UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 **FORM
        10-KSB**
 
 Annual
        Report Pursuant to Section 13 or 15(d) of
 the
        Securities Exchange Act of 1934
  xAnnual
        Report Pursuant
        to Section 13 or 15(d) of the Securities Exchange Act of
        1934
 **For
        the fiscal year ended December 31, 2007**
  oTransition
        Report
        Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for
        the
        transition period from  to
 
 Commission
        File Number: 000-05767
 
 China
        Display Technologies, Inc.
 (Name
        of
        small business issuer in its charter)
 
 Delaware
              23-2753988(State
                  or other jurisdiction of
              (IRS
                  Employerincorporation
                  or organization)
              Identification
                  No.)
 
 12A
                  Block, Xinhe Road, Xinqiao No. 3Industrial
                  Zone, Shajing District, Baoan Town, Shenzen, China 150090
              150090(Address
                  of principal executive office)
              (Zip
                  code)
 
 Issuer’s
        telephone number, including area code:
 86-0755-29758811
  Securities
        registered under Section 12(b) of the Exchange Act: None
 
 Securities
        Registered under Section 12(g) of the Exchange Act:
  Title
                    of each classCommon
                    Stock, $0.001 par value
 
 Check
        whether the issuer is not required to file reports pursuant to Section 13
        or
        15(d) of the Exchange Act. o
 
 Check
        whether the issuer (1) has filed all reports required to be filed by Section
        13
        or 15(d) of the Exchange Act during the preceding 12 months (or for such
        shorter
        period that the Registrant was required to file such reports) and (2) has
        been
        subject to such filing requirements for the past 90 days.
  Yes
                    x
                No
                    o
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-K 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 reference in Part III of this Form 10-KSB or any
        amendment to the Form 10-KSB. |X|
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
  Yes
                    o
                No
                    x
 
 State
        issuer’s revenues for its most recent fiscal year. $32,553,974.
 
 The
        aggregate market value of the voting stock held by non-affiliates of the
        issuer
        based on the closing sale price of $3.00 on March 5, 2008 was
        $16,747,548.
 
 The
        number of shares outstanding of the Registrant’s common stock outstanding,
        excluding treasury shares, as of March 11, 2008 was
        11,845,340.





TABLE
      OF
      CONTENTS


**PART
                  I**Item
                  1.
              DESCRIPTION
                  OF BUSINESS
              1Item
                  2.
              DESCRIPTION
                  OF PROPERTY
              21Item
                  3.
              LEGAL
                  PROCEEDINGS
              21Item
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              21**PART
                  II**Item
                  5
              MARKET
                  FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS
              21Item
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
                  CONDITION
              22Item
                  7.
              FINANCIAL
                  STATEMENTS.
              27Item
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE
              27Item
                  8A.
              CONTROLS
                  AND PROCEDURES
              27Item
                  8B.
              OTHER
                  INFORMATION
              28**PART
                  III**Item
                  9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
                  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
              28Item
                  10.
              EXECUTIVE
                  COMPENSATION
              29Item
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              30Item
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                  INDEPENDENCE
              31Item
                  13.
              EXHIBITS
              31Item
                  14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              32SIGNATURES
              33




**FORWARD
      LOOKING STATEMENTS**




Statements
      in this report may be “forward-looking statements.” Forward-looking statements
      include, but are not limited to, statements that express our intentions,
      beliefs, expectations, strategies, predictions or any other statements relating
      to our future activities or other future events or conditions. These statements
      are based on current expectations, estimates and projections about our business
      based, in part, on assumptions made by management. These statements are not
      guarantees of future performance and involve risks, uncertainties and
      assumptions that are difficult to predict. Therefore, actual outcomes and
      results may, and are likely to, differ materially from what is expressed or
      forecasted in the forward-looking statements due to numerous factors, including
      those described above and those risks discussed from time to time in this
      report, including the risks described under “Risk Factors,” and “Management’s
      Discussion and Analysis of Financial Condition and Results of Operations” in
      this report. In addition, such statements could be affected by risks and
      uncertainties related to the ability to conduct business in China, product
      demand, our ability to develop products using the most current technology,
      our
      ability to raise any financing which we may require for our operations,
      competition, government regulations and requirements, pricing and development
      difficulties, our ability to make acquisitions and successfully integrate those
      acquisitions with our business, as well as general industry and market
      conditions and growth rates, and general economic conditions. Any
      forward-looking statements speak only as of the date on which they are made,
      and
      we do not undertake any obligation to update any forward-looking statement
      to
      reflect events or circumstances after the date of this report.




**PART
      1**




**ITEM
      1 - DESCRIPTION OF BUSINESS**




**History**




We
      are a
      Delaware corporation organized on September 29, 2004 under the name Lincoln
      International Corporation, which is the successor by merger to a Kentucky
      corporation of the same name that was organized on July 1, 1960. On September
      21, 2007, our corporate name was changed to SUNY Display Technologies, Inc.,
      and
      on October 11, 2007, our corporation name was changed to China Display
      Technologies, Inc.





**September
      2007 Reverse Merger and Private Placement**





On
      September 12, 2007, we acquired all of the stock of Keep On Holdings, Limited,
      a
      British Virgin Islands corporation (“Keep On Holdings”) which is the sole
      stockholder of Suny Electronics (Shenzhen) Co., Ltd., a corporation organized
      under the laws of the Peoples’ Republic of China (“Suny”). Keep On Holdings had
      no business other than the ownership of the stock of Suny. The acquisition
      of
      Keep On Holdings is treated as a reverse acquisition, and the business of Suny
      became the business of the Company. At the time of the reverse acquisition,
      Lincoln was not engaged in any active business.





The
      accounting rules for reverse acquisitions require that beginning September
      12,
      2007, the date of the reverse acquisition, our balance sheet includes the
      consolidated assets and liabilities of Keep On Holdings and its wholly-owned
      subsidiary, Suny, and our equity accounts were recapitalized to reflect the
      net
      equity of Suny. The financial condition and results of operations for periods
      prior to September 12, 2007 reflect only the financial condition and operating
      results of Suny.




1





In
      connection with the acquisition of Keep On Holdings, we entered
      into:





•
            An
                agreement with Lawrence Kwok-Yan Chan, the sole shareholder of Keep
                On
                Holdings pursuant to which the he exchanged all of his stock in Keep
                On
                Holdings for 11,376,000 shares of common stock (constituting approximately
                98.1% of our outstanding common stock). The common stock was issued,
                in
                accordance with Mr. Chan’s instructions, to Mr. Chan and his
                designees.





•
            A
                securities purchase agreement with Barron Partners LP and Eos Holdings
                LLC
                pursuant to which the Investors purchased, for $4,000,000, an aggregate
                of
                (i) 3,703,704 shares of series A convertible preferred stock, with
                each
                share of series A preferred stock being initially convertible into
                one
                share of common stock, (ii) warrants to purchase 5,500,000 shares
                of
                common stock at $1.30 per share, and (iii) warrants to purchase 6,000,000
                shares of common stock at $1.50 per
                share.





•
            An
                agreement with our principal stockholder Nathan Low, individually
                and on
                behalf of NFS/FMTC Roth IRA FBO Nathan Low, pursuant to which we
                purchased
                290,000 shares of common stock, for a purchase price of $340,133.13,
                which
                was paid from the proceeds of the series A preferred stock and warrants,
                and repaid obligations to Mr. Low due to him in the aggregate amount
                of
                $284,866.87. The total payments for the stock and obligations to
                Mr. Low
                were $625,000.





•
            A
                registration rights agreement pursuant to which we agreed to register
                the
                shares of common stock issuable upon conversion of the series A preferred
                stock and exercise of the warrants.





•
            An
                escrow agreement pursuant to which we put 3,700,000 shares of series
                A
                preferred stock in escrow. If our consolidated net income, as defined,
                for
                2007 and 2008 do not reach the target numbers, on a per share, fully
                diluted basis, some or all of these shares are to be delivered to
                the
                investors and if the targets are met, the shares are to be returned
                to us
                and cancelled.





References
      to “we,” “us,” “our” and similar words refer to the China Display Technologies,
      Inc. and its subsidiaries, Keep On Holdings and Suny, unless the context
      indicates otherwise, and, prior to the effectiveness of the reverse acquisition,
      these terms refer to Suny. References to Lincoln relate to China Display
      Technologies, Inc. prior to the reverse acquisition.





Our
      executive offices are located at 12A Block, Xinhe Road, Xinqiao No. 3,
      Industrial Zone, Shajing District, Baoan Town, Shenzhen, CHINA 150090, telephone
      86 755-299-39658. Our website is http://suny.hk .
      Information on our website or any other website is not part of this
      report.




2





**September
      2007 Private Placement**





On
      September 12, 2007, we issued to Barron Partners and Eos Holdings, for
      $4,000,000, an aggregate of 3,703,704 shares of series A convertible preferred
      stock and warrants to purchase 5,500,000 shares of common stock at $1.30 per
      share and 6,000,000 shares of common stock at $1.50 per share. Each share of
      series A preferred stock is convertible into one share of common stock, and
      the
      conversion price of the series A preferred stock, which is determined by
      dividing the purchase price of $4,000,000 by the number of shares of common
      stock issuable upon conversion, is $1.08 per share. The following table sets
      forth the investment by each of the investors, the number of shares of series
      A
      preferred stock issued, the number of shares of common stock issuable upon
      conversion of the series A preferred stock and the number of shares of common
      stock issuable upon exercise of each set of warrants:




Series
                A
              Preferred
                Stock
            
            
            Common
                Stock issuable
              upon
                conversion of
              Series
                A Preferred Stock
            
            
            $1.30
                Warrants
            
            
            $1.50
                WarrantsBarron
                Partners LP
            
            
            3,611,111
            
            
            3,611,111
            
            
            5,362,500
            
            
            5,850,000Eos
                Holdings LLC
            
            
            92,593
            
            
            92,593
            
            
            137,500
            
            
            150,000Total
            
            
            3,703,704
            
            
            3,703,704
            
            
            5,500,000
            
            
            6,000,000





Pursuant
      to a registration statement that was declared effective by the SEC on February
      1, 2008, we registered 1,612,500 shares of common stock issuable upon exercise
      of the $1.30 warrants. We have not registered any of the shares of common stock
      issuable upon conversion of the series A preferred stock or the $1.50
      warrants.





**Reverse
      Split**





On
      November 8, 2007, we amended and restated our certificate of incorporation,
      which, among other provisions, effected a one-for-7.5 reverse split and changed
      our authorized capital stock to provide that we are authorized to issue
      20,000,000 shares of preferred stock, par value $.001 per share, and 100,000,000
      shares of common stock, par value $.001 per share. The reverse split became
      effective on that date. All share and per share information in this report
      gives
      retroactive effect to the reverse split, unless otherwise
      indicated.




**The
      LCD Industry**





The
      backlight industry provides one of the major components for LCD displays,
      contributing an estimated 20% of the cost of LCD module. Displays are a part
      of
      every day life. They are found in audio and visual equipment in the home,
      computers and laptops at work. People come across displays in the home, offices,
      restaurants and bars, hotels, cars, hospital and elsewhere.





In
      the
      Displaybank TFT-LCD shipment result report, shipments of large-size TFT-LCD
      panels, 10-inch and larger, jumped by 41% from 2006 to 393.47 million units
      in
      2007, and shipment area also increased by 57.4% to 5,276 million square meters.
      Revenues also reached $71.7 billion, up 35.7% from the previous
      year.




According
      to DisplaySearch, a total of 572 million small and medium displays were shipped
      in the fourth quarter of 2006, a 12% increase over the comparable quarter of
      2005 and a 9% increase in 2006 over 2005 (excluding products added in 2006),
      with total revenues of $5.3 billion in its recent issue of the Quarterly
      Small/Medium Shipment and Forecast Report. The institute has also reported its forecast for the LCD panel market for 2008.
      The
      LCD panel market for 2008 is expected to grow about 18% from 379.5 million
      units
      in 2007 to 447.7 million units by 2008, with LCD TV panels likely to top the
      application list with growth of 26% followed by notebook panels at 14% and
      monitor panels at 12%.





Mobile
      phone displays continue to represent the majority of shipments in the
      small/medium category. Global handset panel shipments reached a record in the
      fourth quarter of 2006, with 297.6 million main displays and 67.9 million
      sub-displays, representing a combined growth of 3% sequentially and 7% on year,
      according to DisplaySearch. Total handset shipments topped 1.1 billion units
      last year but, shipment growth did not translate into revenue growth for the
      display makers.




3




Notebook
      demand is increasing in previous years. CCFL is the mainstream for the
      backlighting source, while the penetration rate of 7-inch LCD panels
      incorporating an LED backlight is expected to reach 62% in 2008. According
      to
      Displaybank,quoted from Robert Yeh, chairman of Everlight Electronics, as cited
      in the Chinese-language Economic Daily News (EDN), the penetration rate of
      LED
      backlighting utilized in medium-size panels will increase from 55% in 2007
      to
      62% in 2008, with related shipments growing from 853 million panels to 1.23
      billion panels.





The
      demand for large size LCD penal has increased since plasma- and LCT-TV been
      introduced. Japan Electronics and Information Technology Industries Association
      (JEITA) has predicted a sharp rise in demand for LCD televisions in the coming
      years. The group expects LCD to outpace demand for Plasma displays, with an
      average 23.4% annual growth for the next five years. In 2006, 37.1 million
      LCD
      units were shipped. Total revenue from sales of flat panel display screens
      are
      set to exceed previous projections by six per cent and hit $194.6 billion over
      2007 and 2008. According to DisplaySearch, an increase in projected FPD revenue
      of $92.7 billion for 2007 and $102 billion in 2008 has led the research body
      to
      amend its earlier projected figure of £183.4 billion for the two-year period.
      DisplaySearch’s figures also revealed that sales of LCD TV panels are due to
      show a year-on-year increase by 38 per cent from the first half of 2007 and
      the
      first half of 2008.





**Our
      Industry**





The
      backlight industry is closely associated with the consumer electronics industry.
      LCDs are used to present data and images in a wide variety of applications,
      ranging from cell phones to car navigation and entertainment systems to the
      larger displays used in flat panel televisions and computer monitors, including
      laptop computer screens.





LCD
      technology allows for a higher level of light output than other types of panel
      displays. It has become the mainstream technology in today’s display market with
      demand for such technology increasing by 10 to 15% per year in recent years.
      Generally, companies that manufacture backlights supply them as a component
      to
      other parties, which incorporate them into a finished display unit, which
      consists of a film (such as a thin film transistor) that bears the image and
      the
      case or shell that is used to hold the backlight and film in place. The
      assemblers of the LCD modules are our typical upstream customers. Some branded
      assemblers of electronic consumer products are our customers too.





Until
      recently, the backlight industry was centered in Japan and Korea, where the
      majority of modules used in the production of LCD displays, such as Samsung
      and
      Toshiba, are located. Based on certain cost advantages, Taiwan has become a
      leading producer of backlights as well.





More
      recently, a large number of backlight manufacturers, both independent ones
      and
      operations associated with Japanese and Korean companies, have begun production
      in the PRC, including Diguang. This shift of backlight production to the PRC
      is
      based in large measure on the comparability of its technical workforce and
      facilities to those of the traditional Asian producers, together with
      significant labor cost advantages. Those factors have, to some extent, pulled
      the assembly of display units into the PRC as well, even though a relatively
      small amount of the modules used to make LCD displays are currently produced
      in
      the PRC.





We
      consider our industry to be one that is expanding. Display has become a
      necessary component for most electronic consumer products. We have an
      engineering team experienced in dot matrix design and optoelectronic physics.
      We
      have benefited from what we believe are cost and strategic advantages relative
      to our competitors, and those advantages have enabled us to maintain attractive
      margins on our products up to this point. However, as a growing percentage
      of
      backlight production shifts to the PRC from higher-cost countries, price
      competition will increase, and our ability to preserve margins will depend
      on
      our continuing to improve our product quality, production efficiency and
      customer services relative to our competitors.





We
      believe that controlling costs is critical in the electronics industry. We
      aim
      to control costs by sourcing suitable replacements for expensive imported raw
      materials, improving production efficiency and maintaining good relationships
      with our customers.




4




**Business
      Overview**





We
      design, manufacture and market small to medium-sized light emitting diodes,
      known as LEDs and cold cathode fluorescent lamp, known as CCFL, for various
      types of displays, such as amorphous silicon thin film liquid crystal displays,
      low temperature poly-silicon thin film liquid crystal displays, super-twisted
      liquid crystal display, colored super-twisted liquid crystal display, twisted
      liquid crystal display, and mono LCDs for liquid crystal displays. Our products
      have a variety of applications, such as mobile phones, PDA’s, GPS system,
      portable DVD/VCD players, MP3 and MP4, medical equipment, household appliances
      with displays, and more. Our emphasis is on small to medium-size back-light
      unit
      (“back lighting unit”) manufacturing, with in-house lightguide processing and
      film processing workshops, for “one-stop processing” for backlight production,
      and we are now developing the large size back lighting unit, targeting the
      LCD-TV market which we believe has a relatively high profit margin.





Suny
      has
      a business license, issued by the Shenzhen Industry and Commerce Bureau, to
      operate as a wholly owned foreign enterprise for a 20-year period commencing
      October 8, 2006 and ending on October 8, 2026. We
      believe that we can benefit from the
      trend in transition from CCFL to LED backlighting. The market focus has been
      intensified into CCFL-LED. The adoption of color gamut, environmentally friendly
      property, thickness/weigh, form factor, contract ratio, and response time,
      which
      were considered to be strengths of LED in the initial stage, has become more
      popular in notebook and TV applications. In 2008, the adoption of LED BLU light
      source is likely to heat up further. Displaybank predicts that LED
      BLU-specialized exclusive components are likely to create high value added
      by
      taking advantage of their competitive edge.




We
      market
      our products principally through an in-house staff. We promote our products
      at
      trade shows in ShenZhen and Hong Kong as well in through trade
      publications.





**Intellectual
      Property**





We
      own
      two Chinese patents for technical optimization of the optoelectronic properties
      and one Chinese copyright for software used in the dot matrix design and
      refining on light guide. The technologies are developed by our research and
      development team. However, because of the changing nature of the industry,
      these
      patents may not be material to our ongoing business.





We
      believe backlight manufacturers generally use similar techniques and procedures
      for back lighting unit production. However, each manufacturer uses its own
      special processes for refining the optoelectronic performance of its products.
      Our research and development efforts are aimed toward the development of new
      technology to preserve what we believe are our technological advantages. We
      plan
      to continue to collaborate with universities in Hong Kong and optoelectronic
      research institutions in China, for developing the innovative and practical
      technologies for back lighting unit production. However, we cannot assure you
      that we will be able to enforce any proprietary rights in our intellectual
      property.





**Principal
      Customers**





A
      significant percentage of our business is generated from a small number of
      customers. The following table sets forth information as to the revenue derived
      from those customers that accounted for more than 10% of our revenue in the
      years ended December 31, 2007 and 2006 (dollars in thousands).




Year
                ended December 31,Customer
            
            2007
            
            2006Dollars
            
            Percent
            
            Dollars
            
            PercentYassy
                Technology (Shenzhen) Co., Ltd.
            
            $
            6,068
            
            
            19
            %
            
            1,009
            
            
            8
            %Sinopac
                Enterprise Company
            
            
            3,242
            
            
            10
            %
            
            2,096
            
            
            13
            %Shenzhen
                Xinjiuding Optronics Technology Co., Ltd.
            
            
            3,542
            
            
            11
            %
            
            1,327
            
            
            8
            %Viewtron
                Technology Ltd.
            
            
            3,129
            
            
            10
            %
            
            1,687
            
            
            10
            %BYD
                Company Limited
            
            
            2,396
            
            
            7
            %
            
            2,153
            
            
            13
            %





Although
      we market to customers both within China and outside of China, our largest
      customers are Chinese manufacturers, many of whom manufacture products for
      sale
      in the international market.




5





**Source
      of Supply**





We
      purchase components for our products from a number of suppliers. We do not
      have
      any long term contracts with any of our suppliers, and we believe that
      alternative suppliers are available. Although we have not been subject to
      shortages for any of our components, since we do not have long-term contracts,
      we may be subject to cutbacks and price increases which we may not be able
      to
      pass on to our customers in the event that the demand for components generally
      exceeds the capacity of our suppliers.





