued for services		200,000		200		9,800			-			-			10,000			-			10,000

Stock option compensation expense		-		-		146,042			-			-			146,042			-			146,042

Contribution from noncontrolling interest		-		-		-			-			-			-			151,759			151,759

Comprehensive loss:
Net loss		-		-		-			(2,226,606	)		-			(2,226,606	)		(420,625	)		(2,647,231	)		(2,226,606	)
Foreign currency translation adjustments		-		-		-			-			7,270			7,270			27,049			34,319			34,319

Unrealized loss on marketable equity securities		-		-		-			-			(2,230	)		(2,230	)		-			(2,230	)		(2,230	)


Balance March 31, 2011		660,968,745	$	660,969	$	42,410,931		$	(34,660,930	)	$	252,023		$	8,662,993		$	4,442,309		$	13,105,302		$	(2,194,517	)

Accumulated China
Additional Other Broadband
Common Par Paid-in Accumulated Comprehensive Shareholders' Noncontrolling Total Comprehensive

Shares

Value

Capital

Deficit

Income(loss)

(Deficit)/Equity

Interest

Equity

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.

Table of Contents

~~China Broadband,~~YOU On Demand Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(Unaudited)~~

	Three Months Ended
	March 31,			March 31,
	2011 (unaudited)			2010 (unaudited)
Cash flows from operating
Net loss	$	(2,647,231	)	$	(1,068,164	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Stock compensation expense		156,042			74,167
Depreciation and amortization		1,074,327			945,444
Noncash interest expense - original issue discount		-			24,875
Deferred income tax		(75,420	)		(13,728	)
Change in fair value of warrant liabilities		-			(41,814	)
Change in fair value of contingent consideration liability		(38,609	)		-
Change in assets and liabilities,
Accounts receivable		(101,524	)		(18,913	)
Inventory		45,949			(37,963	)
Prepaid expenses and other assets		(6,613	)		(3,582	)
Accounts payable and accrued expenses		478,857			342,005
Deferred revenue		6,736			(113,841	)
Other		(337	)		-
Net cash (used in) provided by operating activities		(1,107,823	)		88,486

Cash flows from investing activities:
Acquisition of property and equipment		(553,535	)		(224,334	)
Loan to Sinotop Group Ltd		-			(580,000	)
Loan advances to Shandong Media shareholders		(210,230	)		(585,111	)
Loan repayments to from Shandong Media shareholders		-			17,203
Other		(156,464	)		-
Net cash used in investing activities		(920,229	)		(1,372,242	)

Cash flows from financing activities
Proceeds from issuance of convertible notes payable		-			600,000
Proceeds from Jinan Parent		151,759			-
Payments to Jinan Parent		-			(18,992	)
Net cash provided by financing activities		151,759			581,008

Effect of exchange rate changes on cash		(62,205	)		26,181

Net decrease in cash and cash equivalents		(1,938,498	)		(676,567	)
Cash and cash equivalents at beginning of period		6,584,396			2,190,494

Cash and cash equivalents at end of period	$	4,645,898		$	1,513,927


Supplemental Cash Flow Information:

Cash paid for taxes	$	-		$	-
Cash paid for interest	$	555		$	413
Value assigned to shares as payment for interest expense	$	-		$	65,951

Six Months Ended
June 30, June 30,
2010 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

~~China Broadband, Inc. and Subsidiaries~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

Six Months Ended
June 30, June 30,
2010 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,~~YOU ON DEMAND HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	Basis of Presentation

~~China Broadband,~~YOU On Demand Holdings, Inc., a Nevada corporation (“~~China Broadband”~~YOU On Demand”, “we”, “us”, or “the Company” formerly China Broadband, Inc.) owns and operates in the media segment through ~~its~~our Chinese subsidiaries ~~in the People’s Republic of China~~and variable interest entities (“~~PRC” or “China”~~VIEs”), (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”). and (3) an integrated value-added service solutions business for the delivery of pay-per-view (“PPV”), video-on-demand (“VOD”), and enhanced premium content for cable providers, Sino Top Scope Technology Co., Ltd. (“Sinotop”),

(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”),~~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.

(3) We provide integrated value-added service solutions for the delivery of PPV, VOD, and enhanced premium content for cable providers.

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”)~~PPV and ~~video-on-demand (“VOD”)~~ VOD business, as of December 31, 2009 we permanently suspended ~~day to day~~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,~~subsidiary. China Broadband Cayman, ("CB Cayman"), (b) two wholly-owned subsidiaries of CB Cayman: Beijing China Broadband Network Technology Co, Ltd. ~~(WFOE), a wholly-owned subsidiary of China Broadband Cayman,~~(“WFOE”) and Sinotop Group Limited (“Sinotop Hong Kong”) and (c) ~~four~~six entities located in the PRC: Jinan Zhong Kuan, Jinan Broadband, Shandong Media, AdNet, Sinotop Scope Technology Co., Ltd (“Sinotop Beijing”). and ~~AdNet,~~Zhong Hai Video Information Technology Co., Ltd (“Zhong Hai Video”) 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)~~(“U.S. 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”)~~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.~~2010.

