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 orOrganization)
            (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 No o









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: $1,412,276.**





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.**





EXPLANATORY
      NOTE




This
      Form
      10KSB/A is being filed to amend the China Digital Communication Group ( the
      "Company") Annual Report on Form 10-KSB/A for the period ended December 31,
      2004
      in order to reflect the restatement to correct an error of the Company's
      Consolidated Financial Statements and amendments to related disclosures as
      of
      December 31, 2004. The error relates to the incorrect decision not to do
      purchase price allocation and assignment of value to intangible assets for
      the
      acquisition of Billion Electronics Co., Ltd. on November 14, 2004. Based upon
      new information and communication with the Securities and Exchange Commission,
      our independent auditors, have concluded that the Company was required to do
      purchase price allocation and assign value to intangible asset for the
      acquisition of Billion Electronics Co., Ltd. on November 15, 2004.




2




PART
                  IITEM
                  1.
              DESCRIPTION
                  OF BUSINESS.
              4ITEM
                  2.
              DESCRIPTION
                  OF PROPERTY.
              8ITEM
                  3.
              LEGAL
                  PROCEEDINGS.
              8ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS.
              8PART
                  IIITEM
                  5.
              MARKET
                  FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS AND SMALL BUSINESS
                  ISSUER PURCHASES OF EQUITY SECURITIES.
              8ITEM
                  6.
              MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OR FINANCIAL PLAN OF OPERATION.
              10ITEM
                  7.
              FINANCIAL
                  STATEMENTS.
              14ITEM
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE.
              14ITEM
                  8A.
              CONTROLS
                  AND PROCEDURES.
              15ITEM
                  8B.
              OTHER
                  INFORMATION.
              15PART
                  IIIITEM
                  9.
              DIRECTORS
                  AND EXECUTIVE OFFICERS OF THE REGISTRANT.
              15ITEM
                  10.
              EXECUTIVE
                  COMPENSATION.
              17ITEM
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS.
              18ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS.
              19ITEM
                  13.
              EXHIBITS,
                  LIST AND REPORTS ON FORM 8-K.
              20ITEM
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES.
              20SIGNATURES
              
              21FINANCIAL
                  STATEMENTS
              F-1


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 Articles 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.  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.




4


***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.
      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.




***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:




5




**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. 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.




6





**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.





***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.




7


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.





***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:




8




**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





**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.





9


**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.





**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





The
      following management discussion and analysis of financial condition and results
      of operations (“MD&A”) should be read in conjunction with the December 31,
      2004 consolidated financial statements and notes. The discussion of results,
      causes and trends should not be construed to imply any conclusion that such
      results or trends will necessarily continue in the future.





The
      information contained in this MD&A, other than historical information,
      contains “forward looking statements” within the meaning of The Private
      Securities Litigation Reform Act of 1995 that are based on management’s current
      expectations and assumptions. This MD&A should be read in conjunction with
      the sections entitled “Additional Factors That May Affect Future Results” and
“Forward-Looking Statements.”




**OVERVIEW**




China
      Digital Communication Group (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 Electronics Co., Ltd. (Billion).
      Billion owns all of the issued and outstanding shares of Shenzhen E’Jenie
      Science and Technology Company, Limited (E’Jenie). Billion, was incorporated
      under the laws of the British Virgin Islands on July 27, 2004.





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.




10


**RESULTS
      OF OPERATIONS**




The
      following table presents the statement of operations for the year ended December
      31, 2004 as compared to the comparable period of the year ended December 31,
      2003. The discussion following the table is based on these results.





**2004**
            
            **2003**Net
                Revenue
            
            $
            1,412,276
            
            $
            808Cost
                of revenue
            
            
            718,785
            
            
            579**Gross
                profit**
            
            
            693,491
            
            
            229Operating
                ExpensesSelling
                expenses
            
            
            46,793
            
            
            -General
                and administrative expenses
            
            
            261,751
            
            
            6,028Consulting
                fees
            
            
            598,000
            
            
            -Total
                operating expenses
            
            
            906,544
            
            
            6,028**Loss
                from operations**
            
            
            (213,053
            )
            
            (5,799
            )Other
                (Income) ExpenseInterest
                income
            
            
            (6
            )
            
            -Miscellaneous
                (income) expense
            
            
            5,141
            
            
            (6,581
            )Interest
                expense
            
            
            3,468
            
            
            -Total
                Other (Income) Expense
            
            
            8,603
            
            
            (6,581
            )**Income
                (loss) before income taxes**
            
            
            (221,656
            )
            
            782Provision
                for income taxes
            
            
            13,555
            
            
            -Net
                income (loss)
            
            $
            (235,211
            )
            $
            782




**Net
      sales**




Net
      sales
      for the year ended December 31, 2004 totaled $1,412,276 compared to $808 for
      the
      year ended December 31, 2003, an increase of $1,411,468 or approximately
      174,687%. The increase was due to the acquisition of E’Jenie during the year
      ended December 31, 2004. ****




**Cost
      of Sales**




Cost
      of
      sales for the year ended December 31, 2004 totaled $718,785 or approximately
      50.9% of net sales compared to $579 for the year ended December 31, 2003, an
      increase of $718,206 or approximately 124,042%. The increase was due to the
      acquisition of E’Jenie during the year ended December 31, 2004. ****




**Operating
      Expenses**




Operating
      expenses for the year ended December 31, 2004 totaled $906,544 or approximately
      64% of net sales compared to $6,028 or approximately 746% for the year ended
      December 31, 2003, an increase of $900,516 or approximately 14,939%. The
      increase was due to the acquisition of E’Jenie during the year ended December
      31, 2004. ****




**Income
      (Loss) from Operations**




Income
      (loss) from operations for the year ended December 31, 2004 totaled $(213,053)
      or approximately (15)% of net sales compared to $(5,799) or approximately (718)%
      for the year ended December 31, 2003, a decrease of $207,254 or approximately
      3,574%. The decrease was due primarily due to the consulting fees and expenses
      from E’Jenie that was not included in the 2003 numbers.




**Interest
      Expense**




Interest
      expense for the year ended December 31, 2004 totaled $3,468 compared to $0
      for
      the year ended December 31, 2003.




11


**Net
      Income (Loss)**




Net
      income (loss) for the year ended December 31, 2004 totaled $(235,211) compared
      to $782 for the year ended December 31, 2003, a decrease of $235,993 or
      approximately 30,178%. The decrease was due to the increased operating expenses
      recognized in 2004 as described above.




**LIQUIDITY
      AND CAPITAL RESOURCES**




Our
      primary source of liquidity as of December 31, 2004 is our cash on hand and
      accounts receivable. Net cash (used in) provided by operations for the year
      ended December 31, 2004 was $(32,253) as compared to net cash provided by
      operations of $818 during the same period in 2003. The increase in net cash
      used
      in operating activities was a result of the increase in accounts receivable
      and
      accounts payable. Our cash and cash equivalents were $437,126 and $21,221 as
      of
      December 31, 2004 and 2003, respectively. Our current assets totaled $2,697,534
      on December 31, 2004. Our current liabilities were $1,572,441 on December 31,
      2004. Working capital was $1,125,093 as of December 31, 2004.





Net
      cash
      (used in) provided by investing activities totaled $(1,226,442) for the year
      ended December 31, 2004, compared with net cash of $4,348 for the same period
      in
      2003. The net cash change was $415,905 and $5,166 for the year ended December
      31, 2004 and 2003, respectively.




We
      will
      continue to evaluate alternative sources of capital to meet our growth
      requirements, including other asset or debt financing, issuing equity securities
      and entering into other financing arrangements. There can be no assurance,
      however, that any of the contemplated financing arrangements described herein
      will be available and, if available, can be obtained on terms favorable to
      us.




**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.




There
      are
      no off-balance sheet arrangements.





**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.




12


***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.





13


***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.




**ITEM
      7. FINANCIAL STATEMENTS.**


Our
        financial statements begin on page F-1.




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE.**





None.




14





**ITEM
      8A. CONTROLS AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**


Our
        management evaluated, with the participation of our Chief Executive and Chief
        Financial Officer, the effectiveness of our disclosure controls and procedures
        for the annual period ended December 31, 2004 **.** Based on
        this evaluation, our Chief Executive Officer and Chief Financial Officer
        has
        concluded that our disclosure controls and procedures (as defined in Rules
        13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange
        Act) are ineffective based on the material weakness described below:
  We
        concluded we have insufficient monitoring controls to determine the adequacy
        of
        our internal control over financial reporting and related policies and
        procedures; lack of competent financial management personnel with appropriate
        accounting knowledge and training; insufficient controls over our period-end
        financial close and reporting processes; ineffective controls over the
        accounting for acquisitions, in particular valuation and disclosure of the
        goodwill and intangible asset accounts and the related amortization and
        impairment expense accounts; and ineffective controls over reporting of
        discontinued operations.
 
 We
        are
        developing a plan to ensure that all information will be recorded, processed,
        summarized and reported accurately, and as of the date of this report, we
        have
        taken the following steps to address the above-referenced material weaknesses
        in
        our internal control over financial reporting:
  1.
              We
                  have engaged independent consultants to assist with the preparation
                  of our
                  financial statements and disclosure requirements on our behalf,
                  including
                  assisting with the evaluation of the acquisitions of our wholly-owned
                  subsidiaries referenced elsewhere in this
                  Report;
  2.
              We
                  have commenced efforts to retain directors and officers who are
                  more
                  familiar and conversant with SEC reporting
                  issues.
 
