UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 _________________
 ****
 **FORM
10-KSB/A**
 
 **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 **April
20, 2005 there were 54,460,626 shares of common stock
outstanding.**
 
 2
  EXPLANATORY
NOTE
  This Form
10K/A is being filed to amend the China Digital Communication Group ( the
"Company") Annual Report on Form 10-K for the period ended December 31, 2004 in
order to reflect the restatement of the Company's Consolidated Financial
Statements and amendments to related disclosures as of December 31, 2004 and
2003 and for the years then ended. The restatement arose from the correction of
the posting of a transaction related to the purchase of the Company's operating
subsidiary in 2004. The transaction to record consulting fees paid to Billion
Electronics should have been eliminated upon consolidation as of December 31,
2004 and was not as it was originally posted as occurring prior to the purchase
date. This restatement affected the Company's General and Administrative
Expenses for the year ended December 31, 2004 and the related Net Income and
Stockholders Equity.
 **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)
    
    
    328,645
    
    
    111,851
    
    
    453,041
    
    
    132,152Per
      Common Share Data:Earnings
      (loss)Basic
      & Diluted
    
    
    .009
    
    
    .003
    
    
    .012
    
    
    .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”).
  
 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.
 
 3
 
 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.
 
 
 
 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
    
    
    880,498
    
    
    996,005
    
    
    116,402Research
      and development
    
    
    0
    
    
    0
    
    
    0
    
    
    0Amortization
      of intangibles
    
    
    0
    
    
    0
    
    
    0
    
    
    0Total
      operating expenses
    
    
    115,507
    
    
    880,498
    
    
    996,005
    
    
    116,402Operating
      income (loss)
    
    
    393,005
    
    
    163,874
    
    
    556,879
    
    
    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
    
    
    153,351
    
    
    528,233
    
    
    158,089BENEFIT
      (PROVISION) FOR INCOME TAXES
    
    
    (43,237
    )
    
    (44,500
    )
    
    (87,737
    )
    
    (25,937
    )NET
      INCOME (LOSS)
    
    $
    328,645
    
    $
    111,851
    
    $
    440,496
    
    $
    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.
 
 4
 ****
 **Operating
Expense**
 
 Selling,
general and administrative, and consulting fees for 2004 totaled $996,005 or
approximately 19% of net sales, compared to $116,402 or approximately 5.6% for
2003. The increase in operating expense of $879,603 or approximately 756% 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.
 
 **Income
(Loss) from Operations**
 
 Income
(loss) from operations for 2004 was $556,879 as compared to income from
operations of $134,689 for 2003, an increase of $422,190 or approximately 363%.
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.
 
 
 **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 $440,496 for 2004 compared to $132,152 for 2003, an increase
of $308,344. 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.
 
 **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 $1,694,789 at December 31, 2004. Working capital at December 31, 2004 was
$944,305. 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.
 
 **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.
 
 5
 ******
 ***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.
 
 ***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.
 
 ***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.
 
 6
 ******
 ***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.
  7
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 
 **CONSOLIDATED
FINANCIAL STATEMENTS**
 
 **DECEMBER
31, 2004 AND 2003**
 8
 
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
JASMINE’S GARDEN, INC.)**
 **CONSOLIDATED
FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 **TABLE
OF CONTENTS**
 **ITEM
7. FINANCIAL STATEMENTS.**
  Independent
      Auditors Report
    
    2Consolidated
      Balance Sheets
    
    3Consolidated
      Statements of Income
    
    4Consolidated
      Statements of Cash Flow
    
    5Consolidated
      Statements of Changes in Stockholders’ Equity
    
    6Notes
      to Consolidated Financial Statements
    
    7
 
 
 9
 
 
 **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
 
 10
  ****
 CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES
 (FORMERLY
JASMINE'S GARDEN)
 CONSOLIDATED
BALANCE SHEETS
DECEMBER 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
    
    $
    1,414,993
    
    $
    5,000Deferred
      revenue
    
    
    35,724
    
    
    0Current
      portion, debt
    
    
    244,072
    
    
    0Total
      Current Liabilities
    
    
    1,694,789
    
    
    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
    
    
    2,895,614
    
    
    15,385Retained
      earnings (deficit)
    
    
    106,672
    
    
    (5,179
    )Total
      Stockholders' Equity
    
    
    3,056,747
    
    
    16,221Total
      Liabilities and Stockholders' Equity
    
    $
    4,751,536
    
    $
    21,221
  See Accompanying Notes and Auditor's
Report
 
 11
 
 **CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES
(FORMERLY
JASMINE'S GARDEN)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND
20032004
    