The information presented in the accompanying ~~condensed~~ consolidated balance sheet as of December 31, ~~2009~~2010 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.March 31, 2011.

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 Accumulated Warrant
Paid-in Capital Deficit 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~~

~~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.

4.2.	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~~the quarter ended March 31, 2011 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 Company believes that the acquisition of Sinotop in 2010 and the expected 2011 launch of its PPV and VOD business will generate positive cash flows for the business.

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.

~~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.~~

5.3.	Sinotop Contingent Consideration

In connection with the acquisition of Sinotop on July 30, 2010, if specified performance milestones are achieved, Weicheng Liu (“Mr. Liu” or “the Seller”) will be entitled to earn up to (i) an additional 30,286,464 shares of common stock of the Company, (ii) three-year warrants to purchase 42,845,654 shares of the Company’s common stock, equivalent to 5.0% of the total number of shares of the Company’s common stock underlying all outstanding warrants as of immediately following the closing of the financing and (iii) a four-year option to purchase a number of shares of the Company’s common stock that is equal to 5% of the total number of shares of the Company’s common stock underlying all outstanding options of the Company granted to individuals employed by the Company as of September 1, 2010 (collectively, the securities referred to in clauses (i), (ii) and (iii) are referred to herein as the “Earn-Out Securities”). The milestones are as follows: Sinotop will ensure that (i) at the end of the first earn-out year (July 1, 2012), at least 3 million homes will have access to the Company’s PPV services, (ii) at the end of the second earn-out year (July 1, 2013), at least 11 million homes will have access to the Company’s PPV services, and (iii) at the end of the third earnout year (July 1, 2014), at least 30 million homes will have access to the Company’s PPV services. Although not yet formalized by the Board of the Directors, the intent is for the Seller to receive one-third of the total earn-out each year if the annual performances are achieved.

The amount of contingent consideration recognized as of December 31, 2010 totaled $2,860,978, representing the fair value of the estimated payment of the full earn-out. The contingent consideration is classified as a liability because the earn-out securities do not meet the fixed-for-fixed criteria under ASC 815-40-15 for equity classification. Further ASC 815-40-15 requires us to re-measure the contingent consideration obligation at the end of every reporting period with the change in value reported in the consolidated statements of operations and, accordingly, we reported a gain of $38,609 for the three months ended March 31, 2011.

The following is a summary of the estimated fair value of contingent consideration for the acquisition of Sinotop at December 31, 2010 and March 31, 2011.

	Number of		December 31, 2010		Change in			March 31, 2011
Class of consideration	Instruments		Fair Value		Fair Value			Fair Value
Common stock of the Company		30,286,464	$	1,817,187	$	-		$	1,817,187
Warrants		42,845,654		1,358,715		(34,252	)	$	1,324,463
Stock options		6,000,000		186,203		(4,357	)	$	181,846
Total contingent consideration			$	3,362,105	$	(38,609	)	$	3,323,496

4.	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~~non-controlling interest account. We are currently in discussions with Shandong Broadcast & TV Weekly Press and Modern Movie & TV Biweekly Press with regards to this payment.

6.5.	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.

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Our consolidated VIEs were recorded at fair value on the date we became the primary beneficiary. Our VIEs ~~are~~include Sinotop Beijing, Zhong Hai Video, Jinan Broadband and Shandong Media.

7.6.	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.

Common stocks are valued at closing price reported on the active market on which the individual securities are traded.

The fair value of the liabilities at March 31, 2011 was determined using the Black-Scholes Merton model which incorporates the following assumptions: risk-free interest rate of 0.6% to 1.5%, expected volatility of 60% based on the (High – Low) / (High + Low) method, expected life of 1.75 to 4.25 years and expected dividend yield of 0%.

The fair value of the liabilities at December, 31 2010 was determined using the Black-Scholes Merton model which incorporates the following assumptions: risk-free interest rate of 0.6% to 1.7%, expected volatility of 60% based on the (High – Low) / (High + Low) method, expected life of 2.0 to 4.5 years and expected dividend yield of 0%.

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~~March 31, 2011 and December 31, ~~2009:~~2010 :

	March 31, 2011
	Fair Value Measurements (Unaudited)
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Available-for-sale securities	$	7,203	$	-	$	-	$	7,203
Liabilities
Contingent purchase consideration	$	-	$	-	$	3,323,496	$	3,323,496

	June 30, 2010								December 31, 2010
	Fair Value Measurements								Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Assets
Available-for-sale securities	$	47,875	$	-	$	-	$	47,875	$	9,433	$	-	$	-	$	9,433
Liabilities
Fair value of warrants	$	-	$	-	$	755,404	$	755,404	$	-	$	-	$	3,362,105	$	3,362,105

