UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 _________________
 
 **FORM
10-KSB**
 
 **x**
    **ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**
      For
      the fiscal year ended**- December 31, 2004****OR****o**
    **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**
      For
      the transition period from
 
 Commission
file number **0-024828**
 
 **CHINA
DIGITAL COMMUNICATION GROUP**
 (Name of
Small Business Issuer in Its Charter)
 
 **NEVADA**
    **91-2132336**(State
      or Other jurisdiction of Incorporation or Organization)
    (I.R.S.
      Employer Identification No.)
 
 **A-3.
Xinglian Industrial Zone.**
 **He
Hua Ling Pingxin Road. Xin Nan. Ping Hua**
 **Town.
Longgang. Shenzhen China 51811**
 
 (Address
of Principal Executive Offices, including zip code.)
 
 **86-755-2698-3767**
 (Issuer’s
Telephone Number, Including Area Code)
 
 Securities
registered pursuant to Section 12(b) of the Act:
 **Title
      of each class**
    **Name
      of each exchange on which registered******
    **None**
    **None**
 
 Securities
registered pursuant to Section 12(g) of the Act:
 **Title
      of each class**
    **Common
      Stock**
 
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 Noo
 
 
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by referenced in Part III of this Form
10-KSB or any amendment to this Form 10-KSB x
 
 State
issuer's revenues for its most fiscal year **December 31, 2004: $2,33,8,717.**
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity. **As
of March 29, 2005, the value was $13,206702.**
 
 State the
number of shares outstanding of each of the issuer's classes of common equity,
as of **March 29, 2005 there were 54,460,626 shares of common stock
outstanding.**
  2
 PART
      IITEM
      1.
    
    DESCRIPTION
      OF BUSINESS.ITEM
      2.
    
    DESCRIPTION
      OF PROPERTY.ITEM
      3.
    
    LEGAL
      PROCEEDINGS.ITEM
      4.
    
    SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS.PART
      IIITEM
      5.
    
    MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES.ITEM
      6.
    
    MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR FINANCIAL PLAN OF OPERATION.ITEM
      7.
    
    FINANCIAL
      STATEMENTS.ITEM
      8.
    
    CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.ITEM
      8A.
    
    CONTROLS
      AND PROCEDURES.ITEM
      8B.
    
    OTHER
      INFORMATION.PART
      IIIITEM
      9.
    
    DIRECTORS
      AND EXECUTIVE OFFICERS OF THE REGISTRANT.ITEM
      10.
    
    EXECUTIVE
      COMPENSATION.ITEM
      11.
    
    SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.ITEM
      12.
    
    CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS.ITEM
      13.
    
    EXHIBITS,
      LIST AND REPORTS ON FORM 8-K.ITEM
      14.
    
    PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.SIGNATURES
  3
  **PART
I**
 
 **ITEM
1. DESCRIPTION OF BUSINESS**
 
 China
Digital Communication Group (the "Registrant", “China Digital” or the “Company”)
was incorporated in Nevada in March 27, 2001 under the name Jasmine’s Garden. As
the result of the Acquisition (defined below) of Billion Electronic Co., Ltd., a
company organized under the laws of the British Virgin Islands ("Billion”) in
November 2004, the Registrant is currently in the business of manufacturing and
distributing lithium battery shells and related products primarily in China.
 
 ***Corporate
History***
 
 Until
December 2, 2003, the Registrant operated a nationwide wholesale and retail
business selling greeting cards, note cards and gift tags made from a design
process involving photography and computer graphics.  On December 2, 2003,
Cheering Limited, an investment holding company organized under the laws of the
British Virgin Islands (“Cheering”), acquired 5,700,000 shares of our common
stock, par value $0.001, which constituted approximately 95% of the then issued
and outstanding shares of common stock from Jack and Jasmine Gregory, the
Company’s former officers, directors and principal stockholders, for cash
consideration of $221,221 (the “Cheering Transaction”).
 
 In
connection with the Cheering Transaction, the Board of Directors appointed Zu
Zhuan Xu to serve as the President and elected four designees of Cheering to
serve to serve as directors; and Jack and Jasmine Gregory resigned from their
positions as officers and directors of the Company.  On February 18, 2004,
Zu Zhuan Xu resigned from his position as President and Yi Bo Sun was appointed
to replace him and Xu Bao Dong was appointed to serve on the Board of
Directors.  On February 19, 2004, another director resigned from the Board
of Directors and Yi Bo Sun was appointed to replace him.  Currently, the
Board of Directors consists of Yi Bo Sun, who is also our Chief Executive
Officer, Zu Zhuan Xu and Xu Bao Dong.
 
 On March
17, 2004, we sold 30,000,000 shares of common stock at a per share purchase
price of $0.05 to seven unaffiliated individuals in a private placement, which
yielded aggregate gross proceeds of $1,500,000 (the “Private Placement”). As a
condition to the closing of the Private Placement, each of the investors
executed an irrevocable proxy granting Yi Bo Sun, our Chief Executive Officer,
the right to vote all shares of the common stock purchased in the Private
Placement.  The irrevocable proxies expired on May 1, 2004, however, the
investors and Mr. Sun have reached an agreement with respect to the extension of
the irrevocable proxy which will expire in May 2006. Mr. Yi Bo Sun as the
Chairman and Chief Executive Officer of Cheering is the beneficial owner of the
5,700,000 shares of common stock, which represents approximately 11.8%, of the
issued and outstanding common stock and prior to the expiration of the
irrevocable proxies, Mr. Sun will have the power to vote or direct the voting of
30,000,000 shares issued in the Private Placement. Taken together, Mr. Sun
controls approximately 66% of our issued and outstanding common
stock.
 
 On April
28, 2004, we filed a Certificate of Amendment with the Nevada Secretary of State
to amend our A rticles
of Incorporation to increase our authorized common stock to 140,000,000 and to
authorize 60,000,0000 shares, par value $0.001 of blank check preferred stock.
 
 4
 On
September 3, 2004, we filed a Certificate of Amendment with the Nevada Secretary
of State to amend our Articles of Incorporation to change our name from
“Jasmine’s Garden” to “China Digital Communication Group.”
 
 ***Acquisition
of Billion***
 
 On
November 15, 2004, pursuant to the terms of a Share Exchange Agreement (the
"Exchange Agreement") dated as of September 17, 2004, by and among the Company,
Billion, the shareholders of Billion (the “Shareholders”) and Shenzhen E’Jenie
Technology Development Co., Ltd, a company incorporated under the laws of the
Peoples Republic of China (“E’Jenie”), we acquired from the Shareholders (the
"Acquisition") all of the issued and outstanding equity interests of Billion
(the "Billion Shares"). Billion is a holding company and the sole shareholder of
E’Jenie. Billion has no other assets other than the shares of E’Jenie. As
consideration for the Billion Shares, we paid the Shareholders an aggregate of
$1,500,000 in cash and issued them 4,566,210 shares of common stock. The
consideration for the Acquisition was determined through arms length
negotiations between the management and Billion. As a result of the Acquisition,
the Shareholders hold approximately 8.7% of our then issued and outstanding
common stock and we are the sole shareholder of Billion through which we own all
of the issued and outstanding equity interests of E’Jenie.
 
 In
connection with the Acquisition, as is customary in China, we entered into a
Guarantee Agreement, dated October 9, 2004, as amended October 11, 2004 (the
“Guarantee”), with Shiji Ruichen Guaranty and Investment Co. Ltd., a company
incorporated under the laws of the Peoples Republic of China (“Shiji”). Pursuant
to the terms of the Guarantee, Shiji agreed to guarantee our performance and the
performance of the Shareholders under the Exchange Agreement. As consideration
for Shiji's guaranty, we issued 1,919,016 shares of common stock to Shiji. As
security for our obligations under the Guarantee, one of our principal
shareholders deposited 5,000,000 of their shares of the common stock into
escrow.
 
 We filed
a Form 8-K with the Securities and Exchange Commission on September 30, 2004, as
amended December 15, 2004, which more fully describes the Acquisition.
  ***Operations***
  As a
result of the Acquisition, through Billion's ownership of E’Jenie, we
manufacture and distribute lithium battery shells and related products primarily
in China. Based upon specifications from customers, E’Jenie develops, customizes
and produces steel, aluminum battery shells, aluminum caps, and lithium
batteries for mobile phones, PDAs and MP3s and other small electronic consumer
products. Currently, E’Jenie produces fourteen steel battery shell lines, five
aluminum battery shell lines and two aluminum battery cap lines.
 
 The
lithium battery was created in the nineties, with its first mass production in
1993 in Japan. It was first used in notebook computers and was later used in
cellular phones, cameras, and global positioning satellite systems. Lithium
batteries are now used in cellular phones, cameras, digital cams, global
positioning satellite systems, and an array of other electronic products.
 
 5
 Batteries
are becoming smaller, lighter, more efficient, longer lasting, and free of
pollution. The lithium battery’s energy/weight ratio exceeds that of its
counterparts and with an excellent safety standard, it seems to be the future of
the battery industry. Management anticipates significant growth in the demand
for lithium batteries in China and worldwide. Management believes that the
current trend towards smaller, lighter portable consumer products will continue
to grow and because of its size, the demand for the lithium battery may increase
as well. By way of example, a mobile-phone battery has a typical usage life of
300 to 500 recharges, which translates to a ratio of 1.8 batteries in service
life of each phone, according to official Chinese statistics. However,
management’s internal data reveals that battery replacement demand is faster
than this when consumers turn in their phones for new models before the normal
life of the battery is over. A short product life combined with a short product
innovation cycle creates rapid product turnover - resulting in increased
business for battery shell makers.
 
 Management
believes that it will profit from growth in China’s manufacturing sector.
Manufacturers of batteries and electronic products are direct customers for our
products, and their growth - fueled by exports as well as rising domestic demand
- may translate into higher sales. China’s entry into the World Trade
Organization and the continued privatization of its industrial base will
continue to fuel this expansion.
 
 *Our
Business Strategy*
 
 We seek
to maintain and strengthen our position as a provider of battery shells and caps
while increasing the breadth of our product line and improving the quality of
our products. In order to achieve our objective, we plan to pursue the key
strategies described below.
 
 ·
    Become
      a cost leader in an increasingly competitive market. We believe we can
      ensure competitive pricing by integrating a labor-intensive production
      process with high-tech, proprietary manufacturing equipment. We believe
      our experience in designing and updating key manufacturing equipment and
      operating such equipment at a low cost gives us a cost advantage over our
      competitors.
 
 ·
    Taking
      advantage of our ready production capacity and allowing for increased
      production capacity. We believe our production capacity makes us more
      reliable, flexible and responsive in terms of fulfilling our customers'
      requirements than other providers. As such, existing and potential
      competitors may find it more difficult to compete with our production
      capabilities.
 
 ·
    Enhanced
      research and development activities. Upon completion of our new facility,
      we will have the space to enhance our existing research and development
      capabilities through the addition of state of the art equipment and
      experienced personnel.
 