 The
        remainder of the plan is dependent, in part, upon hiring additional accounting
        personnel, increased management oversight of accounting and reporting functions,
        re-design of accounting systems, reallocation of responsibilities among various
        personnel, possibly hiring additional personnel and additional funding. It
        should also be noted that the design of any system of controls is based in
        part
        upon certain assumptions about the likelihood of future events, and there
        can be
        no assurance that any design will succeed in achieving its stated goals under
        all potential future conditions, regardless of how remote.


**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.





15


***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.





***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.





16


**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)****Name
                and**
              **Principal**
              **Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Other**
              **Annual**
              **Compenation****($)**
            
            **Restricted**
              **Stock**
              **Award(s)**
              **($)**
            
            **Securities**
              **Underlying**
              **Options
                /**
              **SARs
                (#)**
            
            **LTIP**
              **Payouts**
              **($)**
            
            **All
                Other**
              **Compensation
                ($)**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





**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.





17


**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.**





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.





18


**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.





19


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.**




**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 (Exhibit 14.1 to the Form 10KSB filed on March 30,
                  2006)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.**




The
      current independent auditor is Kabani & Company, Inc. Lichter, Yu &
Associates was the prior auditor.




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.





**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.


20


**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 August
      6,
      2008.




**CHINA
                DIGITAL COMMUNICATION GROUP**By:
            /s/ Zhongan
                XuZhongan
                XuChief
                Executive Officer and Chairman






**POWER
      OF ATTORNEY**




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.





**Name**
            
            **Title**
            
            **Date***/s/
                Zhongan Xu*
            
            Chief
                Executive Officer and Chairman
            
            August
                6, 2008ZHONGAN
                XU*/s/
                Jiangcheng Wu*
            
            Chief
                Financial Officer
            
            August
                  6, 2008JIANGCHENG
                WU*/s/
                Mei Jin Bin*
            
            Secretary
                and Director
            
            August
                  6, 2008MEI
                JIN BIN*/s/
                Xu Bao Dong*
            
            Director
            
            August
                  6, 2008XU
                BAO DONG





21




**CHINA
        DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 
 **DECEMBER
        31, 2004**
 
 
 
 
  
  **TABLE
        OF CONTENTS**
   Report
                    of Independent Registered Public Accounting Firm
                F-1Consolidated
                    Balance Sheet
                F-2Consolidated
                    Statements of Operations
                F-3Consolidated
                    Statements of Cash Flow
                F-4Consolidated
                    Statements of Changes in Stockholders’ Equity/(Deficit)
                F-5Notes
                    to Consolidated Financial Statements
                F-6_F-21
  
  Report
        of
        Independent Registered Public Accounting Firm
 
 Board
        of
        Directors and Shareholders
 China
        Digital Communication Group and Subsidiaries
 
 We
        have
        audited the accompanying consolidated balance sheet of China Digital
        Communication Group and Subsidiaries as of December 31, 2004, and the
        related consolidated statements of operations, stockholders’ equity and cash
        flows for the year ended December 31, 2004. These consolidated financial
        statements are the responsibility of the Company's management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audit.
 
 We
        conducted our audit in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit 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 audit provides a
        reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of China Digital Communication
        Group and Subsidiaries as of December 31, 2004, and the results of its
        operations and its cash flows for the year ended December 31, 2004 in conformity
        with accounting principles generally accepted in the United States of America.
 
 As
        discussed in Note O, the financial statements for the years ended December
        31,
        2004 have been restated.
 
 /s/
        KABANI & COMPANY, INC.
 
 CERTIFIED
        PUBLIC ACCOUNTANTS
 
 
 Los
        Angeles, California
 May
        10,
        2007
  F-1
 **CHINA
          DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEET**
 **DECEMBER
          31, 2004**
  **(Restated)**
  **ASSETS**
  **Current
                    Assets**Cash
                    and cash equivalents
                
                $
                437,126Accounts
                    receivable, net
                
                
                2,013,815Inventory
                
                
                223,859Advance
                    to suppliers
                
                
                10,285Other
                    receivables
                
                
                7,459Other
                    receivables - related parties
                
                
                4,990Total
                    Current Assets
                
                
                2,697,534**Property
                    & Equipment, net**
                
                
                237,834**Other
                    Assets**Amortizable
                    intangible assets, net
                
                
                3,287,531Goodwill
                
                
                8,253,436Total
                    Other Assets
                
                
                11,540,967**Total
                    Assets**
                
                $
                14,476,335
 **LIABILITIES
            AND STOCKHOLDERS' EQUITY**
 **Current
                    Liabilities**Accounts
                    payable and accrued expenses
                
                $
                655,972Tax
                    payable
                
                
                499,869Loan
                    payable
                
                
                242,000Loan
                    payable to related party
                
                
                174,600Total
                    Liabilities
                
                
                1,572,441**Stockholders'
                    Equity**Common
                    stock, $.001 par value, 140,000,000shares
                    authorized, 54,460,626 issued and outstanding
                
                
                54,460Additional
                    paid in capital
                
                
                13,089,824Statutory
                    reserve
                
                
                11,522Accumulated
                    deficit
                
                
                (251,912
                )Total
                    Stockholders' Equity
                
                
                12,903,894**Total
                    Liabilities and Stockholders' Equity**
                
                $
                14,476,335
  The
            accompanying notes are an integral part of these consolidated financial
            statements
 F-2
 **CHINA
            DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **CONSOLIDATED
            STATEMENTS OF OPERATIONS**
 **FOR
            THE YEARS ENDED DECEMBER 31, 2004 AND 2003**
  **2004**
                  
                  
                  **2003****(Restated)**Net
                      Revenue
                  
                  $
                  1,412,276
                  
                  $
                  808Cost
                      of revenue
                  
                  
                  718,785
                  
                  
                  579**Gross
                      profit**
                  
                  
                  693,491
                  
                  
                  229Operating
                      ExpensesSelling
                      expenses
                  
                  
                  46,793
                  
                  
                  -General
                      and administrative expenses
                  
                  
                  261,751
                  
                  
                  6,028Consulting
                      fees
                  
                  
                  598,000
                  
                  
                  -Total
                      operating expenses
                  
                  
                  906,544
                  
                  
                  6,028**Loss
                      from operations**
                  
                  
                  (213,053
                  )
                  
                  (5,799
                  )Other
                      (Income) ExpenseInterest
                      income
                  
                  
                  (6
                  )
                  
                  -Miscellaneous
                      (income) expense
                  
                  
                  5,141
                  
                  
                  (6,581
                  )Interest
                      expense
                  
                  
                  3,468
                  
                  
                  -Total
                      Other (Income) Expense
                  
                  
                  8,603
                  
                  
                  (6,581
                  )**Income
                      (loss) before income taxes**
                  
                  
                  (221,656
                  )
                  
                  782Provision
                      for income taxes
                  
                  
                  13,555
                  
                  
                  -**Net
                      income (loss)**
                  
                  $
                  (235,211
                  )
                  $
                  782**Net
                      income (loss) per share:**Basic
                      and diluted
                  
                  $
                  (0.01
                  )
                  $
                  0.00**Weighted
                      average number of shares outstanding:**Basic
                      and diluted
                  
                  
                  40,496,438
                  
                  
                  6,015,400
 Weighted
          average of basic and diluted shares are the same as there are no antidilutive
          shares
  The
            accompanying notes are an integral part of these consolidated financial
            statements
 F-3
 **CHINA
          DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2004 AND 2003**
  **2004**
                
                
                **2003****(Restated)****CASH
                    FLOWS FROM OPERATING ACTIVITIES**Net
                    Income (Loss)
                
                $
                (235,211
                )
                $
                782Adjustments
                    to reconcile net income (loss) to net cashprovided
                    by operating activities:Depreciation
                
                
                730
                
                
                -Amortization
                
                
                41,614
                
                
                -Issuance
                    of shares for consultants
                
                
                598,000
                
                
                -Gain
                    on disposal of marketable securities
                
                
                -
                
                
                (4,348
                )(Increase)
                    / decrease in assets:Accounts
                    receivables
                
                
                (623,529
                )
                
                252Inventory
                
                
                30,910
                
                
                -Other
                    receivables
                
                
                18,271
                
                
                -Other
                    receivables - related party
                
                
                (4,990
                )
                
                -Prepaid
                    expense
                
                
                545
                
                
                -Increase
                    in current liabilities:Accounts
                    payable and accrued expenses
                
                
                141,407
                
                
                4,132Total
                    Adjustments
                
                
                202,959
                
                
                36**Net
                    cash provided by (used in) operations**
                
                
                (32,253
                )
                
                818**CASH
                    FLOWS FROM INVESTING ACTIVITIES**Purchase
                    of marketable securities
                
                
                -
                
                
                (6,808
                )Proceeds
                    from sale of marketable securities
                
                
                -
                
                
                11,156Acquisition
                    of subsidiary
                
                
                (1,500,000
                )
                
                -Cash
                    acquired in acquisition
                
                
                296,713
                
                
                -Acquisition
                    of property & equipment
                
                
                (23,155
                )
                
                -**Net
                    cash provided by (used in) investing activities**
                
                
                (1,226,442
                )
                
                4,348**CASH
                    FLOWS FROM FINANCING ACTIVITIES**Proceed
                    from issuance of shares
                