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

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	March 31, 2011		December 31, 2010
	Contingent Purchase		Contingent Purchase
	Consideration		Consideration		Warrants
	(Unaudited)
Fair value at January 1,	$	3,362,105	$	-	$	819,150
Purchases, Sales and Issuances and Settlements		-		2,860,978		-
Realized Losses		-		-		(669,133)
Unrealized (gains) losses		(38,609)		501,127		-
Transfer to equity		-		-		(150,017)
	$	3,323,496	$	3,362,105	$	-

8.7.	Related Party Transactions

As of ~~June 30,~~March 31, 2011 and December 31, 2010, the Company advanced an aggregate of approximately ~~$291,000~~$305,000 and $305,000, respectively, 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.~~2011. 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,~~March 31, 2011and December 31, 2010, amounts due from shareholders include approximately ~~$92,000~~$95,000 and $301,000 advanced to Shandong Broadcast & TV Weekly Press and ~~approximately $604,000 advanced~~ to Modern Movie & TV Biweekly ~~Press. Both companies~~Press, respectively. All of the parties 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.2011.

Payable to Jinan Parent

During the ~~six~~three months ended ~~June 30, 2010,~~March 31, 2011, our payable to Jinan Parent ~~decreased~~increased approximately ~~$18,000.~~$1,000, due to currency fluctuations. At ~~June 30,~~March 31, 2011 and December 31, 2010, approximately ~~$134,000 remains~~$139,000 and $138,000, respectively, remained due to Jinan Parent. ~~The advance~~This amount represents the remaining balance due from the initial acquisition which is unsecured, interest free and has no fixed repayment terms.

Loan Payable to Beneficial Owner

On March 9, 2010, ~~China Broadband~~CB Cayman entered into a Note Purchase Agreement and a non-binding Letter of Intent or (“the ~~LOI~~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~~CB Cayman acquired a Convertible Promissory Note, or Note from Sinotop Hong Kong in consideration of ~~China Broadband~~CB Cayman’s ~~US$580,000~~US580,000 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~~CB 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 orof $580,000 to Oliveira Capital. ~~As of June 30, 2010, $20,000 remains payable to Oliveira Capital.~~

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.~~

Receivable from Trustee

At the time we acquired Sinotop Hong Kong, one of the bank accounts acquired was in Zhang Yan’s name, our PRC trustee in the VIE agreements. At December 31, 2010 this account remained open with a $172,000 balance and the amount was reported in other current assets in the consolidated balance sheet at December 31, 2010. During the first quarter of 2011, the account was settled in full.

9.8.	Property and Equipment

During ~~the second quarter of~~ 2010, ~~based on our best estimate,~~ the Company ~~recorded an~~analyzed for impairment ~~reserve of $750,000 related to~~ the equipment at ~~our~~its Jinan Broadband ~~subsidiary. In July 2010,~~subsidiary, as the equipment was taken out of service in July 2010 due to changes in customer needs. ~~The net book value~~As of ~~the equipment is $1,483,000. During the next quarter,~~December 31, 2010, the Company ~~will evaluate whether~~determined there ~~are~~were no other uses for the equipment ~~or whether~~and the equipment ~~can~~cannot be sold. ~~Further, we will be able~~As such, the Company recorded a total equipment impairment charge of $1,505,008 in 2010. For 2011, the impairment from 2010 was allocated to ~~better determine the net realizable value of the equipment.~~ headend facilities and machinery.

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

	March 31,			December 31,
	2011			2010
	(Unaudited)
Furniture and office equipment	$	1,630,000		$	1,241,000
Headend facilities and machinery		14,531,000			15,762,000
Vehicles		30,000			30,000
Total property and equipment		16,191,000			17,033,000
Less: accumulated depreciation		(11,700,000	)		(11,064,000	)
Less: impairment charge		-			(1,505,000)
Net carrying value	$	4,491,000		$	4,464,000

Depreciation expense	$	564,000		$	804,000

~~10.~~9.

Goodwill and Intangible Assets

~~In the first quarter of 2009 the~~

The Company ~~decreased the value of our~~has intangible assets ~~by reclassifying approximately $279,000 from noncontrolling interest. The reclassification was made to correct an error related~~relating to the ~~valuation~~acquisitions 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. Ourits Jinan Broadband subsidiary, Shandong Media joint venture, ~~has sustained consistent losses. In accordance with SFAS 144 we prepared an analysis~~AdNet Media 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.

Sinotop. The Company amortizes its intangible assets that have finite lives. The service agreement, publication rights, operating permits ~~customer relationships~~ and ~~software technology that have finite lives. Our service agreement, publication rights and operating permits~~charter/cooperation agreements are amortized over 20 years. Customer relationships, non-compete agreement and software technology are amortized over 10 years, 2.5 years and ~~our software technology is amortized over~~ 3 ~~years.~~years, respectively.

~~We have~~A roll forward of our intangible assets ~~relating~~activity from December 31, 2010 to ~~the acquisition of our Jinan Broadband subsidiary, Shandong Media joint venture and AdNet Media acquisition.~~March 31, 2011 follows:

Balance at

March 31,

In accordance with ASC 250, we recorded amortization expense related to our intangible assets of ~~$235,990~~$501,073 and ~~$180,525~~$117,995 for the ~~six~~three months ended ~~June 30,~~March 31, 2011 and 2010, ~~and 2009,~~ respectively.