**Research
      and Development**





We
      incurred research and development expenses of $646,000 for the year ended
      December 31, 2007 and $344,000 for the year ended December 31, 2006. All
      research and development is company-sponsored and is expensed as incurred.
      Our
      recent research and development projects include a cold color backlight project
      and a backlight light transmission board.





**Government
      Regulations**





Any
      company that conducts business in the PRC must have a business license that
      covers a particular type of work. Our business license covers our present
      manufacturing business.





We
      are
      also subject to numerous national, provincial and local governmental
      regulations, including environmental, labor, waste management, health and safety
      matters and product specifications. We are subject to laws and regulations
      governing our relationship with our employees, including: wage and hour
      requirements, working and safety conditions, citizenship requirements, work
      permits and travel restrictions. These include local labor laws and regulations,
      which may require substantial resources for compliance. We are subject to
      significant government regulation with regard to property ownership and use
      in
      connection with our leased facilities in China, import restrictions, currency
      restrictions and restrictions on the volume of domestic sales and other areas
      of
      regulation, all of which can limit our ability to react to market pressures
      in a
      timely or effective way, thus causing us to lose business or miss opportunities
      to expand our business. These rules are subject to changes both in the law
      and
      regulations as well as the interpretation of existing laws and regulations.
      We
      cannot assure you that we will be in compliance consistently. Failure to comply
      with regulations could result in the imposition of fines, suspension or halting
      of production or closure of manufacturing operations.





**Employees**





At
      December 31, 2007, we had 597 employees, of whom 51 are executive and
      administrative staff, 10 are marketing and sales, 20 are technical, 34 are
      workshop management and 482 are manufacturing workers. We consider our employee
      relations to be good.




**RISK
      FACTORS**




An
      investment in our securities involves a high degree of risk. In determining
      whether to purchase our securities, you should carefully consider all of the
      material risks described below, together with the other information contained
      in
      this report before making a decision to purchase our securities. You should
      only
      purchase our securities if you can afford to suffer the loss of your entire
      investment.




6




***Risks
      Related to our Business***





**Adverse
      trends in the electronics industry may reduce our sales and profitability.**





Our
      business depends on the continued vitality of the electronics industry, which
      is
      subject to rapid technological change, short product life cycles and margin
      pressures. In addition, the electronics industry historically has been cyclical
      and subject to significant downturns characterized by diminished product demand,
      accelerated erosion of average selling prices and margin and production
      over-capacity. **** It
      is also characterized by sudden upswings in the cycle, which can lead to
      shortages of key components needed for our business, for which there is not
      always an alternative source. Economic conditions affecting the electronics
      industry in general or our major customers may adversely affect our operating
      results by reducing the level of business that they furnish to us or the price
      they are willing to pay for our products.   If our customers’ products
      fail to gain widespread commercial acceptance, become obsolete or otherwise
      suffer from low sales volume, our sales and profitability may stagnate or
      decline.





**Our
      sales and income will be impaired if we are unable to market products that
      utilize the most current technology.**





The
      electronics industry in general is characterized by changes in technology that
      either significantly reduce gross margins or make products obsolete
 Organic light emitting diode technology is an alternative to traditional
      LED technology that is still in the development phase, with companies attempting
      to create an organic light emitting diode solution for cell phones and other
      small size applications.  This technology has the potential to supplant
      traditional the LED in many applications.  If this technology or other
      technologies enable companies to have a better and cheaper product, the market
      for the LED may diminish, and, if we are not able to develop or acquire rights
      to new technologies, we may have difficulty in maintaining our sales, margin
      and
      income.





**A
      few customers and applications account for a significant portion of our sales,
      and the loss of any one of these customers may reduce our sales and
      profits.**





A
      small
      number of customers account for a very significant percentage of our revenue.
      During the year ended December 31, 2007, we had four customer that generated
      revenues of at least 10%, with one customer accounting for 19% of our revenue.
      These four customers accounted for approximately 50% of our revenue for 2007.
      For the year ended December 31, 2006, we had three customers that accounted
      for
      at least 10% of revenue, and these three customers accounted for approximately
      36% of our revenue. Unless we replace a customer, the loss of any of these
      customers could have a material adverse effect upon our revenue and net
      income.





**Since
      our largest customers are Chinese companies, we are dependent upon the market
      acceptance of Chinese-made products.**





Although
      we market to customers both within China and outside of China, our largest
      customers are Chinese manufacturers, many of whom manufacture products for
      sale
      in the international market. As a result, we are dependent upon the
      international market acceptance of Chinese made products. To the extent that
      companies in the international market look to suppliers in other countries,
      our
      sales to both domestic and international manufacturers could be
      impaired.





**We
      do not have long-term purchase commitments from our customers and may have
      to
      base our production decisions on non-binding customer forecasts, and any
      cancellation of purchase orders may impair our sales and profitability.**




We
      are
      required to provide our customers with product on very short notice. Industry
      trends over the past five years have led to dramatically shortened lead times
      on
      purchase orders, as rapid product cycles have become the norm. Although we
      sometimes enter into manufacturing contracts with our customers, these contracts
      principally clarify order lead times, inventory risk allocation and similar
      matters, rather than providing for firm, long-term commitments to purchase
      a
      specified volume of products at a fixed price. As a result, customers can
      generally cancel purchase commitments or reduce or delay orders at any time.
      Our
      customers may provide us with non-binding forecasts which are subject to change.
      We must meet our customers’ delivery requirements regardless of whether the
      orders are consistent with the forecasts. As a result, our sales and income
      can
      be impaired if we are unable to meet the customers’ requirements or if we
      produce product based on the forecasts and the anticipated orders are not
      forthcoming. These customer decisions could result in excess and obsolete
      inventory and/or unabsorbed manufacturing capacity if anticipated orders do
      not
      materialize or a strain our resources, leading to a reduction in our margins
      as
      a result of the additional costs necessary to meet the demands which may be
      in
      excess of the forecasts.




7





**We
      may incur design and development expenses and purchase inventory in anticipation
      of orders which are not placed.**





In
      order
      to transact business, we assess the integrity and creditworthiness of our
      customers and suppliers and we may, based on this assessment, incur design
      and
      development costs that we expect to recoup over a number of orders produced
      for
      the customer.  Such assessments are not always accurate and expose us to
      potential costs, including the write off of costs incurred and inventory
      obsolescence if the orders anticipated do not materialize. We may also
      occasionally place orders with suppliers based on a customer’s forecast or in
      anticipation of an order that is not realized. Additionally, from time to time,
      we may purchase quantities of supplies and materials greater than required
      by
      customer orders to secure more favorable pricing, delivery or credit terms.
      These purchases can expose us to losses from cancellation costs, inventory
      carrying costs or inventory obsolescence, and hence adversely affect our
      business and operating results.





**Failure
      to optimize our manufacturing potential and cost structure could materially
      increase our overhead, causing a decline in our margins and profitability.**





We
      strive
      to utilize the manufacturing capacity of our facilities fully but may not do
      so
      on a consistent basis. Our factory utilization is dependent on our success
      in
      accurately forecasting demand, predicting volatility, timing volume sales to
      our
      customers, balancing our productive resources with product mix, and planning
      manufacturing services for new or other products that it intends to produce.
      Demand for contract manufacturing of these products may not be as high as we
      expect, and we may fail to realize the expected benefit from our investment
      in
      our manufacturing facilities. Our profitability and operating results are also
      dependent upon a variety of other factors, including utilization rates of
      manufacturing lines, downtime due to product changeover, impurities in raw
      materials causing shutdowns, and maintenance of contaminant-free operations.
      Failure to optimize our manufacturing potential and cost structure could
      materially and adversely affect our business and operating results.





**Our
      profitability is affected by inflationary pressure in China and other countries
      in which we sell our products.**





Our
      cost
      structure is subject to fluctuations from inflationary pressures in China and
      other countries in which we conduct business. China is currently experiencing
      dramatic growth in its economy. This growth may lead to continued pressure
      on
      wages and salaries that may exceed increases in productivity. In addition,
      these
      may not be compensated for and may be exacerbated by currency
      movements.





**We
      face intense competition, and many of our competitors have substantially greater
      resources than we have.**





We
      operate in a competitive environment that is characterized by price deflation
      and technological change. We compete with major international and domestic
      companies. Our competitors may have greater market recognition and substantially
      greater financial, technical, marketing, distribution, purchasing,
      manufacturing, personnel and other resources than we do. Furthermore, some
      of
      our competitors have manufacturing and sales forces that are geographically
      diversified, allowing them to reduce transportation expenses, tariff costs
      and
      currency fluctuations for certain customers in markets where their facilities
      are located.  Many competitors have production lines that allow them to
      produce more sophisticated and complex devices than we currently offer and
      to
      offer a broader range of display devices. Other emerging companies or companies
      in related industries may also increase their participation in the display
      and
      display module markets, which would intensify competition in our markets. We
      might lose some of our current or future business to these competitors or be
      forced to reduce our margins to retain or acquire that business, which could
      decrease our sales or slow our future revenue growth and lead to a decline
      in
      profitability.




8





**Because
      we depend on the market acceptance of our customers’ products, any significant
      slowdown in demand for those products would reduce our sales and our profits.**





Currently,
      we do not sell products to end users. We design and manufacture display product
      solutions that our customers incorporate into their products. As a result,
      our
      success depends almost entirely upon the market acceptance of our customers’
products. Any significant slowdown in the demand for our products would likely
      reduce our sales and profits. Our failure to identify potential growth
      opportunities or establish these relationships would limit our revenue growth
      and profitability.





**We
      extend credit to our customers and our inability to collect such receivables
      may
      have an adverse effect on our immediate and long-term
      liquidity.**





We
      extend
      credit to our customers based on assessments of their financial circumstances,
      generally without requiring collateral.  As of December 31, 2007, our net
      accounts receivable was $5.3 million, or about 29.8% of current assets and
      24.9%
      of total assets. Our overseas customers may be subject to economic cycles and
      conditions different from those of our domestic customers. We may also be unable
      to obtain satisfactory credit information or adequately secure the credit risk
      for some of these overseas customers.  The extension of credit presents an
      exposure to risk of uncollected receivables.  Additionally, to the extent
      that our receivables are denominated in a foreign currency, the anticipated
      amounts collected in United States dollar may vary due to fluctuations in
      currency values. Our inability to collect on these accounts may reduce on our
      immediate and long term liquidity.





**We
      have made advances to potential suppliers who have not yet provided the
      material.**




During
      2007, we advanced $960,000 to two agents for arranging the order and delivery
      of
      raw materials pursuant to an oral agreement. The raw materials were to be
      delivered by the end of April 2008. As of March 19, 2008, we had not received
      delivery of the materials. Our financial position will be impaired if we do
      not
      either receive the raw materials or a return of the deposit.




**If
      we fail to adapt to changing market conditions, it would reduce our
      profitability.**





The
      consumer electronics industry is characterized by rapid change. New technologies
      are appearing with increasing frequency to supplant existing technologies.
       In order both to retain market share and to increase market share,
      manufacturers are adopting a shorter product life cycle from a cosmetic, if
      not
      functional, standpoint, but cosmetic changes generally have a direct effect
      on
      the backlight products that the new designs incorporate. Technological advances,
      the introduction of new products, new designs and new manufacturing techniques
      could render our inventory obsolete, or it could shift demand for products
      that
      we do not currently offer.  If we fail to adapt to those changing
      conditions in a timely and efficient manner, our sales and profits could
      decline. To remain competitive, we must continue to incur significant costs
      in
      product development, equipment and facilities and to make capital investment
      with no assurance that we will develop a commercially acceptable product. Thus,
      a result, we could be required to expend substantial funds for and commit
      significant resources to the following:





•
            research
                and development activities on existing and potential product
                solutions;





•
            additional
                engineering and other technical
                personnel;





•
            advanced
                design, production and test
                equipment;





•
            manufacturing
                services to meet changing customer
                needs;





•
            technological
                changes in manufacturing processes;
                and





•
            expansion
                of manufacturing capacity.





Our
      future operating results will depend to a significant extent on our ability
      to
      continue to provide new product solutions and electronic manufacturing services
      that compare favorably on the basis of time to market, cost and performance
      with
      the design and manufacturing capabilities and competing third-party suppliers
      and technologies. Our failure to increase our net sales sufficiently to offset
      these increased costs would reduce our profitability.




9





**Because
      we are subject to lengthy sales cycles, it could take us longer than we
      anticipate before our sales and marketing efforts result in
      revenue.**





Our
      focus
      on developing a customer base that requires custom displays and devices means
      that it may take longer to develop strong customer relationships. Moreover,
      factors specific to the electronic products industries have an impact on our
      sales cycles. For example, customers who operate in or supply to the medical
      and
      automotive industries require longer sales cycles, as qualification processes
      are longer and more rigorous, often requiring extensive field audits. These
      lengthy and challenging sales cycles may mean that it could take longer before
      our sales and marketing efforts result in revenue to us, if at all.  As a
      result, the return on the time and effort invested in developing these
      opportunities may be deferred, or may not be realized at all, which would reduce
      our profitability.





**Products
      we manufacture may contain design or manufacturing defects, which could result
      in reduced demand for our services and customer claims, causing us to sustain
      additional costs, loss of business reputation and legal
      liability.**





We
      manufacture products to our customers’ requirements, which can be highly complex
      and may at times contain design or manufacturing errors or failures. Any defects
      in the products we manufacture, whether caused by a design, manufacturing or
      component failure or error, may result in returns, claims, delayed shipments
      to
      customers or reduced or cancelled customer orders. If these defects occur,
      we
      will incur additional costs, and if in they occur in large quantity or
      frequently, we may sustain additional costs, loss of business reputation and
      legal liability.





**Intellectual
      property disputes could result in substantial costs and diversion of our
      management resources regardless of whether we ultimately prevail.**  ****





Although
      we possess two Chinese patents, we may devote significant time and financial
      resources to attempt to halt the infringement without any assurance that we
      will
      prevail in any litigation. While we do not knowingly infringe on patents,
      copyrights or other intellectual property rights of others; we may be required
      to spend a significant amount of time and financial resources to resolve any
      infringement claims against us.  We may not be successful in defending our
      position or negotiating an alternative remedy.  Any litigation could result
      in substantial costs and diversion of our management resources and could reduce
      our sales and profits.





**Our
      customers may decide to design and/or manufacture the products that they
      currently purchase from us.**





Our
      competitive position could be adversely affected if one or more of our customers
      designs or manufactures their own backlights and display modules. We may not
      be
      able to compete successfully with these in-house developments.





**Our
      component and materials suppliers may fail to meet our needs, causing us to
      experience manufacturing delays, which may harm our relationships with current
      or prospective customers and reduce sales.**





We
      do not
      have long term supply contracts with the majority of our suppliers or for
      specific components, which exposes us to supply risk and to price increases
      that
      we may not be able to pass on to our customers.  In our industry, at times,
      there are shortages of some of the materials and components that it uses. If
      we
      are unable to obtain sufficient components on a timely basis, we may experience
      manufacturing delays, which could harm our relationships with current or
      prospective customers and reduce sales.  Moreover, some suppliers may offer
      preferential terms to our competitors, who may have greater buying power or
      leverage in negotiations.  That would place us at a competitive
      disadvantage.




10





**We
      may be affected by power shortages, causing delays in delivery of products
      to
      our customers, resulting in possible loss of business or claims against us
      and
      cause us to lose future business from those or other customers.**





Our
      factory consumes a significant amount of electricity, and there are a
      significant number of industrial facilities in the area where this factory
      is
      located.  Therefore, power shortages may occur and the facility may be
      deprived of electricity for undetermined periods of time.  Any power
      shortage may result in longer production timeframes and delays in delivery
      of
      product to our customers.  Failure to meet delivery deadlines may result in
      the loss of business or claims against us, which may have a material and adverse
      effect on our business, profitability and reputation.





**Our
      financial performance could be harmed if compliance with new environmental
      regulations becomes too burdensome.**





We
      are
      also subject to numerous national, state and local governmental regulations,
      including environmental, labor, waste management, health and safety matters
      and
      product specifications. We are subject to laws and regulations governing our
      relationship with our employees, including: wage and hour requirements, working
      and safety conditions, citizenship requirements, work permits and travel
      restrictions. These include local labor laws and regulations, which may require
      substantial resources for compliance. We are subject to significant government
      regulation with regard to property ownership and use in connection with our
      leased facilities in China, import restrictions, currency restrictions and
      restrictions on the volume of domestic sales and other areas of regulation,
      all
      of which can limit our ability to react to market pressures in a timely or
      effective way, thus causing us to lose business or miss opportunities to expand
      our business. These rules are subject to changes both in the law and regulations
      as well as the interpretation of existing laws and regulations. We cannot assure
      you that we will be in compliance consistently. Failure to comply with
      regulations could result in the imposition of fines, suspension or halting
      of
      production or closure of manufacturing operations.





**As
      a result of the reverse acquisition, our expenses have increased
      significantly.**





As
      a
      result of the reverse acquisition, our ongoing expenses have increased
      significantly, including ongoing public company expenses, including increased
      legal and accounting expenses as a result of our status as a reporting company
      and the requirement that we register the shares of common stock issued in the
      September 2007 private placement, expenses incurred in complying with the
      internal controls requirements of the Sarbanes-Oxley Act, and obligations
      incurred in connection with the reverse acquisition. Our failure to generate
      sufficient revenue and gross profit could result in reduced profits of losses
      as
      a result of the additional expenses.





**We
      may not be able to secure financing needed for future operating needs on
      acceptable terms, or on any terms at all.**





We
      are
      currently seeking additional equity financing to provide the capital required
      to
      maintain or expand our design and production facilities and equipment and/or
      working capital, as well as to repay outstanding loans if cash flow from
      operations is insufficient to do so. We have no formal or informal agreement
      or
      understanding with respect to any financing, and we can give no assurance that
      a
      financing will be available, or, if available, that the terms will be acceptable
      to the Company. Further, our ability to obtain financing may be affected by
      market conditions in general and concerns by investors about investing in
      Chinese companies. If such financing is not available on satisfactory terms,
      we
      may be unable to expand our business or to develop new business at the rate
      desired.





**Failure
      to manage growth effectively could result in inefficiencies that could increase
      our costs, reducing our profitability.**





Our
      ability to manage our planned growth effectively will require us to enhance
      quality, operational, financial and management systems; expand facilities and
      equipment, and hire, train and motivate additional employees, including the
      technical personnel necessary to operate our production facilities. Any
      expansion and diversification of our product range, manufacturing and sales
      will
      result in increases in our overhead and selling expenses, with no assurance
      that
      we will generate revenue sufficient to amortize these costs. Our failure to
      generate sufficient business would adversely affect our profitability.




11





**Potential
      strategic alliances may not achieve their objectives, which could lead to wasted
      effort or involvement in ventures that are not profitable and could harm our
      company’s reputation.**





We
      are
      currently exploring strategic alliances designed to enhance or complement our
      technology or to work in conjunction with our technology, increase our
      manufacturing capacity, provide additional know-how, components or supplies,
      and
      develop, introduce and distribute products and services utilizing our technology
      and know-how, although we do not have any formal or informal understandings
      or
      agreements with respect to any such relationship. Any strategic alliances
      entered into may not achieve their strategic objectives, and parties to our
      strategic alliances may not perform as contemplated.  As a result, the
      alliances themselves may run at a loss, which would reduce our profitability,
      and if the products or customer service provided by such alliances were of
      inferior quality, our reputation in the marketplace could be harmed, affecting
      our existing and future customer relationships.





**If
      we make any acquisitions, they may disrupt or have a negative impact on our
      business.**





Although
      we have no present plans for any acquisitions, in the event that we make
      acquisitions, we could have difficulty integrating the acquired companies’
personnel and operations with our own. In addition, the key personnel of the
      acquired business may not be willing to work for us. We cannot predict the
      affect expansion may have on our core business. Regardless of whether we are
      successful in making an acquisition, the negotiations could disrupt our ongoing
      business, distract our management and employees and increase our expenses.
      In
      addition to the risks described above, acquisitions are accompanied by a number
      of inherent risks, including, without limitation, the following:





·
            the
                difficulty of integrating acquired products, services or
                operations;




·
            the
                potential disruption of the ongoing businesses and distraction of
                our
                management and the management of acquired
                companies;




·
            the
                difficulty of incorporating acquired rights or products into our
                existing
                business;




·
            difficulties
                in disposing of the excess or idle facilities of an acquired company
                or
                business and expenses in maintaining such
                facilities;




·
            difficulties
                in maintaining uniform standards, controls, procedures and
                policies;




·
            the
                potential impairment of relationships with employees and customers
                as a
                result of any integration of new management
                personnel;




·
            the
                potential inability or failure to achieve additional sales and enhance
                our
                customer base through cross-marketing of the products to new and
                existing
                customers;




·
            the
                effect of any government regulations which relate to the business
                acquired; and




·
            potential
                unknown liabilities associated with acquired businesses or product
                lines,
                or the need to spend significant amounts to retool, reposition or
                modify
                the marketing and sales of acquired products or the defense of any
                litigation, whether of not successful, resulting from actions of
                the
                acquired company prior to our
                acquisition.