 **·**
    Expanding
      our product lines to capture new market opportunities. We are seeking to
      produce lithium battery cells that can be used in small electronic
      consumer products such as digital cameras, laptop computers, MP3 players
      and cellular telephones. By entering these markets, we believe we can
      achieve future revenue growth and improved profit
  margins.
  6
 ***Customers***
  In 2004,
our three largest customers represented approximately 69% of our total sales.
The following table sets forth information regarding our three largest
customers:
 **List
      of Major Customers****Name
      of Customer**
    **Percentage
      of Total Revenue for 2004**Bak
      Battery
    63.50%Hua
      Yu Bao
    14.40%Yin
      Si Qi
    4.42%
  Although
we do not have formal contracts with our customers, we have established
long-term relationships. Our customers place orders on a monthly basis and sales
are processed with purchase orders. The loss of Bak Battery as a customer would
have an adverse effect on our revenues as sales to Bak Battery represented 63%
of total sales for 2004. Management believes that its relationship with Bak
Battery is good and does not anticipate a change in the current volume of
business.
  ***Sales
and Marketing***
 
 Our
in-house sales and marketing team contact local battery manufacturers to solicit
interest in our products. If the manufacturer expresses an interest in our
product offering, we ship them samples and if our products suit their needs
orders are placed and filled.
  ***Raw
Material***
  We
purchase various components and raw materials for use in our manufacturing
processes. The principal raw materials we purchase are aluminum and steel. The
price of steel has increased significantly in the past year, and management
believes that it will continue to increase. The increases have had an adverse
impact on gross margins, since some of the increases cannot be passed on to our
customers.
  Our three
largest suppliers are Heng Yuang Li Stainless Steel Factory, Hongzhou Stainless
Steel Product Co and Hua Yi Aluminum Co., which in the aggregate account
approximately 50% of all components and raw materials purchased. Normally, the
annual purchase plan for raw material, such as aluminum and steel, is determined
at the beginning of the calendar year according to past customer's orders and
our own sales forecast. Such purchase plans with key suppliers can be revised
quarterly. Our actual requirements are based on weekly production plans.
Management believes that this arrangement protects us from inventory surplus
when the orders from customers change.
  7
 For raw
materials other than steel and aluminum, we normally maintain from one week up
to one month of inventory at our warehouse. All components and raw materials are
available from numerous sources. We have not experienced any significant
shortages of manufactured components or raw materials and normally do not carry
inventories of these items in excess of what is reasonably required to meet our
production and shipping schedules.
  ***Competition***
 
 We face
competition from manufacturers not only within China but also from other parts
of the world, particularly Japan, Taiwan, Malaysia, Indonesia, and Korea. We
compete with these companies by striving to provide a higher quality product at
a lower cost. Our primary competitors are Shenzhen
Luhua Co., Ltd., Shenzhen TongLi Electronic Co. and Ningbo Pulaite Electronics
Co., Ltd. We
believe that by doing business in China we enjoy competitive advantages over
similar companies based elsewhere, including abundant labor resources and low
cost raw materials.
 
 ***Seasonality***
  Worldwide
battery sales are significantly greater in the second half of the calendar year
than the first half as a result of industry-wide marketing programs and
consumers' traditionally strong purchases of battery-powered products during the
holiday season.
  
 **Doing
Business in China**
 
 ***The
Chinese Legal System***
 
 The
practical effect of the People's Republic of China legal system on our business
operations in China can be viewed from two separate but intertwined
considerations. First, as a matter of substantive law, the Foreign Invested
Enterprise laws provide significant protection from government interference. In
addition, these laws guarantee the full enjoyment of the benefits of corporate
Articles and contracts to Foreign Invested Enterprise participants. These laws,
however, do impose standards concerning corporate formation and governance,
which are not qualitatively different from the general corporation laws of the
several states. Similarly, the People's Republic of China accounting laws
mandate accounting practices, which are not consistent with U.S. Generally
Accepted Accounting Principles. China’s accounting laws require that an annual
"statutory audit" be performed in accordance with People's Republic of China
accounting standards and that the books of account of Foreign Invested
Enterprises are maintained in accordance with Chinese accounting laws. Article
14 of the People's Republic of China Wholly Foreign-Owned Enterprise Law
requires a Wholly Foreign-Owned Enterprise to submit certain periodic fiscal
reports and statements to designate financial and tax authorities, at the risk
of business license revocation.
 
 Second,
while the enforcement of substantive rights may appear less clear than United
States procedures, the Foreign Invested Enterprises and Wholly Foreign- Owned
Enterprises are Chinese registered companies, which enjoy the same status as
other Chinese registered companies in business-to-business dispute resolution.
Generally, the Articles of Association provide that all business disputes
pertaining to Foreign Invested Enterprises are to be resolved by the Arbitration
Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden applying
Chinese substantive law. Any award rendered by this arbitration tribunal is, by
the express terms of the respective Articles of Association, enforceable in
accordance with the "United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (1958)." Therefore, as a practical
matter, although no assurances can be given, the Chinese legal infrastructure,
while different in operation from its United States counterpart, should not
present any significant impediment to the operation of Foreign Invested
Enterprises such as E’Jenie.
 
 8
 ***Economic
Reform Issues***
 
 Although
the Chinese government owns the majority of productive assets in China, in the
past several years the government has implemented economic reform measures that
emphasize decentralization and encourage private economic activity. Because
these economic reform measures may be inconsistent or ineffectual, there are no
assurances that:
 
 -
    We
      will be able to capitalize on economic reforms;-
    The
      Chinese government will continue its pursuit of economic reform
      policies;-
    The
      economic policies, even if pursued, will be successful;-
    Economic
      policies will not be significantly altered from time to time;
      and-
    Business
      operations in China will not become subject to the risk of
      nationalization.
 
 Since
1979, the Chinese government has reformed its economic systems. Because many
reforms are unprecedented or experimental, they are expected to be refined and
improved. Other political, economic and social factors, such as political
changes, changes in the rates of economic growth, unemployment or inflation, or
in the disparities in per capita wealth between regions within China, could lead
to further readjustment of the reform measures. This refining and readjustment
process may negatively affect our operations.
 
 Over the
last few years, China's economy has registered a high growth rate. Recently,
there have been indications that rates of inflation have increased. In response,
the Chinese government recently has taken measures to curb this excessively
expansive economy. These measures have included devaluations of the Chinese
currency, the renminbi, restrictions on the availability of domestic credit,
reducing the purchasing capability of certain of its customers, and limited
re-centralization of the approval process for purchases of some foreign
products. These austerity measures alone may not succeed in slowing down the
economy's excessive expansion or control inflation, and may result in severe
dislocations in the Chinese economy. The Chinese government may adopt additional
measures to further combat inflation, including the establishment of freezes or
restraints on certain projects or markets.
 
 To date
reforms to China's economic system have not adversely impacted our operations
and are not expected to adversely impact operations in the foreseeable future;
however, there can be no assurance that the reforms to China's economic system
will continue or that we will not be adversely affected by changes in China's
political, economic, and social conditions and by changes in policies of the
Chinese government, such as changes in laws and regulations, measures which may
be introduced to control inflation, changes in the rate or method of taxation,
imposition of additional restrictions on currency conversion and remittance
abroad, and reduction in tariff protection and other import
restrictions.
 
 9
 ***Employees
and employment agreements***
 
 The
Registrant currently has eight employees, five (5) officers, two (2) executives
and (1) administrative personnel. E’Jenie has nine (9) divisions with 526
employees in total
 
 **ITEM
2. DESCRIPTION OF PROPERTY.**
 
 Our
headquarters located at A-3. Xinglian Industrial Zone. He Hua Ling Pingxin Road.
Xin Nan. Ping Hua Town. Longgang. Shenzhen China 51811. This facility
is  6,708
square meters of which 15% or 1,000 square meters is used for offices, 4,500
square meters are used for the manufacturing line and storage and the remaining
1,208 square meters are used for employee dormitories. We have an eight-month
lease that expires August. Our rent is approximately $6,700 a
month.
 
 In
February 2005, we opened our first office in the United States. The Los
Angeles-based office is located at 1901 Avenue of the Stars, Suite 201. The
monthly rent is $1,500.
 
 **ITEM
3. LEGAL PROCEEDINGS.**
 
 We are
not a party to any pending litigation and none is contemplated or
threatened.
 
 **ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**
 
 There
were no matters submitted to the stockholders in the fourth quarter of
2004.
 
  **PART
II**
 
 **ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERS MATTERS AND SMALL BUSINESS
ISSUERS PURCHASES OF EQUITY SECURITIES.**
 
 Our
shares are quoted on the Over-The-Counter Bulletin Board under the symbol
“CHID.”  Prior to the Acquisition, there was a limited market for our
common stock.  As a result, our stock had no or nominal trading volume and
a very limited trading history.  During the calendar years ended December
31, 2004 and 2003, the average of our bid and asked prices for our common stock
was $1.89 per share, based upon quotations between dealers, without adjustments
for stock splits, dividends, retail mark-ups, mark-downs or commissions, and
therefore, may not represent actual transactions. After the Acquisition, the
volume of shares traded in fourth quarter increased significantly.   The
following table sets forth the high and low closing sale prices of our common
stock for the periods indicated below:
 
 **HIGH**
    
    **LOW**June
      30, 2004 - September 30, 2004
    
    $
    3.40
    
    $
    1.50October
      1, 2004 - December 31, 2004
    
    $
    2.50
    
    $
    0.99January
      1, 2005 - March 15, 2005
    
    $
    1.68
    
    $
    0.78
 
 10
 
 **Stockholders**
 
 At March
29, 2005, we had approximately 142 registered stockholders of record of our
common stock. This number does not include shares held by brokerage clearing
houses, depositories or otherwise in unregistered form.
 
 **Dividends**
 
 We have
not declared any cash dividends, nor do we intend to do so. We are not subject
to any legal restrictions respecting the payment of dividends, except that they
may not be paid to render us insolvent.
 
 **Securities
authorized for issuance under equity compensation plans**
 
 The
following is a summary of all of our equity compensation plans, including
individual arrangements that provide for the issuance of equity securities as
compensation, as of December 31, 2004. See Note 6 to the financial statements
for additional discussion.
 
 **Plan
      Category**
    
    **Number
      of securities to be**
      **issued
      upon exercise**
      **of
      outstanding options,**
      **warrants
      and rights**
    
    
    
    **Weighted
      average exercise**
      **price
      of outstanding**
      **options,
      warrants and**
      **rights**
    
    **Number
      of securities**
      **remaining
      available for**
      **future
      issuance under**
      **equity
      compensation plan**
      **(excluding
      securities**
      **reflected
      in column (a))****(a)**
    
    
    
    **(b)**
    
    **(c)**Equity
      Compensation Plans Approved By Security HoldersEquity
      Compensation Plans Not Approved By Security Holders
    
    
    12,000,000
    
    
    (1)(2
    )
    
    N/A
    
    
    40,000
    
    
    (2
    )
  
 (1)
Pursuant to the terms of the 2004 Equity Incentive Plan, we are authorized to
grant options (both incentive stock options and non-qualified stock options),
restricted stock and stock awards to eligible participants.
 
 (2)
Effective March 2, 2004, 11,960,000 shares of Common Stock were issued to 19 of
our consultants for services rendered or to be rendered.
 