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

	Jinan		Shandong		AdNet
Years ending December 31,	Broadband		Media		Media		Sinotop		Total
2011 (nine months)	$	65,040	$	54,340	$	189,242	$	1,194,597	$	1,503,219
2012		86,720		72,454		63,080		1,592,796		1,815,050
2013		86,720		72,454		-		259,041		418,215
2014		86,720		72,454		-		137,791		296,965
2015		86,720		72,454		-		137,791		296,965
Thereafter		963,442		787,862		-		2,009,453		3,760,757
Total amortization to be recognized	$	1,375,362	$	1,132,018	$	252,322	$	5,331,469	$	8,091,171

Jinan Shandong AdNet
Years ending December 31, Broadband Media 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.~~10.

Accrued Expenses and Liabilities

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

	March 31, 2011		December 31,
	(Unaudited)		2010

Accrued expenses	$	774,000	$	720,000
Accrued payroll		269,000		84,000
	$	1,043,000	$	804,000

~~12.~~11.

~~Convertible Notes~~Private Financings, July 2010

~~On April 14,~~In connection with our July 2010, Private Financing, 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 connectionRegistration Rights Agreement 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~~investors under which we agreed to use commercially reasonable efforts to file 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.

Series B Preferred Stock and the Warrants. The Agreement required us to file the registration statement within 45 days of the closing (by September 13,

~~The convertible notes due are as follows:~~

~~13.~~

~~Warrant Liabilities~~

~~14.~~12.

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, warrants and ~~warrants.~~series preferred stocks.

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

	March 31,		March 31,
	2011		2010
	(Unaudited)		(Unaudited)
Warrants		11,393,500		16,874,800
Options		96,017,500		317,500
Series A Preferred Stock		70,000,000		-
Series B Preferred Stock		102,668,000		-
Total		280,079,000		17,192,300

For ~~each of~~ the three ~~month~~months ended March 31, 2011 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~~280,079,000 and 17,192,300, respectively.

~~15.~~13.

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.

~~16.~~14.

Interest Expense and Share Issuance

In connection with the Convertible Notes issued in ~~January~~ 2008 and ~~June~~ 2009, ~~during~~there was no interest expense incurred for the ~~six~~three months ended ~~June~~March 31, 2011 because the note holders converted 100% of the outstanding principal and interest owing on such notes into shares of common stock and warrants in connection with the closing of the financings on July 30, 2010 and ~~2009 the~~pursuant to a Waiver and Agreement to Convert, dated May 20, 2010. The Company incurred ~~$183,000 and $176,000, respectively, for~~$91,000 of interest expense related to ~~these Notes.~~

~~17.~~15.

~~Stock~~Share Based ~~Compensation~~Payments

Through ~~June 30, 2010,~~March 31, 2011, we have ~~issued 317,500~~96,017,500 options outstanding to purchase shares of our common stock.

Effective as of December 3, 2010, our board of directors of the company amended our 2008 Stock Incentive Plan and approved the YOU On Demand Holdings, Inc. 2010 Stock Incentive Plan, or the Plan, pursuant to which options or other similar securities may be granted. The maximum aggregate number of shares of our common stock that may be issued under the Plan is 300,000,000 shares.

The following table provides the details of the approximate total ~~stock~~share based ~~compensation~~payments during the three months ended March 31, 2011 and ~~six month periods ended June 30, 2010 and 2009:~~2010:

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 mode. 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 incorporated the following assumptions for the options issued in 2011 and 2010: risk-free interest rate of 3.29% to 3.49%, expected volatility of 60.0%, expected life of 10.0 years and expected dividend yield of 0%.

The Company recorded a charge of ~~$27,000~~approximately $146,000 and $8,000 during ~~both six month periods~~the three months ended ~~June 30,~~March 31, 2011 and 2010, ~~and 2009~~respectively, in connection with stock option compensation. Common shares were also issued to pay for consulting services and were recorded at the closing price of $.05 per share on the issue date and expensed in an amount of $10,000 for the three months ended March 31, 2011.

~~There were no stock options issued during the six month periods ended June 30,~~Stock option activity at March 31, 2011 and 2010 ~~and 2009.~~ is summarized as follows:

	March 31,					March 31,
	2011					2010
	(Unaudited)					(Unaudited)
	Shares			Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding at beginning of year		96,417,500		$	0.04		317,500	$	0.66
Granted		600,000			0.05		-		-
Exercised		-			-		-		-
Cancelled/expired		(1,000,000	)		-		-		-
Options outstanding at end of period		96,017,500		$	0.04		317,500	$	0.66

Options exercisable at end of period		39,738,625		$	0.05		255,000	$	0.65

Options available for issuance		203,582,500					2,182,500

As of ~~June 30, 2010,~~March 31, 2011, there were ~~317,500~~96,017,500 options outstanding with ~~292,500~~39,738,625 options exercisable at a weighted average exercise price of ~~$0.63~~$0.05 with a weighted average remaining life of ~~4.5~~9.5 years.