Our
      business could be severely impaired if and to the extent that we are unable
      to
      succeed in addressing any of these risks or other problems encountered in
      connection with these acquisitions, many of which cannot be presently
      identified, these risks and problems could disrupt our ongoing business,
      distract our management and employees, increase our expenses and adversely
      affect our results of operations.




12





**We
      may not be able to retain, recruit and train adequate management and production
      personnel.**





Our
      success is dependent, to a large extent, on our ability to retain the services
      of our executive management, who have contributed to our growth and expansion
      to
      date.  The executive directors play an important role in our operations and
      the development of our new products. Accordingly, the loss of their services,
      in
      particular Lawrence Kwok-Yan Chan, our chief executive officer and a principal
      stockholder, and Kam Ming Yip, our chief financial officer, without suitable
      replacements, will have an adverse affect on our business generally, operating
      results and future prospects.   In addition, our continued operations are
      dependent upon our ability to identify and recruit adequate management and
      production personnel in China. We require trained graduates of varying levels
      and experience and a flexible work force of semi-skilled operators. Many of
      our
      current employees come from the more remote regions of China as they are
      attracted by the wage differential and prospects afforded by Shenzhen and our
      operations. With the economic growth currently being experienced in China,
      competition for qualified personnel is substantial, and there can be no
      guarantee that a favorable employment climate will continue and that wage rates
      we must offer to attract qualified personnel will enable us to remain
      competitive internationally. Our inability to attract such personnel may or
      the
      increased cost of doing so could reduce our competitive advantage relative
      to
      other backlight producers, reducing or eliminating our growth in sales and
      profits.





**Restrictions
      contained in our agreement relating to our September 2007 private placement
      may
      impair our ability to raise funds.**





The
      securities purchase agreement for our September 2007 private placement prohibits
      us (i) from issuing convertible debt or preferred stock until the earlier of
      five years from the closing or until the investors have converted or exercised
      and sold the securities issued in the private placement or (ii) from having
      debt
      in an amount greater than twice our EBITDA until three years from the closing
      or
      until 90% of the securities have been converted or exercised and sold. The
      investors in the private placement also have a right of first refusal on future
      financings until the earlier of five years from the date of this Agreement
      or
      such time as the investors, as a group, cease to own at least 5% of the total
      number of shares of common stock that were issued or are issuable upon
      conversion of series A preferred stock that were initially issued to the
      investors. These provisions may make it difficult for us to raise money for
      our
      operations or for acquisitions.





***Risks
      Related to Conducting Business in China***





**Because
      the scope of our business license is limited, we may need government approval
      to
      expand our business.**





Suny
      is a
      wholly-owned foreign enterprise, commonly known as a WFOE. The scope of business
      is narrowly defined for all businesses in China, and a WFOE can only conduct
      business within its approved business scope, which appears on the business
      license. Our license, which expires in 2026, permits us to engage in design,
      manufacture and market light emitting diodes. Any amendment to the scope of
      our
      business requires further application and government approval. Inevitably,
      there
      is a negotiation with the authorities to approve as broad a business scope
      as is
      permitted, and we cannot assure you that we will be able to obtain the necessary
      government approval for any change or expansion of our business.





**If
      China does not continue its policy of economic reforms, it could, among other
      things, result in an increase in tariffs and trade restrictions on products
      we
      produce or sell following a business combination, making our products less
      attractive and potentially reducing our sales and profits.**





China’s
      government has been reforming its economic system since the late 1970s. The
      economy of China has historically been a nationalistic, “planned economy,”
meaning it has functioned and produced according to governmental plans and
      pre-set targets or quotas. However, in recent years, the Chinese government
      has
      implemented measures emphasizing, to some extent, the utilization of market
      forces for economic reform and the reduction of state ownership in business
      enterprises. A substantial portion of productive assets in China are still
      owned
      by the Chinese government. Additionally, the government continues to play a
      significant role in regulating industrial development and imposes price controls
      in some industries. We cannot predict the timing or extent of any future
      economic reforms that may be proposed, but should they occur, they could reduce
      our operating flexibility or require us to divert our efforts to products or
      ventures that are less profitable than those we would elect to pursue on our
      own. ****





Although
      China has entered the World Trade Organization, the global international
      organization dealing with the rules of trade between nations, China has not
      fully complied with all of its WTO obligations to date, including fully opening
      its markets to American goods and easing the current trade imbalance between
      the
      two countries. If actions are not taken to rectify these problems, trade
      relations between the United States and China may be strained, and this may
      have
      a negative impact on China’s economy and our business by leading to the
      imposition of trade barriers on items that incorporate our products, which
      would
      reduce our sales and profits.




13





**The
      deterioration of any current favorable local conditions may make it difficult
      or
      prohibitive to continue to operate or expand the manufacturing facilities in
      China.**




Our
      manufacturing workshop and management are in Shenzhen, China. Because of the
      location of the manufacturing facilities in China, we could be affected by
      economic and political instability there, including problems related to labor
      unrest, lack of developed infrastructure, variances in payment cycles, currency
      fluctuations, overlapping taxes and multiple taxation issues, employment and
      severance taxes, compliance with local laws and regulatory requirements, greater
      difficulty in collecting accounts receivable, and the burdens of cost and
      compliance with a variety of foreign laws. Moreover, inadequate development
      or
      maintenance of infrastructure in China, including adequate power and water
      supplies, transportation, raw materials availability or the deterioration in
      the
      general political, economic or social environment could make it difficult,
      more
      expensive and possibly prohibitive to continue to operate or expand the
      manufacturing facilities in China.




**The
      Chinese government could change its policies toward, or even nationalize,
      private enterprise, which could leave us unable to use the assets we have
      accumulated for the purpose of generating profits for the benefit of our
      stockholders.**





Over
      the
      past several years, the Chinese government has pursued economic reform policies,
      including the encouragement of private economic activities and decentralization
      of economic regulation. The Chinese government may not continue to pursue these
      policies or may significantly alter them to our detriment from time to time
      without notice. Changes in policies by the Chinese government that result in
      a
      change of laws, regulations, their interpretation, or the imposition of
      confiscatory taxation, restrictions on currency conversion or imports and
      sources of supply could materially reduce the value of our business by making
      us
      uncompetitive or, for example, by reducing our after-tax profits. The
      nationalization or other expropriation of private enterprises by the Chinese
      government could result in the total loss of our investment in China, where
      a
      significant portion of our profits are generated.





Government
      policies are subject to rapid change and the government of China may adopt
      policies which have the effect of hindering private economic activity and
      greater economic decentralization. There is no assurance that the government
      of
      China will not significantly alter its policies from time to time without notice
      in a manner with reduces or eliminates any benefits from its present policies
      of
      economic reform. In addition, a substantial portion of productive assets in
      China remains government-owned. For instance, all lands are state owned and
      leased to business entities or individuals through governmental granting of
      state-owned land use rights. The granting process is typically based on
      government policies at the time of granting, which could be lengthy and complex.
      This process may adversely affect our future expansion. The Chinese government
      also exercises significant control over China’s economic growth through the
      allocation of resources, controlling payment of foreign currency and providing
      preferential treatment to particular industries or companies. Uncertainties
      may
      arise with changing of governmental policies and measures. In addition, changes
      in laws and regulations, or their interpretation, or the imposition of
      confiscatory taxation, restrictions on currency conversion, imports and sources
      of supply, devaluations of currency, the nationalization or other expropriation
      of private enterprises, as well as adverse changes in the political, economic
      or
      social conditions in China, could have a material adverse effect on our
      business, results of operations and financial condition.




**The
      Chinese legal system may have inherent uncertainties that could materially
      and
      adversely impact our ability to enforce the agreements governing our
      operations.**





The
      performance of the agreements and the operations of our factories are dependent
      on our relationship with the local government. Our operations and prospects
      would be materially and adversely affected by the failure of the local
      government to honor our agreements or an adverse change in the laws governing
      them. In the event of a dispute, enforcement of these agreements could be
      difficult in China. China tends to issue legislation, which is followed by
      implementing regulations, interpretations and guidelines that can render
      immediate compliance difficult. Similarly, on occasion, conflicts arise between
      national legislation and implementation by the provinces that take time to
      reconcile. These factors can present difficulties in our ability to achieve
      compliance. Unlike the United States, China has a civil law system based on
      written statutes in which judicial decisions have limited precedential value.
      The Chinese government has enacted laws and regulations to deal with economic
      matters such as corporate organization and governance, foreign investment,
      commerce, taxation and trade. However, our experience in implementing,
      interpreting and enforcing these laws and regulations is limited, and our
      ability to enforce commercial claims or to resolve commercial disputes in China
      is therefore unpredictable. These matters may be subject to the exercise of
      considerable discretion by agencies of the Chinese government, and forces and
      factors unrelated to the legal merits of a particular matter or dispute may
      influence their determination.




14





**Because
      our operations are international, we are subject to significant worldwide
      political, economic, legal and other uncertainties that may make collection
      of
      amounts owed to us difficult or costly, or conducting operations more difficult
      should materials needed from certain places be unavailable for an indefinite
      or
      extended period of time.**





Because
      we manufacture all of our products in China, substantially all of the net book
      value of our total fixed assets is located there. However, we sell our products
      to customers worldwide, with concentrations of customers in Taiwan, Hong Kong,
      North America, Europe, Japan, Southeast Asia and China.  As a result, we
      will have receivables from and goods in transit to those locations.
      Protectionist trade legislation in the United States or foreign countries,
      such
      as a change in export or import legislation, tariff or duty structures, or
      other
      trade policies, could adversely affect our ability to sell products in these
      markets, or even to purchase raw materials or equipment from foreign suppliers.
      Moreover, we are subject to a variety of United States laws and regulations,
      changes to which may affect our ability to transact business with certain
      customers or in certain product categories.





**Fluctuation
      of the Renminbi (“RMB”), the Chinese currency, could make our pricing less
      attractive, causing us to lose sales, or could reduce our profitability when
      stated in terms of another currency, such as the U.S. dollar.**





The
      value
      of the RMB, the main currency used in China, fluctuates and is affected by,
      among other things, changes in China’s political and economic conditions. The
      conversion of RMB into foreign currencies such as the dollar has been generally
      based on rates set by the People’s Bank of China. The official exchange rate had
      remained stable over the past several years. However, China recently adopted
      a
      floating rate with respect to the RMB, with a 0.3% fluctuation. The exchange
      rate of the RMB at December 31, 2007 was 7.59474 to the dollar. This floating
      exchange rate, and any appreciation of the RMB that may result from such rate,
      could have various effects on our business, which include making our products
      more expensive relative to those of our competitors than has been true in the
      past, or increasing our profitability when stated in dollar terms.  It is
      not possible to predict if the net effects of the appreciation of the RMB,
      if it
      occurred, would be positive or negative for our business.




**Changes
      in foreign exchange regulations in China may affect our ability to pay dividends
      in foreign currency or conduct other business for which we would need access
      to
      foreign currency exchange.**





The
      RMB
      is not currently a freely convertible currency, and the restrictions on currency
      exchanges may limit our ability to use sales generated in RMB to fund business
      activities outside China or to make dividends or other payments in United States
      dollars. The Chinese government strictly regulates conversion of RMB into
      foreign currencies.  For example, RMB cannot be converted into foreign
      currencies for the purpose of expatriating the foreign currency, except for
      purposes such as payment of debts lawfully owed to parties outside of China.
       Over the years, foreign exchange regulations in China have significantly
      reduced the government’s control over routine foreign exchange transactions
      under current accounts. We can give no assurance that the current foreign
      exchange measures will not be changed in a way that will make payment of
      dividends and other distributions outside of China more difficult or
      unlawful.




15





**We
      are subject to various tax regimes, which may adversely affect our profitability
      and tax liabilities in the future.**





Although
      virtually all of our profits will be earned outside of the U.S., under U.S.
      tax
      laws it is possible that some or much of our earnings will be subject to U.S.
      taxation regardless of whether we repatriate any of our foreign earnings to
      the
      U.S.  If we are subject to U.S. taxation, our after-tax profits could
      decrease significantly.  We will attempt to structure our operations in a
      manner that minimizes our overall corporate tax costs, but we cannot assure
      you
      that we will be able to avoid paying significantly higher taxes than we have
      paid historically.





**We
      may be subject to penalties under Chinese tax laws.**





Under
      the
      commercial practice in China **,** we paid
      value added taxes and business tax based on tax invoices issued. We generally
      issue our tax invoice subsequent to the date on which revenue is recognized,
      and
      there may be a considerable delay between the date on which the revenue is
      recognized and the date on which the tax invoice is issued.  Further,
      questions may arise as to whether a transaction is subject to value added
      taxes.  In the event that the Chinese tax authorities dispute our
      determination of the tax due or the date on which the tax was to have been
      paid,
      the Chinese tax office has the right to assess a penalty which can range from
      zero to five times of tax which is determined to have been improperly
      deferred.  Although we believe that we are paying value added taxes and
      business taxes in accordance with the common practice in China, we cannot assure
      you that the Chinese tax authorities would not reach a different conclusion
      or
      determine that common practice is not in accordance with the tax laws of
      China.  If a penalty is ultimately assessed against us, the penalty could
      represent a material amount.





**Cessation
      of our income tax exemption may have an adverse impact on our net
      profits.**





We
      enjoy
      enterprise income tax preferential treatment granted by the Shenzhen Tax
      Authority to foreign owned manufacturing enterprises. We were exempt from the
      enterprise income tax for 2005 and 2006 and we will receive a 50% reduction
      in
      the tax rate for the following three years. The cessation of the preferential
      treatment may have an adverse effect on our profits.





**Because
      Chinese law governs almost all of our material agreements, we may not be able
      to
      enforce our legal rights within China or elsewhere, which could result in a
      significant loss of business, business opportunities, or capital.**





Chinese
      law governs almost all of our material agreements that relate to the operation
      of our business. We cannot assure you that we will be able to enforce any of
      our
      material agreements or that remedies will be available outside of China. The
      system of laws and the enforcement of existing laws in China may not be as
      certain in implementation and interpretation as in the United States.  The
      Chinese judiciary is relatively inexperienced in enforcing corporate and
      commercial law, leading to a higher than usual degree of uncertainty as to
      the
      outcome of any litigation. The inability to enforce or obtain a remedy under
      any
      of our future agreements could result in a significant loss of business,
      business opportunities or capital.





**It
      will be extremely difficult to acquire jurisdiction and enforce liabilities
      against our officers, directors and assets based in China.**





Substantially
      all of our assets will be located outside of the United States and our officers
      and directors will reside outside of the United States.  As a result, it
      may not be possible for United States investors to enforce their legal rights,
      to effect service of process upon our directors or officers or to enforce
      judgments of United States courts predicated upon civil liabilities and criminal
      penalties of our directors and officers under Federal securities laws. Moreover,
      we have been advised that China does not have treaties providing for the
      reciprocal recognition and enforcement of judgments of courts with the United
      States.  Further, it is unclear if extradition treaties now in effect
      between the United States and China would permit effective enforcement of
      criminal penalties of the Federal securities laws.




16





**We
      may have difficulty establishing adequate management, legal and financial
      controls in China, which could impair our planning processes and make it
      difficult to provide accurate reports of our operating results.**





China
      historically has not followed Western style management and financial reporting
      concepts and practices, and its access to modern banking, computer and other
      control systems has been limited.  Although we are required to implement
      internal controls, we may have difficulty in hiring and retaining a sufficient
      number of qualified employees to work in China in these areas. As a result
      of
      these factors, we may experience difficulty in establishing the required
      controls and instituting business practices that meet Western standards, making
      it difficult for management to forecast its needs and to present the results
      of
      our operations accurately at all times.





**Because
      our funds are held in banks which do not provide insurance, the failure of
      any
      bank in which we deposit our funds could affect our ability to continue in
      business.**





Banks
      and
      other financial institutions in the PRC do not provide insurance for funds
      held
      on deposit. As a result, in the event of a bank failure, we may not have access
      to funds on deposit. Depending upon the amount of money we maintain in a bank
      that fails, our inability to have access to our cash could impair our
      operations, and, if we are not able to access funds to pay our suppliers,
      employees and other creditors, we may be unable to continue in
      business.





**Failure
      to comply with the United States Foreign Corrupt Practices Act could subject
      us
      to penalties and other adverse consequences.**





We
      are
      subject to the United States Foreign Corrupt Practices Act, which generally
      prohibits United States companies from engaging in bribery or other prohibited
      payments to foreign officials for the purpose of obtaining or retaining
      business. Foreign companies, including some that may compete with us, are not
      subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft
      and other fraudulent practices occur from time-to-time in the PRC. We can make
      no assurance, however, that our employees or other agents will not engage in
      such conduct for which we might be held responsible. If our employees or other
      agents are found to have engaged in such practices, we could suffer severe
      penalties and other consequences that may have a material adverse effect on
      our
      business, financial condition and results of operations.





**Imposition
      of trade barriers and taxes may reduce our ability to do business
      internationally, and the resulting loss of revenue could harm our profitability.**





We
      may
      experience barriers to conducting business and trade in our targeted emerging
      markets in the form of delayed customs clearances, customs duties and tariffs.
      In addition, we may be subject to repatriation taxes levied upon the exchange
      of
      income from local currency into foreign currency, substantial taxes of profits,
      sales, assets and payroll, as well as value-added tax. The markets in which
      we plan to operate may impose onerous and unpredictable duties, tariffs and
      taxes on our business and products, and there can be no assurance that this
      will
      not reduce the level of sales that we achieve in such markets, which would
      reduce our sales and profits.





**There
      can be no guarantee that China will comply with the membership requirements
      of
      the World Trade Organization, which could leave us subject to retaliatory
      actions by other governments and reduce our ability to sell our products
      internationally.**




China
      has
      agreed that foreign companies will be allowed to import most products into
      any
      part of China.  In the sensitive area of intellectual property rights,
      China has agreed to implement the trade-related intellectual property agreement
      of the Uruguay Round. There can be no assurances that China will implement
      any
      or all of the requirements of its membership in the World Trade Organization
      in
      a timely manner, if at all.  If China does not fulfill its obligations to
      the World Trade Organization, we may be subject to retaliatory actions by the
      governments of the countries into which we sell our products, which could render
      our products less attractive, thus reducing our sales and profits.




17





**If
      we are not able to protect our intellectual property rights, our business may
      be
      impaired.**




Our
      intellectual property relates to our know-how in developing our products. The
      protection of intellectual property rights in China is weak, and we cannot
      give
      any assurance that we will be able to protect our intellectual property rights.
      To the extent that our business is dependent upon intellectual property, our
      ability to generate revenue from these products, would be severely impaired
      if
      we are not able to protect our rights in these products.





**A
      downturn in the economy of the PRC may slow our growth and
      profitability.**





The
      growth of the Chinese economy has been uneven across geographic regions and
      economic sectors. There can be no assurance that growth of the Chinese economy
      will be steady or that any downturn will not have a negative effect on our
      business especially if it results in either a decreased use of products such
      as
      ours or in pressure on us to lower our prices.





**If
      the PRC enacts regulations which forbid or restrict foreign investment, our
      ability to grow may be severely impaired.**





We
      may
      expand seek to expand our business both by increasing our product range or
      making acquisitions of companies in related industries, although we have no
      planned acquisitions. Many of the rules and regulations that we would face
      are
      not explicitly communicated, and we may be subject to rules that would affect
      our ability to grow, either internally or through acquisition of other Chinese
      or foreign companies. There are also substantial uncertainties regarding the
      proper interpretation of current Chinese laws and regulations. New laws or
      regulations that forbid foreign investment could severely impair our businesses
      and prospects. Additionally, if the relevant authorities find us in violation
      of
      Chinese laws or regulations, they would have broad discretion in dealing with
      such a violation, including, without limitation:




•
            levying
                fines;





•
            revoking
                our business and other licenses;





•
            requiring
                that we restructure our ownership or operations;
                and





•
            to
                the extent that we use the Internet for marketing and providing
                information on our products and services, requiring that we discontinue
                any portion or all of our Internet related
                business.