                
                1,500,000
                
                
                -Proceed
                    from loan from related party
                
                
                174,600
                
                
                -**Net
                    cash provided by financing activities**
                
                
                1,674,600
                
                
                -**NET
                    INCREASE IN CASH AND CASH EQUIVALENTS**
                
                
                415,905
                
                
                5,166**CASH
                    AND CASH EQUIVALENTS, BEGINNING BALANCE**
                
                
                21,221
                
                
                16,055**CASH
                    AND CASH EQUIVALENTS, ENDING BALANCE**
                
                $
                437,126
                
                $
                21,221**SUPPLEMENTAL
                    DISCLOSURES:**Cash
                    paid during the year for:Income
                    tax payments
                
                $
                -
                
                $
                -Interest
                    payments
                
                $
                5,354
                
                $
                -Non
                    cash transactions:Issuance
                    of stock for purchase of business
                
                $
                7,762,557
                
                $
                -Issuance
                    of stock for guarentee
                
                $
                3,262,327
                
                $
                -
  The
          accompanying notes are an integral part of these consolidated financial
          statements
  F-4
 **CHINA
          DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENT OF STOCKHOLDERS' EQUITY/(DEFICIT)**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2004 AND 2003**
 **(Restated)**
  **Common
                    Stock****Total****Additional
                    Paid**
                
                
                **Statutory**
                
                
                **Accumulated**
                
                
                **Stockholders'****Shares**
                
                
                **Amount**
                
                
                **In
                    Capital**
                
                
                **Reserve**
                
                
                **Deficit**
                
                
                **Equity/(Deficit**)******Balance
                    January 1, 2002**
                
                6,015,400
                
                $
                6,015
                
                $
                15,385
                
                $
                -
                
                $
                (5,961
                )
                $
                15,439Net
                    income for the year ended December 31, 2003
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                782
                
                
                782**Balance
                    December 31, 2003**
                
                6,015,400
                
                
                6,015
                
                
                15,385
                
                
                -
                
                
                (5,179
                )
                
                16,221Shares
                    issued for cash
                
                30,000,000
                
                
                30,000
                
                
                1,470,000
                
                
                -
                
                
                -
                
                
                1,500,000Shares
                    issued to consultant
                
                10,684,000
                
                
                10,684
                
                
                523,516
                
                
                -
                
                
                -
                
                
                534,200Shares
                    issued to consultant
                
                1,276,000
                
                
                1,276
                
                
                62,524
                
                
                -
                
                
                -
                
                
                63,800Shares
                    issued for acquisition of Billion
                
                4,566,210
                
                
                4,566
                
                
                7,757,991
                
                
                -
                
                
                -
                
                
                7,762,557Shares
                    issued for guarantee
                
                1,919,016
                
                
                1,919
                
                
                3,260,408
                
                
                -
                
                
                -
                
                
                3,262,327Transfer
                    to statutory reserve
                
                -
                
                
                -
                
                
                -
                
                
                11,522
                
                
                (11,522
                )
                
                -Net
                    loss for the year ended December 31, 2004
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (235,211
                )
                
                (235,211
                )**Balance
                    December 31, 2004**
                
                54,460,626
                
                $
                54,460
                
                $
                13,089,824
                
                $
                11,522
                
                $
                (251,912
                )
                $
                12,903,894
  The
            accompanying notes are an integral part of these consolidated financial
            statements
 F-5
 **CHINA
        DIGITAL COMMUNICATION GROUP AND SUBSIDIARIES**
 **(FORMERLY
        JASMINE’S GARDEN, IN.)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2004**
  **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**
 
 Basis
        of Presentation
 
 The
        accompanying consolidated financial statements have been prepared in conformity
        with accounting principles generally accepted in the United States of America.
        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
        significant inter-company transactions and accounts have been eliminated
        in the
        consolidation.
 
 The
        Company’s functional currency is the Chinese Renminbi; however the accompanying
        consolidated financial statements have been translated and presented in United
        States Dollars ($).
 
 Use
        of
        Estimates
  The
        preparation of consolidated financial statements in conformity with accounting
        principles generally accepted in the United States of America requires
        management to make estimates and assumptions that affect the reported amounts
        of
        assets and liabilities and disclosure of contingent assets and liabilities
        at
        the date of the consolidated financial statements and the amount of revenues
        and
        expenses during the reporting periods. Management makes these estimates using
        the best information available at the time the estimates are made. However,
        actual results could differ materially from those results.
  Exchange
        Gain (Loss)
  The
        reporting currency of the Company is the US dollar. The Company uses their
        local
        currency, Renminbi (RMB), as their functional currency. Results of operations
        and cash flow are translated at average exchange rates during the period,
        and
        assets and liabilities are translated at the unified exchange rate at the
        end of
        the period. Translation adjustments resulting from this process are included
        in
        accumulated other comprehensive income in the statement of shareholders'
        equity.
        Transaction gains and losses that arise from exchange rate fluctuations on
        transactions denominated in a currency other than the functional currency
        are
        included in the results of operations as incurred.
  F-6
  Financial
        instruments
  Statement
        of Financial Accounting Standard No. 107, "Disclosures about Fair Value of
        Financial Instruments", requires that the Company disclose estimated fair
        values
        of financial instruments.
  The
        Company's financial instruments primarily consist of cash and cash equivalents,
        accounts receivable, other receivables, advances to suppliers, accounts payable,
        other payable, tax payable, and related party advances and borrowings.
  As
        of the
        balance sheet dates, the estimated fair values of the financial instruments
        were
        not materially different from their carrying values as presented on the balance
        sheet. This is attributed to the short maturities of the instruments and
        that
        interest rates on the borrowings approximate those that would have been
        available for loans of similar remaining maturity and risk profile at respective
        balance sheet dates.
  Cash
        and Cash Equivalents
 
 Cash
        and
        cash equivalents include cash in hand and cash in time deposits, certificates
        of
        deposit and all highly liquid debt instruments with original maturities of
        three
        months or less.
 
 Accounts
        Receivable
 
 The
        Company maintains reserves for potential credit losses on accounts receivable.
        Management reviews the composition of accounts receivable and analyzes
        historical bad debts, customer concentrations, customer credit worthiness,
        current economic trends and changes in customer payment patterns to evaluate
        the
        adequacy of these reserves.
 
 Inventory
 
 Inventories
        are valued at the lower of cost (determined on a weighted average basis)
        or
        market. The Management compares the cost of inventories with the market value
        and allowance is made for writing down their inventories to market value,
        if
        lower. As of December 31, 2004, inventory consisted of raw material, work
        in
        progress and finished goods as follows:
  Raw
                    Material
                
                $
                72,870Work-in-process
                
                
                39,610Finished
                    goods
                
                
                111,379$
                223,859
  Property,
        Plant & Equipment
  Property
        and equipment are stated at cost. Expenditures for maintenance and repairs
        are
        charged to earnings as incurred; additions, renewals and betterments are
        capitalized. When property and equipment are retired or otherwise disposed
        of,
        the related cost and accumulated depreciation are removed from the respective
        accounts, and any gain or loss is included in operations. Depreciation of
        property and equipment is provided using the straight-line method for
        substantially all assets with estimated lives of:
  F-7
 Furniture
                    and Fixtures
                5
                    yearsEquipment
                5
                    yearsComputer
                    Hardware and Software
                5
                    years
 
 As
        of
        December 31, 2004 Property, Plant & Equipment consist of the
        following:
 Machinery
                
                $
                218,372Automobile
                
                
                15,980Office
                    equipment
                
                
                4,212238,564Accumulated
                    depreciation
                
                
                (730
                )$
                237,834
 Depreciation
        expenses were $730 and $0 for the years ended December 31, 2004, and
        2003.
  Impairment
  The
        Company applies the provisions of Statement of Financial Accounting Standard
        No.
        144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS
        No.
        144"), issued by the Financial Accounting Standards Board ("FASB"). FAS No.
        144
        requires that long-lived assets be reviewed for impairment whenever events
        or
        changes in circumstances indicate that the carrying amount of an asset may
        not
        be recoverable through the estimated undiscounted cash flows expected to
        result
        from the use and eventual disposition of the assets. Whenever any such
        impairment exists, an impairment loss will be recognized for the amount by
        which
        the carrying value exceeds the fair value.
  The
        Company tests long-lived assets, including property, plant and equipment
        and
        intangible assets subject to periodic amortization, for recoverability at
        least
        annually or more frequently upon the occurrence of an event or when
        circumstances indicate that the net carrying amount is greater than its fair
        value. Assets are grouped and evaluated at the lowest level for their
        identifiable cash flows that are largely independent of the cash flows of
        other
        groups of assets. The Company considers historical performance and future
        estimated results in its evaluation of potential impairment and then compares
        the carrying amount of the asset to the future estimated cash flows expected
        to
        result from the use of the asset. If the carrying amount of the asset exceeds
        estimated expected undiscounted future cash flows, the Company measures the
        amount of impairment by comparing the carrying amount of the asset to its
        fair
        value. The estimation of fair value is generally measured by discounting
        expected future cash flows as the rate the Company utilizes to evaluate
        potential investments. The Company estimates fair value based on the information
        available in making whatever estimates, judgments and projections are considered
        necessary. There was no impairment of long-lived assets for the years ended
        December 31, 2004 and 2003.
  Revenue
        Recognition
  The
        Company's revenue recognition policies are in compliance with Staff accounting
        bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to
        customers when a formal arrangement exists, the price is fixed or determinable,
        the delivery is completed, no other significant obligations of the Company
        exist
        and collectibility is reasonably assured. Payments received before all of
        the
        relevant criteria for revenue recognition are satisfied are recorded as unearned
        revenue.
  The
        Company's revenue consists of invoiced value of goods, net of a value-added
        tax
        (VAT). No product return or sales discount allowance is made as products
        delivered and accepted by customers are normally not returnable and sales
        discount is normally not granted after products are delivered.
  F-8
  Stock-Based
        Compensation
  In
        December 2004, the FASB issued SFAS No. 123 (revised 2004),
‘‘Share-Based Payment’’ (‘‘SFAS 123R’’), which requires the measurement of all
        employee share-based payments to employees, including grants of employee
        stock
        options, using a fair-value-based method and the recording of such expense
        in
        the consolidated statements of operations. In March 2005, the SEC issued
        Staff
        Accounting Bulletin No. 107 (“SAB 107”) regarding the SEC’s interpretation
        of SFAS 123R and the valuation of share-based payments for public companies.
 