    2003Sales,
      net
    
    $
    2,338,718
    
    $
    808Cost
      of sales
    
    
    1,294,346
    
    
    579Gross
      profit
    
    
    1,044,372
    
    
    229Selling
      expense
    
    
    55,416
    
    
    0General
      and administrative expenses
    
    
    227,082
    
    
    6,028Consulting
      fees
    
    
    598,000
    
    
    0Income
      (loss) from operations
    
    
    163,874
    
    
    (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
    
    
    156,351
    
    
    782Provison
      for income taxes
    
    
    44,500
    
    
    0Net
      income (loss)
    
    $
    111,851
    
    $
    782Net
      income per share (basic and diluted)Basic
    
    $
    0.00
    
    $
    0.00Diluted
    
    $
    0.00
    
    $
    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


12**
 ****
 CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES
(FORMERLY JASMINE'S GARDEN)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR THE
YEARS ENDED DECEMBER 31, 2004 AND 2003
 2004
    
    2003CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income (loss)
    
    $
    111,851
    
    $
    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
    
    
    148,478
    
    
    4,132(Decrease)
      Increase in deferred revenue
    
    
    35,724
    
    
    0Total
      Adjustments
    
    
    407,718
    
    
    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
 
 
 13
  CHINA
DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES
 (FORMERLY
JASMINE'S GARDEN)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 FOR 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
    
    
    2,880,229
    
    
    0Balance
      at end of year
    
    
    2,895,614
    
    
    15,385Retained
      (deficits)Balance
      at beginning of year
    
    
    ($5,179
    )
    
    ($5,961
    )Net
      income (loss)
    
    
    111,851
    
    
    782Balance
      at end of year
    
    
    106,672
    
    
    (5,179
    )Total
      stockholders' equity at end of year
    
    $
    3,056,747
    
    $
    16,221
 See
Accompanying Notes and Auditor's Report
 
 14
 
 **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.
 
 
 15
 
 **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
 
 16
 
 **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.
  
 17
  
 **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 uncollectible 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.
  18
 
 **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.
   19
 
 **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.
  
 20
 
 **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.
 
 
 21
 
 
 **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:
  Cash
      and cash equivalents
    
    $
    130,852Accounts
      receivable
    
    
    1,337,093Other
      receivable
    
    
    194,494Inventories
    
    
    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
  22
 
 **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)
    
    
    427,930Net
      income per share—basic
    
    
    .011Net
      income per share—diluted
    
    
    .011
 
 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
    
    $
    255,559
    
    $
    0Automobile
    
    
    23,675
    
    
    —Office
      equipment
    
    
    5,520
    
    
    —$
    284,755
    
    
    —Accumulated
      depreciation
    
    
    (46,921
    )
    
    —$
    237,834
    
    $
    0
 23
 
 **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**
 
 Total
Federal and State income tax expense for the years ended December 31, 2004 and
2003 amounted to $144,500  and $0,
respectively. For the years ended December 31, 2004 and 2003, there is no
difference between the federal statutory tax rate and the effective tax rate.
  The
      following is a reconciliation of income tax expense:12/31/04
    
    U.S.
    
    State
    
    International
    
    TotalCurrent
    
    $
    44,500
    
    $
    0
    
    $
    0
    
    $
    44,500Deferred
    
    
    0
    
    
    0
    
    
    0
    
    
    0Total
    
    $
    44,500
    
    $
    0
    
    $
    0
    
    $
    44,50012/31/2003
    
    
    U.S.
    
    
    State
    
    
    International
    
    
    TotalCurrent
    
    $
    0
    
    $
    0
    
    $
    0
    
    $
    0Deferred
    
    
    0
    
    
    0
    
    
    0
    
    
    0Total
    
    $
    0
    
    $
    0
    
    $
    0
    
    $
    0Reconciliation
      of the differences between the statutory U.S. Federal income tax
      rateand
      the effective rate is as follows:12/31/2004
    
    
    12/31/2003Federal
      statutory tax rate
    
    
    28
    %
    
    0
    %State,
      net of federal benefit
    
    
    0
    %
    
    0
    %Effective
      tax rate
    
    
    28
    %
    
    0
    %
 24
 
  
 
 **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
    
    
    82,1112010
      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.
 
 
 25
 
  
 **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.
 **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 Ethics23.1
    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.
 
 
 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 21st day of April
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
    April 21,
      2005Yi
      Bo Sun/s/
      Yao Mia
    Chief Financial Officer
    April 21,
      2005Yao
      Miao/s/
      Mei Jin Bin
    Secretary
    April 21,
      2005Mei
      Jin Bin/s/
      Xu Bao Dong
    Director
    April 21,
      2005Xu
      Bao Dong/s/
      Zu Zhuan Xu
    Director
    April 21,
      2005Zu
      Zhuan Xu
  27