**Because
      we may not be able to obtain business insurance in China, we may not be
      protected from risks that are customarily covered by insurance in the United
      States.**





Business
      insurance is not readily available in China. To the extent that we suffer a
      loss
      of a type which would normally be covered by insurance in the United States,
      such as product liability and general liability insurance, we would incur
      significant expenses in both defending any action and in paying any claims
      that
      result from a settlement or judgment.




18




***Risks
      Related to our Securities.***





**There
      is not an active, liquid trading market for our common
      stock.**





Our
      common stock is registered pursuant to the Securities Exchange Act of 1934,
      and
      is currently listed on the OTC Bulletin Board. However, we do not have a
      significant public float and there is no regular trading market in our common
      stock. We cannot give an assurance that an active trading market will develop.
      If an active market for our common stock develops, there is a significant risk
      that our stock price may fluctuate dramatically in the future in response to
      any
      of the following factors, some of which are beyond our control:





•
            variations
                in our quarterly operating results;





•
            announcements
                that our revenue or income are below analysts’
                expectations;





•
            general
                economic slowdowns;





•
            matters
                affecting the economy of China and the relationship between the United
                States and China;





•
            changes
                in market valuations of both similar companies and companies whose
                business is primarily or exclusively in
                China;





•
            sales
                of large blocks of our common
                stock;





•
            announcements
                by us or our competitors of significant contracts, acquisitions,
                strategic
                partnerships, joint ventures or capital
                commitments;





•
            fluctuations
                in stock market prices and volumes, which are particularly common
                among
                highly volatile securities of internationally-based
                companies.





**Failure
      to achieve and maintain effective internal controls in accordance with Section
      404 of the Sarbanes Oxley Act could have a material adverse effect on our
      business and operating results and stockholders could lose confidence in our
      financial reporting.**





Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. Our independent registered accounting firm will
      be
      required to provide an attestation report on the effectiveness of our internal
      controls over financial reporting until our Form 10-Kfor the year ended December
      31, 2008. If we cannot provide reliable financial reports or prevent fraud,
      our
      operating results could be harmed. Failure to achieve and maintain an effective
      internal control environment, in addition to being a violation of federal
      securities laws, could cause investors to lose confidence in our reported
      financial information, which could have a material adverse effect on our stock
      price.





**Our
      chief executive officer controls a significant amount of our common
      stock.**





Approximately
      49.2% of our outstanding common stock is owned by Mr. Lawrence Kwok-Yan Chan,
      our chief executive officer and his wife. As a result, Mr. Chan and his wife
      presently have the voting power to exert substantial control over election
      of
      all of the directors and approval of any transaction requiring stockholder
      approval.





**We
      do not anticipate paying dividends on our common stock.**





We
      are
      prohibited from paying dividends on our common stock while the series A
      preferred stock is outstanding.





**The
      terms on which we may raise additional capital may result in significant
      dilution and may impair our stock price.**





Because
      of both the absence of an active public market for our common stock, the terms
      of our recent private placement and the number of outstanding warrants and
      the
      exercise price and other terms on which we may issued common stock upon exercise
      of the warrants, it may be difficult for us to raise additional capital if
      required for our present business and for any planned expansion. We cannot
      assure you that we will be able to get additional financing on any terms, and,
      if we are able to raise funds, it may be necessary for us to sell our securities
      at a price which is at a significant discount from the market price and on
      other
      terms which may be disadvantageous to us. In connection with any such financing,
      we may be required to provide registration rights to the investors and pay
      damages to the investor in the event that the registration statement is not
      filed or declared effective by specified dates. The price and terms of any
      financing which would be available to us could result in both the issuance
      of a
      significant number of shares and significant downward pressure on our stock
      price and could result in a reduction of the conversion price of the series
      A
      preferred stock and exercise price of the warrants held by the investors in
      our
      September 2007 private placement.




19





**If
      we fail to achieve certain financial results, we will be required to issue
      more
      shares of series A preferred stock to the investors in the September 2007
      private placement and the exercise price of the warrants would be
      reduced.**





As
      part
      of the September 2007 private placement, we entered into an escrow agreement
      pursuant to which we put 3,700,000 shares of series A preferred stock in escrow.
      If our consolidated net income, as defined, for 2007 and 2008 do not reach
      the
      target numbers, on a per share, fully diluted basis, some or all of these shares
      are to be delivered to the investors and if the targets are met, the shares
      are
      to be returned to Lincoln and cancelled. Although we have met the target number
      for 2007, if we do not meet the target number for 2008, which is RMB¥1.569
      (approximately $0.2066) per share, except that, if all of the warrants shall
      not
      have been exercised by March 31, 2008, the target number for 2008 shall be
      RMB¥1.368 (approximately $0.1801) per share. The conversion rates are based on
      the rates on December 31, 2007, and are subject to change. In addition, if
      these
      targets are not met, the exercise price of the warrants is reduced in each
      year
      by up to 50%, based on the shortfall from the targeted amounts.





**If
      we issue stock at a price lower than the conversion price of the series A
      preferred stock or the exercise price of the warrants, these conversion or
      exercise prices will be reduced.**





The
      series A preferred stock and the warrants that we issued in our September 2007
      private placement have anti-dilution provisions which increase the number of
      shares issuable upon conversion of the note or the series A preferred stock
      and
      reduce the exercise price of the warrants if we issue common stock at a price
      which is less than the conversion price of the series A preferred stock or
      the
      exercise price of the warrants.





**We
      may be required to pay liquidated damages if our board does not consist of
      a
      majority of independent directors.**





The
      purchase agreement relating to the September 2007 private placement requires
      us
      to appoint and maintain such number of independent directors that would result
      in a majority of our directors being independent directors, that the audit
      committee would be composed solely of independent directors and the compensation
      committee would have a majority of independent directors. Our failure to
      maintain these requirements would results in our payment of liquidated damages
      that payable in cash or by the issuance of additional shares of series A
      preferred stock, at the option of the investors.





**The
      rights of the holders of common stock may be impaired by the potential issuance
      of preferred stock.**





Our
      board
      of directors has the right, without stockholder approval, to issue preferred
      stock with voting, dividend, conversion, liquidation or other rights which
      could
      adversely affect the voting power and equity interest of the holders of common
      stock, which could be issued with the right to more than one vote per share,
      could be utilized as a method of discouraging, delaying or preventing a change
      of control. The possible impact on takeover attempts could adversely affect
      the
      price of our common stock. Although we have no present intention to issue any
      additional shares of preferred stock or to create any new series of preferred
      stock, we may issue such shares in the future.





**Our
      stock price may be affected by our failure to meet projections and estimates
      of
      earnings developed either by us or by independent securities
      analysts.**





Although
      we do not make projections relating to our future operating results, our
      operating results may fall below the expectations of securities analysts and
      investors. In this event, the market price of our common stock would likely
      be
      materially adversely affected.





**The
      registration and potential sale, either pursuant to a registration statement
      or,
      commencing September 2009, pursuant to Rule 144, by our stockholders could
      encourage short sales by third parties.**





Because
      there is no active public market for our stock, there may be significant
      downward pressure on our stock price caused by the sale or potential sale of
      a
      significant number of shares pursuant to a registration statement or, commencing
      in September 2009, Rule 144, which could allow short sellers of our stock an
      opportunity to take advantage of any decrease in the value of our stock. The
      presence of short sellers in our common stock may further depress the price
      of
      our common stock.




20





If
      the
      selling stockholders under the prospectus sell a significant number of shares
      of
      common stock, the market price of our common stock may decline. Furthermore,
      the
      sale or potential sale the offered shares pursuant to the prospectus and the
      depressive effect of such sales or potential sales could make it difficult
      for
      us to raise funds from other sources.





Although
      the prospectus did not cover shares of common stock issuable upon conversion
      of
      the series A preferred stock, the selling stockholders, who hold shares of
      series A preferred stock which are convertible into an aggregate of 3,703,704
      shares of common stock, will be able to sell such shares of common stock
      pursuant to Rule 144 commencing on September 19, 2008.




**ITEM
      2 - DESCRIPTION OF PROPERTY**




We
      lease
      approximately 108,000 square feet of office space in Shenzhen, China at an
      annual rental of approximately $240,000. This lease expires in January 2010.
      We
      believe that we have sufficient space for our anticipated short term needs
      and
      that additional space would be available on commercially reasonable terms if
      we
      require additional space.




**ITEM
      3 - LEGAL PROCEEDINGS**




We
      are
      not party to any material legal proceedings.




**ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




On
      September 19, 2007, the holders of 43,746,180 shares of common stock, or 50.31%
      of our outstanding common stock voted by written consent to approve our restated
      certificate of incorporation, which, among other changes, effected a one-for-7.5
      reverse split of the common stock, all as set forth in our information statement
      which was filed with the SEC on October 16, 2007.  The restated certificate
      of incorporation was effective on November 8, 2007.  The number of shares
      referred to in this Item 4 does not reflect the reverse split.




**PART
      II**




**ITEM
      5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**




Our
      common stock is quoted on the OTC Bulletin Board under the symbol CDYT. Prior
      to
      our registration statement being declared effective with the Securities and
      Exchange Commission on February 1, 2008, there had not a been a reported trade
      in our common stock since prior to December 31, 2006. Since February 1, 2008,
      there has been a limited amount of trading in our common stock, with no reported
      trading on many trading days. Since February 1, 2008, the high and low bid
      prices for our common stock are $3.50 and $2.55, respectively. As of March
      19,
      2008, the last reported closing price of our common stock is $3.00, which was
      a
      trade reported on March 5, 2008. These quotations reflect inter-dealer prices,
      without adjustment for markups, markdowns, or commissions, and may not represent
      actual transactions.




We
      have
      not paid dividends and we are precluded from payment of dividends while any
      of
      the series A preferred stock is outstanding.




As
      of
      March 11, 2008, we had 11,845,340 shares of common stock issued and outstanding
      and approximately 122 shareholders of record.




As
      of
      March 11, 2008, we had the following shares of common stock reserved for
      issuance:




3,611,111shares
      of common stock issuable upon conversion of the series A preferred stock. These
      shares will become eligible for sale pursuant to Rule 144 commencing September
      19, 2008.




11,249,687
      shares of common stock issuable upon exercise of outstanding warrants issued
      in
      the September 2007 private placement. If the holders of the warrants exercise
      their cashless exercise rights, the underlying shares may be sold pursuant
      to
      Rule 144 commencing September 19, 2008.




21




**Equity
      Compensation Plan Information**




As
      of
      December 31, 2007, we have no equity compensation plan.




**ITEM
      6 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF** **OPERATIONS
      AND FINANCIAL CONDITION**




*The
      following discussion of the results of our operations and financial condition
      should be read in conjunction with our financial statements and the related
      notes, which appear elsewhere in this report. The following discussion includes
      forward-looking statements. For a discussion of important factors that could
      cause actual results to differ from results discussed in the forward-looking
      statements, see “Forward Looking Statements.”*




**Overview**




The
      financial statements reflect the operations of Suny prior to September 12,
      1007,
      the date of the reverse acquisition, and the consolidated operations of the
      Company subsequent to September 12, 2007.




We
      design, manufacture and market small to medium-sized LEDs and cold cathode
      fluorescent lamp for various types of displays. Our emphasis is on small to
      medium-size back lighting unit manufacturing, and we are now developing the
      large size back lighting unit.




We
      sell
      our products to manufacturers of electronic products and not to end users.
      Our
      customers generally do not provide us with any long-term commitments. As a
      result it is necessary for us to estimate, based in part on non-binding
      estimates by our customers and potential customers, the requirements for our
      products. In addition, in some instances, we develop products based on
      anticipated customer demand with no assurance that we will get the anticipated
      orders. To the extent that we do not receive the anticipated orders or that
      our
      customers require products in greater quantities than we anticipated, our
      revenue and margins will be affected.




A
      small
      number of customers account for a very significant percentage of our revenue.
      During the year ended December 31, 2007, we had four customer that generated
      revenues of at least 10%, with one customer accounting for 19% of our revenue
      during the year ended December 31, 2007. These four customers accounted for
      approximately 50% of our revenue for that period. For the year ended December
      31, 2006, we had three customers that accounted for at least 10% of revenue,
      and
      these three customers accounted for approximately 36% of our revenue. Unless
      we
      replace a customer, the loss of any of these customers could have a material
      adverse effect upon our revenue and net income. Although we market to customers
      both within China and outside of China, our largest customers are Chinese
      manufacturers, many of whom manufacture products for sale in the international
      market. As a result, we are dependent upon the international market acceptance
      of Chinese made products.




We
      also
      do not have long term supply contracts. While this practice reduces our risk,
      it
      also subjects us to price changes and, if our suppliers have a larger than
      anticipated demand for its products, our allocation may be reduced. We may
      not
      be able to obtain the components from alternate suppliers in a timely manner
      if
      at all, which would affect our relationship with our customers.




Prior
      to
      September 2007, we were a privately-owned company and we did not have the legal,
      accounting and other expenses that are associated with our being a public
      company. Commencing in the third quarter of 2007, our general and administrative
      expenses will increase as a result of these factors.




22




As
      a
      result of the issuance of series A preferred stock and warrants, we incurred
      a
      deemed dividend to the holders of the series A preferred stock in the amount
      of
      approximately $2.2 million, resulting from the discount of the conversion price
      of the series A preferred stock from the value of the underlying common stock
      and the allocated value of the warrants granted.




**Critical
      Accounting Policies and Estimates**




The
      discussion and analysis of our financial condition and results of operations
      is
      based upon our financial statements which have been prepared in accordance
      with
      accounting principles generally accepted in the United States. The preparation
      of these financial statements requires us to make estimates and judgments that
      affect the reported amounts of assets and liabilities. On an on-going basis,
      we
      evaluate our estimates including the allowance for doubtful accounts, the
      salability and recoverability of inventory, income taxes and contingencies.
      We
      base our estimates on historical experience and on other assumptions that we
      believes to be reasonable under the circumstances, the results of which form
      our
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.




In
      estimating the collectability of accounts receivable we analyze historical
      write-offs, changes in our internal credit policies and customer concentrations
      when evaluating the adequacy of our allowance for doubtful accounts. Differences
      may result in the amount and timing of expenses for any period if we make
      different judgments or uses difference estimates. Our accounts receivable
      represent a significant portion of our current assets and total assets. Our
      realization on accounts receivable, expressed in terms of United States dollars
      may be affected by fluctuations in currency rates since the customer’s currency
      is frequently a currency other than United States dollars.




Inventories
      comprise raw materials work on process, finished goods and low value consumable
      articles are stated at the lower of cost or market. Substantially all inventory
      costs are determined using the weighted average basis. Costs of finished goods
      include direct labor, direct materials, and production overhead before the
      goods
      are ready for sale. Inventory costs do not exceed net realizable
      value.




Property,
      equipment are stated at cost. Depreciation is provided principally by use of
      the
      straight-line method over the useful lives of the related assets. Expenditures
      for maintenance and repairs, which do not improve or extend the expected useful
      life of the assets, are expensed to operations while major repairs are
      capitalized. The gain or loss on disposal of property, plant and equipment
      is
      the difference between the net sales proceeds and the carrying amount of the
      relevant assets, and, if any, is recognized in the statements of
      operations.




Under
      the
      tax laws of the PRC, we received a 100% tax holiday for 2005 and 2006 for the
      enterprise income tax. For 2007, 2008 and 2009, under present law, we will
      be
      entitled to a 50% tax holiday from this tax. As a result, there is no provision
      for income tax for 2005 and 2006. The tax provision for 2007 is 7.5% of taxable
      income.




We
      cannot
      predict what future laws and regulations might be passed that could have a
      material effect on our results of operations. We assess the impact of
      significant changes in laws and regulations on a regular basis and update the
      assumptions and estimates used to prepare our financial statements when we
      deem
      it necessary.




We
      recognize product sales generally at the time the product is shipped. Shipping
      and handling costs are included in cost of goods sold. Revenue is presented
      net
      of any sales tax and value added tax.




Our
      functional currency is the RMB, which is the currency of the PRC, and our
      reporting currency is United States dollars. Our balance sheet accounts are
      translated into United States dollars at the year-end exchange rates prevailing
      during the periods in which these items arise. Translation gains and losses
      are
      deferred and accumulated as a component of other comprehensive income in owners’
equity. Transaction gains and losses that arise from exchange rate fluctuations
      from transactions denominated in a currency other than the functional currency
      are included in the statement of operations as incurred. The translation and
      transaction gains and losses were immaterial in the statement of operations
      as
      incurred. The translation and transaction gains and losses were immaterial
      for
      the year ended December 31, 2007 and 2006.




23




The
      PRC
      government imposes significant exchange restrictions on fund transfers out
      of
      the PRC that are not related to business operations. These restrictions have
      not
      had a material impact on our operations because we have not previously engaged
      in any significant transactions that are subject to the
      restrictions.




**Reverse
      Acquisition**




On
      September 12, 2007, we acquired Keep On Holdings and its wholly-owned
      subsidiary, Suny, in a transaction which is accounted for as a reverse
      acquisition. Although we are the company that made the acquisition, for
      accounting purposes, Suny is treated as the acquiring company. As a result
      our
      financial statements reflect the financial position, results of operations
      and cash flows of Suny prior to September 12, 2007 and the combined operations
      of Suny and the Company from and after September 12, 2007. From Suny’s
      organization until the completion of the reverse acquisition, Lawrence Kwok-Yan
      Chan, was Suny’s sole stockholder. The 11,376,000 shares issued to Mr. Chan and
      his designees are deemed to have been outstanding for all periods prior to
      September 12, 2007.




**Convertible
      Preferred Stock and Warrants**




In
      accordance with EITF 00-19, we determined that the convertible preferred stock
      and the accompanying warrants were equity instruments under SFAS 150 and 133.
      Although we had unconditional obligation to issue additional shares of common
      stock upon conversion of the series A preferred stock if our fully-diluted
      EBITDA per share were below the targeted levels, the certificate of designation
      relating to the series A preferred stock did not provide that we must issue
      shares that are registered pursuant to the Securities Act of 1933, with the
      result, pursuant to the certificate of designation, the additional shares need
      not be registered shares. Our series A preferred stock also met all other
      conditions for the classification as equity instruments. We had a sufficient
      number of authorized shares, the agreement contained an explicit limit on the
      number of shares to be delivered on conversion of the series A preferred stock,
      there is no required cash payment or net cash settlement requirement, and the
      holders of the series A preferred stock had no right higher than the holders
      of
      the common stock.




Our
      warrants were excluded from derivative accounting because they were indexed
      to
      our common stock and were classified in stockholders’ equity section according
      to SFAS 133 paragraph 11(a).




24




**Results
      of Operations**




***Years
      ended December 31, 2007 and 2006***




The
      following table sets forth information from our statements of operations for
      the
      years ended December 31, 2007 and 2006, in dollars and as a percentage of
      revenue (dollars in thousands):




Year
                Ended December 31,2007
            
            2006Sales
            
            $
            32,554
            
            
            100.0
            %
            $
            15,884
            
            
            100.0
            %Cost
                of sales
            
            
            24,814
            
            
            76.2
            %
            
            12,267
            
            
            77.2
            %Gross
                profit
            
            
            7,740
            
            
            23.8
            %
            
            3,617
            
            
            22.8
            %Selling
            
            
            748
            
            
            2.3
            %
            
            249
            
            
            1.6
            %Research
                and development
            
            
            646
            
            
            2.0
            %
            
            344
            
            
            2.2
            %General
                and administrative
            
            
            915
            
            
            2.8
            %
            
            609
            
            
            3.8
            %Income
                from operations
            
            
            5,430
            
            
            16.7
            %
            
            2,413
            
            
            15.2
            %Interest
                expense, net
            
            
            172
            
            
            0.5
            %
            
            2
            
            
            0.0
            %Other
                income (expenses)
            
            
            0
            
            
            0.0
            %
            
            0
            
            
            0.0
            %Income
                before income taxes
            
            
            5,257
            
            
            16.1
            %
            
            2,411
            
            
            15.2
            %Provision
                for income taxes
            
            
            416
            
            
            1.3
            %
            
            0
            
            
            0.0
            %Net
                income
            
            
            4,841
            
            
            14.9
            %
            
            2,411
            
            
            15.2
            %Deemed
                preferred stock dividend
            
            
            2,177
            
            
            6.7
            %
            
            -Net
                income to common stockholders
            
            
            2,663
            
            
            8.2
            %
            
            2,411
            
            
            15.2
            %




Sales
      were $32.5 million for the year ended December 31, 2007, an increase of $16.6
      million, or 104%, compared to $15.9 million for the year ended December 31,
      2006. The increase in revenue was attributed mainly due to the increased demand
      for BLU products from small screen LCD manufacturers and our successful market
      expansion efforts




Cost
      of
      sales was $24.8 million for 2007, an increase of $12.5 million, or 102%,
      compared to $12.2 million for the year 2006. This increase was consistent with
      the increase in the net revenue. As a percentage of the net revenue, cost of
      sales for the year ended December 31, 2007 and 2006 was 76% and 77%,
      respectively.