 Advertising
 
 Advertising
        expenses consist primarily of costs of promotion for corporate image and
        product
        marketing and costs of direct advertising. The Company expenses all advertising
        costs as incurred.
  Income
        Taxes
  The
        Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
        recognition of deferred tax assets and liabilities for the expected future
        tax
        consequences of events that have been included in the financial statements
        or
        tax returns. Under this method, deferred income taxes are recognized for
        the tax
        consequences in future years of differences between the tax bases of assets
        and
        liabilities and their financial reporting amounts at each period end based
        on
        enacted tax laws and statutory tax rates applicable to the periods in which
        the
        differences are expected to affect taxable income. Valuation allowances are
        established, when necessary, to reduce deferred tax assets to the amount
        expected to be realized. The Company does not have any significant deferred
        tax
        asset or liabilities in the PRC tax jurisdiction.
  According
        to the Provisional Regulations of the People's Republic of China on Income
        Tax,
        the Company’s operating subsidiaries in China is under a tax rate of 15% for the
        years ended December 31, 2004.
  Segment
        reporting
  Statement
        of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About
        Segments of an Enterprise and Related Information" requires use of the
        "management approach" model for segment reporting. The management approach
        model
        is based on the way a company's management organizes segments within the
        company
        for making operating decisions and assessing performance. Reportable segments
        are based on products and services, geography, legal structure, management
        structure, or any other manner in which management disaggregates a company.
  SFAS
        No.
        131 has no effect on the Company's consolidated financial statements as the
        Company operates in one reportable business segment - manufacture and marketing
        high-precision investment casting and metal fabrication products in China.
  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
  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.
  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.
 
 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.
  Basic
        and Diluted Earnings Per Share
  Earnings
        per share is calculated in accordance with the Statement of financial accounting
        standards No. 128 (SFAS No. 128), “Earnings per share”. SFAS No. 128 superseded
        Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for
        all
        periods presented has been restated to reflect the adoption of SFAS No. 128.
        Basic net loss per share is based upon the weighted average number of common
        shares outstanding. Diluted net loss per share is based on the assumption
        that
        all dilutive convertible shares and stock options were converted or exercised.
        Dilution is computed by applying the treasury stock method. Under this method,
        options and warrants are assumed to be exercised at the beginning of the
        period
        (or at the time of issuance, if later), and as if funds obtained thereby
        were
        used to purchase common stock at the average market price during the period.
  F-10
  Recent
        accounting pronouncements
 
 In
        December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
        an
        Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
        companies to recognize in the statement of operations the grant- date fair
        value
        of stock options and other equity-based compensation issued to employees.
        FAS
        No. 123R is effective beginning in the Company's second quarter of fiscal
        2006.
        The Company believes that the adoption of this standard will have no material
        impact on its financial statements.
 
 In
        December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of Nonmonetary
        Assets." The Statement is an amendment of APB Opinion No. 29 to eliminate
        the
        exception for nonmonetary exchanges of similar productive assets and replaces
        it
        with a general exception for exchanges of nonmonetary assets that do not
        have
        commercial substance. The Company believes that the adoption of this standard
        will have no material impact on its financial statements.
 
 In
        May
        2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections."
        This statement applies to all voluntary changes in accounting principle and
        requires retrospective application to prior periods' financial statements
        of
        changes in accounting principle, unless this would be impracticable. This
        statement also makes a distinction between "retrospective application" of
        an
        accounting principle and the "restatement" of financial statements to reflect
        the correction of an error. This statement is effective for accounting changes
        and corrections of errors made in fiscal years beginning after December 15,
        2005.
 
 In
        February 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid
        Financial Instruments”. SFAS No. 155 amends SFAS No 133, “Accounting for
        Derivative Instruments and Hedging Activities”, and SFAF No. 140, “Accounting
        for Transfers and Servicing of Financial Assets and Extinguishments of
        Liabilities”. SFAS No. 155, permits fair value remeasurement for any hybrid
        financial instrument that contains an embedded derivative that otherwise
        would
        require bifurcation, clarifies which interest-only strips and principal-only
        strips are not subject to the requirements of SFAS No. 133, establishes a
        requirement to evaluate interest in securitized financial assets to identify
        interests that are freestanding derivatives or that are hybrid financial
        instruments that contain an embedded derivative requiring bifurcation, clarifies
        that concentrations of credit risk in the form of subordination are not embedded
        derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
        qualifying special-purpose entity from holding a derivative financial instrument
        that pertains to a beneficial interest other than another derivative financial
        instrument. This statement is effective for all financial instruments acquired
        or issued after the beginning of the Company’s first fiscal year that begins
        after September 15, 2006.
  In
        March
        2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this
        Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing
        of Financial Assets and Extinguishments of Liabilities, with respect to the
        accounting for separately recognized servicing assets and servicing liabilities.
        This Statement:
 1.
                Requires
                    an entity to recognize a servicing asset or servicing liability
                    each time
                    it undertakes an obligation to service a financial asset by entering
                    into
                    a servicing contract.
  2.
                Requires
                    all separately recognized servicing assets and servicing liabilities
                    to be
                    initially measured at fair value, if practicable.
  3.
                Permits
                    an entity to choose ‘Amortization method’ or Fair value measurement
                    method’ for each class of separately recognized servicing assets and
                    servicing liabilities:
  4.
                At
                    its initial adoption, permits a one-time reclassification of
                    available-for-sale securities to trading securities by entities
                    with
                    recognized servicing rights, without calling into question the
                    treatment
                    of other available-for-sale securities under Statement 115, provided
                    that
                    the available-for-sale securities are identified in some manner
                    as
                    offsetting the entity’s exposure to changes in fair value of servicing
                    assets or servicing liabilities that a servicer elects to subsequently
                    measure at fair value.
  F-11
  5.
                Requires
                    separate presentation of servicing assets and servicing liabilities
                    subsequently measured at fair value in the statement of financial
                    position
                    and additional disclosures for all separately recognized servicing
                    assets
                    and servicing liabilities.
 An
        entity
        should adopt this Statement as of the beginning of its first fiscal year
        that
        begins after September 15, 2006. Management believes that this statement
        will
        not have a significant impact on the financial statement.
  In
        June
        2005, the EITF reached consensus on Issue No. 05-6, Determining the Amortization
        Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance
        on
        determining the amortization period for leasehold improvements acquired in
        a
        business combination or acquired subsequent to lease inception. The guidance
        in
        EITF 05-6 will be applied prospectively and is effective for periods beginning
        after June 29, 2005. The company is in the process of evaluating the effect
        on
        its consolidated financial position or results of operations.
 
 In
        September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement
        defines fair value, establishes a framework for measuring fair value in
        generally accepted accounting principles (GAAP), and expands disclosures
        about
        fair value measurements. This Statement applies under other accounting
        pronouncements that require or permit fair value measurements, the Board
        having
        previously concluded in those accounting pronouncements that fair value is
        the
        relevant measurement attribute. Accordingly, this Statement does not require
        any
        new fair value measurements. However, for some entities, the application
        of this
        Statement will change current practice. This Statement is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007,
        and interim periods within those fiscal years. The management is currently
        evaluating the effect of this pronouncement on financial
        statements.
  In
        September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit
        Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87,
        88, 106, and 132(R)’ This Statement improves financial reporting by requiring an
        employer to recognize the over funded or under funded status of a defined
        benefit postretirement plan (other than a multiemployer plan) as an asset
        or
        liability in its statement of financial position and to recognize changes
        in
        that funded status in the year in which the changes occur through comprehensive
        income of a business entity or changes in unrestricted net assets of a
        not-for-profit organization. This Statement also improves financial reporting
        by
        requiring an employer to measure the funded status of a plan as of the date
        of
        its year-end statement of financial position, with limited exceptions. An
        employer with publicly traded equity securities is required to initially
        recognize the funded status of a defined benefit postretirement plan and
        to
        provide the required disclosures as of the end of the fiscal year ending
        after
        December 15, 2006. An employer without publicly traded equity securities
        is
        required to recognize the funded status of a defined benefit postretirement
        plan
        and to provide the required disclosures as of the end of the fiscal year
        ending
        after June 15, 2007. However, an employer without publicly traded equity
        securities is required to disclose the following information in the notes
        to
        financial statements for a fiscal year ending after December 15, 2006, but
        before June 16, 2007, unless it has applied the recognition provisions of
        this
        Statement in preparing those financial statements:
 a.
                A
                    brief description of the provisions of this Statement
 b.
                  The
                        date that adoption is required
 c.
                The
                    date the employer plans to adopt the recognition provisions of
                    this
                    Statement, if earlier.
 The
        requirement to measure plan assets and benefit obligations as of the date
        of the
        employer’s fiscal year-end statement of financial position is effective for
        fiscal years ending after December 15, 2008. The management is currently
        evaluating the effect of this pronouncement on financial
        statements.
  F-12
  In
        February 2007, FASB issued FASB Statement No. 159, The Fair Value Option
        for
        Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
        years beginning after November 15, 2007. Early adoption is permitted subject
        to
        specific requirements outlined in the new Statement. Therefore, calendar-year
        companies may be able to adopt FAS 159 for their first quarter 2007 financial
        statements.
 
