SOURCE: China Broadband, Inc.

March 10, 2010 09:00 ET

China Broadband Signs Letter of Intent for Acquisition of Sinotop Group Ltd.

Company Provides Debt Financing to Sinotop Group Ltd.; Positioned to Become Leader in Multi-Billion Dollar Pay Per View (PPV) and Video on Demand (VOD) Market

NEW YORK, NY--(Marketwire - March 10, 2010) - China Broadband, Inc. ("China Broadband" or the "Company") (OTCBB: CBBD), a provider of cable broadband services and publisher of digital and analog program guides in the Shandong Province of China, announced today that its subsidiary, China Broadband, Ltd. ("CB Cayman"), has entered into a non-binding letter of intent ("LOI") relating to the acquisition of Sinotop Group Ltd. ("Sinotop"), to provide integrated value-added service (VAS) solutions for the delivery of pay-per-view (PPV), video-on-demand (VOD), and enhanced premium content for cable providers.

Through a series of contractual arrangements with its affiliate, Beijing Sino Top Scope Technology Co., Ltd., Sinotop is a party to a joint venture with two other PRC companies, The proposed acquisition of Sinotop would serve to provide China Broadband with a nationwide platform to deliver PPV and VOD entertainment programming to a potential audience of more than 160 million subscribers with access to digital cable in the PRC.

The acquisition is contingent upon several conditions, including the drafting and negotiation of definitive agreements that cover the matters discussed in the LOI and the contribution by CB Cayman of approximately US$5,000,000 to the capital of Sinotop, or the purchase by CB Cayman of newly issued shares of Sinotop Hong Kong in consideration for the same amount. The closing of the transactions contemplated by the LOI is expected to occur on March 15, 2010.

In conjunction to the LOI, CB Cayman also entered into a Note Purchase Agreement with Sinotop. Pursuant to the Note Purchase Agreement, on March 9, 2010, CB Cayman acquired a Convertible Promissory Note (the "Note") from Sinotop in consideration of CB Cayman's loan to Sinotop Hong Kong under the Note in the amount of US$580,000. The Note accrues interest at a simple annual rate of 5% and is due on the date that is the earlier of the fifth anniversary of the date of issuance of the Note or the day following a change of control. The outstanding principal amount of the Note along with all accrued interest is convertible into common shares of Sinotop upon the occurrence of specified events. A significant shareholder of the Company advanced the funds necessary for CB Cayman to make the loan to Sinotop.

The Company has also announced it is implementing an aggressive cost savings initiative designed to preserve capital and re-focus the Company's resources, including its technology and employees, on the proposed launch of the content and premium service platform that would be acquired if the acquisition of Sinotop were to occur. Accordingly, the Company is temporarily suspending the day-to-day operations of Adnet, its multimedia advertising delivery service business and reducing its workforce. China Broadband will maintain Adnet's licenses, contracts, technology and other assets for future use in its new PPV business that would be created if the acquisition of Sinotop is consummated.

"China Broadband has begun executing on a vision to launch a proprietary and one-of-a kind service that is currently unavailable in China's premium service cable market," says Marc Urbach, President of China Broadband. "This letter of intent and the related loan to Sinotop represent a significant achievement for us. Once we consummate the acquisition of Sinotop, we will leverage Sinotop's technology, advanced resources and an already established audience base, in order to deploy a uniform system to offer a selection of high-quality movie content and PPV events. Ultimately our objective is to provide an all-encompassing VAS service platform that will allow our viewers a seamless optimal experience managing specific video content by configuring their own entertainment content playlist. From a strategic standpoint, the Company is also taking measures to prudently deploy its assets to effectively execute on value-driven goals and we expect our operating budget to increase in the coming months as a result. We believe the fundamentals are strong in the VAS market due to high demand, increases in digital subscribers, and an appetite for better content. These factors will directly attribute to diversifying our revenues, maximizing our profitability, and providing the highest value to our shareholders."

About China Broadband

China Broadband's flagship operation is Jinan Jia He Broadband, also known as Jinan Broadband, the fifth largest broadband operator in China and the second largest broadband service provider in Shandong's capital city of Jinan. Through its Shandong Group subsidiary, China Broadband publishes digital and analog television program guides, newspapers and entertainment magazines. It holds the exclusive license to publish television program guides in Shandong Province, one of the largest regional economies in China. For more information, visit http://www.chinabroadband.tv

Disclosure

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements by management, statements concerning internal operations, marketing, management's plans, objectives and strategies, and management's assessment of market factors and conditions, constitute forward-looking statements. Specifically, statements relating to the pending acquisition of Sinotop and our ability to enter into definitive agreements and ultimately consummate such acquisition are forward looking and no assurance can be made that we will complete such transaction. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitations, the volatility of domestic and international financial, bond and stock markets, intense competition, extensive governmental regulation, litigation, substantial fluctuations in the volume and price level of securities and other risks as detailed in the Company's filings with the Securities and Exchange Commission.

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