Selling
      expenses were approximately $748,000 for 2007, an increase of $499,000, or
      201%,
      compared to $249,000 for the prior year. The increase in selling expenses was
      attributable to the increase in sales commissions and marketing expenses as
      a
      result of and also in line with the increase in our revenue.




Our
      research and development expenses for 2007 were approximately $646,000, an
      increase of $302,000, or 88%, compared to $344,000 for 2006. This increase
      reflected an increased effort to develop new types of backlight products through
      the acquisition of the relevant know how and technology. Our focus on research
      and development and the related expenses ultimately resulted in a significant
      increase in our total sales. In the future, we expect to continue to increase
      our research and development efforts and to enable us to manufacture wider
      lines
      of backlight products.




General
      and administrative expenses for 2007 were approximately $915,000, an increase
      of
      $306,000 or 50%, compared to approximately $609,000 for 2006. The increase
      was
      in line with the increase in our scale of operation and also reflected
      additional expenses in the fourth quarter as a result of our status as a public
      company.




Income
      from operations was approximately $5.3 million for the 2007, compared with
      approximately $2.4 million for 2006. The increase was primarily the result
      of
      factors described above.




Net
      interest expenses for 2007 were approximately $172,000, compared to $0 for
      2006.
      The increase was new short term bank loan in 2007




Income
      tax provision for 2007 was approximately $416,000 compared to a benefit from
      income taxes of $0 in 2006 because of the 100% tax holiday that was in effect
      in
      2006. The tax for 2007 is 7.5%, as a result of the 50% tax holiday that, under
      current law, applies to 2007, 2008 and 2009.





In
      2007,
      we had net income of $4.8m compared to $2.4m, an increase of $2.4m or
      100%.




25





The
      beneficial effect of the conversion price is reflected as a deemed dividend
      of
      approximately $2.2million to the holders of the series A preferred stock in
      the
      year ended 2007. This deemed dividend is a non-cash transaction.




As
      a
      result of the foregoing factors, net income increased $251,000 to $2.6 million,
      or $0.23 per share (basic) and $0.17  per share (diluted), for 2007,
      from approximately $2.4m or $0.21 per share (basic and diluted) for
      2006.




**Liquidity
      and Capital Resources**




At
      December 31, 2007, we had a cash balance of $3 million, compared with a cash
      balance of $135,000 at December 31, 2006. These funds are located in financial
      institutions located in China, and these funds are not insured. In addition,
      at
      December 31, 2007, we also had approximately $2.0 million in restricted cash,
      which is held as security for short term loans. The restricted cash is not
      included in our cash balance.





We
      are
      subject to the regulations of the PRC which restricts the transfer of cash
      from
      that country, except under certain specific circumstances. Accordingly, such
      funds may not be readily available to us to satisfy obligations which have
      been
      incurred outside the PRC.





As
      of
      December 31, 2007, we had working capital of approximately $9 million, compared
      to $2.0 million at December 31, 2006, of which cash and cash equivalents
      amounted to $3 million, compared to $135,000 at December 31, 2006. Our accounts
      receivable has been a significant portion of our current assets, representing
      $5.3 million, or 30% of current assets, compared to $1.7 million, or 46% of
      current assets at December 31, 2006. Inventories amounted to $1.7 million,
      compared to $1.5 million at December 31, 2006. During the year of 2007 , our
      cash flow used in operations amounted $3.4 million compared to net cash provided
      by operating activities of $1.1 million in the year 2006.




In
      September 2007, we received gross proceeds of $4.0 million from the sale of
      our
      series A preferred stock and warrants. We used $625,000 of the proceeds in
      connection to pay a former principal stockholder for his stock, which was
      subsequently cancelled, and to pay debt to that stockholder. The net proceeds
      to
      us after payment of closing costs and the payment to the former principal
      stockholder, was approximately $3.0 million. We used the net proceeds for
      working capital purposes.




We
      have
      entered into 90-day revolving loan facilities with several banks pursuant which
      we have borrowed $5.6 million. Each 90-day period, we are required to renew
      these loans. At December 31, 2007, there was $5,600,896 outstanding, all of
      which were due in the fourth quarter of 2007. These loans bear interest at
      rates
      ranging from 6.44% to 9.50% and are secured by restricted cash of $2,039,314.
      These loans have been renewed for an additional 90-day term. Additionally,
      at
      December 31, 2007, we have a loan payable with a bank of $685,486 that is due
      on
      July 23, 2008 and is personally guarantee by our chief executive
      officer.





The
      private placement and the loan facilities were our principal source of funds
      from financing activities. In 2006, our cash flow from financing activities
      was
      a negative $341,000, reflecting repayment of loans to related parties.





For
      2007,
      we used cash for investing activities of $1.8 million as compared to $689,000
      for the year 2006. In 2007, these funds were used for the purchase of property
      and equipment ($1.1 million) and recapitalization costs relating to the reverse
      acquisition of $625,000. For 2007, we used cash from investing activities
      primarily for the purchase of property and equipment of $1.1m. For 2006, we
      used
      cash for the purchase of property and equipment of $689,000.




The
      securities purchase agreement for our September 2007 private placement prohibits
      us (i) from issuing convertible debt or preferred stock until the earlier of
      five years from the closing or until the investors have converted or exercised
      and sold the securities issued in the private placement or (ii) from having
      debt
      in an amount greater than twice our EBITDA until September 12, 2010 or until
      90%
      of the securities have been converted or exercised and sold. The investors
      in
      the private placement also have a right of first refusal on future financings
      until the earlier of September 12, 2012 or such time as the investors, as a
      group, cease to own at least five percent (5%) of the total number of shares
      of
      common stock that were issued or are issuable upon conversion of series A
      preferred stock that were initially issued to the investors. These provisions
      may make it difficult for us to raise money for our operations or for
      acquisitions.




26




*Off-balance
      Sheet Arrangements*





We
      have
      not entered into any other financial guarantees or other commitments to
      guarantee the payment obligations of any third parties. We have not entered
      into
      any derivative contracts that are indexed to our shares and classified as
      stockholder's equity or that are not reflected in our consolidated financial
      statements. Furthermore, we do not have any retained or contingent interest
      in
      assets transferred to an unconsolidated entity that serves as credit, liquidity
      or market risk support to such entity. We do not have any variable interest
      in
      any unconsolidated entity that provides financing, liquidity, market risk or
      credit support to us or engages in leasing or hedging services with
      us.


**ITEM
        7 - FINANCIAL STATEMENTS**
  The
        financial statements of China Display Technologies, Inc., together with notes
        and the Independent Auditors Report, begin on page F-1.


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




None.




**ITEM
      8A - CONTROLS AND PROCEDURES**




As
      of the
      end of the period covered by this report, the Company’s chief executive officer
      and chief financial officer evaluated the effectiveness of our disclosure
      controls and procedures. Based on their evaluation, the chief executive officer
      and chief financial officer concluded that our disclosure controls and
      procedures are effective in alerting them to material information that is
      required to be included in the reports that we file or submit under the
      Securities Exchange Act of 1934, as amended.




Our
      principal executive officer and principal financial officer have concluded
      that
      there were no significant changes in our internal controls or in other factors
      that could significantly affect these controls during the fourth quarter ended
      December 31, 2007




**Management’s
      Report of Internal Control over Financial Reporting.**




We
      are
      responsible for establishing and maintaining adequate internal control over
      financial reporting in accordance with Exchange Act Rule 13a-15. With the
      participation of our chief executive officer and chief financial officer, our
      management conducted an evaluation of the effectiveness of our internal control
      over financial reporting as of December 31, 2007 based on the criteria
      established in Internal Control-Integrated Framework issued by the Committee
      of
      Sponsoring Organizations of the Treadway Commission. Based on this evaluation,
      management concluded that our internal control over financial reporting was
      effective as of December 31, 2007, based on those criteria. A control system,
      no
      matter how well conceived and operated, can provide only reasonable, not
      absolute, assurance that the objectives of the control system are met. Because
      of the inherent limitations in all control systems, no evaluation of controls
      can provide absolute assurance that all control issues and instances of fraud,
      if any, within the Company have been detected.




27




This
      annual report does not include an attestation report of the Company’s registered
      accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the Company’s registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission.




**ITEM
      8B - OTHER INFORMATION**




None.




**PART
      III**




**ITEM
      9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS CONTROL PERSONS AND CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
      ACT**




The
      following table sets forth certain information regarding our officers and
      directors.




**Name**
            **Age**
            **Position**Lawrence
                Kwok-Yan Chan
            39
            Chief
                executive officer, chairman and a directorKam
                Ming Yip
            38
            Chief
                financial officerLiang
                Hong
            43
            DirectorSen
                Li
            46
            DirectorOliver
                Chi Choi Kwong
            55
            Director




Lawrence
      Kwok-Yan Chan has been our chief executive officer and a director since the
      reverse acquisition on September 12, 2007. He founded Suny in 2004 and has
      been
      Suny’s chairman since its inception. From 2000 to 2003, Mr. Chan was employed as
      general manger by Wai Chi Electronics Co. Mr. Chan graduated from Hong Kong
      Polytechnic University with first honor in 1991.




Kam
      Ming
      Yip has been our chief financial officer since January 15, 2008. Mr. Yip was
      chief financial officer and secretary of ALCO, Inc., an insurance brokerage
      company, from October 2005 to January 2008. From November 2002 to October 2005,
      Mr. Yip worked for Intac International Holdings Limited, initially as a
      financial controller, and from 2004 as group financial controller. At Intac,
      Mr.
      Yip oversaw the preparation of consolidated accounts and set up accounting
      procedures. Mr. Yip is a fellow member of the Association of Chartered Certified
      Accountants and a member of Hong Kong Institute of Certified Public Accountants.
      Mr. Yip received a degree from the Curtin University of Technology and has
      a
      Master’s degree in corporate finance from the Hong Kong Polytechnic
      University.





Liang
      Hong has been director of the Company since September 18, 2007. Mr. Hong has
      served as senior project manager for Shenzhen High Tech Investment and Guaranty
      Co., Ltd., since March 1995. From January 2001 to April 2002, Mr. Hong was
      a
      financial manager in Shenzhen HuaMao Pawn Co., Ltd., and from May 2000 to
      December 2000, Mr. Hong worked for Shenzhen ZhongBaoHua Electronics Co., Ltd.,
      as financial controller. Mr. Hong holds a B.A. in Economics from Southwest
      University of Finance.





Sen
      Li
      has been a director of the Company since September 18, 2007. Mr. Li has served
      as senior engineer for Committee of Experts of Shenzhen Bureau of Science
      Technology and Information since 2001. From 1999 to 2001 Mr. Li served as
      project controller for the Beijing representative office of New Zealand Tower
      Finance Group. Mr. Li has been a senior lecturer in Guangzhou Metallurgy
      College. Mr. Li received a B.S. from Jiangsu Normal University and took the
      MBA
      in-service training from September 1999 to November 2000 and also took the
      MBA
      training in New Zealand Engineering and Technology College from 1996 to
      1998.




28




Oliver
      Chi Choi Kwong has been a director of the Company since March 11, 2008. Since
      1995, Mr. Kwong has been a Senior Partner of CC Kwong & Company Chartered
      Accountants in Hong Kong and the Chief Executive of KCLG Corporate Consulting
      Ltd specializing in taxation (planning and investigation) and migration audit
      business. He worked with Peat Marwick Mitchell (now KPMG) from 1977 to 1981
      and
      Nelson Parkhill BDO in Sydney until 1991. He was General Manger (Finance) of
      SmartTone Mobile Communications Limited until 1995. He is a CPA (Hong Kong)
      since 1983 and a member of the Institute of Chartered Accountants in England
      and
      Wales.




**Committees**




As
      of the
      date of this report, our board of directors has no separate committees and
      it
      acts as the audit committee at this time. We intend to have an audit committee
      comprised of three independent directors and a compensation committee of which
      at least a majority of the members are independent directors.




**Section
      16(a) Compliance**




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
      and officers, and persons who own more than 10% of our common stock, to file
      with the Securities and Exchange Commission initial reports of beneficial
      ownership and reports of changes in beneficial ownership of our Common Stock
      and
      other equity securities. Our officers, directors and greater than 10% beneficial
      owners are required by SEC regulation to furnish us with copies of all Section
      16(a) forms they file. To our knowledge, based solely on a review of the copies
      of such reports furnished to us and written representations that no other
      reports were required, during the fiscal year ended December 31, 2007, all
      Section 16(a) filing requirements applicable to our officers, directors and
      greater than 10% beneficial owners were complied with.




**Code
      of Ethics**




As
      of the
      date of this report, the Company has not adopted a code of ethics.




**ITEM
      10 - EXECUTIVE COMPENSATION**




We
      did
      not pay our chief executive officer, Lawrence Kwok-Yan Chan, any compensation,
      either in the form of equity or salary or benefits, during 2007 or 2006. No
      officer received compensation of $100,000 for either 2007 or 2006. The following
      table sets forth information as to Lincoln’s treasurer, who became chief
      executive officer in 2007. No other officer received any compensation in
      Lincoln’s fiscal year ended July 31, 2007 or 2006.




Summary
      Compensation Table





Name
            
            Year
            
            Salary
            
            Bonus
            
            Other
                CompensationSamir
                Masri
            
            
            2007
            
            $
            13,487
            
            $
            0
            
            $
            02006
            
            $
            16,000
            
            $
            0
            
            $
            0




**Employment
      Agreements**




The
      Company entered into an employment agreement, effective January 15, 2008, with
      Yip Kam Ming, pursuant to which Mr. Yip will serve as our chief financial
      officer. Mr. Yip will receive a base monthly salary of Hong Kong $65,000.
      Following a three month probation period, and during the term of the agreement,
      Mr. Yip will receive an annual bonus equal to one month’s salary, and will be
      eligible for additional bonus payments and salary increases in our discretion.
      During the term of the agreement, we are to grant to Mr. Yip 50,000 shares
      of
      common stock per year. The initial stock grant shall vest in nine equal monthly
      installments, commencing April 15, 2008 through and including January 15, 2009.
      Mr. Yip shall be eligible for additional annual grants of 50,000 shares, in
      our
      discretion.




29




During
      the probationary period, the employment agreement may be terminated for any
      reason by either party without any prior notice and without payment of any
      severance. Thereafter, the agreement may be terminated by either party for
      any
      reason on not less than 30 days’ written notice, provided that we may elect to
      terminate the Employment Agreement forthwith upon payment of one month’s base
      salary.




**Outstanding
      Equity Awards at Fiscal Year-End**




There
      were no outstanding equity awards as of December 31, 2007.




**Director
      Compensation**




No
      director of the Company received any compensation for services as director
      for
      the year ended December 31, 2007.




**ITEM
      11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**




The
      following table provides information as to shares of common stock beneficially
      owned as of March 11, 2008 by:


•
            Each
                director•
            Each
                officer named in the summary compensation table•
            each
                person owning of record or known by us, based on information provided
                to
                us by the persons named below, to own beneficially at least 5% of
                our
                common stock; and•
            all
                directors and executive officers as a group.






Name
            
            Shares
                of Common Stock Beneficially Owned
            
            PercentageLawrence
                Kwok-Yan Chan
              12A
                Block, Xinhe Road, Xinqiao
              No.
                3, Industrial Zone,
              Shajing
                District, Baoan Town
              Shenzen,
                China 150090
            
            
            5,832,824
            
            
            49.2
            %Kam
                Ming Yip
            
            
            0
            
            
            0
            %Liang
                Hong
            
            
            430,000
            
            
            3.6
            %Sen
                Li
            
            
            0
            
            
            0
            %Oliver
                Chi Choi Kwong
            
            
            0
            
            
            0
            %All
                officers and directors as a group (two individuals beneficially owning
                stock)
            
            
            6,262,824
            
            
            52.9
            %




The
      shares owned by Mr. Chan represents 4,832,824 shares owned by Mr. Chan and
      1,000,000 owned by his wife, as to which Mr. Chan disclaims beneficial
      ownership.





Except
      as
      otherwise indicated each person has the sole power to vote and dispose of all
      shares of common stock listed opposite his name. Each person is deemed to own
      beneficially shares of common stock that are issuable upon exercise of warrants
      or upon conversion of convertible securities if they are exercisable or
      convertible within 60 days of March 11, 2008. None of the persons named in
      the
      table owns any options or convertible securities.





Pursuant
      to Kam Ming Yip’s employment agreement, Mr. Yip is entitled to a stock grant of
      50,000 shares, which vests over nine months commencing April 15, 2008. Since
      Mr.
      Yip’s probationary periods has not expired, he is not deemed to beneficially own
      any of the shares. The number of shares that would be beneficially owned by
      Mr.
      Yip if his employment continues beyond the probationary period would be 5,556
      shares.




30





Barron
      Partners owns series A preferred stock and warrants which, if fully converted
      and exercised, would result in the ownership of more than 5% of our outstanding
      common stock. However, the series A preferred stock may not be converted and
      the
      warrants may not be exercised if such conversion or exercise would result in
      Barron Partners and its affiliates owning more than 4.9% of our outstanding
      common stock. This limitation may not be waived.




**ITEM
      12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**




In
      connection with the reverse acquisition, Lawrence Kwok-Yan Chan, the sole
      shareholder of Keep On Holdings exchanged all of his stock in Keep On Holdings
      for 11,376,000 shares of common stock (constituting approximately 98.1% of
      our
      outstanding common stock). The common stock was issued, in accordance with
      Mr.
      Chan’s instructions, to Mr. Chan and his designees.





Also
      in
      connection with the reverse acquisition, we entered into an agreement with
      our
      then principal stockholder Nathan Low, individually and on behalf of NFS/FMTC
      Roth IRA FBO Nathan Low, pursuant to which we purchased 290,000 shares of common
      stock, for a purchase price of $340,133.13, and we repaid Mr. Low $284,866.87
      which was due to him for advances made to Lincoln. The total payments for the
      stock and obligations to Mr. Low were $625,000. Mr. Low also waived any rights
      he had under convertible securities.




**Director
      Independence**




Messrs.
      Hong, Li and Kwong are independent as that term is defined under the Nasdaq
      Marketplace Rules.




**ITEM
      13 - EXHIBITS**




2.1
            
            Share
                Exchange Agreement, dated September 12, 2007, between the Company
                and
                Lawrence Kwok-Yan Chan13.1
            
            Restated
                certificate of incorporation23.2
            
            Certificate
                of designation of series A convertible preferred stock (included
                in
                restated certificate of incorporation)3.3
            
            By-laws34.1
            
            $1.30
                warrants (formerly $0.17 1/3 warrants) issued to the Investors under
                the
                Securities Purchase Agreement, dated September 12, 200714.2
            
            $1.50
                warrants (formerly $0.20 warrants) issued to the Investors under
                the
                Securities Purchase Agreement, dated September 12, 2007110.1
            
            Securities
                purchase agreement, dated September 12, 2007, between the Company
                and the
                Investors named therein110.2
            
            Registration
                rights agreement dated September 12, 2007, between the Company and
                the
                Investors named therein110.3
            
            Closing
                Escrow Agreement among the Company, the Investors and Sichenzia Ross
                Friedman Ference LLP110.4
            
            Agreement,
                dated September 12, 2007, between the Company and Nathan Low110.5
            
            Employment
                agreement, dated as of January 15, 2008, between the Company and
                Yip Kam
                Ming421.1
            
            List
                of Subsidiaries231.1
            
            Certification
                of Chief Executive Officer531.2
            
            Certification
                of Chief Financial Officer532.1
            
            Section
                1350 Certification5





1
            Filed
                as an exhibit to the Company’s current report on Form 8-K, which was filed
                with the Commission on September 19, 2007 and incorporated herein
                by
                reference.2
            Filed
                as an exhibit to the Company’s registration statement on Form SB-2 (File
                No. 333-148724), which was filed with the Commission on January 17,
                2008,
                and incorporated herein by reference.3
            Filed
                as an exhibit to the Company’s current report on Form 8-K which was filed
                with the Commission on October 26, 2007 and incorporated herein by
                reference.4
            Filed
                as an exhibit to the Company’s current report on Form 8-K which was filed
                with the Commission on January 2, 2008 and incorporated herein by
                reference.5
            Filed
                herewith.