 The
        new
        Statement allows entities to choose, at specified election dates, to measure
        eligible financial assets and liabilities at fair value that are not otherwise
        required to be measured at fair value. If a company elects the fair value
        option
        for an eligible item, changes in that item's fair value in subsequent reporting
        periods must be recognized in current earnings. FAS 159 also establishes
        presentation and disclosure requirements designed to draw comparison between
        entities that elect different measurement attributes for similar assets and
        liabilities. The
        management is currently evaluating the effect of this pronouncement on financial
        statements.
  **Note
        C** - ** **ADVANCES
        TO SUPPLIERS**
 
 Advances
        to suppliers amounted to $10,285 as of December 31, 2004.
 
 **Note
        D -** **ACCOUNTS PAYABLE & ACCRUED EXPENSES**
 
 As
        of
        December 31, 2004, accounts payable & accrued expenses comprised of the
        following:
 Accounts
                    payable and accrued expenses
                
                $
                361,245Payroll
                    payable
                
                
                166,446Other
                    payable
                
                
                104,122Welfare
                    payable
                
                
                24,159Total
                
                $
                655,972
  **Note
        E-** **LOAN
        PAYABLE**
 
 At
        December 31, 2004, the Company had a secured note payable to Xinye bank in
        China, with annual interest rate at 5.31%, due on July 30, 2005 in the amount
        of
        $242,000. The note payable is guaranteed by an unrelated party. The Company
        paid
        the unrelated party $9,680 for the guanrenttee. All assets of E’Jenie as of
        December 31, 2004 was pledged against guarantee agreement.
 
 **Note
        F -** **TAX
        PAYABLE**
 
 At
        December 31, 2004, the tax payable included the following:
  Value
                  added tax payable
              
              $
              407,445Income
                  tax payable
              
              
              92,424Total
              
              $
              499,869
  **Note
        G -** **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.
  F-13
  On
        March
        4, 2004, certain of the Company’s principal stockholders holding approximately
        52.53% of the then total issued and outstanding common stock, approved a
        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 the
        amount
        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 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 $3,262,327.
 
 **Note
        H -** ****** **STOCK
        PURCHASE BUSINESS COMBINATION**
 
 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. The Company also issued
        1,919,016 shares for guarantee related to the acquisation. This transaction
        closed on November 15, 2004.
 
 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 components of the purchase price of $12,524,884
        million related to the acquisition of Billion.
 Total
                    cash paid for the acquisition of Billion
                
                $
                1,500,0004,566,210
                    shares issued for the acquisition of Billion at $1.70 per
                    share
                
                
                7,762,5571,919,016
                    shares issued as guarantee fees related to Billion at $1.70 per
                    share
                
                
                3,262,327Total
                    Investment Cost
                
                $
                12,524,884
 
 The
        Company used the quoted market price as of November 15, 2004, which is the
        earlier of the date of issuance and the closing date of the acquisition,
        to
        determine the cost of the shares issued for the acquisition of Billion and
        for
        the guarantee fees related to the acquisition of Billion.
  F-14
  Prior
        to
        the acquisition of Billion, the Company did not have significant revenue
        or
        business. The acquisition of Billion not only helped the Company establish
        a new
        business but also allowed the Company to gain access to one of the fastest
        growing economy in the world, China.
  E’Jenie,
        a leader in the manufacturer of battery shell industry in China, was in an
        industry where the demand for lithium batteries was projected to increase
        for
        several more years from the date of acquisition. E’Jenie was not only profitable
        in the past but would also generate positive cash flow to the Company for
        many
        years. The Company also believed that with the existing technology, E’Jenie
        could eventually begin to produce both lithium batteries and shells.
  The
        Company had to pay a premium based on the above reasons to entice the
        shareholders of Billion to sell their shares.
  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
                
                $
                296,713Accounts
                    receivable
                
                
                1,390,287Other
                    receivable
                
                
                25,730Prepaid
                    expenses
                
                
                10,830Inventories
                
                
                254,770Property,
                    plant, and equipment
                
                
                215,409Total
                    assets
                
                $
                2,193,739Accounts
                    payable
                
                $
                636,940Loan
                    payable
                
                
                242,000Other
                    current liabilities
                
                
                372,496Total
                    liabilities
                
                $
                1,251,436Net
                    tangible assets acquired
                
                $
                942,303CostTotal
                    cost of investment
                
                $
                12,524,884Less
                    intangible asset (customer relationship)
                
                
                (2,691,445
                )Less
                    intangible asset (proprietary technology)
                
                
                (270,850
                )Less
                    intangible asset (Design)
                
                
                (366,850
                )Net
                    tangible assets acquired
                
                
                (942,303
                )Goodwill
                
                $
                8,253,436
  The
        Company hired an outside consultant and in accordance with SFAS 141, the
        consultants arrived at the valuation for the intangible assets utilizing
        an
        income approach, specifically the discounted cash flow method. They have
        determined that the value of the customer relationship, design and proprietary
        technology could be attributable to the future revenue the Company can expect
        to
        generate as a result of their intangible assets.
  F-15
  The
        following (unaudited) pro forma consolidated results of operations have been
        prepared as if the acquisition of Billion had occurred at January 1, 2004
        and
        2003:
 December
                    31, 2004
                
                
                December
                    31, 2003Net
                    revenue
                
                $
                5,181,694
                
                $
                2,062,336Net
                    income (loss)
                
                $
                540,115
                
                $
                132,934Net
                    income (loss) per share - basic and diluted
                
                $
                0.01
                
                $
                0.01**Weighted
                    average number of shares outstanding:**Basic
                    and diluted
                
                
                40,496,438
                
                
                12,500,626
 
 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.
 
 **GOODWILL
        AND INTANGIBLE ASSETS**
  Goodwill
  Goodwill
        represents the excess of the purchase price over the fair value of the
        identifiable assets and liabilities acquired as a result of the Company’s
        acquisitions of interests in its subsidiaries. Under Statement of Financial
        Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible
        Assets (“SFAS 142”),” goodwill is no longer amortized, but tested for impairment
        upon first adoption and annually, thereafter, or more frequently if events
        or
        changes in circumstances indicate that it might be impaired. The Company
        assesses goodwill for impairment periodically in accordance with SFAS 142.
  As
        of
        December 31, 2004, the Goodwill comprised of the following:
 Acquisition
                    of Billion
                
                $
                8,253,436
  Intagible
        Assets
  The
        Company applies the criteria specified in SFAS No. 141, “Business
        Combinations” to determine whether an intangible asset should be recognized
        separately from goodwill. Intangible assets acquired through business
        acquisitions are recognized as assets separate from goodwill if they satisfy
        either the “contractual-legal” or “separability” criterion. Per SFAS 142,
        intangible assets with definite lives are amortized over their estimated
        useful
        life and reviewed for impairment in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-lived Assets.” Intangible
        assets, such as purchased technology, trademark, customer list, user base
        and
        non-compete agreements, arising from the acquisitions of subsidiaries and
        variable interest entities are recognized and measured at fair value upon
        acquisition. Intangible assets are amortized over their estimated useful
        lives
        from one to ten years. The Company reviews the amortization methods and
        estimated useful lives of intangible assets at least annually or when events
        or
        changes in circumstances indicate that it might be impaired. The recoverability
        of an intangible asset to be held and used is evaluated by comparing the
        carrying amount of the intangible asset to its future net undiscounted cash
        flows. If the intangible asset is considered to be impaired, the impairment
        loss
        is measured as the amount by which the carrying amount of the intangible
        asset
        exceeds the fair value of the intangible asset, calculated using a discounted
        future cash flow analysis. The Company uses estimates and judgments in its
        impairment tests, and if different estimates or judgments had been utilized,
        the
        timing or the amount of the impairment charges could be different.
  F-16
  Effective
        January 1, 2002, the Company adopted Statement of Financial Accounting Standards
        No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS
        144”), which addresses financial accounting and reporting for the impairment
        or
        disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the
        Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
        Of,”
and the accounting and reporting provisions of APB Opinion No. 30, “Reporting
        the Results of Operations for a Disposal of a Segment of a Business.” The
        Company periodically evaluates the carrying value of long-lived assets to
        be
        held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
        to be recorded on long-lived assets used in operations when indicators of
        impairment are present and the undiscounted cash flows estimated to be generated
        by those assets are less than the assets’ carrying amounts. In that event, a
        loss is recognized based on the amount by which the carrying amount exceeds
        the
        fair market value of the long-lived assets. Loss on long-lived assets to
        be
        disposed of is determined in a similar manner, except that fair market values
        are reduced for the cost of disposal. Based on its review, the Company believes
        that, as of December 31, 2004 there were no significant impairments of its
        long-lived assets.
  As
        of
        December 31, 2004 intangible assets consist of the following:
 Customer
                    relationship
                
                $
                2,691,445Design
                
                
                366,850Proprietary
                    technology
                
                
                270,850Intangible
                    assets
                
                
                3,329,145Accumulated
                    amortization
                
                
                (41,614
                )$
                3,287,531
  The
        intangible assets are amortized over 10 years.
 Amortization
        expenses were $41,614 and $0 for the years ended December 31, 2004 and
        2003.
 