 **Repurchase
of Securities**
  We did
not repurchase any of our common shares during the fourth quarter of
2004.
 
 **Recent
Sales of Unregistered Securities**
 
 As
consideration for the Acquisition, we issued 4,566,210 shares of common stock to
the Shareholders. As consideration for Shiji's guaranty, we issued 1,919,016
shares of common stock to Shiji in October 2004. The shares were issued pursuant
to an exemption provided by Section 4(2) of the Securities Act of 1933, as
amended.
 
 11
 
 **ITEM
6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.**
 
 The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-KSB.
The following discussion contains forward-looking statements. Our actual results
may differ significantly from those projected in the forward-looking statements.
Factors that may cause future results to differ materially from those projected
in the forward-looking statements include, but are not limited to, those
discussed in “Risk Factors” and elsewhere in this Form 10-KSB.
 
 The
following table presents the pro forma results of operations of
E’Jenie (the accounting predecessor company) for the period from January 1, 2004
to November 15, 2004 and the consolidated results of China Digital Communication
Group (the accounting successor company) from November 16, 2004 (inception) to
December 31, 2004 and the results of operations of E’Jenie (the accounting
predecessor company) for the year ended December 31, 2003. The discussion
following the table is based on the pro forma results of operations of E’Jenie
(the accounting predecessor company) for the period from January 1, 2004 to
November 15, 2004 and the consolidated results of China Digital Communication
Group (the accounting successor company) from November 16, 2004 (inception) to
December 31, 2004 and the results of operations of E’Jenie (the accounting
predecessor company) for the year ended December 31, 2003.
 
 **January
      1, 2004 - November 15, 2004**
      **(Predecessor)**
    
    **November
      16, 2004 - December 31, 2004**
      **(Successor)**
    
    **Year
      ended**
      **December
      31,**
      **2004**
      **(Pro
      forma)**
    
    **Year
      ended**
      **December
      31,**
      **2003**
      **(Predecessor)**Statement
      of Earnings Data:Net
      revenues
    
    $
    2,843,404
    
    $
    2,338,718
    
    $
    5,182,122
    
    $
    2,061,528Net
      income (loss)
    
    
    341,191
    
    
    (868,738
    )
    
    (527,548
    )
    
    132,152Per
      Common Share Data:Earnings
      (loss)Basic
      & Diluted
    
    
    .009
    
    
    (.022
    )
    
    (.013
    )
    
    .022Balance
      Sheet Data:Total
      assets
    
    
    1,999,445
    
    
    4,751,536
    
    
    4,751,536
    
    
    1,014,761Long-term
      debt
    
    
    0
    
    
    0
    
    
    0
    
    
    2,067Weighted
      Average Number of Common Shares:Basic
    
    
    37,758,202
    
    
    39,172,889
    
    
    39,172,889
    
    
    6,015,400Diluted
    
    
    37,758,202
    
    
    39,172,889
    
    
    39,172,889
    
    
    6,015,400
 
 **OVERVIEW**
 
 China
Digital Communication Group (the "Registrant", “China Digital” or the “Company”)
was incorporated in Nevada in March 27, 2001 under the name Jasmine’s
Garden to sell
greeting cards, note cards and related products. The business operations
generated limited revenues and operated at a loss since inception. On September
3, 2004, in contemplation of the transactions discussed below, we changed our
name from Jasmine’s Garden to China Digital Communication Group.
 
 On
December 2, 2003, Cheering Limited, an investment holding company organized
under the laws of the British Virgin Islands (“Cheering”), acquired 5,700,000
shares of our common stock, par value $0.001, which constituted approximately
95% of the then issued and outstanding shares of common stock from Jack and
Jasmine Gregory, the Company’s former officers, directors and principal
stockholders, for cash consideration of $221,221 (the “Cheering
Transaction”).
 
 12
 In
connection with the Cheering Transaction, the Board of Directors appointed
Zuzhuan Xu to serve as the President and elected four designees of Cheering to
serve to serve as directors; and Jack and Jasmine Gregory resigned from their
positions as officers and directors of the Company.  On February 18, 2004,
Zu Zhuan Xu resigned from his position as President and Yi Bo Sun was appointed
to replace him and Xu Bao Dong was appointed to serve on the Board of
Directors.  On February 19, 2004, another director resigned from the Board
of Directors and Yi Bo Sun was appointed to replace him.  Currently, the
Board of Directors consists of Yi Bo Sun, who is also our Chief Executive
Officer, Zu Zhuang Xu and Xu Bao Dong.
 
 On March
17, 2004, we sold 30,000,000 shares or approximately 62% of our issued and
common stock at a per share purchase price of $0.05 to seven unaffiliated
individuals in a private placement, which yielded aggregate gross proceeds of
$1,500,000 (the “Private Placement”).
 
 On
November 15, 2005, pursuant to the terms of a Share Exchange Agreement (the
"Exchange Agreement") dated as of September 17, 2004, by and among the Company,
Billion, the shareholders of Billion (the “Shareholders”) and Shenzhen E’Jenie
Technology Development Co., Ltd, a company incorporated under the laws of the
Peoples Republic of China (“E’Jenie”), we acquired from the Shareholders (the
"Acquisition") all of the issued and outstanding equity interests of Billion
(the "Billion Shares"). Billion is a holding company and the sole shareholder of
E’Jenie. Billion has no other assets other than the shares of E’Jenie. As
consideration for the Billion Shares, we paid the Shareholders an aggregate of
$1,500,000 in cash and issued them 4,566,210 shares of common stock. As a result
of the Acquisition, the Shareholders hold approximately 8.7% of our then issued
and outstanding common stock and we are the sole shareholder of Billion through
which we own all of the issued and outstanding equity interests of
E’Jenie.
 
 As a
result of the Cheering Transaction, the Private Placement and the Acquisition
transactions, we have had a change of our management, our controlling
shareholders, our financial position and our business plan. China Digital
Communication Group (formerly Jasmin’s Garden) became a holding company and has
no significant business operations or assets other than its interest in E’Jenie,
the accounting predecessor company. Since China Digital Communication Group, the
accounting successor company, had no significant business operations or assets
prior to the Acquisition described above, presenting comparative periods would
not be meaningful. As such, the results of operations presented below for the
predecessor are those of E’Jenie.
 
 **E’Jenie**
 
 Through
E’Jenie, we manufacture and distribute lithium battery shells and related
products primarily in China. Based upon specifications from customers, E’Jenie
develops, customizes and produces steel, aluminum battery shells, aluminum caps,
and lithium batteries for mobile phones, PDAs and MP3s and other small
electronic consumer products.
 
 13
 Our short
to mid-term strategic plan is to focus on both domestic and international market
expansion. To achieve this goal, we will focus on brand recognition, quality
control, decreasing costs, research and development and strategic
acquisitions.
 
 **RESULTS
OF OPERATIONS**
 
 The
following table presents the pro forma statement of operations for the periods
of January 1, 2004 to November 15, 2004 (for the predecessor company) and
November 16, 2004 to December 31, 2004 (for the successor company) as compared
to the comparable period of the year ended December 31, 2003 (for the
predecessor). The discussion following the table is based on the pro forma
results.
 
 **January
      1, 2004 - November 15, 2004**
      **(Predecessor)**
    
    **November
      16, 2004 -December 30, 2004**
      **(Successor)**
    
    **Pro
      forma**
      **for
      the Year**
      **ended**
      **December 31,**
      **2004**
    
    **Year
      Ended December 31,**
      **2003**
      **(Predecessor)**NET
      SALES
    
    $
    2,843,404
    
    $
    2,338,718
    
    $
    5,182,122
    
    $
    2,061,528COST
      OF SALES
    
    
    2,334,892
    
    
    1,294,346
    
    
    3,629,238
    
    
    1,810,126GROSS
      PROFIT
    
    
    508,512
    
    
    1,044,372
    
    
    1,552,884
    
    
    251,402OPERATING
      EXPENSES:Selling,
      general and administrative
    
    
    115,507
    
    
    1,893,042
    
    
    2,008,549
    
    
    116,402Research
      and development
    
    
    0
    
    
    0
    
    
    0
    
    
    0Amortization
      of intangibles
    
    
    0
    
    
    0
    
    
    0
    
    
    0Total
      operating expenses
    
    
    115,507
    
    
    1,893,042
    
    
    2,008,549
    
    
    116,402Operating
      income (loss)
    
    
    393,005
    
    
    (848,670
    )
    
    (455,665
    )
    
    134,689OTHER
      INCOME
    
    
    1,.991
    
    
    (139
    )
    
    1,852
    
    
    23,545INTEREST
      EXPENSE
    
    
    23,114
    
    
    7,384
    
    
    30,498
    
    
    145Income
      (loss) before benefit for income taxes
    
    
    371,882
    
    
    (856,193
    )
    
    (484,311
    )
    
    158,089BENEFIT
      (PROVISION) FOR INCOME TAXES
    
    
    (30,692
    )
    
    (12,545
    )
    
    (43,237
    )
    
    (25,937
    )NET
      INCOME (LOSS)
    
    $
    341,191
    
    
    ($868,738
    )
    
    ($527,548
    )
    $
    132,152
 
 **Net
sales**
 
 Net sales
for 2004 totaled $5,182,122 compared to $2,061,528 as of 2003, an increase of
$3,120,594 or approximately 151%. The increase was due to the expansion of our
product lines to meet the needs of our existing clients and to service new
clients in 2004 as compared to 2003.
  **Cost
of Sales**
  Cost of
sales for 2004 totaled $3,629,238 or approximately 70% of net sales compared to
$1,810,126 or approximately 58% for 2003. The increase in cost of sales as a
percentage was due to an increase in material cost from the introduction of new
product lines during 2004.
 
 **Operating
Expense**
 
 Selling,
g eneral
and administrative, and consulting fees for 2004 totaled $2,008,549 or
approximately 39% of net sales, compared to $116,402 or approximately 5.6% for
2003. The increase in operating expense of $1,892,147 or approximately 1626% was
due to the hiring of additional administrative and marketing staff in order to
build our infrastructure to meet the increased demand for our products and to
market our new products.
  14
 **Income
(Loss) from Operations**
  Income
(loss) from operations for 2004 was ($455,665) as compared to income from
operations of $134,689 for 2003, an increase of $590,354 or approximately 438%.
The decrease was due to the hiring of additional administrative and marketing
staff in order to build our infrastructure to meet the increased demands for out
products and to market our new products.
 
 **Interest
Expense**
 
 Interest
expense for 2004 totaled $30,498 compared to $145 for 2003, an increase of
$30,353. The increase in interest expense was due to indebtedness related to the
acquisition of fixed assets.
 
 **Net
Income**
 
 Net
income (loss) was ($527,548) for 2004 compared to $132,152 for 2003, a decrease
of $659,700. The
decrease was due to the hiring of additional administrative and marketing staff
in order to build our infrastructure to meet the increased demands for out
products and to market our new products
 
 **LIQUIDTY
AND CAPITAL RESOURCES**
 
 China
Digital Communication Group, as the successor company, had no significant
business operations or assets prior to the Acquisition. As such, the liquidity
and capital resources described below of E’Jenie are the same for China Digital
Communication Group.
 