31




**ITEM
      14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES**




The
      following is a summary of fees for professional services rendered by Kempisty
      & Company certified public accountants, P.C. (“Kempisty”), our registered
      independent public accounting firm for the year ended December 31,
      2007:




Description
                of services
            
            2007Audit
                fees
            
            $
            75,000Audit
                related fees
            
            
            55,500Tax
                fees
            
            
            0All
                other fees
            
            
            0$
            130,500





*Audit
      fees.* Audit
      fees represent fees for professional services performed by Kempisty for the
      audit of our annual financial statements and the review of our quarterly
      financial statements, as well as services that are normally provided in
      connection with statutory and regulatory filings or engagements.




*Audit-related
      fees.* Audit-related
      fees represent fees for assurance and related services performed by Kempisty
      that are reasonably related to the performance of the audit or review of our
      financial statements. The specific service related to our registration statement
      on Form SB-2.




*Tax
      Fees.* Kempisty
      did not perform any tax compliance services.




*All
      other fees.* Kempisty
      did not receive any other audit fees for 2007.




The
      aggregate fees billed to Lincoln for Lincoln’s fiscal years ended July 31, 2007,
      and 2006, by Sherb & Co., LLP, Lincoln’s registered independent public
      accounting firm, were $22,500 and $22,500 respectively.




32





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


March
                  21, 2008
              CHINA
                  DISPLAY TECHNOLOGIES, INC.By:
              /s/
                  Lawrence Kwok-Yan ChanLawrence
                  Kwok-Yan ChanChief
                  Executive Officer


Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      report has been signed by the following persons on behalf of the Registrant
      and
      in the capacities and on the dates indicated. Each person whose signature
      appears below hereby authorizes Lawrence Kwok-Yan Chan as his true and lawful
      attorney-in-fact and agent, with full power of substitution and resubstitution
      for him and in his name, place and stead, in any and all capacities to sign
      any
      and all amendments to this report, and to file the same, with all exhibits
      thereto and other documents in connection therewith, with the Securities and
      Exchange Commission.





Signature
            
            Title
            
            Date/s/
                Lawrence Kwok-Yan Chan
            
            Chief
                Executive Officer and Director
            
            March
                21, 2008Lawrence
                Kwok-Yan Chan
            
            (Principal
                Executive Officer)/s/
                Kam Ming Yip
            
            Chief
                Financial Officer
            
            March
                21, 2008Kam
                Ming Yip
            
            (Principal
                Financial and Accounting Officer)/s/
                Liang Hong
            
            Director
            
            March
                21, 2008Liang
                Hong/s/
                Sen Li
            
            Director
            
            March
                21, 2008Sen
                LiDirector
            
            March
                21, 2008Oliver
                Chi Choi Kwong




33





**CHINA
                  DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES****INDEX
                  TO FINANCIAL STATEMENTS**
  **PAGE****REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
              **F-2****CONSOLIDATED
                  BALANCE SHEETS**
              **F-3****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
              **F-4****CONSOLIDATED
                  STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**
              **F-5****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**
              **F-6****NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS**
              **F7
                  - F23**
  F-1
  *KEMPISTY
          & COMPANY*
 *CERTIFIED
                      PUBLIC ACCOUNTANTS, P.C.**15
                      MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038 - TEL (212) 406-7272
                      - FAX
                      (212) 513-1930*
  REPORT
            OF
            INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board
          of
          Directors
 China
          Display Technologies, Inc. and Subsidiaries
  We
          have
          audited the accompanying consolidated balance sheets of China Display
          Technologies, Inc. (the
          "Company") as
          of
          December 31, 2007 and 2006 and the related consolidated statements of
          operations, changes in stockholders’ equity and cash flows for each of the years
          in the two year period ended December 31, 2007. These financial statements
          are
          the responsibility of the Company's management. Our responsibility is to
          express
          an opinion on these financial statements based on our audits.
  We
          conducted our audits in accordance with the 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. The Company is not required
          at
          this time, to have, nor were we engaged to perform, an audit of its internal
          control over financial reporting. Our audit included consideration of internal
          control over financial reporting as a basis for designing audit procedures
          that
          are appropriate in the circumstances, but not for the purpose of expressing
          an
          opinion on the effectiveness of the Company's internal control over financial
          reporting. Accordingly, we express no such opinion. 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 financial statements referred to above present fairly, in
          all
          material respects, the financial position of China Display Technologies,
          Inc. at
          December 31, 2007 and 2006 and the results of its operations and its cash
          flows
          for each of the years in the two year period ended December 31, 2007 in
          conformity with accounting principles generally accepted in the in the
          United
          States of America.
  /s/
          Kempisty & Company CPA's PC
 Kempisty
          & Company
 Certified
          Public Accountants PC
 New
          York,
          New York
 March
          10,
          2008
  F-2
  CHINA
                  DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  BALANCE SHEETS
  December
                  31,ASSETS
              
              2007
              
              2006Current
                  AssetsCash
                  and cash equivalents
              
              $
              2,949,356
              
              $
              134,991Restricted
                  cash (Note 8 )
              
              
              2,039,314
              
              
              -Trade
                  receivables, net of allowance for doubtful accounts (Note 4)
              
              
              5,279,282
              
              
              1,656,461Inventories,
                  net (Note 5)
              
              
              1,692,934
              
              
              1,460,055Advances
                  to suppliers (Note 9 )
              
              
              5,498,257
              
              
              290,858Prepaid
                  expenses and other receivables (Note 10 )
              
              
              259,170
              
              
              36,621Total
                  Current Assets
              
              
              17,718,313
              
              
              3,578,986Property
                  and Equipment, net (Note 6)
              
              
              2,441,264
              
              
              1,771,460Loan
                  to Employee
              
              
              -
              
              
              157,442Other
                  assets (Note 11)
              
              
              1,059,222
              
              
              -Total
                  Assets
              
              $
              21,218,799
              
              $
              5,507,888LIABILITIESCurrent
                  LiabilitiesAccounts
                  Payables and accrued liabilities
              
              $
              2,132,499
              
              $
              1,540,124Short
                  term bank loans (Notes 7)
              
              
              5,600,896
              
              
              -Various
                  taxes payable
              
              
              383,397
              
              
              -Wages
                  payable
              
              
              103,944
              
              
              -Corporate
                  taxes payable
              
              
              432,532
              
              
              -Total
                  Current Liabilities
              
              
              8,653,268
              
              
              1,540,124Due
                  to related party-Chen Guoxin
              
              
              -
              
              
              47,809Total
                  Liabilities
              
              
              8,653,268
              
              
              1,587,933Commitments
                  and Contingencies (Note 14)
              
              
              -
              
              
              -Stockholders'
                  Equity (Note 12)Series
                  A convertible preferred stock, $.001 par value; 20,000,000
                  sharesauthorized;
                  3,703,704 shares issued and outstanding;liquidation
                  preference $4,000,000
              
              
              3,704
              
              
              -Common
                  stock. $.001 par value; 100,000,000 shares authorized;11,600,000
                  shares issued and outstanding
              
              
              11,600
              
              
              11,376Additional
                  paid-in capital
              
              
              6,083,501
              
              
              673,457Accumulated
                  other comprehensive income
              
              
              692,625
              
              
              124,238Statutory
                  reserves
              
              
              198,550
              
              
              198,550Retained
                  earnings
              
              
              5,575,551
              
              
              2,912,334Total
                  Stockholders' Equity
              
              
              12,565,531
              
              
              3,919,955Total
                  Liabilities and Stockholders' Equity
              
              $
              21,218,799
              
              $
              5,507,888
  The
                  accompanying notes are an integral part of these consolidated financial
                  statements
  F-3
  CHINA
                  DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF OPERATIONS
  For
                  the Year EndedDecember
                  31,2007
              
              2006Revenues
              
              $
              32,553,974
              
              $
              15,884,094Cost
                  of Sales
              
              
              24,813,637
              
              
              12,267,433Gross
                  Profit
              
              
              7,740,337
              
              
              3,616,661Operating
                  Expenses:Selling
                  Expenses
              
              
              748,034
              
              
              249,187Research
                  and development
              
              
              646,186
              
              
              344,433General
                  and administrative
              
              
              915,993
              
              
              609,367Total
                  Expenses
              
              
              2,310,213
              
              
              1,202,987Income
                  from Operations
              
              
              5,430,124
              
              
              2,413,674Other
                  Income (Expenses):Other
              
              
              147
              
              
              -Interest
                  Income
              
              
              1,380
              
              
              -Interest
                  Expense
              
              
              (174,500
              )
              
              (1,879
              )Total
                  Other Income (Expenses)
              
              
              (172,973
              )
              
              (1,879
              )Income
                  Before Income Taxes
              
              
              5,257,151
              
              
              2,411,795Provision
                  for Income Taxes
              
              
              416,081
              
              
              -Net
                  Income
              
              
              4,841,070
              
              
              2,411,795Deemed
                  preferred stock dividend
              
              
              (2,177,853
              )
              
              -Net
                  Income available to common shareholders
              
              $
              2,663,217
              
              $
              2,411,795Net
                  earnings per share of common stock, basic
              
              $
              0.23
              
              $
              0.21Weighted
                  average number of shares outstanding, basic
              
              
              11,559,479
              
              
              11,376,000Net
                  earnings per share of common stock, diluted
              
              $
              0.17
              
              $
              0.21Weighted
                  average number of shares outstanding, diluted
              
              
              15,263,183
              
              
              11,376,000
  The
                  accompanying notes are an integral part of these consolidated financial
                  statements
  F-4
  **CHINA
                  DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**Consolidated
                  Statements of Changes in Stockholders’ EquityFor
                  the years ended December 31, 2007 and 2006(In
                  US Dollars)
 AccumulatedAdditional
                  
                  
                  Other
                  
                  
                  
                  
                  
                  
                  
                  
                  TotalPreferred
                      Stock
                  
                  
                  Common
                      Stock
                  
                  
                  Paid-in
                  
                  
                  Comprehensive
                  
                  
                  Statutory
                  
                  
                  Retained
                  
                  
                  Stockholders'
                  
                  
                  ComprehensiveShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Income
                  
                  
                  Reserves
                  
                  
                  Earnings
                  
                  
                  Equity
                  
                  
                  IncomeBalanceDecember
                      31, 2005
                  
                  
                  -
                  
                  $
                  -
                  
                  
                  11,376,000
                  
                  $
                  11,376
                  
                  $
                  673,457
                  
                  $
                  24,161
                  
                  $
                  69,909
                  
                  $
                  629,180
                  
                  $
                  1,408,083Transfer
                      to statutory reserves
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  128,641
                  
                  
                  -128,641
                  
                  
                  -Net
                      income
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,411,795
                  
                  
                  2,411,795
                  
                  $
                  2,411,795Foreign
                      currency translation adjustments
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  100,077
                  
                  
                  -
                  
                  
                  -
                  
                  
                  100,077
                  
                  
                  100,077Comprehensive
                      income
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  $
                  2,511,872BalanceDecember
                      31, 2006
                  
                  
                  -
                  
                  
                  -
                  
                  
                  11,376,000
                  
                  
                  11,376
                  
                  
                  673,457
                  
                  
                  124,238
                  
                  
                  198,550
                  
                  
                  2,912,334
                  
                  
                  3,919,955Recapitalization
                  
                  
                  -
                  
                  
                  -
                  
                  
                  58,000
                  
                  
                  58
                  
                  
                  -624,932
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (624,874
                  )Preferred
                      stock issued
                  
                  
                  3,703,704
                  
                  
                  3,704
                  
                  
                  166,000
                  
                  
                  166
                  
                  
                  3,857,123
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  3,860,993Deemed
                      preferred stock dividend
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  2,177,853
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,177,853
                  )
                  
                  -Net
                      income
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  4,841,070
                  
                  
                  4,841,070
                  
                  $
                  4,841,070Foreign
                      currency translation adjustments
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  568,387
                  
                  
                  -
                  
                  
                  -
                  
                  
                  568,387
                  
                  
                  568,387Comprehensive
                      income
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  $
                  5,409,457BalanceDecember
                      31, 2007
                  
                  
                  3,703,704
                  
                  $
                  3,704
                  
                  
                  11,600,000
                  
                  $
                  11,600
                  
                  $
                  6,083,501
                  
                  
                  692,625
                  
                  $
                  198,550
                  
                  $
                  5,575,551
                  
                  $
                  12,565,531
 The
              accompanying notes are an integral part of these consolidated financial
              statements
 F-5
 CHINA
                  DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED
                  STATEMENTS OF CASH FLOWS
  For
                    the Year EndedDecember
                    31,2007
                
                2006Cash
                    flows from operating activitiesNet
                    income
                
                $
                4,841,070
                
                $
                2,411,795Adjustments
                    to reconcile net income to cash provided by (used in) operating
                    activities:Bad
                    debts
                
                
                21,590
                
                
                78,662Depreciation
                
                
                459,404
                
                
                266,171Changes
                    in operating assets and liabilities:Decrease
                    (Increase) in assets:Accounts
                    receivable, net
                
                
                (3,644,411
                )
                
                (655,298
                )Advances
                    to suppliers
                
                
                (5,207,399
                )
                
                1,101Inventories,
                    net
                
                
                (232,879
                )
                
                (1,037,656
                )Prepaid
                    expenses and other receivables
                
                
                (65,107
                )
                
                (23,418
                )Other
                    assets
                
                
                (1,059,222
                )
                
                -Increase
                    (Decrease) in liabilities:Accounts
                    payables and accrued liabilities
                
                
                904,722
                
                
                103,234Various
                    tax payable
                
                
                143,924
                
                
                -Wage
                    payable
                
                
                31,070
                
                
                -Corporate
                    tax payable
                
                
                432,532
                
                
                -Net
                    cash provided by (used in) operating activities
                
                
                (3,374,706
                )
                
                1,144,591Cash
                    flows from investing activitiesLoan
                    to employee
                
                
                -
                
                
                (3,722
                )Recapitalization
                    costs
                
                
                (625,000
                )
                
                -Purchase
                    of property and equipment
                
                
                (1,129,209
                )
                
                (685,623
                )Net
                    cash used in investing activities
                
                
                (1,754,209
                )
                
                (689,345
                )Cash
                    flows from financing activitiesIncrease
                    in restricted cash
                
                
                (2,039,314
                )
                
                -Proceeds
                    from loans payable
                
                
                5,600,896
                
                
                -Net
                    Proceeds from preferred stock offering
                
                
                3,860,993
                
                
                -Proceeds
                    from related party loan
                
                
                -
                
                
                691Repayment
                    of related party loans
                
                
                (47,808
                )
                
                (341,864
                )Net
                    cash provided by (used in) financing activities
                
                
                7,374,767
                
                
                (341,173
                )Effect
                    of exchange rate changes on cash
                
                
                568,513
                
                
                (5,217
                )Net
                    increase (decrease) in cash
                
                
                2,814,365
                
                
                108,856Cash,
                    beginning of period
                
                
                134,991
                
                
                26,135Cash,
                    end of period
                
                $
                2,949,356
                
                $
                134,991Supplemental
                    disclosure information:Interest
                    expense paid
                
                $
                174,500
                
                $
                1,879Income
                    taxes paid
                
                $
                -
                
                $
                -Non
                    cash investing and financing activitiesIssuance
                    of 166,000 shares of common stock to pay offering expenses for
                    preferred
                    stock sale
                
                $
                -
                
                $
                -
 The
                  accompanying notes are an integral part of these consolidated financial
                  statements
  F-6
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
  **1.
        Organization**
  China
        Display Technologies, Inc. (the “Company”) was incorporated in Delaware on
        September 29, 2004 under the name Lincoln International Corporation (“Lincoln”).
        On September 21, 2007, its corporate name was changed to SUNY Display
        Technologies, Inc., and on October 11, 2007, its corporate name was changed
        to
        China Display Technologies, Inc. References to Lincoln relate to the Company
        prior to the reverse acquisition. At the time of the acquisition, Lincoln
        was
        not engaged in any active business.
  On
        September 12, 2007, the Company executed a share exchange agreement (“Share
        Exchange Agreement”) with Lawrence Kwok-Yan
        Chan, the sole stockholder of Keep On Holdings, Limited, a British Virgin
        Island
        corporation incorporated on April 18, 2007 (“Keep On”) , whereby
        the Company acquired all of the outstanding common stock of Keep On in exchange
        for newly-issued stock of the Company to Keep On’s sole shareholder.
 
 Under
        the
        Share Exchange Agreement, on September 12, 2007, the Company issued
        11,376,000 shares of common stock to the Keep On Stockholder and his assignees
        in exchange for 100% of the stock of Keep On. Pursuant to a separate agreement,
        the Company acquired from the principal stockholder 290,000 shares of the
        Company’s common stock he owned immediately prior to the closing for $340,133
        and the Company repaid obligations to the principal stockholders due to him
        in
        the aggregate amount of $284,867. The shares acquired from the principal
        stockholder were cancelled. After
        giving effect to the cancellation of shares, the Company had 58,000 shares
        of
        common stock outstanding immediately prior to Closing. After the Closing,
        the
        Company had a total of 11,600,000 shares of common stock outstanding, with
        the
        Keep On stockholder and his assignees owning 98.1% of the total issued and
        outstanding shares of the Company's common stock.
 
 The
        Company is the sole stockholder of Keep On and Keep On is the sole stockholder
        of Suny Electronics (Shenzhen) Company Limited (“Suny”), a corporation organized
        under the laws of the Peoples’ Republic of China. Suny was organized on November
        2, 2004 and commenced operations in 2005. On July 19, 2007, Keep On acquired
        all
        of the equity interest in Suny.
  The
        Company’s business is the business of Suny. Suny designs, manufactures and
        markets small to medium-sized light emitting diode, known as “LEDs,” and cold
        cathode fluorescent lamp, known as “CCFL,” for various types of displays, such
        as amorphous
        silicon thin film liquid
        crystal displays, low
        temperature poly-silicon thin film liquid
        crystal displays, super-twisted liquid crystal display, colored super-twisted
        liquid crystal display, twisted liquid crystal display, and mono LCDs for
        liquid
        crystal displays. Suny’s products are used in a variety of products, such as
        mobile phones, PDA’s, GPS system, portable DVD/VCD players, MP3 and MP4, medical
        equipment, household appliances with displays. Its emphasis is on small to
        medium-size back-light unit manufacturing.
  As
        a
        result of the Share Exchange Agreement, t he
        acquisition of Keep On by the Company was accounted for as a reverse acquisition
        because on a post-acquisition basis, the former stockholder of Keep On and
        his
        assignees held a majority of the outstanding common stock of the Company
        on a
        voting and fully-diluted basis. As a result, Keep On is deemed to be the
        acquirer for accounting purposes. Accordingly, the consolidated financial
        statement data presented are those of Keep On and its wholly-owned subsidiary,
        Suny, for all periods prior to the Company’s acquisition of Keep On on September
        12, 2007, and the financial statements of the consolidated companies from
        the
        acquisition date forward.
 
 On
        September 19, 2007, the holders of a majority of the outstanding shares of
        the
        Company’s common stock approved the adoption of a restated certificate of
        incorporation which, among other provisions, effected a one-for-7.5 reverse
        split and changed our authorized capital stock to provided that the Company
        is
        authorized to issue 20,000,000 shares of preferred stock, par value $.001
        per
        share, and 100,000,000 shares of common stock, par value $.001 per share.
        The
        restated certificate of incorporation, including the reverse split, became
        effective on November 8, 2007. All share and per share information in these
        financial statements give retroactive effect to the reverse split and the
        change
        in par value.
  **2.**
              SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES
 
 **a.**  **Basis
        of Preparation**
 
 The
        accompanying consolidated financial statements have been prepared by the
        Company
        in accordance with accounting principles generally accepted in the United
        States
        of America and pursuant to the rules and regulations of the SEC for annual
        financial statements.
 