 Amortization
        expenses for the Company’s intangible assets over the next five fiscal years is
        estimated to be:
  2005
                
                $
                332,9152006
                
                
                332,9152007
                
                
                332,9152008
                
                
                332,9152009,
                
                
                332,915After
                
                $
                1,622,956Total
                
                $
                3,287,531
 **Note
        I-** **INCOME
        TAXES**
  The
        Company through its subsidiaries, E’Jenie, is governed by the Income Tax Laws of
        the PRC. Operations in the United States of America have incurred net
        accumulated operating losses for income tax purposes. The Company believes
        that
        it is more likely than not that these net accumulated operating losses will
        not
        be utilized in the future and hence the Company has not recorded any deferred
        assets as of December 31, 2004.
  F-17
  Pursuant
        to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) is at a statutory
        rate in Shenzhen (where E’Jenie is located) of 15%.
 The
          following is a reconciliation of income tax expense:
 12/31/2004
                
                
                U.S.
                
                
                State
                
                
                International
                
                
                TotalCurrent
                
                $
                0
                
                $
                0
                
                $
                13,555
                
                $
                13,555Deferred
                
                
                -
                
                
                -
                
                
                -
                
                
                -Total
                
                $
                0
                
                $
                0
                
                $
                13,555
                
                $
                13,555
  12/31/2003
                
                
                U.S.
                
                
                State
                
                
                International
                
                
                TotalCurrent
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0Deferred
                
                
                -
                
                
                -
                
                
                -
                
                
                -Total
                
                $
                0
                
                $
                0
                
                $
                0
                
                $
                0
  Reconciliation
            of the differences between the statutory U.S. Federal income tax rate
and
            the
            effective rate is as follows:
 12/31/2004
                
                
                12/31/2003US
                    statutory tax rate
                
                
                34
                %
                
                34
                %Foreign
                    income not recognized in US
                
                
                -34
                %
                
                -34
                %PRC
                    income tax
                
                
                15
                %
                
                15
                %Effective
                    rate
                
                
                15
                %
                
                15
                %
 **Note
        J -** **COMMITTMENTS**
 
 Operating
        Leases
 
 The
        Company leases office building from unrelated party. The lease agreement
        is from
        to May 1, 2003 to April 30, 2011 at an annual lease at $82,111. The rental
        expenses for the years ended December 31, 2004 and 2003 are $10,264 and 0.
        The
        rental expenses for the next five years ended 12-31-2004 are as
        follows:
 2005
                
                $
                73,3862006
                
                
                90,677Total
                
                $
                150,304
 
 In
        the
        subsequent period, Ejenie relocated to a larger production facility in Shenzhen,
        China. The operating leases will be expired on December 31, 2006.
 
 **Note
        K -** **STATUTORY
        COMMON WELFARE FUND**
 
 As
        stipulated by the Company Law of the People’s Republic of China (PRC), net
        income after taxation can only be distributed as dividends after appropriation
        has been made for the following:
 i.
                Making
                    up cumulative prior years’ losses, if any;
 
 ii.
                Allocations
                    to the “Statutory surplus reserve” of at least 10% of income after tax, as
                    determined under PRC accounting rules and regulations, until
                    the fund
                    amounts to 50% of the Company’s registered capital;
 
 iii.
                Allocations
                    of 5-10% of income after tax, as determined under PRC accounting
                    rules and
                    regulations, to the Company’s “Statutory common welfare fund”, which is
                    established for the purpose of providing employee facilities
                    and other
                    collective benefits to the Company’s employees; and
  F-18
  iv.
                Allocations
                    to the discretionary surplus reserve, if approved in the stockholders’
                    general meeting.
 As
        of
        December 31, 2004, the Company reserve $3,841 as statutory common welfare
        fund.
 
 **Note
        L -** **STATUTORY
        RESERVE**
 
 In
        accordance with the Chinese Company Law, the company has allocated 10% of
        its
        annual net income, amounting $7,681 as statutory reserve for the year ended
        December 31, 2004.
 
 **Note
        M -** **RELATED
        PARTY TRANSACTIONS**
 
 As
        of
        December 31, 2004, the Company has an unsecured, due on demand, interest
        free
        loan from a shareholder, in the amount of $174,600.
 
 As
        of
        December 31, 2004, the Compay has other receivable from related parties
        amounting $4,990. including $2,570 advance to a shareholder and $2,420 loan
        to a
        company owned by the CEO’ close family member. Both other receivables are due on
        demand and interest free.
 
 **Note
        N -** **CURRENT
        VULNERABILITY DUE TO RISK FACTORS**
 
 The
        Company’s operations are carried out in the PRC. Accordingly, the Company’s
        business, financial condition and results of operations may be influenced
        by the
        political, economic and legal environments in the PRC, by the general state
        of
        the PRC’s economy. The Company’s business may be influenced by changes in
        governmental policies with respect to laws and regulations, anti-inflationary
        measures, currency conversion and remittance abroad, and rates and methods
        of
        taxation, among other things.
 
 **Note
        O -** **RESTATEMENTS**
 
 Subsequent
        to the issuance of the Company's financial statements for the year ended
        De c ember
        31,
        2004, the Company determined that certain transactions and presentation in
        the
        financial statements had not been accounted for properly in the Company's
        financial statements. Specifically,
        the purchase price allocation for the acquisition of Billion Electronics C o.
        Ltd.,
        was not done properly. Also, the acquisition balance sheet for Billion
        Electronics Co.
        Ltd.,
        was taken as of September 30, 2004 instead of November 15, 2004. The Company
        de cided
        to
        restate the financial statements for the year ended December 31, 2004. The
        financial statements for the year ended December 31, 2004 have been restated
        to
        give effect to the changes to the opening balances.
 
 The
        effect of the restatements is as follows:
 
 F-19
 **CONSOLIDATED
          BALANCE SHEET**
  Reported
                
                
                Restated2004
                
                
                2004**Current
                    Assets**Cash
                    and cash equivalents
                
                $
                437,126
                
                $
                437,126Accounts
                    receivable, net
                
                
                1,964,069
                
                
                2,013,815Inventory
                
                
                225,450
                
                
                223,859Advance
                    to suppliers
                
                
                -
                
                
                10,285Other
                    receivables
                
                
                12,449
                
                
                7,459Other
                    receivables - related parties
                
                
                -
                
                
                4,990Total
                    Current Assets
                
                
                2,639,094
                
                
                2,697,534**Property
                    & Equipment, net**
                
                
                237,834
                
                
                237,834**Other
                    Assets**Prepaid
                    expenses
                
                
                1,071
                
                
                -Deposits
                
                
                8,470
                
                
                -Amortizable
                    intangible assets, net
                
                
                -
                
                
                3,287,531Goodwill
                
                
                1,865,067
                
                
                8,253,436Total
                    Other Assets
                
                
                1,874,608
                
                
                11,540,967**Total
                    Assets**
                
                $
                4,751,536
                
                $
                14,476,335
 **LIABILITIES
            AND STOCKHOLDERS' EQUITY**
 **Current
                    Liabilities**Accounts
                    payable and accrued expenses
                
                $
                1,414,994
                
                $
                655,972Tax
                    payable
                
                
                -
                
                
                499,869Loan
                    payable
                
                
                244,072
                
                
                242,000Loan
                    payable to related party
                
                
                -
                
                
                174,600Deferred
                    revenue
                
                
                35,724
                
                
                -Total
                    Liabilities
                
                
                1,694,790
                
                
                1,572,4411,694,790
                
                
                1,572,441**Stockholders'
                    Equity**Common
                    stock, $.001 par value, 140,000,000shares
                    authorized, 54,460,626 issued and outstanding
                
                
                54,460
                
                
                54,460Additional
                    paid in capital
                
                
                2,895,614
                
                
                13,089,824Statutory
                    reserve
                
                
                -
                
                
                11,522Other
                    comprehensive income
                
                
                -
                
                
                -Accumulated
                    deficit
                
                
                106,672
                
                
                (251,912
                )Total
                    Stockholders' Equity
                
                
                3,056,746
                
                
                12,903,894**Total
                    Liabilities and Stockholders' Equity**
                
                $
                4,751,536
                
                $
                14,476,335
  F-20
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
  Reported
                
                
                Restated2004
                
                
                2004Net
                    Revenue
                
                $
                2,338,718
                
                $
                1,412,276Cost
                    of revenue
                
                
                1,294,346
                
                
                718,785**Gross
                    profit**
                
                
                1,044,372
                
                
                693,491Operating
                    ExpensesSelling
                    expenses
                