 Cash has
historically been generated from operations. Operations and liquidity needs are
funded primarily through cash flows from operations and short-term borrowings.
Cash and cash equivalents were $437,126 at December 31, 2004 and current assets
totaled $2,639,094 at December 31, 2004. The Company’s total current liabilities
were $1,650,289 at December 31, 2004. Working capital at December 31, 2004 was
$988,805. We believe that the funds available to us are adequate to meet our
operating needs for 2005. During 2004, net cash provided by operating activities
was $519,569. Cash provided by financing activities was $1,500,000 for 2004.
  **Capital
expenditures**
  Total
capital expenditures during the year ended December 31, 2004 was $1,603,665, of
which $103,665 was for purchase of fixed assets.
  **Working
Capital Requirements**
  Historically
operations and short term financing have been sufficient to meet our cash needs.
We believe that we will be able to generate revenues from sales and raise
capital through private placement offerings of its equity securities to provide
the necessary cash flow to meet anticipated working capital requirements.
However, our actual working capital needs for the long and short term will
depend upon numerous factors, including operating results, competition, and the
availability of credit facilities, none of which can be predicted with
certainty. Future expansion will be limited by the availability of financing
products and raising capital.
  15
 **OFF-BALANCE
SHEET ARRANGEMENTS**
  We have
never entered into any off-balance sheet financing arrangements and have never
established any special purpose entities. We have not guaranteed any debt or
commitments of other entities or entered into any options on non-financial
assets.
 
 **RISK
FACTORS**
 
 **Risks
associated with our Common Stock**
 
 ***There
is a limited public market for our common stock.*** There is
currently a limited public market for the common stock. Holders of our common
stock may, therefore, have difficulty selling their common stock, should they
decide to do so. In addition, there can be no assurances that such markets will
continue or that any shares of common stock, which may be purchased may be sold
without incurring a loss. Any such market price of the common stock may not
necessarily bear any relationship to our book value, assets, past operating
results, financial condition or any other established criteria of value, and may
not be indicative of the market price for the common stock in the future.
Further, the market price for the common stock may be volatile depending on a
number of factors, including business performance, industry dynamics, news
announcements or changes in general economic conditions.
 
 ***Our
common stock may be deemed penny stock with a limited trading
market*** . 
Our common stock is currently listed for trading in the Over-The-Counter Market
on the NASD Electronic Bulletin Board or in the “pink sheets” maintained by the
National Quotation Bureau, Inc., which are generally considered to be less
efficient markets than markets such as NASDAQ or other national exchanges, and
which may cause difficulty in conducting trades and difficulty in obtaining
future financing. Further, our securities are subject to the “penny stock rules”
adopted pursuant to Section 15 (g) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). The penny stock rules apply to non-NASDAQ
companies whose common stock trades at less than $5.00 per share or which have
tangible net worth of less than $5,000,000 ($2,000,000 if the company has been
operating for three or more years). Such rules require, among other things, that
brokers who trade “penny stock” to persons other than “established customers”
complete certain documentation, make suitability inquiries of investors and
provide investors with certain information concerning trading in the security,
including a risk disclosure document and quote information under certain
circumstances. Many brokers have decided not to trade “penny stock” because of
the requirements of the penny stock rules and, as a result, the number of
broker-dealers willing to act as market makers in such securities is limited. In
the event that we remain subject to the “penny stock rules” for any significant
period, there may develop an adverse impact on the market, if any, for our
securities. Because our securities are subject to the “penny stock rules,”
investors will find it more difficult to dispose of our securities. Further, for
companies whose securities are traded in the Over-The-Counter Market, it is more
difficult: (i) to obtain accurate quotations,  (ii) to obtain coverage for
significant news events because major wire services, such as the Dow Jones News
Service, generally do not publish press releases about such companies, and (iii)
to obtain needed capital.
 
 16
 ***Our
Chief Executive Officer has voting control of the
company*** . Yi Bo
Sun, our Chief Executive Officer and a director, is also the Chief Executive
Officer and Chairman of the Board of Cheering Limited.  As such, Yi Bo Sun
may be entitled to direct the vote of the 5,700,000 shares of common stock (or
approximately 11.88% of our issued and outstanding common stock) owned by
Cheering Limited.  Yi Bo Sun is also entitled to direct the vote of an
additional 30,000,000 shares of common stock, for a total of 35,700,000 shares
(approximately 66% of our issued and outstanding common stock) pursuant to
certain irrevocable proxies granted to him in connection with the private
placement of such securities to certain individuals.  The parties have
reached an agreement pursuant to which the proxies will expire on May 1,
2006.  As a result, Yi Bo Sun will be in a position to exercise significant
control with respect to our affairs and the election of directors.
 
 ***A
group of seven investors beneficially own 62.53% of our common
stock*** **.** We
sold 30,000,000 shares of common stock to seven individuals in a private
placement in March of 2004.  As a result of such offering, such investors
as a group will beneficially own approximately 62.53% of the issued and
outstanding shares of common stock.  The investors have granted Yi Bo Sun
an irrevocable proxy to direct the voting of their shares of common stock, which
expires May 1, 2006.  Upon the expiration of these proxies (and assuming
that such proxies are not extended), the investors as a group will be able to
exercise control over any matters requiring the vote of stockholders, including
the approval of any business acquisition and the election of directors assuming
no further issuances.  This could delay or prevent a change in control of
our board of directors.  This may have the effect of precluding or delaying
the opportunity of minority stockholders to sell their common stock to
interested purchasers or may significantly reduce the offering price in any such
transaction.
 
 ***We
do not intend to pay dividends on our common stock.*** We have
not paid any dividends on our common stock to date and there are no plans for
paying dividends in the foreseeable future. We intend to retain earnings, if
any, to provide funds for the implementation of our new business plan.  We
do not intend to declare or pay any dividends in the foreseeable future. 
Therefore, there can be no assurance that holders of common stock will receive
any additional cash, stock or other dividends on their shares of common stock
until we have funds, which the Board of Directors determines, can be allocated
to dividends
 
 **Risks
related to doing business in China**
 
 *Much
our business operations take place primarily in China. Because Chinese laws,
regulations and policies are continually changing, our Chinese operations will
face several risks summarized below.*
 
 ***Limitations
on Chinese economic market reforms may discourage foreign investment in Chinese
businesses.*** The value
of investments in Chinese businesses could be adversely affected by political,
economic and social uncertainties in China. The economic reforms in China in
recent years are regarded by China's central government as a way to introduce
economic market forces into China. Given the overriding desire of the central
government leadership to maintain stability in China amid rapid social and
economic changes in the country, the economic market reforms of recent years
could be slowed, or even reversed.
 
 17
 ***Any
change in policy by the Chinese government could adversely affect investments in
Chinese businesses.*** Changes
in policy could result in imposition of restrictions on currency conversion,
imports or the source of suppliers, as well as new laws affecting joint ventures
and foreign-owned enterprises doing business in China. Although China has been
pursuing economic reforms for the past two decades, events such as a change in
leadership or social disruptions that may occur upon the proposed privatization
of certain state-owned industries could significantly affect the government's
ability to continue with its reform.
 
 ***We
face economic risks in doing business in China.*** ** As a
developing nation, China's economy is more volatile than that of developed
Western industrial economies. It differs significantly from that of the U.S. or
a Western European Country in such respects as structure, level of development,
capital reinvestment, resource allocation and self-sufficiency. Only in recent
years has the Chinese economy moved from what had been a command economy through
the 1970s to one that during the 1990s encouraged substantial private economic
activity. In 1993, the Constitution of China was amended to reinforce such
economic reforms. The trends of the 1990s indicate that future policies of the
Chinese government will emphasize greater utilization of market forces. For
example, in 1999 the Government announced plans to amend the Chinese
Constitution to recognize private property, although private business will
officially remain subordinated to the state-owned companies, which are the
mainstay of the Chinese economy. However, there can be no assurance that, under
some circumstances, the government's pursuit of economic reforms will not be
restrained or curtailed. Actions by the central government of China could have a
significant adverse effect on economic conditions in the country as a whole and
on the economic prospects for our Chinese operations.
 
 ***The
Chinese legal and judicial system may negatively impact foreign
investors.*** ** In 1982,
the National People's Congress amended the Constitution of China to authorize
foreign investment and guarantee the "lawful rights and interests" of foreign
investors in China. However, China's system of laws is not yet comprehensive.
The legal and judicial systems in China are still rudimentary, and enforcement
of existing laws is inconsistent. Many judges in China lack the depth of legal
training and experience that would be expected of a judge in a more developed
country. Because the Chinese judiciary is relatively inexperienced in enforcing
the laws that do exist, anticipation of judicial decision-making is more
uncertain than would be expected in a more developed country. It may be
impossible to obtain swift and equitable enforcement of laws that do exist, or
to obtain enforcement of the judgment of one court by a court of another
jurisdiction. China's legal system is based on written statutes; a decision by
one judge does not set a legal precedent that is required to be followed by
judges in other cases. In addition, the interpretation of Chinese laws may be
varied to reflect domestic political changes.
 
 The
promulgation of new laws, changes to existing laws and the pre-emption of local
regulations by national laws may adversely affect foreign investors. However,
the trend of legislation over the last 20 years has significantly enhanced the
protection of foreign investment and allowed for more control by foreign parties
of their investments in Chinese enterprises. There can be no assurance that a
change in leadership, social or political disruption, or unforeseen
circumstances affecting China's political, economic or social life, will not
affect the Chinese government's ability to continue to support and pursue these
reforms. Such a shift could have a material adverse effect on our business and
prospects.
 
 18
 **ITEM
7. FINANCIAL STATEMENTS.**
 
 INDEPENDENT
      AUDITOR'S REPORT
    F-1FINANCIAL
      STATEMENTSBalance
      Sheets
    F-2Statements
      of Operations
    F-3Statement
      of Stockholders' Equity
    F-4Statements
      of Cash Flows
    F-5NOTES
      TO THE FINANCIAL STATEMENTS
    F-6
 
 **ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.**
 
 None.
 
 **ITEM
8A. CONTROLS AND PROCEDURES**
 
 **Evaluation
of Disclosure Controls and Procedures**
 
 As of
December 31, 2004, the end of the period covered by this report, our Chief
Executive Officer and our Chief Financial Officer reviewed and evaluated the
effectiveness of the our disclosure controls and procedures (as defined in
Exchange Act Rule 13a-15(e) and 15d-15(e)), which are designed to ensure that
material information we must disclose in our report filed or submitted under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded,
processed, summarized, and reported on a timely basis, and have concluded, based
on that evaluation, that as of such date, our disclosure controls and procedures
were effective to ensure that information required to be disclosed by us in
reports that we file or submit under the Exchange Act is accumulated and
communicated to our Chief Executive Officer and Chief Financial Officer as
appropriate to allow timely decisions regarding required disclosure.
 
 **Changes
in Internal Control over Financial Reporting**
 
 There was
no change in our internal control over financial reporting that occurred during
the fourth fiscal quarter of the fiscal year covered by this Annual Report on
Form 10-KSB that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
 
 19
 **ITEM
8B. OTHER INFORMATION.**
 
 None.
 **PART
III**
  **ITEM
9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.**
 
 The name,
age and position held by each of the directors and officers of our company are
as follows:
 The
following table sets forth certain information regarding our directors and
executive officers.
 