 In
        the
        opinion of management, the consolidated financial statements reflect all
        adjustments (which include only normal recurring adjustments) necessary to
        present fairly the financial position of the Company as of December 31, 2007
        and
        the results of operations and cash flow for the years ended December 31,
        2007and
        2006, respectively.
  F-7
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 **b.**  **Basis
        of consolidation**
 
 The
        consolidated financial statements include the accounts of the Company and
        its
        wholly-owned subsidiaries, Keep On and Suny. Intercompany transactions have
        been
        eliminated in consolidation.
 
 **c.**  **Use
        of Estimates**
 
 The
        preparation of 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 as well as
        the
        reported amounts of revenues and expenses. Actual results could differ from
        these estimates.
 
 **d.**  **Fair
        values of financial instruments**
 
 The
        Company values its financial instruments as required by Statement of Financial
        Accounting Standard (SFAS) No. 107, “Disclosures about Fair Value of Financial
        Instruments”. The estimated fair value amounts have been determined by the
        Company, using available market information and appropriate valuation
        methodologies. The estimates presented herein are not necessarily indicative
        of
        amounts that the Company could realize in a current market
        exchange.
 
 The
        Company’s financial instruments primarily consist of cash and cash equivalent,
        restricted cash, accounts receivable, inventories, advance to suppliers,
        prepaid
        expenses and other receivables, accounts payable, accrued expenses, short
        term
        loan, various taxes payable, wages payable and corporate taxes
        payable.
 
 As
        of the
        balance sheet date, the estimated fair values of the financial instruments
        were
        not materially different from their carrying values as presented due to the
        short maturities of these instruments and that the interest rates on the
        borrowings approximate those that would have been available for loans of
        similar
        remaining maturity and risk profile at respective year ends.
 
 **e.**  **Cash
        and Cash Equivalents**
 
 Cash
        and
        cash equivalents include cash on hand, demand deposits with banks and liquid
        investments with an original maturity of three months or less.
 
 **f.**  **Accounts
        Receivable**
 
 Accounts
        receivable are carried at original invoice amount less an estimate made for
        doubtful accounts based on a review of all outstanding amounts on a monthly
        basis. Management’s judgment and estimates are made in connection with
        establishing the allowance for doubtful accounts. Specifically, the Company
        analyzes the aging of accounts receivable balances, historical bad debts,
        customer concentrations, customer credit-worthiness, current economic trends
        and
        changes in our customer payment terms. Significant changes in customer
        concentration or payment terms, deterioration of customer credit-worthiness
        or
        weakening in economic trends could have a significant impact on the
        collectibility of receivables and our operating results. If the financial
        condition of our customers were to deteriorate, resulting in an impairment
        of
        their ability to make payments, additional allowances may be required. The
        allowance for doubtful accounts for the year ended December 31, 2007 was
        $165,911.
 
 **g.**  **Inventories**
 
 Inventories
        are stated at the lower of cost, as determined on a weighted average basis,
        or
        market. Costs of inventories include purchase and related costs incurred
        in
        bringing the products to their present location and condition. Market value
        is
        determined by reference to selling prices after the balance sheet date or
        to
        management’s estimates based on prevailing market conditions. The management
        writes down the inventories to market value if market value is below cost.
        The
        management also regularly evaluates the composition of its inventories to
        identify slow-moving and obsolete inventories to determine if a valuation
        allowance is required.
 
 **h.**  **Property
        and Equipment**
 
 Property
        and equipment are initially recognized recorded at cost. Gains or losses
        on
        disposals are reflected as gain or loss in the period of disposal. The cost
        of
        improvements that extend the life of plant and equipment are capitalized.
        These
        capitalized costs may include structural improvements, equipment and fixtures.
        All ordinary repairs and maintenance costs are expensed as
        incurred.
  F-8
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 Depreciation
        for financial reporting purposes is provided using the straight-line method
        over
        the estimated useful lives of the assets:
 
 Production
                  machinery and equipment
              
              8
                  yearsLeasehold
                  improvements
              
              10
                  yearsOffice
                  and other equipment
              
              5
                  yearsAutomobiles
              
              5
                  years
 
 **i.**  **Impairment
        of Long-Lived Assets**
 
 The
        Company accounts for impairment of plant and equipment and amortizable
        intangible assets in accordance with SFAS No. 144, “Accounting for Impairment of
        Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the
        Group to evaluate a long-lived asset for recoverability when there is event
        or
        circumstance that indicate the carrying value of the asset may not be
        recoverable. An impairment loss is recognized when the carrying amount of
        a
        long-lived asset or asset group is not recoverable (when carrying amount
        exceeds
        the gross, undiscounted cash flows from use and disposition) and is measured
        as
        the excess of the carrying amount over the asset’s (or asset group’s) fair
        value.
 
 **j.**  **Comprehensive
        income**
 
 SFAS
        No.130, “Reporting Comprehensive Income”, requires disclosure of all components
        of comprehensive income and loss on an annual and interim basis. Comprehensive
        income and loss is defined as the change in equity of a business enterprise
        during a period from transactions and other events and circumstances from
        non-owner sources. The comprehensive income arose from the effect of foreign
        currency translation adjustments.
 
 **k.**  **Segment
        information**
 
 SFAS
        No.131, “Disclosures about Segments of an Enterprise and Related Information”,
        requires certain financial and supplementary information to be disclosed
        on an
        annual and interim basis for each reportable segment of an enterprise. The
        Group
        believes that it operates in one business segment (research, development,
        production, marketing and sales of opto electronic products) and in one
        geographical region (China), as all of the Company’s current operations are
        carried out in China and most of its sales are made to companies in
        China.
 
 **l.**  **Revenue
        recognition**
 
 The
        Company generates revenues from the sales of LEDs and CCFLs. Sales are
        recognized when the following four revenue criteria are met: persuasive evidence
        of an arrangement exists, delivery has occurred, the selling price is fixed
        or
        determinable, and collectibility is reasonably assured. Sales are presented
        net
        of value added tax (VAT). No return allowance is made as products returns
        are
        insignificant based on historical experience.
 
 **m.**  **Research
        and development costs**
 
 Research
        and development costs are expensed to operations as incurred.
 
 **n.**  **Income
        taxes**
 
 The
        Company accounts for income taxes in accordance with SFAS No. 109, "Accounting
        for Income Taxes." SFAS No. 109 requires an asset and liability approach
        for
        financial accounting and reporting for income taxes and allows recognition
        and
        measurement of deferred tax assets based upon the likelihood of realization
        of
        tax benefits in future years. Under the asset and liability approach, deferred
        taxes are provided for the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. A valuation allowance is provided
        for
        deferred tax assets if it is more likely than not these items will either
        expire
        before the Group is able to realize their benefits, or that future deductibility
        is uncertain.
  F-9
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 **o.**  **Foreign
        currency translation**
 
 The
        reporting currency is the U.S. dollar. The functional currency of the Company
        is
        the local currency, the Chinese Renminbi (“RMB”). The financial statements of
        the Company are translated into United States dollars in accordance with
        Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency
        Translation”, using year-end rates of exchange for assets and liabilities, and
        average rates of exchange for the period for revenues, costs, and expenses
        and
        historical rates for the equity. Translation adjustments resulting from the
        process of translating the local currency financial statements into U.S.
        dollars
        are included in determining comprehensive income. At December 31, 2007, the
        cumulative translation adjustment of $692,625 was classified as an item of
        other
        comprehensive income in the stockholders’ equity section of the consolidated
        balance sheet. For
        the
        year ended December 31, 2007 and 2006, accumulated other comprehensive income
        was $692,625 and
        $124,238, respectively.
 
 The
        exchange rates used to translate amounts in RMB into U.S. Dollars for the
        purposes of preparing the consolidated financial statements were as follows:
        As
        of December 31, 2007, the Company used the period-end rates of exchange for
        assets and liabilities of $0.1371 to RMB1.00. For the year ended December
        31,
        2007 and 2006, the Company used the period’s average rate of exchange to convert
        revenues, costs, and expenses of $0.13167 to RMB1.00 and $0.12557 to RMB1.00,
        respectively, and the Company used historical rates for equity.
  **p.**  **Related
        parties**
 
 A
        party
        is considered to be related to the Company if the party directly or indirectly
        or through one or more intermediaries, controls, is controlled by, or is
        under
        common control with the Company or one of its subsidiaries. Related parties
        also
        include principal owners of the Company, its management, members of the
        immediate families of principal owners of the Company and its management
        and
        other parties with which the Company or its subsidiaries may deal if one
        party
        controls or can significantly influence the management or operating policies
        of
        the other to an extent that one of the transacting parties might be prevented
        from fully pursuing its own separate interests. A party which can significantly
        influence the management or operating policies of the transacting parties
        or if
        it has an ownership interest in one of the transacting parties and can
        significantly influence the other to an extent that one or more of the
        transacting parties might be prevented from fully pursuing its own separate
        interests is also a related party.
 
 **q.**  Basic
        earnings per share is computed by dividing net earnings by the weighted average
        number of shares of common stock outstanding during the period. Diluted income
        per share is computed by dividing net income by the weighted average number
        of
        shares of common stock, common stock equivalents and potentially dilutive
        securities outstanding during each period. Potentially dilutive shares of
        common
        stock consist of the common stock issuable upon the exercise of stock warrants
        (using the treasury stock method) and upon the conversion of convertible
        preferred stock (using the if-converted method). A reconciliation of the
        denominator used in the calculation of basic and diluted net income (loss)
        per
        share is as follows:
 
 For
                  the Year EndedDecember
                  31,2007
              
              2006Numerator:Net
                  income (loss) available to common shareholders
              
              $
              2,663,217
              
              $
              2,411,795Denominator:Weighted-average
                  shares outstanding for basic earnings per share
              
              
              11,559,479
              
              
              11,376,000Effect
                  of dilutive securities:Convertible
                  preferred stock
              
              
              3,703,704
              
              
              -Weighted-average
                  shares outstanding for diluted earnings (loss) per share
              
              
              15,263,183
              
              
              11,376,000
  F-10
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 The
        following were excluded from the computation of diluted shares outstanding
        as
        they would have had an anti-dilutive impact. In periods where the Company
        has a
        net loss, all dilutive securities are excluded. In periods where the Company
        has
        net income, the dilutive securities are excluded when, for example, their
        exercise prices are greater than the average fair values of the Company’s common
        stock as follows:
 
 For
                  the Year EndedDecember
                  31,2007
              
              2006Stock
                  warrants
              
              
              11,500,000
              
              
              -Series
                  A preferred stock
              
              
              3,703,704
              
              
              -
 
 **r.**  **Recently
        issued accounting pronouncements**
 
 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. The adoption of this statement did not have a material
        impact on the Company’s consolidated financial position or consolidated results
        of operations.
 
 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:
 
 •
              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.
 •
              Requires
                  all separately recognized servicing assets and servicing liabilities
                  to be
                  initially measured at fair value, if
                  practicable
 •
              Permits
                  an entity to choose 'Amortization method' or ‘Fair value measurement
                  method’ for each class of separately recognized servicing assets and
                  servicing liabilities.
 
 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.
 
 •
              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.
 
 The
        adoption of this statement did not have a material impact on the Company’s
        financial position or results of operations.
 
 In
        June
        2006, the Financial Accounting Standards Board (“FASB”) ratified the provisions
        of Emerging Issues Task Force (“EITF”) Issue No. 06-3, “How Taxes Collected from
        Customers and Remitted to Governmental Authorities Should Be Presented in
        the
        Income Statement (That Is, Gross versus Net Presentation).” EITF Issue No. 06-3
        requires that the presentation of taxes within revenue-producing transactions
        between a seller and a customer, including but not limited to sales, use,
        value
        added, and some excise taxes, should be on either a gross (included in revenue
        and cost) or a net (excluded from revenue) basis. In addition, for any such
        taxes that are reported on a gross basis, a company should disclose the amounts
        of those taxes in interim and annual financial statements for each period
        for
        which an income statement is presented if those amounts are significant.
        The
        disclosure of those taxes can be done on an aggregate basis. EITF Issue No.
        06-3
        is effective for fiscal years beginning after December 15, 2006, which will
        be
        the Company’s fiscal 2008. The adoption of EITF Issue No. 06-3 did not have a
        material impact on the Company’s consolidated results of operations or financial
        position.
  F-11
 **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 In
        July
        2006, the FASB issued FASB Interpretation (“FIN”) No. 48, “Accounting for
        Uncertainty in Income Taxes,” which prescribes a comprehensive model for how a
        company should recognize, measure, present and disclose in its financial
        statements uncertain tax positions that the company has taken or expects
        to take
        on a tax return (including a decision whether to file or not to file a return
        in
        a particular jurisdiction). The accounting provisions of FIN No.48 are effective
        for fiscal years beginning after December 15, 2006. The adoption of this
        Interpretation had no impact on the Company’s financial position or results of
        operations.
 
 In
        September 2006, the FASB issued Statement of Financial Accounting Standards
        (“SFAS”) No. 157, “Fair Value Measurements”, which establishes a framework for
        reporting fair value and expands disclosures about fair value measurements.
        SFAS
        No. 157 is effective for financial statements issued for fiscal years beginning
        after November 15, 2007 and interim periods within those fiscal years. The
        adoption of this standard will have no impact on the Company’s financial
        statements.
 
 In
        February 2007, the FASB issued Statement of Financial Accounting Standards
        No. 159, “The Fair Value Option for Financial Assets and Financial
        Liabilities-Including an amendment of FASB Statement No. 115,
        (“SFAS No. 159”). SFAS No. 159 permits entities to choose to
        measure many financial instruments and certain other items at fair value.
        Most
        of the provisions of this Statement apply only to entities that elect the
        fair
        value option. However, the amendment to FASB Statement No. 115, “Accounting
        for Certain Investments in Debt and Equity Securities,”
(“SFAS No. 115”), applies to all entities with available-for-sale and
        trading securities. SFAS No. 159 is effective for the Company’s
        consolidated financial statements for the annual reporting period beginning
        after November 15, 2007. The Company is currently evaluating the impact of
        this new pronouncement on its consolidated financial statements.
 
 On
        December 4, 2007, the Financial Accounting Standards Board (FASB) issued
        SFAS
        No. 160, *Noncontrolling
        interest in Consolidated Financial Statements* (SFAS
        No.
        160). SFAS No. 160 requires all entities to report noncontrolling (minority)
        interests in subsidiaries as equity in the consolidated financial statements.
        The statement establishes a single method of accounting for changes in a
        parent’s ownership interest in a subsidiary that do not result in
        deconsolidation and expands disclosures in the consolidated financial
        statements. SFAS No. 160 is effective for fiscal years beginning after December
        15, 2008 and interim periods within those fiscal years. We have not yet
        determined the impact of the adoption of SFAS No. 160 on our consolidated
        financial statements and footnote disclosures.
  On
        December 4, 2007, the FASB issued SFAS No.141R, *Business
        Combinations (* SFAS
        No.
        141R). SFAS No. 141R requires the acquiring entity in a business combination
        to
        recognize all the assets acquired and liabilities assumed, establishes the
        acquisition date fair value as the measurement objective for all assets acquired
        and liabilities assumed, and requires the acquirer to expand disclosures
        about
        the nature and financial effect of the business combination. SFAS No. 141R
        is
        effective for business combinations for which the acquisition date is on
        or
        after the beginning of the first annual reporting period beginning on or
        after
        December 15, 2008. We have not yet determined the impact of the adoption
        of SFAS
        No. 141R on our consolidated financial statements and footnote disclosures.
 
 **3.**
              **CONCENTRATION
                  OF CREDIT RISK**
 
 Financial
        instruments which potentially expose the Company to concentrations of credit
        risk, consist of cash, accounts and other receivables as of December 31,
        2007
        and 2006. The Company performs ongoing evaluations of its cash position and
        credit evaluations to ensure collections and minimize losses.
 
 As
        of
        December 31, 2007 the Company’s bank deposits were 100% placed with banks in the
        PRC where there is currently no insurance to cover bank deposits in the event
        of
        bank failure.
 
 For
        the
        year ended December 31, 2007, approximately 75% of the Company’s sales were made
        to customers located in the PRC. ** In
        addition, approximately 90% ** of
        accounts receivables as of December 31, 2007 also arose from customers located
        in the PRC.
  F-12
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 The
        largest customer accounted for approximately 19% of the Company’s total revenue
        for the year ended December 31, 2007.
 
 **4.**
              **ACCOUNTS
                  RECEIVABLE**
 
 Accounts
        receivable consists of the following:
 
 December
                  31,2007
              
              2006Accounts
                  receivable
              
              $
              5,445,193
              
              $
              1,790,632Less:
                  Allowance for doubtful accounts
              
              
              (165,911
              )
              
              (134,171
              )Accounts
                  receivable, net
              
              $
              5,279,282
              
              $
              1,656,461
 
 The
        provision for bad debts increased by $31,740 and $82,137 in the years ended
        December 31, 2007 and 2006 as follows:
 
 December
                  31,2007
              
              2006Beginning
                  of year
              
              $
              134,171
              
              $
              52,034Additions
              
              
              31,740
              
              
              82,137End
                  of year
              
              $
              165,911
              
              $
              134,171
 
 **5.**
              **INVENTORIES**
 
 Inventories
        consist of the following:
 
 December
                  31,2007
              
              2006Raw
                  materials
              
              $
              1,821,884
              
              $
              1,480,238Work-in-progress
              
              
              155,880
              
              
              102,744Consumables
              
              
              32,559
              
              
              24,7192,010,323
              
              
              1,607,701Less:
                  Allowance for obsolescence
              
              
              (317,389
              )
              
              (147,646
              )Total
              
              $
              1,692,934
              
              $
              1,460,055
  F-13
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 The
        allowance for obsolescence increased by $169,743 and $4,937 in the years
        ended
        December 31, 2007 and 2006 as follows:
 
 December
                  31,2007
              
              2006Beginning
                  of year
              
              $
              147,646
              
              $
              142,709Additions
              
              
              169,743
              
              
              4,937End
                  of year
              
              $
              317,389
              
              $
              147,646
 
 **6.**
              **PROPERTY
                  AND EQUIPMENT**
 
 Property
        and equipment consist of the following:
 December
                  31,2007
              
              2006Production
                  machinery and equipment
              
              $
              2,680,413
              
              $
              1,577,906Leasehold
                  improvements
              
              
              329,812
              
              
              308,529Office
                  and other equipment
              
              
              67,375
              
              
              44,404Automobiles
              
              
              296,680
              
              
              266,0083,374,280
              
              
              2,196,847Less:
                  Accumulated depreciation
              
              
              (933,016
              )
              
              (425,387
              )Total
              
              $
              2,441,264
              
              $
              1,771,460
  Depreciation
        expense was $459,404 and $266,171 for the years ended December 31, 2007 and
        2006, and is broken down as follows:
  For
                  the Year EndedDecember
                  31,2007
              
              2006Cost
                  of sales
              
              $
              388,396
              
              $
              190,969Operating
                  expense
              
              
              71,008
              
              
              75,202Total
              
              $
              459,404
              
              $
              266,171
 
 **7.**
              **SHORT-TERM
                  BANK LOANS**
 
 At
        December 31, 2007, short-term bank loans consist of the following:
 December
                    31,2007Revolving
                    loans with ABN Amro, renewable on 90-days terms, interest at
                    6.44% per
                    annum due January to March 2008 and secured by restricted cash
                    of
                    approximately $822,582. These loans were each renewed for 90
                    days.
                
                $
                4,005,240Revolving
                    loans with Public Bank (Hong Kong) Limited, renewable on 90-day
                    terms,
                    interest rates ranging from 8.55% - 9.48%, due in February 2008
                    and
                    secured by restricted cash of approximately $137,097. These loans
                    were
                    each renewed for 90 days.
                
                
                273,968Revolving
                    loans with DBS Bank, renewable on 90-days terms, interest at
                    9.50% per
                    annum, due February to March 2008 and secured by restricted cash
                    of
                    approximately $257,052. These loans were each renewed for 90
                    days.
                