                
                55,416
                
                
                46,793General
                    and administrative expenses
                
                
                227,082
                
                
                261,751Consulting
                    fees
                
                
                598,000
                
                
                598,000Total
                    operating expenses
                
                
                880,498
                
                
                906,544**Loss
                    from operations**
                
                
                163,874
                
                
                (213,053
                )Other
                    (Income) ExpenseInterest
                    income
                
                
                (6
                )
                
                (6
                )Miscellaneous
                    (income) expense
                
                
                145
                
                
                5,141Interest
                    expense
                
                
                7,384
                
                
                3,468Total
                    Other (Income) Expense
                
                
                7,523
                
                
                8,603**Income
                    (loss) before income taxes**
                
                
                156,351
                
                
                (221,656
                )Provision
                    for income taxes
                
                
                44,500
                
                
                13,555**Net
                    income (loss)**
                
                $
                111,851
                
                $
                (235,211
                )**Net
                    income (loss) per share:**Basic
                    and diluted
                
                $
                0.00
                
                $
                (0.01
                )**Weighted
                    average number of shares outstanding:**Basic
                    and diluted
                
                
                39,172,889
                
                
                40,496,438
   21
  **CONSOLIDATED
            STATEMENTS OF CASH FLOWS**
 Reported
                  
                  
                  Restated2004
                  
                  
                  2004**CASH
                      FLOWS FROM OPERATING ACTIVITIES**Net
                      Income (Loss)
                  
                  $
                  111,851
                  
                  $
                  (235,211
                  )Adjustments
                      to reconcile net income (loss) to net cashprovided
                      by operating activities:Depreciation
                  
                  
                  13,500
                  
                  
                  730Amortization
                  
                  
                  -
                  
                  
                  41,614Issuance
                      of shares for consultants
                  
                  
                  598,000
                  
                  
                  598,000Gain
                      on disposal of marketable securities
                  
                  
                  8,791
                  
                  
                  -(Increase)
                      / decrease in assets:Accounts
                      receivables
                  
                  
                  (626,976
                  )
                  
                  (623,529
                  )Inventory
                  
                  
                  (73,155
                  )
                  
                  30,910Other
                      receivables
                  
                  
                  182,045
                  
                  
                  18,271Other
                      receivables - related party
                  
                  
                  -
                  
                  
                  (4,990
                  )Prepaid
                      expense
                  
                  
                  (1,070
                  )
                  
                  545Deposits
                  
                  
                  (8,470
                  )
                  
                  -Increase
                      in current liabilities:Accounts
                      payable and accrued expenses
                  
                  
                  148,478
                  
                  
                  141,407Deferred
                      revenue
                  
                  
                  35,724
                  
                  
                  0Total
                      Adjustments
                  
                  
                  276,867
                  
                  
                  202,958**Net
                      cash provided by (used in) operations**
                  
                  
                  388,718
                  
                  
                  (32,253
                  )**CASH
                      FLOWS FROM INVESTING ACTIVITIES**Acquisition
                      of subsidiary
                  
                  
                  (1,500,000
                  )
                  
                  (1,500,000
                  )Cash
                      acquired in acquisition
                  
                  
                  130,852
                  
                  
                  296,713Acquisition
                      of property & equipment
                  
                  
                  (103,665
                  )
                  
                  (23,155
                  )**Net
                      cash provided by (used in) investing activities**
                  
                  
                  (1,472,813)
                  
                  
                  (1,226,442
                  )**CASH
                      FLOWS FROM FINANCING ACTIVITIES**Proceed
                      from issuance of shares
                  
                  
                  1,500,000
                  
                  
                  1,500,000Proceed
                      from loan from related party
                  
                  
                  0
                  
                  
                  174,600**Net
                      cash provided by financing activities**
                  
                  
                  1,500,000
                  
                  
                  1,674,600Effect
                      of exchange rate changes on cash and cash equivalents
                  
                  
                  -
                  
                  
                  -**NET
                      INCREASE IN CASH AND CASH EQUIVALENTS**
                  
                  
                  415,905
                  
                  
                  415,905**CASH
                      AND CASH EQUIVALENTS, BEGINNING BALANCE**
                  
                  
                  21,221
                  
                  
                  21,221**CASH
                      AND CASH EQUIVALENTS, ENDING BALANCE**
                  
                  $
                  437,126
                  
                  $
                  437,126**SUPPLEMENTAL
                      DISCLOSURES:**Cash
                      paid during the year for:Income
                      tax payments
                  
                  $
                  -
                  
                  $
                  -Interest
                      payments
                  
                  $
                  7,384
                  
                  $
                  5,354Non
                      cash transactions:Issuance
                      of stock for purchase of business
                  
                  $
                  832,906
                  
                  $
                  7,762,557Issuance
                      of stock for guarantee
                  
                  $
                  0
                  
                  $
                  3,262,327
  F-22
 CONSOLIDATED
            STATEMENT OF STOCKHOLDERS' EQUITY
  Reported
                  
                  
                  Restated2004
                  
                  
                  2004Common
                      Stock
                  
                  $
                  54,460
                  
                  $
                  54,460Additional
                      Paid In CapitalBalance
                      at beginning of year
                  
                  $
                  15,385
                  
                  $
                  15,385Shares
                      issued for cash
                  
                  
                  1,470,000
                  
                  
                  1,470,000Shares
                      issued to consultant
                  
                  
                  523,516
                  
                  
                  523,516Shares
                      issued to consultant
                  
                  
                  62,524
                  
                  
                  62,524Shares
                      issued for acquisition of Billion
                  
                  
                  223,745
                  
                  
                  7,757,991Shares
                      issued for guarantee
                  
                  
                  600,444
                  
                  
                  3,260,408Balance
                      December 31, 2004
                  
                  $
                  2,895,614
                  
                  $
                  13,089,824Statutory
                      ReserveBalance
                      at beginning of year
                  
                  $
                  -
                  
                  $
                  -Transfer
                      from net income (loss)
                  
                  
                  -
                  
                  
                  11,522Balance
                      December 31, 2004
                  
                  $
                  -
                  
                  $
                  11,522Retained
                      earningsBalance
                      at beginning of year
                  
                  $
                  (5,179
                  )
                  $
                  (5,179
                  )Transfer
                      to statutory reserve
                  
                  
                  -
                  
                  
                  (11,522
                  )Net
                      income (loss)
                  
                  
                  111,851
                  
                  
                  (235,211
                  )Balance
                      at end of year
                  
                  $
                  106,672
                  
                  $
                  (251,912
                  )Total
                      Stockholder's Equity
                  
                  $
                  $3,056,747
                  
                  $
                  $12,903,894
 Disclosure
          for each separate adjustment made to the financial statements and the impact
          on
          each line item of the financial statements.
  F-23
 
 ASSETSOriginal
                    
                    
                    
                    
                    
                    
                    
                    
                    Restated2004
                    
                    
                    
                    
                    
                    Adjustments
                    
                    
                    2004Current
                        AssetsCash
                        and cash equivalents
                    
                    $
                    437,126
                    
                    
                    
                    
                    
                    
                    
                    $
                    437,126Accounts
                        receivable, net
                    
                    
                    1,964,069
                    
                    
                    3
                    
                    
                    49,746
                    
                    
                    2,013,815Inventory
                    
                    
                    225,450
                    
                    
                    4
                    
                    
                    (1,591
                    )
                    
                    223,859Advance
                        to suppliers
                    
                    
                    -
                    
                    
                    5
                    
                    
                    10,285
                    
                    
                    10,285Other
                        receivables
                    
                    
                    -
                    
                    
                    5
                    
                    
                    7,459
                    
                    
                    7,459Other
                        receivables - related parties
                    
                    
                    12,449
                    
                    
                    5
                    
                    
                    (7,459
                    )
                    
                    4,990Total
                        Current Assets
                    
                    
                    2,639,094
                    
                    
                    
                    
                    
                    
                    
                    
                    2,697,534Fixed
                        Assets, net
                    
                    
                    237,834
                    
                    
                    
                    
                    
                    -
                    
                    
                    237,834Total
                        Fixed Assets
                    
                    
                    237,834
                    
                    
                    
                    
                    
                    
                    
                    
                    237,834Other
                        AssetsPrepaid
                        expenses
                    
                    
                    1,071
                    
                    
                    5
                    
                    
                    (1,071
                    )
                    
                    -Deposits
                    
                    
                    8,470
                    
                    
                    5
                    
                    
                    (8,470
                    )
                    
                    -Amortizable
                        intangible assets, net
                    
                    
                    -
                    
                    
                    1
                    
                    
                    3,287,531
                    
                    
                    3,287,531Goodwill
                    
                    
                    1,865,067
                    
                    
                    1
                    
                    
                    6,388,369
                    
                    
                    8,253,436Total
                        Other Assets
                    
                    
                    1,874,608
                    
                    
                    
                    
                    
                    
                    
                    
                    11,540,967Total
                        Assets
                    
                    $
                    4,751,536
                    
                    
                    
                    
                    
                    
                    
                    $
                    14,476,335LIABILITIES
                        AND STOCKHOLDERS' EQUITYCurrent
                        LiabilitiesAccounts
                        payable and accrued expenses
                    
                    $
                    1,414,993
                    
                    
                    6
                    
                    
                    (759,021
                    )
                    $
                    655,972Tax
                        payable
                    
                    
                    -
                    
                    
                    6
                    
                    
                    499,869
                    
                    
                    499,869Loan
                        payable
                    
                    
                    -
                    
                    
                    6
                    
                    
                    242,000
                    
                    
                    242,000Loan
                        payable - related party
                    
                    
                    -
                    
                    
                    6
                    
                    
                    174,600
                    
                    
                    174,600Deferred
                        revenue
                    
                    
                    35,724
                    
                    
                    6
                    
                    
                    (35,724
                    )
                    
                    -Current
                        portion, debt
                    
                    
                    244,072
                    
                    
                    6
                    
                    
                    (244,072
                    )
                    
                    -Total
                        Current Liabilities
                    
                    
                    1,694,789
                    
                    
                    
                    
                    
                    
                    
                    
                    1,572,441Stockholders'
                        EquityCommon
                        stock
                    
                    
                    54,461
                    
                    
                    1
                    
                    
                    (1
                    )
                    
                    54,460Additional
                        paid in capital
                    
                    
                    2,895,614
                    
                    
                    1
                    
                    
                    10,194,210
                    
                    
                    13,089,824Statutory
                        reserve
                    
                    
                    -
                    
                    
                    8
                    
                    
                    11,522
                    
                    
                    11,522Retained
                        earnings (deficit)
                    
                    
                    106,672
                    
                    
                    
                    
                    
                    (358,584
                    )
                    
                    (251,912
                    )Total
                        Stockholders' Equity
                    
                    
                    3,056,747
                    
                    
                    
                    
                    
                    
                    
                    
                    12,903,894Total
                        Liabilities and Stockholders' Equity
                    
                    $
                    4,751,536
                    
                    
                    
                    
                    
                    
                    
                    $
                    14,476,335
  F-24
 Original
                      
                      
                      
                      
                      
                      
                      
                      
                      Restated2004
                      
                      
                      
                      
                      
                      Adjustments
                      
                      
                      2004Sales,
                          net
                      
                      $
                      2,338,718
                      
                      
                      **2,6**
                      
                      
                      (926,442
                      )
                      $
                      1,412,276Cost
                          of sales
                      
                      
                      1,294,346
                      
                      
                      **2,4**
                      
                      
                      (575,561
                      )
                      
                      718,785Gross
                          profit
                      
                      
                      1,044,372
                      
                      
                      
                      
                      
                      
                      
                      
                      693,491Selling
                          expense
                      
                      
                      55,416
                      
                      
                      **2,5**
                      
                      
                      (8,623
                      )
                      
                      46,793General
                          and administrative expenses
                      
                      
                      227,082
                      
                      
                      **2,3,6,7**
                      
                      
                      34,669
                      
                      
                      261,751Consulting
                          fees
                      
                      
                      598,000
                      
                      
                      
                      
                      
                      -
                      
                      
                      598,000Income
                          (loss) from operations
                      
                      
                      163,874
                      
                      
                      
                      
                      
                      
                      
                      
                      (213,053
                      )Other
                          (Income) ExpenseInterest
                          income
                      
                      
                      (6
                      )
                      
                      
                      
                      
                      
                      
                      
                      (6
                      )Other
                          income
                      
                      
                      -
                      
                      
                      
                      
                      
                      
                      
                      
                      -Miscellaneous
                          expense
                      
                      
                      145
                      
                      
                      6
                      
                      
                      4,996
                      
                      
                      5,141Interest
                          expense
                      
                      
                      7,384
                      
                      
                      2,6
                      
                      
                      (3,916
                      )
                      
                      3,468Total
                          Other (Income) Expense
                      
                      
                      7,523
                      
                      
                      
                      
                      
                      
                      
                      
                      8,603Income
                          (loss) before income taxes
                      
                      
                      156,351
                      
                      
                      
                      
                      
                      
                      
                      
                      (221,656
                      )Provison
                          for income taxes
                      
                      
                      44,500
                      
                      
                      6
                      
                      
                      (30,945
                      )
                      
                      13,555Net
                          income (loss)
                      
                      $
                      111,851
                      
                      
                      
                      
                      
                      
                      
                      $
                      (235,211
                      )
 
 F-25
 **AJE
                        #**
                    
                    
                    **ACCOUNT**
                    
                    
                    **DR**
                    
                    
                    **CR**1
                    
                    
                    Goodwill
                    
                    
                    6,388,369Amortizable
                        intangible assets, net
                    
                    
                    3,329,145Common
                        stock
                    
                    
                    1Additional
                        paid in capital
                    
                    
                    
                    
                    
                    10,194,210Retained
                        earnings
                    
                    
                    476,695Adjustment
                        was made related to the restatement for the error in the
                        valuation of
                        thecommon
                        shares and for the failure to appropriately identify intangible
                        assets2
                    
                    
                    Sales,
                        net
                    
                    
                    962,166Cost
                        of sales
                    
                    
                    
                    
                    
                    577,152Selling
                        expenses
                    
                    
                    
                    
                    
                    7,879General
                        and administrative expenses
                    
                    
                    101,404Miscellaneous
                        expensesInterest
                        expense
                    
                    
                    
                    
                    
                    1,844Retained
                        earnings
                    
                    
                    
                    
                    
                    476,695To
                        correct revenue from the use of incorrect acquisition
                        dateAccounts
                        receivable, net
                    
                    
                    49,7463
                    
                    
                    Bad
                        debt
                    
                    
                    
                    
                    
                    49,746Reduce
                        original reserve for bad debt4
                    
                    
                    Inventory
                    
                    
                    
                    
                    
                    1,591Cost
                        of sales
                    
                    
                    1,591Reduce
                        inventory to actual value during audit5
                    
                    
                    Advance
                        to suppliers
                    
                    
                    10,285Other
                        receivables
                    
                    
                    7,459Other
                        receivables - related parties
                    
                    
                    
                    
                    
                    7,459Prepaid
                        expenses
                    
                    
                    
                    
                    
                    1,071Deposits
                    
                    
                    
                    
                    
                    8,470Selling
                        expenses
                    
                    
                    
                    
                    
                    744To
                        reclassify account previously disclosed and correct balance
                        to
                        actual6
                    
                    
                    Accounts
                        payable and accrued expenses
                    
                    
                    759,021Tax
                        payable
                    
                    
                    
                    
                    
                    499,869Loan
                        payable
                    
                    
                    
                    
                    
                    242,000Loan
                        payable - related party
                    
                    
                    
                    
                    
                    174,600Deferred
                        revenue
                    
                    
                    35,724Current
                        portion, debt
                    
                    
                    244,072Sales,
                        net
                    
                    
                    
                    
                    
                    35,724General
                        and administrative expense
                    
                    
                    
                    
                    
                    58,603Miscellaneous
                        expenses
                    
                    
                    4,996Interest
                        expense
                    
                    
                    
                    
                    
                    2,072Income
                        tax
                    
                    
                    
                    
                    
                    30,945To
                        reclassify account previously disclosed and correct balance
                        to
                        actual
 **Note
        P -** **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.
 
 On
        February 14, 2006, China Digital Communication Group, UPE Limited (Far East),
        a
        BVI corporation (“UPE Limited”), Shenzhen Zhuo Tong Power Supply Industry Co.,
        Ltd., a Shenzhen corporation and a wholly-owned subsidiary of UPE Limited
        (“Zhuo
        Tong”), and the shareholders of UPE Limited (the “Shareholders”), entered into a
        Share Exchange Agreement (the “Agreement”) pursuant to which China Digital will
        acquire 100% of UPE Limited in an all stock transaction valued at approximately
        US$9.6 million. China Digital issued 18.5 million shares of its common stock
        to
        the Shareholders in exchange for all of the shares UPE Limited (the “Share
        Exchange”). Upon completion of the Share Exchange, the Shareholders will own
        approximately 25% of China Digital.
  F-26
  On
        June
        26, 2006, the Company issued a press release announcing that it had terminated
        its Share Exchange Agreement dated February 14, 2006 (the “Agreement”), with UPE
        Limited (Far East), a BVI corporation (“UPE Limited”), Shenzhen Zhuo Tong Power
        Supply Industry Co., Ltd., a Shenzhen corporation and a wholly-owned subsidiary
        of UPE Limited, and the shareholders of UPE Limited (the “Shareholders”). As a
        result of the termination of the Agreement, the Shareholders returned, and
        the
        Company cancelled, the 18.5 million shares of the Company’s common stock that
        were previously issued to the Shareholders.
 
 On
        March
        22, 2006, China Digital Communication Group, Galaxy View International LTD,
        a
        BVI corporation (“Galaxy”), Shenzhen Sono, a Shenzhen corporation and a
        wholly-owned subsidiary of the Galaxy (“Sono”), and the shareholders of Galaxy
        (the “Shareholders”), entered into a Share Exchange Agreement (the “Agreement”)
        pursuant to which China Digital will acquire 100% of Galaxy for approximately
        $6,787,879. China Digital paid $3 million dollars on March 12, 2006 to Galaxy
        and issued 7,575,757 million shares of Series A-1 Convertible Preferred Stock.
        The Company finalized the Agreement on June 28, 2006. Each share of Series
        A-1
        Preferred Stock entitles the holder thereof to seven votes per share on all
        matters to be voted on by the shareholders of the Company and is mandatorily
        convertible into one share of the Company’s common stock on June 29, 2011. Each
        share of Series A-1 Preferred Stock shall, with respect to rights on
        liquidation, dissolution or winding up, rank (i) on a parity with the Company’s
        common stock, and (ii) junior to any other class of the Company’s preferred
        stock.
 
 F-27