 **Name**
    
    **Age**
    
    **Position**Yi
      Bo Sun
    
    29
    
    Chief
      Executive Officer and ChairmanYao
      Miao
    
    33
    
    Chief
      Financial OfficerMei
      Jin Bin
    
    27
    
    SecretaryXu
      Bao Dong
    
    34
    
    DirectorZu
      Zhuan Xu
    
    39
    
    Director
 
 All
directors have a term of office expiring at the next annual general meeting,
unless re-elected or earlier vacated in accordance with the Bylaws. All officers
have a term of office lasting until their removal or replacement by the Board of
Directors.
 
 **Background
of Officers and Directors**
  ***Yi
Bo Sun*** **- Chief Executive Officer**
 
 Mr. Sun
has served as the Chief Executive Officer on November 15, 2004. Prior to
beginning his service at with China Digital, Mr. Sun served as the CEO and
President of E’Jenie, from February 2004 through November 2004. From April 2003
through January 2004 he was president of Shenzhen Jing Kong Chao Ying Electronic
Industrial Corp. From April 2002 through March 2003, he was the marketing
director for Shenzhen Heng Tian Communication Equipment Co., Ltd. From August
2001 through March 2002 he served as the Executive President assistant of
Shenzhen Te Fa Tong Cheng Industrial Inc. He has a Bachelor of Science degree
from Jilin University.
 
 ***Yao
Miao, Chief Financial Officer***
 
 Mr. Yao
Miao has served as the Chief Financial Officer of China Digital since February
2004. Before assuming this role, he was CFO of Shenzhen Southern Heng Ye
Industrial Co., Ltd. From September 2002 through January 2004. He served as the
auditing manager of the accounting department at Shenzhen Run Ze Universal
Development Co., Ltd. From August 2001 through August 2002. He served as the
accounting department director at Golden Butterfly International Software Co.,
Ltd. From June 1999 through July 2001. He has a Bachelor of Science degree in
economics from Hubei University, and is a certified public accountant in China.
 
 20
 ***Mei
Bin Jin*** - ***Secretary***
 
 Ms. Jin
has been on the Board of Directors of China Digital since February 2004. From
February 2002 through June 2003 she was the executive general manager of
Shenzhen E’Jenie Science and Technology Development Co., Ltd. From August 1999
January 2002 she served as the Executive Secretary of Shenzhen Gao Yi Electronic
Co. Ltd. She is a graduate of Hubei Province Huangshi City Professional
Institute.
  ***Xu
Bao Dong*** **- Director**
 
 Mr. Dong
has served as a director since February 2004. Since March 2003 he served as Vice
President at Shenzhen Heng Tian Tong Communication Equipment Inc. From August
2001 through February 2003 he served as the Marketing Director at Shenzhen Li
Gao Electronics. From July 1999 until July 2001 he served as Marketing Director
at Shenzhen Blue Hope Electronic Co., Ltd. He holds a Bachelors of Science
degree from degree from Shenzhen University.
  ***Zu
Zhuan Xu - Director***
 
 Mr. Xu
has served as a director since December 2003. Since November 1502 he has served
as the Vice Director of Human Resources and Senior Executive Assistant at
Shenzhen Xin Jia Electronics Co., Ltd. From May 1999 until March 2002, he was
the Director of Human Resources at Shenzhen Golden Island Biao Industrial Group.
His primary job duties were to maintain, create, and implement all programs in
Human Resources. From October 1992 through April 1999 he served as the Director
of Human Resources at Shenzhen Xie Li Paper Products Co., Ltd. From April 1985
through September 1992 he served as the Primary Executive Secretary at E Zhou
Huang Wei Electronic Generators Manufacture. Mr. Hu holds a Bachelor of Science
degree from Shenzhen University.
 
 **Family
Relationships**
 
 There are
no family relationships among the officers and directors.
 
 **Involvement
in Certain Legal Proceedings**
 
 To our
knowledge, during the past five years, our officers and directors: have not
filed a petition under the federal bankruptcy laws or any state insolvency law,
nor had a receiver, fiscal agent or similar officer appointed by a court for the
business or present of such a person, or any partnership in which he was a
general partner at or within two years before the time of such filing, or any
corporation or business association of which he was an executive officer within
two years before the time of such filing; were not convicted in a criminal
proceeding or named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); were not the subject of any order,
judgment or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining him from
or otherwise limiting their respective activities.
 
 21
 **Compliance
with Section 16 (a) of the Exchange Act**
 
 Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished to us
pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934 during our
most recent fiscal year and Forms 5 and amendments thereto furnished to us with
respect to our most recent fiscal year, all officers, directors and owners of
10% or more of our outstanding shares have filed all Forms 3, 4 and 5 required
by Section 16(a) of the Securities Exchange Act of 1934, as amended.
 
 **Audit
Committee and Charter**
 
 We have
undergone a significant change in management and restructuring of the Company.
We are in the process of searching for outside directors to serve on Board of
Directors and our audit committee and to serve as an audit committee financial
expert.  Currently, Xu Bao Dong and Zu Zhuan Xu serve as our audit
committee.
 
 **Code
of Ethics**
 
 We have
adopted a corporate code of ethics. We believe our code of ethics is reasonably
designed to deter wrongdoing and promote honest and ethical conduct; provide
full, fair, accurate, timely and understandable disclosure in public reports;
comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.
 
  **ITEM
10. EXECUTIVE COMPENSATION.**
 
 The
following table sets forth information with respect to compensation paid by us
to the chief executive officer since the Exchange. Please note that we have
recently undergone a change in management and a restructuring of our operations
and as such, the compensation of executives prior to the Cheering Transaction
and the Acquisition would be meaningless. Further, no executive officer received
compensation during 2003 or 2004. The annual compensation for 2005 will be
determined by the Board of Directors at the next Board meeting.
 
 **Summary
Compensation Table**
 **Long
      Term Compensation****Annual
      Compensation**
    **Awards**
    **Payouts****(a)**
    **(b)**
    **(c)**
    **(d)**
    **(e)**
    **(f)**
    **(g)**
    **(h)**
    **(i)****Other****Annual**
    **Restricted**
    **Securities****Compen**
    **Stock**
    **Underlying**
    **LTIP**
    **All
      Other****Name
      and Principal**
    
    **Salary**
    **Bonus**
    **ation**
    **Award(s)**
    **Options
      /**
    **Payouts**
    **Compens****Position**
    **Year**
    **($)**
    **($)**
    **($)**
    **($)**
    **SARs
      (#)**
    **($)**
    **ation
      ($)**Yi
      Bo Sun
    2004
    0
    0
    0
    0
    0
    0
    0Yi
      Bo Sun
    2003
    0
    0
    0
    0
    0
    0
    0Zuzhuan
      Xu
    2003
    0
    0
    0
    0
    0
    0
    0
 
 22
 **Option/SAR
Grants**
 
 No
individual grants of stock options, whether or not in tandem with stock
appreciation rights ("SARs") and freestanding SARs have been made to any
executive officer or any director since our inception. Accordingly, no stock
options have been exercised by any of the officers or directors in fiscal
2004.
 
 **Long-Term
Incentive Plan Awards**
 
 We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance to occur over a period longer than one fiscal year,
whether such performance is measured by reference to our financial performance,
our stock price, or any other measure.
 
 **Compensation
of Directors**
 
 The
directors did not receive any other compensation for serving as members of the
board of directors other than compensation for out of pocket expenses. The Board
has not implemented a plan to award options. There are no contractual
arrangements with any member of the board of directors. As of the date hereof,
we have not entered into employment contracts with any of our
officers.
 
 **Indemnification**
 
 Under
Section 145 of the Nevada General Corporation law, the Company has broad powers
to indemnify its directors and officers against liabilities they may incur in
such capacities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). The Registrant's Bylaws also provide that the
Registrant has the power to indemnify its directors, officers, employees and
other agents to the maximum extent permitted by Nevada law.
  The
Registrant's Certificate of Incorporation provides for the elimination of
liability for monetary damages for breach of the directors' fiduciary duty of
care to the Registrant and its stockholders. The provision does not eliminate
the directors' duty of care and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Nevada law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Nevada law.
The provision does not affect director’s responsibilities under any other laws,
such as the federal securities laws or state or federal environmental
laws.
  **ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDERS MATTERS.**
 
 23
 The
following table sets forth, as of March 29, 2005, the beneficial shareholdings
of persons or entities holding five percent or more of our common stock, each
director individually, each named executive officer and all of our directors and
officers as a group. Each person has sole voting and investment power with
respect to the shares of common stock shown, and all ownership is of record and
beneficial. Unless otherwise disclosed, the address of each person set forth
below is that of the Registrant.
 
 **Name
      and Address Of Beneficial Owner (1)**
    
    **Number
      of Shares Beneficially**
      **Owned
      (2)**
    
    **Percentage
      of Shares**
      **Beneficially
      Owned (2)****Officers
      and Directors:**Yi
      Bo Sun (3)(4)
    
    35,700,000
    
    65.55Yao
      Miao
    
    *
    
    *Mei
      Bin Jin
    
    *
    
    *Xu
      Bao Don
    
    *
    
    *Zu
      Zhuan XuAll
      Officers, Directors (5 persons)
    
    35,700,000
    
    65.55**5%
      Beneficial Owners:**Cheering
      Limited (3)
    
    5,700,000
    
    10.47
  
 *
None.
 
 (1) The
address of the persons named in this column is A-3. Xinglian Industrial Zone. He
Hua Ling Pingxin Road. Xin Nan. Ping Hua Town. Longgang. Shenzhen China
51811.
 
 (2)
Shares of Common Stock subject to stock options and warrants that are currently
exercisable or exercisable within 60 days or shares that otherwise may be
acquired within 60 days of this Report are deemed to be beneficially owned by
the person holding the options and warrants or person with the right to acquire
such shares for computing such person’s percentage, but are not treated as
outstanding for computing the percentage of any other person.
 
 (3) Yi Bo
Sun, our President and director, is also the Chairman and Chief Executive
Officer of Cheering Limited.  Cheering Limited beneficially owns 5,700,000
shares of our Common Stock.  As the Chief Executive Officer and Chairman of
the Board of Cheering Limited, Yi Bo Sun may be deemed to beneficially own
shares owned by Cheering Limited.
 
 (4) In
connection with the private placement we issued 30,000,000 shares of common
stock, to the following investors:
 
 Xiong
      Xin Gan
    
    7,200,000
    
    13.22Ruan
      Ju Xiang
    
    6,000,000
    
    11.02Fan
      Xi
    
    5,400,000
    
    9.92Xu
      Zu Hong
    
    4,500,000
    
    8.26Xu
      Zhu Zhuan
    
    3,750,000
    
    6.89
 
 Each of
these investors executed an Irrevocable Proxy granting Yi Bo Sun the right to
vote all shares of Common Stock purchased by such investors in such
placement.  The Irrevocable Proxies expire May 1, 2006.  As a result,
Yi Bo Sun will be entitled to vote an aggregate of 35,700,000 shares (or
approximately 65.55%) of our Common Stock until May 1, 2006.
 