As of ~~June 30, 2010~~March 31, 2011 the Company had total unrecognized compensation expense related to options granted of ~~$8,000~~approximately $1,595,000 which will be recognized over a remaining service period of ~~.75~~4 years.

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 and the July 2010 financings, the Company issued warrants to investors and service providers to purchase common stock of the Company. As of ~~June 30, 2010,~~March 31, 2011, the weighted average exercise price was ~~$.88~~$1.21 and the weighted average remaining life was ~~3.0~~1.75 years. The following table outlines the warrants outstanding as of ~~June 30,~~March 31, 2011 and December 31, 2010:

	March 31,		December 31,
	2011		2010
Warants Outstanding	Number of Warrants Issued		Number of Warrants Issued		Exercise Price		Expiration Date
Share Exchange Consulting Warrants		4,474,800		4,474,800	$	0.60	1/11/2013
2007 Private Placement Broker Warrants		640,000		640,000	$	0.60	1/11/2013
2007 Private Placement Investor Warrants		4,000,000		4,000,000	$	2.00	1/11/2013
July 2010 Sinotop Acquisition Warrants		1,278,700		1,278,700	$	0.60	1/11/2013
July 2010 Sinotop Acquisition Warrants		1,000,000		1,000,000	$	2.00	1/11/2013

		11,393,500		11,393,500

~~19.~~17.

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~~three month periods ended ~~June 30,~~March 31, 2011 and 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.~~them except in those instances in which they can offset deferred tax liabilities. The income tax benefit for the three months ended March 31, 2011 is net of a $456 expense for estimated penalties and interest that would be due on unrecognized tax positions.

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~~its Chinese and ~~AdNet~~Hong Kong subsidiaries 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’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 years from 2007 ~~2008 and 2009~~to 2010 as applicable.

China passed a new Enterprise Income Tax Law (“EIT Law”) and implementing rules, both of which became effective 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.

If the EIT Law were to be applied to You On Demand Holdings, Inc., (the Nevada Corporation itself) and/or to CB Cayman those entities would be subject to Chinese corporate income tax, currently at a rate of 25%. To date, these two entities have generated no net income so there would be no Chinese tax liability even if the EIT Law were to apply to them.

Furthermore, we believe that the law does not apply to our non-Chinese entities and have substantial defenses, that we believe would prevail, if the Chinese tax authorities were to try to apply the EIT Law to us. It is, of course reasonably possible that the Chinese tax authorities would successfully make that claim.

~~20.~~18.

~~Non-Controlling Interests~~Commitments and Contingencies

~~In December 2007, the FASB issued authoritative guidance which establishes reporting standards~~The Company has employment agreements with certain employees that ~~require companies to more clearly identify~~provide severance payments upon termination of employment under certain circumstances, as defined in the ~~financial statements~~applicable agreements. As of March 31, 2011, the Company's potential minimum cash obligation to these employees was approximately $717,250.

The Company is committed to paying leased property costs related to our Sinotop office during the rest of 2011, 2012 and ~~disclose the impact of noncontrolling interests in a consolidated subsidiary on the consolidated financial statements. Noncontrolling interests are now classified as equity~~2013 in the ~~financial statements. The consolidated income statement is presented by requiring net income~~amounts of RMB 1,423,969 (USD 217,599) , RMB 1,949,391 (USD 297,890), and RMB 1,774,251 (USD 271,126), respectively.

From time to ~~include net income for both the parent~~time, we may become involved in various lawsuits 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.

~~21.~~

~~Subsequent Events~~

Cautionary Note Regarding Forward Looking Statements

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

Principal Factors Affecting Our Financial Performance

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. We could potentially benefit if the stimulus plan injects funds into cable infrastructure allowing access to our PPV network.

~~Recent Developments~~

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.

Cayman ~~Sinotop Group Limited, a~~ Islands

Hong Kong ~~corporation, or Sinotop Hong Kong. Through a series of contractual arrangements referred to herein as “VIE Contracts”,~~

The People’s Republic of China

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.

Consolidated Results of Operations

Comparison of Three Months Ended ~~June 30,~~March 31, 2011 and 2010 ~~and 2009~~

The following table breaks down the results of operations for the three months ended March 31, 2011 and 2010 between our VIE operating companies and our non-operating companies. Our VIE operating companies include Jinan Broadband, Shandong Media and Sinotop.