                
                636,202China
                    Construction Bank, interest at 8.42% per annum, due July 23,
                    2008 and
                    secured by a personal guarantee of the Company’s chief executive officer
                    and restricted cash of approximately $137,097.
                
                
                685,486Total
                    short-term loans
                
                $
                5,600,896
  F-14
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 Interest
        expenses arising from these loans for the year ended December 31, 2007 and
        2006
        amounted to$174,500 and $0, respectively.
 
 **8.**
              **RESTRICTED
                  CASH**
 
 Restricted
        cash consist of following:
 
 December
                  31,2007ABN
                  Amro
              
              $
              822,582Public
                  Bank (Hong Kong) Limited,
              
              
              137,097DBS
                  Bank
              
              
              257,052China
                  Construction Bank
              
              
              137,097East
                  Asia Bank
              
              
              685,486Total
              
              $
              2,039,314
  **9.**
              **ADVANCE
                  TO SUPPLIERS**
 
 Advance
        to suppliers is mainly for deposit in advance for purchase of raw materials
        for
        the year ended December 31 2007.
 
 **10.**
              **PREPAID
                  EXPENSES AND OTHER
                  RECEIVABLES**
 
 December
                  31,2007
              
              2006Prepaid
                  expense
              
              $
              129,498
              
              $
              32,781Customs
                  duty deposit
              
              
              125,403
              
              
              -Other
              
              
              4,269
              
              
              3,840$
              259,170
              
              $
              36,621
  F-15
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 **11.**
              **OTHER
                  ASSETS**
   December
                  31,2007Deposit
              
              $
              959,680Other
              
              
              99,542$
              1,059,222
 
 The
        deposit for $959,680 was paid to two agents for arranging an order and delivery
        of raw materials before the end of March 2008. The deposit will be fully
        recoverable if the raw material cannot be delivered before the end of April
        2008. Since there is no definitive written agreement in place the deposit
        is
        included in other assets.
 
 **12.**
              **STOCKHOLDERS****’
                  EQUITY**
 
 **Reverse
        Split**
  See
        Note
        1 for information concerning a one-for-7.5 shares reverse split of the common
        stock. All stock and per share information has been retroactively restated
        to
        reflect the reverse split.
 
 **Series
        A Convertible Preferred Stock**
 
 On
        September 12, 2007, the Company entered into a securities purchase agreement
        with Barron Partners LP and EOS Holdings LLC pursuant to which the investors
        purchased, for $4,000,000, an aggregate of (i) 3,703,704 shares of series
        A
        convertible preferred stock, with each share of series A preferred stock
        being
        initially convertible into one of a share of common stock, (ii) warrants
        to
        purchase 5,500,000 shares of common stock at $1.30 per share, and (iii) warrants
        to purchase 6,000,000 shares of common stock at $1.50 per share.
  Additionally,
        the Company entered into a registration rights agreement pursuant to which
        the
        Company agreed to register the shares of Common Stock issuable upon conversion
        of the series A preferred stock and exercise of the warrants and an escrow
        agreement pursuant to which the Company placed 3,700,000 shares of series
        A
        preferred stock in escrow. If the Company’s consolidated net income, as defined,
        for 2007 and 2008 do not reach the target numbers, on a per share, fully
        diluted
        basis, some or all of these shares are to be delivered to the investors and
        if
        the targets are met, the shares are to be returned to the Company and cancelled. The
        target number are stated in RMB. The target number for 2007 is approximately
        $0.1303 per share, and the target number for 2008 is approximately $0.2085
        per
        share, except that, if all of the warrants shall not have been exercised
        by
        March 31, 2008, the target number for 2008 shall by approximately $0.1818
        per
        share. All of the shares held in escrow are delivered to the Investors if
        the
        net income for either year is 50% or less than the target number for that
        year.
        If the shortfall is less than 50%, a ratable portion of the shares are delivered
        to the Investors. The conversion rates are based on the rates on September
        11,
        2007, and are subject to change.
  Net
        income, for the purposes of determining whether any shares are to be delivered
        to the investors, is defined to mean net income
        determined in accordance with GAAP plus (a) any charges relating to the
        transaction contemplated by the Purchase Agreement and the registration rights
        agreement, minus (b) the amount, if any, by which all non-recurring losses
        or
        expenses exceed all non-recurring items or income or gain .
        Net
        Income shall not be adjusted if all non-recurring items of income or gain
        exceed
        all non-recurring losses or expenses. Items shall be deemed to be non-recurring
        only if they qualify as non-recurring pursuant to GAAP. For determining net
        income per share, all shares which are outstanding or which may be issuable
        upon
        exercise or conversion of options, warrants and other convertible securities
        are
        deemed to be outstanding, regardless of whether the shares would be counted
        for
        purposes of computing diluted earnings per shares under GAAP.
  The
        warrants have a term of five years, and expire on September 12, 2012. The
        warrants provide a cashless exercise feature which permits the conversion
        of the
        warrants into shares of Common Stock or Series A Preferred Stock; however,
        the
        holders of the warrants may not make a cashless exercise during the twelve
        months commencing on September 12, 2007 and thereafter only if the underlying
        shares are not covered by an effective registration statement.
  F-16
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 The
        warrants provide that the exercise price of the warrants may be reduced by
        up to
        50% in each of 2007 and 2008 if the Company’s net income, as defined, per share
        of common stock, on a fully-diluted basis, is less than the Target Numbers
        described above for 2007 and 2008. An adjustment in the warrant exercise
        price
        does not affect the number of shares issuable upon exercise of the
        warrants.
  In
        accordance with Emerging Issues Task Force (‘‘EITF’’) 98-5 and EITF 00-27, the
        Series A convertible preferred stock (“Series A Preferred”) were considered to
        have an embedded beneficial conversion feature (BCF) because the effective
        conversion price was less than the fair value of the Company’s common stock.
        This convertible preferred stock was fully convertible at the issuance date,
        therefore the portion of proceeds allocated to the Series A preferred of
        $1,088,927 was determined to be the value of the beneficial conversion feature
        and was recorded as a deemed preferred stock dividend.
 
 The
        investors also received Common Stock Purchase Warrants (the “Warrants”) to
        purchase up to 5,500,000 shares of common stock of the Company at an exercise
        price of $1.30 per share and up to 6,000,000 shares of common stock of the
        Company at an exercise price of $1.50 per share. The fair market value of
        each
        stock warrant was estimated on the date of grant using the Black-Scholes
        option-pricing model in accordance with SFAS No. 123R using the following
        weighted-average assumptions: expected dividend yield 0%; risk-free interest
        rate of 4.50%; volatility of 15% and an expected term of five years. The
        portion
        of proceeds allocated to the warrants of $1,088,926 was determined to be
        the
        value of the warrants and was recorded as a deemed preferred stock dividend.
 
 The
        Purchase Agreement, the certificate of designation and the warrants provide
        that
        those securities may not be exercised or converted if such conversion or
        exercise would result in the holder and its affiliates having beneficial
        ownership of more than 4.9% of the Company’s outstanding common stock.
        Beneficial ownership is determined in accordance with Section 13(d) of the
        Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder. This
        limitation may not be waived.
  The
        Purchase Agreement, the certificate of designation for the series A preferred
        stock and the warrants also provide that, with certain exceptions, if the
        Company issues common stock at a price, or other warrants or other convertible
        securities with an exercise or conversion price which is less than the
        conversion price of the series A preferred stock or the exercise price of
        the
        warrants, as the case may be, the conversion price of the warrants or the
        exercise price of the warrants will be reduced to the sales price, exercise
        price or conversion price, as the case may be, of such other securities,
        except
        that, the exercise price of the $1.30 warrants has a formula
        adjustment.
 
 Pursuant
        to the purchase agreement, in addition to the foregoing:
 
 ·
              The
                  Company agreed to have appointed such number of independent directors
                  that
                  would result in a majority of its directors being independent directors,
                  that the audit committee would be composed solely of independent
                  directors
                  and the compensation committee would have a majority of independent
                  directors within 90 days after the closing. Failure to meet this
                  date will
                  result in liquidated damages commencing 90 days after the closing
                  from the
                  period from the end of the 90 day period until the date on which
                  the
                  requirement is satisfied. Thereafter, if the Company does not meet
                  these
                  requirements for a period of 60 days for an excused reason, as
                  defined in
                  the Purchase Agreement, or 75 days for a reason which is not an
                  excused
                  reason, this would result in the imposition of liquidated
                  damages.
  ·
              The
                  Company agreed to hire a full-time qualified chief financial officer
                  within 60 days after the closing date. Failure to meet this covenant
                  would
                  result in the imposition of liquidated
                  damage.
  ·
              Liquidated
                  damages for failure to comply with the preceding two covenants
                  are
                  computed in an amount equal to 12% per annum of the Purchase Price,
                  up to
                  a maximum of 15% of the Purchase Price, which is $600,000, which
                  is
                  payable in cash or series A preferred stock, at the election of
                  the
                  investors.
  ·
              The
                  Company and the investors entered into a registration rights agreement
                  pursuant to which the Company agreed to file, within 60 days after
                  the
                  closing, a registration statement covering the common stock issuable
                  upon
                  conversion of the series A preferred stock and exercise of the
                  warrants.
                  The failure of the Company to meet this schedule and other timetables
                  provided in the registration rights agreement would result in the
                  imposition of liquidated damages, which are payable through the
                  issuance
                  of additional shares of series A preferred stock at the rate of
                  1,217
                  shares of series A preferred stock for each day, based on the proposed
                  registration of all of the underlying shares of common stock, with
                  a
                  maximum of 550,000 shares. The registration rights agreement also
                  provides
                  for additional demand registration rights in the event that the
                  investors
                  are not able to register all of the shares in the initial registration
                  statement.
  ·
              The
                  investors have a right of first refusal on future
                  financings.
  ·
              The
                  Company is restricted from issuing convertible debt or preferred
                  stock or
                  from having debt in an amount greater than twice the Company’s earnings
                  before interest, taxes, depreciation and
                  amortization.
  ·
              The
                  Company’s debt cannot exceed twice the preceding four quarters earnings
                  before interest, taxes, depreciation and
                  amortization.
  ·
              The
                  Company’s officers and directors agreed, with certain limited exceptions,
                  not to publicly sell shares of common stock for 27 months or such
                  earlier
                  date as all of the convertible securities and warrants have been
                  converted
                  or exercised and the underlying shares of common stock have been
                  sold.
  ·
              The
                  Company paid Barron Partners $50,000 for its due diligence
                  expenses.
  F-17
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 **Common
        Stock**
  **** On
        September 12, 2007, in connection with securities purchase agreement, the
        Company issued 166,000 shares of its common stock as professional
        fees.
  **Warrants
        and Options**
  Through
        a
        private placement on September 12, 2007, the Company issued an aggregate
        of
        11,500,000 five-year warrants consisting of 5,500,000 Series A Warrants
        exercisable at $1.30 per share and 6,000,000 Series B Warrants exercisable
        at
        $1.50 per share, as set forth above.
 
 A
        summary
        of the status of the Company's outstanding stock warrants as of December
        31,
        2007 and changes during the periods then ended is as follows:
 WeightedNumber
                  of
              
              AverageWarrants
              
              Exercise
                  PriceBalance
                  at December 31, 2006
              
              
              -
              
              $
              -Granted
              
              
              11,500,000
              
              
              1.40Balance
                  at December 31, 2007
              
              
              11,500,000
              
              $
              1.40
 
 Warrants
                  Outstanding
              
              Warrants
                  ExercisableWeightedAverage
              
              Weighted
              
              
              
              WeightedRemaining
              
              Average
              
              
              
              AverageRange
                  of
              
              
              
              Contractual
              
              Exercise
              
              
              
              ExerciseExercise
                  Prices
              
              Shares
              
              Life
                  (Years)
              
              Price
              
              Shares
              
              Price$
              1.30
              
              
              5,500,000
              
              
              4.75
              
              $
              1.30
              
              
              5,500,000
              
              $
              1.30$
              1.50
              
              
              6,000,000
              
              
              4.75
              
              $
              1.50
              
              
              6,000,000
              
              $
              1.5011,500,000
              
              
              
              
              $
              1.40
              
              
              11,500,000
              
              $
              1.40
 
 Following
        the Model of EITF 00-19, “Accounting for Derivative Financial Instruments
        Indexed to, and Potentially Settled in, a Company’s Own Stock”, the Warrants,
        are considered freestanding instruments and are classified as equity instruments
        and included in additional paid-in capital.
  F-18
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 As
        of
        December 31, 2007 and 2006, the Company did not have an equity-based incentive
        plan and no options were outstanding.
 
 **13.**
              **CURRENT
                  VULNERABILITY DUE TO CERTAIN
                  CONCENTRATIONS**
 
 The
        Company’s operations are all 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, and by the general
        state
        of the PRC’s economy.
 
 The
        Company’s operations in the PRC are subject to specific considerations and
        significant risks not typically associated with companies in the North America
        and Western Europe. These include risks associated with, among others, the
        political, economic and legal environments and foreign currency exchange.
        The
        Company’s consolidated results of operations may be adversely affected 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.
 
 **14.**
              **COMMITMENTS
                  AND CONTINGENCIES**
 
 (a)
              Operating
                  lease commitments
 
 The
        Company has entered into 5-year leases for factory premises and staff dorms.
        These leases can be renewed for an additional 5-year term. The Company’s
        commitments for minimum lease payments under these non-cancelable operating
        leases for the next five years and thereafter are as follows: Rent expense
        for
        the years ended December 31,2007 and 2006 was $183,692 and $224,151,
        respectively.
 
 Year
                  Ending December 31,2008
              
              $
              257,6772009
              
              
              257,6772010
                  and thereafter
              
              
              64,715$
              580,069
 
 (b)
              Social
                  insurances of Suny’s employees
 
 According
        to the laws and regulations of the PRC, Suny is required to cover its employees
        with medical, retirement and unemployment insurance programs. Management
        believes that due to the transient nature of its employees, Suny does not
        need
        to provide all employees with such social insurances, and has paid the social
        insurances for those of its employees who have completed three months’
continuous employment with Suny.
 
 In
        the
        event that any current or former employee files a complaint with the PRC
        government and the complaint is upheld, Suny may be subject to making up
        the
        social insurances as well as administrative fines. The Company does not believe
        that any liability it may incur if it is held to be in violation of these
        laws
        would be material, and, accordingly, no provision has been made for any possible
        liability.
 
 (c)  Statutory
        Reserves
 
 Based
        on
        the legal formation of the entities, Suny is required to set aside 10% of
        its
        net income as reported in its statutory accounts on an annual basis to the
        Statutory Surplus Reserve Fund. Once the total Statutory Surplus Reserve
        reaches
        50% of the registered capital of Suny, further appropriations are discretionary.
        The Statutory Surplus Reserve can be used to increase the registered capital
        and
        eliminate future losses of the respective companies under PRC GAAP. The
        Statutory Surplus Reserve is not distributable to shareholders except in
        the
        event of liquidation.
 
 Before
        January 1, 2006, Suny was also required on an annual basis to set aside at
        least
        5% of after-tax profit, calculated in accordance with PRC accounting standards
        and regulations, to the Statutory Surplus Welfare Fund, which can be used
        for
        staff welfare.
  F-19
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 Effective
        from January 1, 2006, the appropriation to the Statutory Surplus Welfare
        Fund is
        no longer required. If Suny provide the Statutory Surplus Welfare Fund, such
        amount shall be determined at the discretion of its board of
        directors.
 
 The
        Reserve Fund can be used to increase the registered capital upon approval
        by
        relevant government authorities and eliminate future losses of the respective
        companies upon a resolution by the board of directors.
 
 Appropriations
        to the above statutory reserves are accounted for as a transfer from retained
        earnings to statutory reserves and are performed once a year at the fiscal
        year-end.
 
 There
        are
        no legal requirements in the PRC to fund these statutory reserves by transfer
        of
        cash to any restricted accounts, and the Group does not do so. These reserves
        are not distributable as cash dividends.
 
 **15.**
              **INCOME
                  TAXES**
 
 The
        Company is registered in the PRC as a wholly-foreign owned enterprise. Under
        the
        tax laws of the PRC, the Company is entitled to a preferential Enterprise
        Income
        Tax (“EIT”) rate of 15%, which a full exemption for the first two profitable
        years, followed by a 50% reduction on EIT for the following three consecutive
        years.
 
 The
        provision for taxes on earnings consisted of:
  December
                  31,2007
              
              2006Current
                  income tax expenses:PRC
                  Enterprise Income Tax
              
              $
              416,081
              
              $
              -United
                  States Federal Income Tax
              
              
              -
              
              
              -Total
              
              $
              416,081
              
              $
              -
 
 A
        reconciliation between the income tax computed at the U.S. statutory rate
        and
        The Group’s provision for income tax is as follows:
  December
                  31,2007
              
              2006U.S.
                  statutory rate
              
              
              34
              %
              
              34
              %Foreign
                  income not recognized in the U.S.
              
              
              (34
              %)
              
              (34
              %)PRC
                  preferential Enterprise Income Tax rate
              
              
              15
              %
              
              0
              %Tax
                  holiday and relief granted to the Subsidiary
              
              
              (7.5
              %)
              
              (0
              %)Provision
                  for income tax
              
              
              7.5
              %
              
              0
              %
  No
        material deferred tax liabilities or assets existed as of either December
        31,
        2007 or 2006.
  The
        tax
        authority of the PRC Government conducts periodic and ad hoc tax filing reviews
        on business enterprises operating in the PRC after those enterprises had
        completed their relevant tax filings, hence the Company’s tax filings may not be
        finalized. It is therefore uncertain as to whether the PRC tax authority
        may
        take different views about the Company’s tax filings which may lead to
        additional tax liabilities.
 
 The
        Company has no United States corporate income tax liability for 2007 or
        2006.
 
 **16.**
              **SEGMENT
                  INFORMATION**
 
 The
        Company operates in one industry segment - research, development, manufacture,
        marketing and sales of electronic products. Substantially all of the Company’s
        identifiable assets and operations for all periods presented were located
        in the
        PRC.
  F-20
  **CHINA
          DISPLAY TECHNOLOGIES, INC. AND SUBSIDIARIES**
 Notes
          to
          Consolidated Financial Statements
 **17.**
              **OPERATING
                  RISK**
 
 Country
        Risk
 
 The
        Company has significant investments in the PRC. The operating results of
        the
        Company may be adversely affected by changes in the political and social
        conditions in the PRC and by changes in Chinese government policies with
        respect
        to laws and regulations, anti-inflationary measures, currency conversion
        and
        remittance abroad, and rates and methods of taxation, among other things.
        The
        Company can give no assurance that those changes in political and other
        conditions will not result in have a material adverse effect upon the Company’s
        business and financial condition.
 
 Principal
        Customers
 
 A
        significant percentage of the Company’s business is generated from a small
        number of customers. The following table sets forth information as to the
        revenue derived from those customers that accounted for more than 10% of
        our
        revenue in for the years ended December 31, 2007 and 2006 (dollars in
        thousands).
  Year
                  Ended December 31,2007
              
              2006Customer
              
              Dollars
              
              Percent
              
              Dollars
              
              PercentYassy
                  Technology (Shenzhen) Co., Ltd
              
              
              6,068
              
              
              19
              %
              
              1,009
              
              
              8
              %Sinopac
                  Enterprise Company
              
              
              3,242
              
              
              10
              %
              
              2,096
              
              
              13
              %Shenzhen
                  Xinjiuding Optronics Technology Co., Ltd
              
              
              3,542
              
              
              11
              %
              
              1,327
              
              
              8
              %Viewtron
                  Technology Ltd
              
              
              3,129
              
              
              10
              %
              
              1,687
              
              
              10
              %BYD
                  Company Ltd
              
              
              2,396
              
              
              7
              %
              
              2,153
              
              
              13
              %
  Although
        the Company markets to companies both within China and outside of China,
        its
        largest customers are Chinese manufacturers, many of whom manufacture products
        for sale in the international market.
  Source
        of Supply
 
 The
        Company purchases components for its products from a number of suppliers.
        However, on occasion, a customer’s specifications may require us to purchase
        components from a specific supplier. The Company does not have any long term
        contracts with any of its suppliers, and the Company believes that alternative
        suppliers are available. Although the Company has not been subject to shortages
        for any of its components, since it does not have long-term contracts, the
        Company may be subject to cutbacks and price increases which it may not be
        able
        to pass on to its customers in the event that the demand for components
        generally exceeds the capacity of its suppliers.


F-21