 **ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.**
 
 Mr. Yi Bo
Sun as the Chairman and Chief Executive Officer of Cheering is the beneficial
owner of the 5,700,000 shares approximately 11.88%, of the issued and
outstanding common stock of the Company issued in the Cheering Transaction and
prior to the expiration of the irrevocable proxies, Mr. Sun will have the power
to vote or direct the voting of 30,000,000 shares issued in the Private
Placement. Taken together, Mr. Sun controls approximately 66% of the Registrants
issued and outstanding common stock.
 
 24
 During
calendar years 2003 and 2004, we were parties to an agreement with Jack Gregory,
our former President, whereby Mr. Gregory allowed us to use his office space
rent-free until we were able to show significant revenue.  This agreement
terminated upon the consummation of the purchase of 5,700,000 shares of Common
Stock by Cheering Limited.
 
 **ITEM
13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.**
 
 **Reports
on Form 8-K**
 
 **Exhibits**
 
 **Exhibit
      No.**
    **Document
      Description**3.1
    Articles
      of Incorporation (Exhibit 3.1 to Registration Statement on Form SB-2/A,
      Amendment No. 8, filed with the Commission on March 22,
    2002)3.2
    Bylaws
      (Exhibit 3.4 to Registration Statement on Form SB-2/A, Amendment No. 8,
      filed with the Commission on March 22, 2002)4.1
    Form
      of Stock Certificate (Exhibit 4.1 to Registration Statement on Form
      SB-2/A, Amendment No. 8, filed with the Commission on March 22,
      2002)4.2
    2004
      Equity Incentive Plan (Exhibit 4.1 to Registration Statement on Form S-8
      filed with the Commission on March 2, 2004)10.1
    Form
      of Subscription Agreement dated March 17, 2004 by and among Jasmine’s
      Garden and the Investors (Exhibit 4.1 to Form 8-K filed with the
      Commission on March 22, 2004)10.2
    Share
      Exchange Agreement and Plan of Reorganization (Exhibit 10.1 to the Form
      8-K file September 29, 2004)14.1
    Code
      of Ethics (*)23.1
    Consent
      of registered accountants Lichter, Yu &
  Associates(*)31.1
    Certification
      of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as amended.
      (*)31.2
    Certification
      of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as amended.
      (*)32.1
    Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
    (*)32.2
    Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
    (*)
 _________________
 
 (*)  Filed
herewith.
 
 **ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.**
 
 Lichter,
Yu & Associates, Certified Public Accountants, was the Registrant's
independent registered public accounting firm engaged to examine the financial
statements of the Registrant for the fiscal years ending December 31, 2004 and
2003.
 
 25
 **Audit
Fees**
 
 Lichter,
Yu & Associates was paid aggregate fees of approximately $40,000 for
professional services rendered for the audit of the Registrant's annual
financial statements and for the reviews of the financial
statements.
 
 **Audit-Related
Fees**
 
 Lichter,
Yu & Associates was paid additional fees of approximately $2,500 for
assurance and related services reasonably related to the performance of the
audit or review of the Registrant's financial statements.
 
 **Tax
Fees**
 
 Lichter,
Yu & Associates was not paid any fees for professional services rendered for
tax compliance, tax advice and tax planning. This service was not
provided.
 
 **Audit
Committee Pre-Approval Policies and Procedures**
 
 Our Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by our independent auditors. These services may include audit
services, audit-related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to
the particular service or category of services. The independent auditor and
management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditor in accordance with
this pre-approval.
  26
  **SIGNATURES**
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on this 29th day of March
2005.
 
 
 **CHINA
      DIGITAL COMMUNICATION GROUP**By:
    /s/
      Yi Bo SunYi
      Bo SunChief
      Executive Officer and Chairman
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the Registrant and in the
capacities.
 
 **Signatures**
    **Title**
    **Date**/s/
      Yi Bo Sun
    Chief
      Executive Officer and Chairman
    March
      29, 2005Yi
      Bo Sun/s/
      Yao Mia
    Chief
      Financial Officer
    March
      29, 2005Yao
      Miao/s/
      Mei Jin Bin
    Secretary
    March
      29, 2005Mei
      Jin Bin/s/
      Xu Bao Dong
    Director
    March
      29, 2005Xu
      Bao Dong/s/
      Zu Zhuan Xu
    Director
    March
      29, 2005Zu
      Zhuan Xu
  27
  **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 
 **CONSOLIDATED
FINANCIAL STATEMENTS**
 
 **DECEMBER
31, 2004 AND 2003**
 
 
 
 
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **CONSOLIDATED
FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **TABLE
OF CONTENTS**
  Independent
      Auditors Report
    F-2Consolidated
      Balance Sheets
    F-3Consolidated
      Statements of Income
    F-4Consolidated
      Statements of Cash Flow
    F-5Consolidated
      Statements of Changes in Stockholders’ Equity
    F-6Notes
      to Consolidated Financial Statements
    F-7
 
 
 
 **INDEPENDENT
AUDITOR'S REPORT**
 
 
 To the
Board of Directors and Stockholders
 **China
Digital Communication Group and Subsidiaries**
 Las
Vegas, Nevada
 
 
 We have
audited the accompanying consolidated balance sheets of China Digital
Communication Group and its subsidiaries ("the Company") as of December 31,
2004, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of China Digital Communication Group
(formerly Jasmine’s Garden, Inc.) as of December 31, 2003, were audited by other
auditors whose report dated April 8, 2004, on those financial statements
included an explanatory paragraph that described the Company’s recurring losses
and limited capital resources that raise substantial doubt about its ability to
continue as a going concern, as discussed in Note M to the consolidated
financial statements.
 
 We
conducted our audit in accordance with auditing standards generally accepted in
the United States of America. ** Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the China
Digital Communication Group and Subsidiaries as of December 31, 2004, and the
consolidated results of its operations and cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United States
of America.
 
 March 3,
2005
 San
Diego, California
 
 F-2
 
 CHINA
      DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES(FORMERLY
      JASMINE'S GARDEN)CONSOLIDATED
      BALANCE SHEETSDECEMBER
      31, 2004 AND 2003
  ASSETS2004
    
    2003Current
      AssetsCash
      and cash equivalents
    
    $
    437,126
    
    $
    21,221Accounts
      receivable, net
    
    
    1,964,069
    
    
    0Inventory
    
    
    225,450
    
    
    0Other
      receivables
    
    
    12,449
    
    
    0Total
      Current Assets
    
    
    2,639,094
    
    
    21,221Fixed
      Assets, net
    
    
    237,834
    
    
    0Total
      Fixed Assets
    
    
    237,834
    
    
    0Other
      AssetsPrepaid
      expenses
    
    
    1,071
    
    
    0Deposits
    
    
    8,470
    
    
    0Goodwill
    
    
    1,865,067
    
    
    0Total
      Other Assets
    
    
    1,874,608
    
    
    0Total
      Assets
    
    $
    4,751,536
    
    $
    21,221LIABILITIES
      AND STOCKHOLDERS' EQUITY2004
    
    
    2003Current
      LiabilitiesAccounts
      payable and accrued expenses
    
    $
    1,370,493
    
    $
    5,000Deferred
      revenue
    
    
    35,724
    
    
    0Current
      portion, debt
    
    
    244,072
    
    
    0Total
      Current Liabilities
    
    
    1,650,289
    
    
    5,000Stockholders'
      EquityCommon
      stock, $.001 par value, 140,000,000and
      50,000,000 shares authorized, 54,460,626 and6,015,400
      issued and outstanding, respectively
    
    
    54,461
    
    
    6,015Additional
      paid in capital
    
    
    3,895,614
    
    
    15,385Retained
      earnings (deficit)
    
    
    (848,828
    )
    
    (5,179
    )Total
      Stockholders' Equity
    
    
    3,101,247
    
    
    16,221Total
      Liabilities and Stockholders' Equity
    
    $
    4,751,536
    
    $
    21,221
   See Accompanying Notes and Auditor's Report
 F-3
 
  CHINA
      DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES(FORMERLY
      JASMINE'S GARDEN)CONSOLIDATED
      STATEMENTS OF OPERATIONSFOR
      THE YEARS ENDED DECEMBER 31, 2004 AND 2003
  2004
    
    2003Sales,
      net
    
    $
    2,338,718
    
    $
    808Cost
      of sales
    
    
    1,294,346
    
    
    579Gross
      profit
    
    
    1,044,372
    
    
    229Selling
      expense
    
    
    55,416
    
    
    0General
      and administrative expenses
    
    
    1,227,082
    
    
    6,028Consulting
      fees
    
    
    598,000
    
    
    0Income
      (loss) from operations
    
    
    (836,126
    )
    
    (5,799
    )Other
      (Income) ExpenseInterest
      income
    
    
    (6
    )
    
    0Other
      income
    
    
    0
    
    
    (6,581
    )Miscellaneous
      expense
    
    
    145
    
    
    0Interest
      expense
    
    
    7,384
    
    
    0Total
      Other (Income) Expense
    
    
    7,523
    
    
    (6,581
    )Income
      (loss) before income taxes
    
    
    (843,649
    )
    
    782Provison
      for income taxes
    
    
    0
    
    
    0Net
      income (loss)
    
    
    ($843,649
    )
    $
    782Net
      loss per share (basic and diluted)Basic
    
    
    ($0.02
    )
    $
    0.00Diluted
    
    
    ($0.02
    )
    $
    0.00Weighted
      average number of sharesBasic
    
    
    39,172,889
    
    
    6,015,400Diluted
    
    
    39,172,889
    
    
    6,015,400
 See
Accompanying Notes and Auditor's Report
  F-4
  CHINA
      DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES(FORMERLY
      JASMINE'S GARDEN)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2004 AND 2003
  2004
    
    2003CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income (loss)
    
    
    ($843,649
    )
    $
    782Adjustments
      to reconcile net loss to net cashused
      in operating activities:Depreciation
    
    
    13,500
    
    
    0Gain
      on disposal of marketable securities
    
    
    8,791
    
    
    (4,348
    )Issuance
      of shares for consultants
    
    
    598,000
    
    
    0Cash
      acquired in acquisition
    
    
    130,852
    
    
    0Decrease
      (Increase) in receivables
    
    
    (626,976
    )
    
    252Decrease
      (Increase) in inventory
    
    
    (73,155
    )
    
    0Decrease
      (Increase) in other receivables
    
    
    182,045
    
    
    0Decrease
      (Increase) in prepaid expenses
    
    
    (1,071
    )
    
    0Decrease
      (Increase) in deposits
    
    
    (8,470
    )
    
    0(Decrease)
      Increase in accounts payableand
      accrued expenses
    
    
    1,103,978
    
    
    4,132(Decrease)
      Increase in deferred revenue
    
    
    35,724
    
    
    0Total
      Adjustments
    
    
    1,363,218
    
    
    36Net
      cash provided by operations
    
    
    519,569
    
    
    818CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of marketable securities
    
    
    0
    
    
    (6,808
    )Proceeds
      on disposal of marketable securities
    
    
    0
    
    
    11,156Purchase
      of subsidiary
    
    
    (1,500,000
    )
    
    0Purchase
      of furniture and equipment
    
    
    (103,665
    )
    