3 Months Ended Amount %
June 30, June 30, Increase / Increase /
2010 2009 (Decrease) (Decrease)

Revenue $ 1,817,000 $ 1,989,000 $ (172,000 ) -9 %
Cost of revenue 1,035,000 1,103,000 (68,000 ) -6 %
Gross profit 782,000 886,000 (104,000 ) -12 %

Selling, general and adminstrative expenses 616,000 741,000 (125,000 ) -17 %
Professional fees 381,000 182,000 199,000 109 %
Depreciation and amortization 957,000 905,000 52,000 6 %

Loss from operations (1,172,000 ) (942,000 ) (230,000 ) 24 %

Interest & other income / (expense)
Interest income 1,000 2,000 (1,000 ) -50 %
Interest expense (182,000 ) (90,000 ) (92,000 ) 102 %
Change in fair value of warrant liabilities 22,000 (627,000 ) 649,000 -
Gain (loss) on sale of securities 1,000 (10,000 ) 11,000 -110 %
Impairment of intangibles (900,000 ) - (900,000 ) -
Impairment of equipment (750,000 ) - (750,000 ) -
Other (2,000 ) - (2,000 ) -

Loss before income taxes and noncontrolling interests (2,982,000 ) (1,667,000 ) (1,315,000 ) 79 %

Income tax benefit 246,000 15,000 231,000 1540 %

Net loss, net of tax (2,736,000 ) (1,652,000 ) (1,084,000 ) 66 %

Net loss attributable to noncontrolling interests 1,317,000 139,000 1,178,000 847 %

Net loss attributable to China Broadband shareholders $ (1,419,000 ) $ (1,513,000 ) $ 94,000 -6 %

Depreciation and Amortization

Interest and Other Income (Expense), net

Change in fair value of warrant liabilities

~~Loss on sale~~Change in fair value of ~~marketable equity~~contingent consideration

Loss on equity investment

Net ~~Income/~~Loss Attributable to ~~Noncontrolling~~Non-controlling Interest

20% of the operating loss of our Zhong Hai Video joint venture is allocated to Huacheng Interactive (Beijing) TV, our 20% joint venture partner. During the three months ended March 31, 2011, $83,000 of our operating loss from Zhong Hai Video was allocated to Huacheng Interactive (Beijing) TV (none in 2010).

Net Loss Attributable to Common Shareholders

The following table breaks down the results of operations for the three 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 Media.

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

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

~~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.

~~Professional Fees~~

~~Depreciation and Amortization~~

~~Interest and Other Income (Expense), net~~

~~Interest expense~~

~~Change in fair value of warrant liabilities~~

~~Loss on sale of marketable equity securities~~

~~Impairment of intangibles~~

~~Impairment of 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~~decreased gross profit 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.

~~Net Loss Attributable to Noncontrolling Interest~~

~~Net Loss Attributable to Shareholders~~

Net loss attributable to shareholders for the six months ended June 30, 2010 was $2,468,000, an increase of $387,000, or 14%, 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 Media 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.

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 includeboth Jinan Broadband and Shandong Media.

Liquidity and Capital Resources

Operating Activities

Investing ~~activities~~Activities

Financing activities

Obligations Under Material Contracts

~~On June 30, 2009,~~Effects of Inflation

Off Balance Sheet Arrangements

Critical Accounting Policies and Significant Judgments and Estimates

Recent Accounting Pronouncements

~~We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results~~

Table of ~~operations, liquidity or capital expenditures.~~Contents

a. Evaluation of Disclosure Controls and Procedures

b. Changes in Internal Control over Financial Reporting

~~There have been no changes~~

The Company is in ~~our~~the process of improving its internal ~~control~~controls over financial reporting ~~during~~as demonstrated by the addition of U.S. GAAP-experienced professionals to its financial reporting operations. During the period covered by this report, ~~that have materially affected, or are reasonably likely to~~these changes did not materially affect our internal control over financial reporting.

~~Title: President (Principal Executive Officer, Principal Accounting Officer and Principal~~ ~~Financial Officer)~~

Nevada		20-1778374
(State or other jurisdiction ofincorporation or organization)		(I.R.S. Employer Identification No.)
~~incorporation or organization)~~

	Balance at				Amortization/					Balance at
	December 31,				Impairment			Other		June 30,
	2009		Additions		Charge			Changes		2010		Balance at December 31, 2010		Additions			Amortization Expense		Impairment Charge		Other Changes		Balance at March 31, 2011 (Unaudited)
Amortized intangible assets:
Service agreement	$	1,483,762	$	-	$	(43,360	)	$	-	$	1,440,402	$	1,397,042	$	-		$	(21,680)	$	-	$	-	$	1,375,362
Publication rights		824,812		-		(354,116	)		-		470,696		425,253		-			(6,075)		-		-		419,178
Customer relationships		183,730		-		(82,307	)		-		101,423		88,359		-			(2,945)		-		-		85,414
Operating permits		1,234,583		-		(530,045	)		-		704,538		636,519		-			(9,093)		-		-		627,426
Software technology		567,727		-		(126,162	)		-		441,565		315,403		-			(63,081)		-		-		252,322
Charter / Cooperation agreements													2,698,408		-			(34,448)		-		-		2,663,960
Non-compete agreement													3,031,260		-	-		(363,751)		-		-		2,667,509
Total amortized intangible assets	$	4,294,614	$	-	$	(1,135,990	)	$	-	$	3,158,624	$	8,592,244	$	-		$	(501,073)	$	-	$	-	$	8,091,171