    0Net
      (cash used in) provided by investing activities
    
    
    (1,603,665
    )
    
    4,348CASH
      FLOWS FROM FINANCING ACTIVITIESIssuance
      of common stock
    
    
    1,500,000
    
    
    0Net
      cash provided by financing activities
    
    
    1,500,000
    
    
    0Net
      change in cash and cash equivalents
    
    
    415,905
    
    
    5,166Cash
      and cash equivalents at beginning of year
    
    
    21,221
    
    
    16,055Cash
      and cash equivalents at end of year
    
    $
    437,126
    
    $
    21,221Supplemental
      cash flows disclosures:Income
      tax payments
    
    $
    0
    
    $
    0Interest
      payments
    
    $
    7,384
    
    $
    0Issuance
      of stock for purchase of subsidiary
    
    $
    832,906
    
    $
    0
  See
Accompanying Notes and Auditor's Report
 F-5
 
 CHINA
      DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES(FORMERLY
      JASMINE'S GARDEN)CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYFOR
      THE YEARS ENDED DECEMBER 31, 2004 AND 2003
   2004
    
    2003Common
      stock outstanding, number of sharesBalance
      at beginning of year
    
    
    6,015,400
    
    
    6,015,400Common
      stock issued
    
    
    48,445,226
    
    
    0Balance
      at end of year
    
    
    54,460,626
    
    
    6,015,400Common
      stock, par value $.001 per shareBalance
      at beginning of year
    
    $
    6,015
    
    $
    6,015Common
      stock issued
    
    
    48,446
    
    
    0Balance
      at end of year
    
    
    54,461
    
    
    6,015Additional
      paid in capitalBalance
      at beginning of year
    
    
    15,385
    
    
    15,385Issuance
      of stock
    
    
    3,880,229
    
    
    0Balance
      at end of year
    
    
    3,895,614
    
    
    15,385Retained
      (deficits)Balance
      at beginning of year
    
    
    ($5,179
    )
    
    ($5,961
    )Net
      income (loss)
    
    
    (843,649
    )
    
    782Balance
      at end of year
    
    
    (848,828
    )
    
    (5,179
    )Total
      stockholders' equity at end of year
    
    $
    3,101,247
    
    $
    16,221
  See
Accompanying Notes and Auditor's Report
  F-6
  **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
A -** **ORGANIZATION**
 
 China
Digital Communication Group, formerly Jasmine’s Garden, Inc. (the “Company”) was
incorporated under the laws of the State of Nevada on March 27, 2001. On
September 30, 2004, the Company entered into an Exchange Agreement with Billion.
Billion owns all of the issued and outstanding shares of Shenzhen E’Jenie
Science and Technology Company, Limited (E’Jenie). Billion Electronics Co., Ltd.
(Billion), was incorporated under the laws of the British Virgin Islands on July
27, 2004. Shenzhen
E’Jenie Science & Technology Company Limited , was
legally established on July 8, 2002 under the laws of the Peoples’ Republic of
China. When used in these notes, the terms “Company,” “we,” “our,” or “us” mean
China Digital Communication Group and its Subsidiaries.
 
 On
September 30, 2004, the Company entered into an Exchange Agreement with Billion.
Pursuant to the Exchange Agreement, the Company agreed to purchase all of the
issued and outstanding shares of Billion for approximately $1,500,000 in cash
and 4,566,210 shares of the Company’s common stock, or approximately 8.7% of the
total issued and outstanding shares.
 
 The
Company through its acquisition of Billion and E’Jenie is no longer considered a
development stage company as it was during the year ended December 31, 2003. The
Company is now engaged in the business of the research and development,
manufacture, and distribution of battery casings.
 
 **Note
B -** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES**
 
 Revenue
Recognition
 Revenue
from sales of products to customers is recognized upon shipment or when title
passes to customers based on the terms of the sales, and is recorded net of
returns, discounts and allowances.
 
 Principles
of Consolidation
 The
consolidated financial statements include the accounts of China Digital
Communication Group and its wholly owned subsidiaries Billion and E’Jenie,
collectively referred to within as the Company. All material intercompany
accounts, transactions and profits have been eliminated in
consolidation.
 
 Risks
and Uncertainties
 The
Company is subject to substantial risks from, among other things, intense
competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements,
limited operating history, foreign currency exchange rates and the volatility of
public markets.
  F-7
 
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
B -** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED** **)**
 
 Contingencies
 Certain
conditions may exist as of the date the financial statements are issued, which
may result in a loss to the Company but which will only be resolved when one or
more future events occur or fail to occur. The Company’s management and legal
counsel assess such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or unasserted claims that
may result in such proceedings, the Company’s legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or expected to be
sought.
 
 If the
assessment of a contingency indicates that it is probable that a material loss
has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If
the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material would be disclosed.
 
 Loss
contingencies considered to be remote by management are generally not disclosed
unless they involve guarantees, in which case the guarantee would be
disclosed.
 
 Use of
Estimates
 The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States (“GAAP”) requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Significant estimates include collectibility of accounts receivable, accounts
payable, sales returns and recoverability of long-term assets.
 
 Allowance
for Doubtful Accounts
 We have
made an allowance for doubtful accounts for trade receivables based on a
combination of write-off history, aging analysis, and any specific known
troubled accounts.
 
 Fixed
Assets
 Property
and equipment are stated at cost less accumulated depreciation. Expenditures for
major additions and improvements are capitalized, and minor replacements,
maintenance and repairs are charged to expense as incurred. Depreciation is
provided on the straight-line method over the estimated useful lives of the
assets, or the remaining term of the lease, as follows:
 
 Furniture
      and Fixtures
    5
      yearsEquipment
    5
      yearsComputer
      Hardware and Software
    5
      years
   F-8
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 ****
 **Note
B -** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED** **)**
 
  Exchange
Gain (Loss):
  During
the year ended December 31, 2004, the transactions of Billion and E’Jenie were
denominated in foreign currency and were recorded in Chinese Yuan Renminbi (CNY)
at the rates of exchange in effect when the transactions occur. Exchange gains
and losses are recognized for the different foreign exchange rates applied when
the foreign currency assets and liabilities are settled.
 
 Translation  Adjustment
  As of
December 31, 2004, the accounts of Billion and E’Jenie were maintained, and its
financial statements were expressed, in Chinese Yuan Renminbi (CNY). Such
financial statements were translated into U.S. Dollars (USD) in accordance with
Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency
Translation,” with the CNY as the functional currency. According to the
Statement, all assets and liabilities were translated at the current exchange
rate, stockholder’s equity are translated at the historical rates and income
statement items are translated at the average exchange rate for the period. The
resulting translation adjustments are reported under other comprehensive income
in accordance with SFAS No. 130, “Reporting Comprehensive Income.”
  As of
December 31, 2004 the exchange rates between CNY and the USD was
NTD$1=USD$0.1210. The weight-average rate of exchange between CNY and USD was
NTD$1 = USD$0.1210.
 
 Fair
Value of Financial Instruments
  Our
Company measures its financial assets and liabilities in accordance with GAAP.
For certain of the Company’s financial instruments, including accounts
receivable (trade and related party), notes receivable and accounts payable
(trade and related party), and accrued expenses, the carrying amounts
approximate fair value due to their short maturities. The amounts owed for
long-term debt and revolving credit facility also approximate fair value because
interest rates and terms offered to the Company are at current market
rates.
  Statement
of Cash Flows
  In
accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
Company’s operations is based upon the local currencies. As a result, amounts
related to assets and liabilities reported on the statement of cash flows will
not necessarily agree with changes in the corresponding balances on the balance
sheet.
  F-9
  **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
B -** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
  Concentration
of Credit Risk
  Financial
instruments that potentially subject the Company to concentrations of credit
risk are cash, accounts receivable and other receivables arising from its normal
business activities. The Company places its cash in what it believes to be
credit-worthy financial institutions. The Company has a diversified customer
base, most of which are in China. The Company controls credit risk related to
accounts receivable through credit approvals, credit limits and monitoring
procedures. The Company routinely assesses the financial strength of its
customers and, based upon factors surrounding the credit risk, establishes an
allowance, if required, for un - collectible
accounts and, as a consequence, believes that its accounts receivable credit
risk exposure beyond such allowance is limited.
  Inventory
 
 Inventory
is valued at the lower of cost or market. Cost is determined on the weighted
average method. As of December 31, 2004, inventory consisted of raw material,
work in progress and finished goods as follows:
 
 **Inventory**Raw
      material
    
    $
    72,870Work-in
      -process
    
    
    39,611Finished
      goods
    
    
    112,
      969$
    225,450
  Cash
and Cash Equivalents
 The
Company considers all highly liquid investments purchased with initial
maturities of three months or less to be cash equivalents.
 
 Advertising
 Advertising
costs are expensed in the year incurred.
  F-10
  **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
B -** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED** **)**
 
 Income
Taxes
 Provisions
for income taxes are based on taxes payable or refundable for the current year
and deferred taxes on temporary differences between the amount of taxable income
and pretax financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements.
  Deferred
tax assets and liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled as prescribed in
SFAS No. 109, “Accounting for Income Taxes.” As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through the provision
for income taxes.
  Earnings
Per Share
 The
Company uses SFAS No. 128, “Earnings Per Share,” for calculating the basic and
diluted earnings (loss) per share. Basic earnings (loss) per share are computed
by dividing net income (loss) attributable to common stockholders by the
weighted average number of common shares outstanding. Diluted earnings per share
are computed similar to basic earnings per share except that the denominator is
increased to include common stock equivalents, if any, as if the potential
common shares had been issued.
 
 Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed of
 The
Company adopted the provision of Financial Accounting Standards Board (“FASB”)
No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of.” This statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amounts of the assets exceed the fair values of the assets. In assessing the
impairment of these identifiable intangible assets, identifiable goodwill will
be allocated on a pro rata basis using fair values of the assets at the original
acquisition date. In estimating expected future cash flows for determining
whether an asset is impaired and if expected future cash flows are used in
measuring assets that are impaired, assets will be grouped at the lowest level
(entity level) for which there are identifiable cash flows that are largely
independent of the cash flows of other groups of assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell. In recording an impairment loss, any related goodwill would be reduced to
zero before reducing the carrying amount of any identified impaired
asset.
  For
goodwill not identifiable with an impaired asset, the Company will establish
benchmarks at the lowest lever (entity level) as its method of assessing
impairment. In measuring impairment, unidentifiable goodwill will be considered
impaired if the fair value at the lowest level is less than its carrying amount.
The fair value of unidentifiable goodwill will be determined by subtracting the
fair value of the recognized net asset at the lowest level (excluding goodwill)
from the value at the lowest level. The amount of the impairment loss should be
equal to the difference between the carrying amount of goodwill and the fair
value of goodwill. In the event that impairment is recognized, appropriate
disclosures would be made.
  F-11
 
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
B -** **SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
 
 New
Accounting Pronouncements
 In
January 2003, The Financial Accounting Standards Board (FABB”) issued FASB
Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN46”).
This interpretation of Accounting Research Bulletin No. 51, requires companies
to consolidate the operations of all variable interest entities (“VIE’s”) for
which they are the primary beneficiary. The term “primary beneficiary” is
defined as the entity that will absorb a majority of expected losses, receive a
majority of the expected residual returns, or both. This interpretation was
later revised by the issuance of Interpretation No. 46R (“FIN 46R”). The
revision was issued to address certain implementation issues that had arisen
since the issuance of the original interpretation and to provide companies with
the ability to defer the adoption of FIN46 to period after March 15, 2004. The
implementation of FIN No. 46 and FIN 46R, had no material impact on the
Company’s financial statements.
  On
December 16, 2004, the FASB issued SFAS No. 123 (revised 2004),
‘‘Share-Based Payment’’ (‘‘SFAS 123R’’), which replaces SFAS No. 123,
‘‘Accounting for Stock-Based Compensation’’ (‘‘SFAS 123’’) and supercedes APB
Opinion No. 25, ‘‘Accounting for Stock Issued to Employees.’’ SFAS 123R
requires all share-based payments to employees, including grants of employee
stock options, to be recognized in the financial statements based on their fair
values, beginning with the first interim or annual period after June 15,
2005. The pro forma disclosures previously permitted under SFAS 123 no longer
will be an alternative to financial statement recognition. The Company is
required to adopt SFAS 123R in its three months ending September 30, 2005.
Under SFAS 123R, The Company must determine the appropriate fair value model to
be used for valuing share-based payments, the amortization method for
compensation cost and the transition method to be used at date of adoption. The
transition methods include prospective and retroactive adoption options. Under
the retroactive options, prior periods may be restated either as of the
beginning of the year of adoption or for all periods presented. The prospective
method requires that compensation expense be recorded for all unvested stock
options and restricted stock at the beginning of the first quarter of adoption
of SFAS 123R, while the retroactive methods would record compensation expense
for all unvested stock options and restricted stock beginning with the first
period restated. The Company is evaluating the requirements of SFAS 123, and it
expects that the adoption of SFAS 123R will have no material impact on the
Company’s financial statements.
   In
September 2004, the EITF Issue No. 04-08, “The Effect of Contingently
Convertible Debt on Diluted Earnings per Share.” (“EITF 04-08”) was issued
stating that contingently convertible debt should be included in diluted
earnings per share computations regardless of whether the market price trigger
has been met. EITF 04-08 is effective for reporting periods ending after
December 15, 2004. The adopted EITF 02-14 will have no material impact on the
Company’s financial statements.
  
 F-12
 ****
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 
 **Note
C -** **COMMON
STOCK**
 
 On March
1, 2004, the Company announced a plan named “Jasmine’s Garden 2004 Equity
Incentive Plan” (“Plan”) for providing incentives to attract, retain and
motivate eligible persons whose presence and potential contributions are
important to the success of the Company. 12,000,000 shares of common stock were
allocated to the plan.
 
 On March
4, 2004, certain of the Company’s principal stockholders holding 9,442,700
shares of common stock, representing approximately 52.53% of the then total
issued and outstanding common stock, approved by written consent to adopt a
resolution to amend the Company’s Articles of Incorporation to increase the
number of shares of common stock authorized to be issued from 50,000,000 to
140,000,000 and to establish a class of preferred stock consisting of 60,000,000
shares, par value $0.001 per share. The amendment was filed on April 28,
2004.
 
 On March
9, 2004, the Company issued 11,960,000 shares under the Plan to a number of
consultants who were engaged to provide various services to the Company during
the period from January 1, 2004 to March 31, 2004 in relation to the Company’s
proposed plan to identify and complete a merger or acquisition with private
entities. These shares were valued at $0.05 per share or $598,000 and was
expensed as consulting fees in the statements of operations.
 
 On March
17, 2004, the Company completed a private offering of 30,000,000 shares of its
common stock at a per share price of $0.05 to seven unaffiliated individuals,
resulting in gross proceeds to the Company of $1,500,000. The proceeds were to
be used for the Company’s proposed plan to identify and complete a merger or
acquisition with private entities.
 
 On
September 30, 2004, the Company agreed to purchase all of the issued and
outstanding shares of Billion from its shareholders for approximately $1,500,000
in cash and 4,566,210 shares of the Company’s common stock, or approximately
8.7% of the total issued and outstanding shares.
 
 On
September 30, 2004, the Company issued 1,919,016 shares of the Company’s common
stock to a company for guarantee fees related to the acquisition of Billion. The
guarantee was valued at $604,595.
 
 F-13
  **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
D -** ****** **EXCHANGE
AGREEMENT**
 
 On
September 30, 2004, the Company entered into an Exchange Agreement with Billion
Electronics Co., Ltd. (Billion), a company incorporated under the laws of the
British Virgin Islands. Billion owns all of the issued and outstanding shares of
Shenzhen E’Jenie Science and Technology Company, Ltd.. E’Jenie is incorporated
under the laws of the Peoples Republic of China, and is engaged in the business
of the research and development, manufacture, and distribution of battery
casings.
 
 Pursuant
to the Exchange Agreement, the Company agreed to purchase all of the issued and
outstanding shares of Billion from the shareholders for approximately $1,500,000
in cash and 4,566,210 shares of the Company’s common stock, or approximately
8.7% of the total issued and outstanding shares. This transaction closed on
November 15, 2004.
 
 **Note
E -** ****** **STOCK
PURCHASE BUSINESS COMBINATION**
 
 On
November 15, 2004  the
Company completed the purchase of Billion, which owns all of the issued and
outstanding shares of E’Jenie. By acquiring all of the outstanding capital stock
of Billion and E’Jenie in exchange for $1,500,000 and 4,566,210 shares of the
Company’s common stock. The acquisition was accounted for using the purchase
method of accounting and, accordingly, Billion’s and E’Jenie’s results of
operations have been included in the consolidated financial statements since the
date of acquisition.
 
 The
following table presents the allocation of the acquisition cost, including
professional fees and other related acquisition costs, to the assets acquired
and liabilities assumed:
 
 Inventories
    
    
    152,295Property,
      plant, and equipment
    
    
    184,711Total
      assets
    
    $
    1,999,445Accounts
      payable
    
    $
    552,572Loan
      payable
    
    
    241,345Other
      current liabilities
    
    
    737,689Total
      liabilities
    
    $
    1,531,606Total
      acquisition cost
    
    $
    467,839CostTotal
      Cost of investment
    
    $
    2.332,906Total
      acquisition cost
    
    
    467,839Goodwill
    
    $
    1,865,067
 F-14
 
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
E -** ****** **STOCK
PURCHASE BUSINESS COMBINATION (CONTINUED)**
 
 The
following (unaudited) pro forma consolidated results of operations have been
prepared as if the acquisition of Billion had occurred at January 1,
2004:
 
 December
      31, 2004Sales
    
    $
    5,181,694Net
      income (loss)
    
    
    (527,570
    )Net
      income per share—basic
    
    
    (.013
    )Net
      income per share—diluted
    
    
    (.013
    )
 
 The pro
forma information is presented for informational purposes only and is not
necessarily indicative of the results of operations that actually would have
been achieved had the acquisitions been consummated as of that time, nor is it
intended to be a projection of future results.
 
 **Note
F -** **CASH**
 
 The
Company maintains its cash balances at various banks in China and the United
States. As of December 31, 2004 there were no uninsured portions of the balances
held at these banks.
 
 **Note
G -** **FIXED
ASSETS**
 
 Fixed
assets consist of the following:
 2004
    
    2003Machinery
    
    $
    255,599
    
    $
    0Automobile
    
    
    23.675
    
    
    —Office
      equipment
    
    
    5,520
    
    
    —$
    284,755
    
    
    —Accumulated
      depreciation
    
    
    (46,921
    )
    
    —$
    237,834
    
    $
    0
 
 F-15
  
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **Note
H -** **COMPENSATED
ABSENCES**
 
 Employees
earn annual vacation leave at the rate of seven (7) days per year for the first
three years. Upon completion of the third year of employment, employees earn
annual vacation leave at the rate of ten (10) days per year for years four
through five. Upon completion of the fifth year of employment, employees earn
annual vacation leave at the rate of fourteen (14) days per year for years six
(6) through ten (10). Upon completion of the tenth year of employment, one (1)
additional day for each additional year, until it reaches thirty (30) days per
year. At termination, employees are paid for any accumulated annual vacation
leave. As of December 31, 2004 no accumulated vacation liability
exists.
 
 **Note
I -** **INCOME
TAXES**
 
 The
Company’s total deferred tax asset as of December 31, 2004 is as
follows:
 
  Net
      operating loss carry forward
    
    
    848,828Value
      allowance
    
    
    (848,828
    )—
 The
difference between the income tax benefit in the accompany statements of
operations and the amount that would result if the Federal statutory rate of 34%
were applied to pre-tax profit is as of December 31, 2004.
 2004Income
      tax (credit) expense at statutory rate
    
    
    (288,602
    )Valuation
      allowance
    
    
    288,602—

The net
operating loss carried forward of $848,828 for federal tax purpose will expire
in the year 2025.


F-16

**CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
**(FORMERLY
JASMINE’S GARDEN, INC.)**
**NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
**DECEMBER
31, 2004 AND 2003**

**Note
J-****COMMITTMENTS**

The
Company leases various office facilities under operating leases that terminate
on various dates. Rental expense for these leases consisted of $20,528 for the
year ended December 31, 2004. The Company has future minimum lease obligations
as follows:
2005
    
    $
    82,1112006
    
    
    82,1112007
    
    
    82,1112008
    
    
    82,1112009
    
    
    821112010
      and thereafter
    
    
    109,481Total
    
    $
    520,036
**Note
K -****DEBT**

At
December 31, 2004, the Company had a secured note payable to a banks in China,
interest at 5.31% per annum, due on July 30, 2005 in the amount of
$242,000.

At
December 31, 2004, the Company had a secured note payable to a bank in China,
interest at 4.93% per annum, in the amount of $2,072.

**Note
L -****FAIR
VALUE OF FINANCIAL INSTRUMENTS**

The
carrying amounts of cash and cash equivalents, accounts receivable, deposits and
accounts payable approximate their fair value because of the short maturity of
those instruments.

The
carrying amounts of the Company's long-term debt approximate their fair value
because of the short maturity and/or interest rates which are comparable to
those currently available to the Company on obligations with similar
terms.

**Note
M -****GOING
CONCERN**

As of
December 31, 2003 the prior auditor issued a Going Concern opinion due to the
recurring losses and limited capital resources of the Company.

As of
December 31, 2004 the Company has changed its financial position by its
acquisition of Billion pursuant to the Exchange Agreement detailed in Note D
above and by the sale of common stock during the year to raise
capital.

F-17

**CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
**(FORMERLY
JASMINE’S GARDEN, INC.)**
**NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
**DECEMBER
31, 2004 AND 2003**

**Note
N -****SUBSEQUENT
EVENTS**

On
February 1, 2005 The Company signed an operating lease agreement for an office
space in Los Angeles that terminates on Januray 31, 2006. The office will serve
as the new center of operations in North America. Monthly rent is
$1,200.


On
February 12, 2005 Ejenie relocated to a larger production facility in Shenzhen,
China. The lease is an operating lease that terminates on September 15, 2005.
The lease requires monthly payment of $6,493.

F-18