Unamortized intangible assets:
Goodwill												$	6,105,478	$	-		$	-	$	-	$	-	$	6,105,478

	Balance at				Amortization/						Balance at
	December 31,				Impairment			Other			December 31,
	2008		Additions		Charge			Changes			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	)	$	-		$	-

	June 30,	December 31,
	2010	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

	Three Months Ended				Amount		%
	March 31,		March 31,		Increase /		Increase /
	2011		2010		(Decrease)		(Decrease)

Revenue	$	1,698,000	$	1,876,000	$	(178,000)		-9	%
Cost of revenue		1,250,000		1,074,000		176,000		16	%
Gross profit		448,000		802,000		(354,000)		-44	%

Selling, general and administrative expenses		1,813,000		723,000		1,090,000		151	%
Professional fees		318,000		169,000		149,000		88	%
Depreciation and amortization		1,074,000		946,000		128,000		14	%

Loss from operations		(2,757,000)		(1,036,000)		(1,721,000)		166	%

Interest & other income / (expense)
Interest income		3,000		3,000		-		0	%
Interest expense		(1,000)		(91,000)		90,000		-99	%
Change in fair value of warrant liabilities		-		42,000		(42,000)		-
Change in fair value of contingent consideration		39,000		-		39,000		-
Loss on equity investment		(7,000)		-		(7,000)		-

Loss before income taxes and non-controlling interests		(2,723,000)		(1,082,000)		(1,641,000)		152	%

Income tax benefit		75,000		14,000		61,000		436	%

Net loss, net of tax		(2,648,000)		(1,068,000)		(1,580,000)		148	%

Net loss attributable to non-controlling interests		421,000		263,000		158,000		60	%

Net loss attributable to YOU On Demand shareholders	$	(2,227,000)	$	(805,000)	$	1,422,000		177	%

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2010			2009			2010			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

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

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

	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

	Number of
	Warrants		Exercise		Expiration
Name	Issued		Price		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

	3 Months Ended						Amount			%
	June 30,			June 30,			Increase /			Increase /
	2010			2009			(Decrease)			(Decrease)

Revenue	$	1,817,000		$	1,989,000		$	(172,000	)		-9	%
Cost of revenue		1,035,000			1,103,000			(68,000	)		-6	%
Gross profit		782,000			886,000			(104,000	)		-12	%

Selling, general and adminstrative expenses		616,000			741,000			(125,000	)		-17	%
Professional fees		381,000			182,000			199,000			109	%
Depreciation and amortization		957,000			905,000			52,000			6	%

Loss from operations		(1,172,000	)		(942,000	)		(230,000	)		24	%

Interest & other income / (expense)
Interest income		1,000			2,000			(1,000	)		-50	%
Interest expense		(182,000	)		(90,000	)		(92,000	)		102	%
Change in fair value of warrant liabilities		22,000			(627,000	)		649,000			-
Gain (loss) on sale of securities		1,000			(10,000	)		11,000			-110	%
Impairment of intangibles		(900,000	)		-			(900,000	)		-
Impairment of equipment		(750,000	)		-			(750,000	)		-
Other		(2,000	)		-			(2,000	)		-

Loss before income taxes and noncontrolling interests		(2,982,000	)		(1,667,000	)		(1,315,000	)		79	%

Income tax benefit		246,000			15,000			231,000			1540	%

Net loss, net of tax		(2,736,000	)		(1,652,000	)		(1,084,000	)		66	%

Net loss attributable to noncontrolling interests		1,317,000			139,000			1,178,000			847	%

Net loss attributable to China Broadband shareholders	$	(1,419,000	)	$	(1,513,000	)	$	94,000			-6	%

	6 Months Ended						Amount			%
	June 30,			June 30,			Increase /			Increase /
	2010			2009			(Decrease)			(Decrease)

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 adminstrative 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	%

Plus: Net loss attributable to noncontrolling interests		1,580,000			384,000			1,196,000			311	%

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

Exhibit No.		Description
~~3.1~~		~~Amended and Restated Bylaws of the Company~~
~~3.2~~		~~Certificate of Designations of Preferences, Rights and Limitations of Series A Preferred Stock~~
~~3.3~~		~~Certificate of Designations of Preferences, Rights and Limitations of Series B Preferred Stock~~
~~4.1~~		~~Form of Warrant issued pursuant to the Securities Purchase Agreement dated May 20, 2010~~
~~4.2~~		~~Form of Warrant issued pursuant to the Series A Securities Purchase Agreement dated May 20, 2010, as amended on July 30, 2010.~~
~~4.3~~		~~Form of Warrant issued pursuant to the Series B Securities Purchase Agreement dated May 20, 2010.~~
~~4.4~~		~~Form of Registration Rights Agreement dated July 30, 2010 pursuant to the Securities Purchase Agreement dated May 20, 2010.~~
~~4.5~~		~~Registration Rights Agreement dated July 30, 2010 between the Company and Shane McMahon.~~
~~4.6~~		~~Registration Rights Agreement dated July 30, 2010 pursuant to the Series B Securities Purchase Agreement dated May 20, 2010.~~
~~10.1~~		~~Form of Securities Purchase Agreement dated May 20, 2010~~
~~10.2~~		~~Form of Series A Securities Purchase Agreement, dated May 20, 2010~~
~~10.3.~~		~~Form of Series B Securities Purchase Agreement dated May 20, 2010.~~
~~10.4~~		~~Form of Waiver and Agreement to Convert, dated May 20, 2010~~
~~10.5~~		~~Form of Waiver and Agreement to Convert, dated May 20, 2010~~
~~10.6~~		~~Loan Cancellation Agreement, dated May 20, 2010, between the Company and Steven Oliveira~~
~~10.7~~		~~Loan Cancellation and Note Assignment Agreement, dated June 24, 2010, between the Company and Chardan SPAC Asset Management LLC~~
~~10.8~~		~~First Amendment to Series A Securities Purchase Agreement, dated July 30, 2010~~
~~10.9~~		~~Employment Agreement, dated July 30, 2010 between the Company and Shane McMahon~~
~~10.10~~		~~Employment Agreement, dated July 30, 2010 between the Company and Weicheng Liu~~
~~10.11~~		~~Employment Agreement, dated July 30, 2010 between the Company and Marc Urbach~~
~~10.12~~		~~Employment Agreement, dated July 30, 2010 between the Company and Clive Ng~~
~~10.13~~		~~Ordinary Share Purchase Agreement, dated July 30, 2010, among the Company, China Broadband Ltd. and Weicheng Liu~~
~~31.1~~		~~Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302.~~
~~31.2~~		~~Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302.~~
~~32.1~~		~~Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.~~
~~32.2~~		~~Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.~~

	~~CHINA BROADBAND, INC~~

	~~By:~~	~~/s/ Marc Urbach~~
		~~Name: Marc Urbach~~
		~~Title: President (Principal Executive Officer, Principal Accounting Officer and Principal~~ ~~Financial Officer)~~

~~Exhibit No.~~		~~Description~~
~~3.1~~		~~Amended and Restated Bylaws of the Company~~
~~3.2~~		~~Certificate of Designations of Preferences, Rights and Limitations of Series A Preferred Stock~~
~~3.3~~		~~Certificate of Designations of Preferences, Rights and Limitations of Series B Preferred Stock~~
~~4.1~~		~~Form of Warrant issued pursuant to the Securities Purchase Agreement dated May 20, 2010~~
~~4.2~~		~~Form of Warrant issued pursuant to the Series A Securities Purchase Agreement dated May 20, 2010, as amended on July 30, 2010.~~
~~4.3~~		~~Form of Warrant issued pursuant to the Series B Securities Purchase Agreement dated May 20, 2010.~~
~~4.4~~		~~Form of Registration Rights Agreement dated July 30, 2010 pursuant to the Securities Purchase Agreement dated May 20, 2010.~~
~~4.5~~		~~Registration Rights Agreement dated July 30, 2010 between the Company and Shane McMahon.~~
~~4.6~~		~~Registration Rights Agreement dated July 30, 2010 pursuant to the Series B Securities Purchase Agreement dated May 20, 2010.~~
~~10.1~~		~~Form of Securities Purchase Agreement dated May 20, 2010~~
~~10.2~~		~~Form of Series A Securities Purchase Agreement, dated May 20, 2010~~
~~10.3.~~		~~Form of Series B Securities Purchase Agreement dated May 20, 2010.~~
~~10.4~~		~~Form of Waiver and Agreement to Convert, dated May 20, 2010~~
~~10.5~~		~~Form of Waiver and Agreement to Convert, dated May 20, 2010~~
~~10.6~~		~~Loan Cancellation Agreement, dated May 20, 2010, between the Company and Steven Oliveira~~
~~10.7~~		~~Loan Cancellation and Note Assignment Agreement, dated June 24, 2010, between the Company and Chardan SPAC Asset Management LLC~~
~~10.8~~		~~First Amendment to Series A Securities Purchase Agreement, dated July 30, 2010~~
~~10.9~~		~~Employment Agreement, dated July 30, 2010 between the Company and Shane McMahon~~
~~10.10~~		~~Employment Agreement, dated July 30, 2010 between the Company and Weicheng Liu~~
~~10.11~~		~~Employment Agreement, dated July 30, 2010 between the Company and Marc Urbach~~
~~10.12~~		~~Employment Agreement, dated July 30, 2010 between the Company and Clive Ng~~
~~10.13~~		~~Ordinary Share Purchase Agreement, dated July 30, 2010, among the Company, China Broadband Ltd. and Weicheng Liu~~
31.1		Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302.
31.2		Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302.
32.1		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

	YOU ON DEMAND HOLDINGS, INC

	By:	/s/ Marc Urbach
		Name: Marc Urbach
		Title: President and Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer)