----

----

| [X]    | QUARTERLY      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|---------------------------------------------------------------------------------------------|
|   |                                                                                        |
|   | For      the quarterly period ended March 31,2009                                           |

| [  ] | TRANSITION      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|----------------|----------------------------------------------------------------------------------------------|

|             Nevada       |             91-1948355       |
|--------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|
| (State      or Other Jurisdiction of                                                 | (I.R.S.      Employer I.D. No.)                                                          |
| incorporation      or organization)                                                  |                                                                                     |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                |
|---------------------------------------------------------------------------|
|                                                                      |   |
|                                                                      |   |
|                                                                      |   |
|                                                                      |   |
| INDEX                                                                     |
|                                                                      |   |
|                                                                      |   |
|                                                                      |   |
|                                                                      | PAGE |
|                                                                      |   |
| CONSOLIDATED      BALANCE SHEETS                                          | 2 |
|                                                                      |   |
| CONSOLIDATED      STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME | 3 |
|                                                                      |   |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                | 4 |
|                                                                      |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS                           | 5-29 |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |
| CONSOLIDATED      BALANCE SHEETS                                                                                                                                                                |
|                                                                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |
|                                                                                                                                                                                            |   | March      31, |   |   | December      31, |   |
|                                                                                                                                                                                            |   | 2009 |   |   | 2008 |   |
|                                                                                                                                                                                            |   | (unaudited) |   |   |   |   |
| ASSETS                                                                                                                                                                                          |
|                                                                                                                                                                                            |   |   |   |   |   |   |
| Current      Assets:                                                                                                                                                                            |   |   |   |   |   |   |
|      Cash      and cash equivalents                                                                                                                                    |   | $ | 46,366 |   |   | $ | 33,415 |   |
|      Prepaid      expense (Note 6)                                                                                                                                     |   |   | 359,277 |   |   |   | 374,597 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|           Total      current assets                                                                                                           |   |   | 405,643 |   |   |   | 408,012 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Property,      Plant, and Equipment, net (Note 7)                                                                                                                                               |   |   | 195,451 |   |   |   | 215,515 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Long-term      Investment (Note 9)                                                                                                                                                              |   |   | 233,727 |   |   |   | 233,434 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Contract      Security Deposit (Note 8)                                                                                                                                                         |   |   | 89,226 |   |   |   | 89,114 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
|           Total      Assets                                                                                                                   |   | $ | 924,047 |   |   | $ | 946,075 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                                       |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Current      Liabilities:                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|      Accrued      expenses (Note 10)                                                                                                                                   |   |   | 41,971 |   |   |   | 53,667 |   |
|      Taxes      payable                                                                                                                                                |   |   | 1,230 |   |   |   | 34 |   |
|      Deferred      revenue (Note 11)                                                                                                                                   |   |   | 1,242 |   |   |   | 1,679 |   |
|      Agreement      security deposit (Note 12)                                                                                                                         |   |   | 321,374 |   |   |   | 320,971 |   |
|      Due      to officers (Note 13)                                                                                                                                    |   |   | 26,137 |   |   |   | - |   |
|           Total      Current Liabilities                                                                                                      |   |   | 391,954 |   |   |   | 376,351 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Commitments      and Contingencies (Note 17)                                                                                                                                                    |   |   | - |   |   |   | - |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Stockholders'      Equity:                                                                                                                                                                      |   |   |   |   |   |   |   |   |
|      Common      stock, $0.001 par value, 200,000,000 shares authorized;      38,381,375 shares issued and outstanding as of      March 31, 2009 and December 31, 2008 |   |   | 38,381 |   |   |   | 38,381 |   |
|      Additional      paid-in capital                                                                                                                                   |   |   | 799,255 |   |   |   | 799,255 |   |
|      Unamortized      contractual services costs                                                                                                                       |   |   | (18,333 | ) |   |   | (29,333 | ) |
|      Statutory      reserves                                                                                                                                           |   |   | 236,875 |   |   |   | 236,875 |   |
|      Retained      earnings                                                                                                                                            |   |   | (703,100 | ) |   |   | (653,811 | ) |
|      Accumulated      other comprehensive income                                                                                                                       |   |   | 179,015 |   |   |   | 178,357 |   |
|         Stockholders'      Equity                                                                                                                       |   |   | 532,093 |   |   |   | 569,724 |   |
|                                                                                                                                                                                            |   |   |   |   |   |   |   |   |
| Total      Liabilities and Stockholders' Equity                                                                                                                                                 |   | $ | 924,047 |   |   | $ | 946,075 |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                                |
|-------------------------------------------------------------------------------------------|
|                                                                                      |   |   |   |   |   |   |   |
|                                                                                      |   |   |   |   |   |   |   |
| CONSOLIDATED      STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME                 |   |
|                                                                                      |   |   |   |   |   |   |   |
|                                                                                      |   |   |   |   |   |   |   |
|                                                                                      |   |   | For      the Three Months Ended |   |
|                                                                                      |   |   | March      31, |   |
|                                                                                      |   |   | 2009 |   |   | 2008 |   |
|                                                                                      |   |   | (unaudited) |   |   | (unaudited) |   |
| Revenues                                                                                  |   |   |   |   |   |   |   |
|      (a)      GRT public telephone service                       |   | $ | 1,127 |   |   | $ | 5,144 |   |
|      (b)      GRT network solution                               |   |   | - |   |   |   | - |   |
|      (c)      GRT VoIP call time distribution                    |   |   | 22,131 |   |   |   | 88,950 |   |
|      (d)      GRT sales of call forwarding cards                 |   |   | - |   |   |   | 1,062 |   |
|      (e)  Franchise      Fees-GRT                      |   |   | - |   |   |   | - |   |
|                                                                                      | Total      Revenue |   |   | 23,258 |   |   |   | 95,156 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Costs      of Revenue                                                                     |   |   |   |   |   |   |   |   |
|      (a)      GRT public telephone service                       |   |   | 1,217 |   |   |   | 8,386 |   |
|      (b)      GRT network solution                               |   |   | - |   |   |   | - |   |
|      (c)      GRT VoIP call time distribution                    |   |   | 14,571 |   |   |   | 74,078 |   |
|      (d)      GRT sales of call forwarding cards                 |   |   | - |   |   |   | 1,576 |   |
|      (e)  Franchise      Fees-GRT                      |   |   | - |   |   |   | - |   |
|                                                                                      | Total      Costs of Revenue |   |   | 15,788 |   |   |   | 84,040 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Gross      Profit                                                                         |   |   | 7,470 |   |   |   | 11,116 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Operating      Expenses                                                                   |   |   |   |   |   |   |   |   |
|      Compensation      to CEO                                    |   |   | - |   |   |   | 44,028 |   |
|      Payroll      and employee benefit                           |   |   | 7,768 |   |   |   | 12,995 |   |
|      Depreciation      expenses                                  |   |   | 21,656 |   |   |   | 19,326 |   |
|      Office      expenses                                        |   |   | 11,126 |   |   |   | 6,953 |   |
|      Repair      and maintenance                                 |   |   | - |   |   |   | 518 |   |
|      Professional      fees                                      |   |   | 5,048 |   |   |   | 4,000 |   |
|      Consultant      fees (Note 14)                              |   |   | 11,000 |   |   |   | 148,882 |   |
|      Travel      and entertainment                               |   |   | 181 |   |   |   | 20,654 |   |
|      Other      general and administrative expenses              |   |   | - |   |   |   | 283 |   |
|           Total      Operating Expenses |   |   | 56,779 |   |   |   | 257,639 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Income      (Loss) from Operation                                                         |   |   | (49,309 | ) |   |   | (246,523 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Other      Income                                                                         |   |   |   |   |   |   |   |   |
|      Interest      income                                        |   |   | 20 |   |   |   | 197 |   |
|           Total      other income       |   |   | 20 |   |   |   | 197 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Income      (Loss) before provision for Income Tax                                   |   |   | (49,289 | ) |   |   | (246,326 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Provision      for Income Tax                                                             |   |   | - |   |   |   | - |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Income      (Loss) from Continuing Operations                                             |   |   | (49,289 | ) |   |   | (246,326 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Loss      from Discontinued Operations--VoIP      Call Time Distribution of QTC           |   |   | - |   |   |   | (5,280 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Net      Income                                                                           |   |   | (49,289 | ) |   |   | (251,606 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income (Loss)                                                    |   |   |   |   |   |   |   |   |
|     Effects      of Foreign Currency Conversion                       |   |   | 658 |   |   |   | 62,033 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Comprehensive      Income (Loss)                                                          |   | $ | (48,631 | ) |   | $ | (189,573 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Basic      and fully diluted earnings (loss) per share                                    |   | $ | (0.00 | ) |   | $ | (0.00 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                  |   |   | 38,381,375 |   |   |   | 38,381,375 |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                                                |
|-----------------------------------------------------------------------------------------------------------|
|                                                                                                      |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                                                |
|                                                                                                      |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |
|                                                                                                      |   | For      the Three Months Ended |   |
|                                                                                                      |   | March      31, |   |
|                                                                                                      |   | 2009 |   |   | 2008 |   |
|                                                                                                      |   | (unaudited) |   |   | (unaudited) |   |
| Operating Activities                                                                                      |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |
| Net      income (loss)                                                                                    |   | $ | (49,289 | ) |   | $ | (251,606 | ) |
| Adjustments      to reconcile net income (loss) to      net cash provided (used) by operating activities: |   |   |   |   |   |   |   |   |
|         Depreciation                                              |   |   | 21,656 |   |   |   | 19,326 |   |
|         Deferred      consultant compensation                     |   |   | 11,000 |   |   |   | 107,690 |   |
| Changes      in operating assets and liabilities:                                                         |   |   |   |   |   |   |   |   |
|    (Increase)/Decrease      in accounts receivable                                         |   |   | - |   |   |   | (4,659 | ) |
|    (Increase)/Decrease      in purchased SIM cards                                         |   |   | - |   |   |   | 403 |   |
|    (Increase)/Decrease      in prepaid expenses                                            |   |   | 15,788 |   |   |   | (262,401 | ) |
|     Increase/(Decrease)      in accounts payable and accrued expenses                 |   |   | (3,217 | ) |   |   | (24,047 | ) |
|     Increase/(Decrease)      in deferred revenue                                      |   |   | (439 | ) |   |   | 300 |   |
|     Increase/(Decrease)      in taxes payable                                         |   |   | 1,196 |   |   |   | (293 | ) |
| Net      cash provided (used) by operating activities                                                     |   |   | (3,305 | ) |   |   | (415,287 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Investing Activities                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Investment      in subsidiary                                                                             |   |   | - |   |   |   | (61,212 | ) |
| Purchase      of fixed assets                                                                             |   |   | (1,329 | ) |   |   | - |   |
| Net      cash (used) by investing activities                                                              |   |   | (1,329 | ) |   |   | (61,212 | ) |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Financing Activities                                                                                      |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Loans      from shareholders                                                                              |   |   | 17,529 |   |   |   | - |   |
| Net      cash provided (used) by financing activities                                                     |   |   | 17,529 |   |   |   | - |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Increase      (decrease) in cash                                                                          |   |   | 12,895 |   |   |   | (476,499 | ) |
| Effects      of exchange rates on cash                                                                    |   |   | 56 |   |   |   | 52,237 |   |
| Cash      at beginning of the period                                                                      |   |   | 33,415 |   |   |   | 521,016 |   |
| Cash      at end of the period                                                                            |   | $ | 46,366 |   |   | $ | 96,754 |   |
|                                                                                                      |   |   |   |   |   |   |   |   |
| Supplemental      Disclosures of Cash Flow Information:                                                   |   |   |   |   |   |   |   |   |
|    Cash      paid (received) during year for:                                              |   |   |   |   |   |   |   |   |
|        Interest                                                        |   | $ | - |   |   | $ | - |   |
|        Income      taxes                                               |   | $ | - |   |   | $ | - |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      1- | BASIS OF      PRESENTATION |   |
|                                                       |   |   |   |
|                                                       |   | The      consolidated financial statements of Smooth Global (China) Holdings, Inc.      and subsidiaries ( the "Company"), included herein were prepared, without      audit, pursuant to rules and regulations of the Securities and Exchange      Commission.   In management's opinion, all adjustments      (consisting only of normal recurring adjustments) considered necessary for      a fair presentation have been included.  Because certain      information and notes normally included in financial statements prepared      in accordance with accounting principles generally accepted in the United      States of America were condensed or omitted pursuant to such rules and      regulations, these financial statements should be read in conjunction with      the financial statements and notes thereto included in the audited      financial statements of the Company as included in the Company's Form 10-K      for the year ended December 31, 2008. |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      2- | ORGANIZATION      AND OPERATIONS |   |
|                                                       |   |   |   |
|                                                       |   | Organization      and Business Background |   |
|                                                       |   |   |   |
|                                                       |   | The      Bralorne Mining Company ("Bralorne") was incorporated under the laws of      the State of Nevada on December 2, 1998 with authorized common stock of      200,000,000 shares at $0.001 par value.  Currently, the Company      principally engages in the business to provide telecommunication services      in the People's Republic of China ("PRC'), through its wholly-owned      subsidiaries, Gold Profit (Asia) Group Limited ("Gold Profit") and Smooth      Global Services Limited ("Smooth Global").  On July 31, 2007,      Bralorne changes its name to Smooth Global (China) Holdings, Inc. ("Smooth      Global (China)" or the "Company"). |
|                                                       |   |   |   |
|                                                       |   | On      November 2, 2006, Bralorne entered into an Share Exchange Agreement (“the      Agreement") with the sole shareholder of Gold Profit to exchange 1,333,334      shares (40,000,000 shares prior to reverse stock split on July 31, 2007)      of common stock of Bralorne for 100% of the outstanding stock of Gold      Profit.  Upon the execution of the Agreement, Gold Profit became      a wholly-owned subsidiary of Bralorne. |
|                                                       |   |   |   |
|                                                       |   | Gold      Profit was incorporated as a limited liability company in the British      Virgin Islands (“BVI”) under the BVI Business Companies Act on July 28,      2006, for the purpose of seeking and consummating a merger or acquisition      with a business entity organized as a private corporation, partnership, or      sole proprietorship as defined by Statement of Financial Accounting      Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage      Enterprises”. |
|                                                       |   |   |   |
|                                                       |   | On      September 8, 2006, Gold Profit entered into a Share Purchase Agreement      with all the shareholders of Beijing Quan Tong Chang Information Service      Limited a/k/a Beijing Smooth Global Information Services Ltd. (”QTC') to      acquire 100% of QTC's registered capital for RMB500,000 (equivalent to      US$60,386).  Upon completion of this transaction, QTC became a      wholly-owned subsidiary of Gold Profit. |
|                                                       |   |   |   |
|                                                       |   | Under      the Company Law of PRC, QTC was incorporated in Beijing City, PRC on      August 2, 2003 with a registered capital of RMB500,000 (equivalent to      US$60,386).  QTC is engaged in the business of providing      telecommunication services inPRC. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      2- | ORGANIZATION      AND OPERATIONS (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Organization      and Business Background (continued) |   |
|                                                       |   |   |   |
|                                                       |   | On      October 24, 2007 Smooth Global (China) completed the acquisition of all      the registered capital stock of Smooth Global.  In exchange for      the capital stock of Smooth Global, Smooth Global (China) issued      33,000,000 shares of its common stock to the prior owners of Smooth      Global.  The prior registered owners were Christina Nelson and      Shannon Lee Alsop.  They held the shares, however, as nominees      for nine residents of PRC.  Accordingly, upon closing of the      acquisition, Ms. Nelson and Ms. Alsop assigned the 33,000,000 shares to      those nine beneficiaries.  20,000,000 of the shares were      assigned to Ms. Zheng Shuying.  Ms. Zheng is the Chief Executive      Officer of Smooth Global (China).  Also, Smooth Global became a      wholly-owned subsidiary of Smooth Global (China) upon completion of the      acquisition. |
|                                                       |   |   |   |
|                                                       |   | Smooth      Global was incorporated on January 25, 2006 in the British Virgin Island      ("BVI") under the BVI Business Companies Act, 2004, as a BVI Business      Company.  The Company was formed for the purpose of seeking and      consummating a merger or acquisition with a business entity organized as a      private corporation, partnership, or sole proprietorship as defined by      Statement of Financial Accounting Standards (SFAS) No.  7. |
|                                                       |   |   |   |
|                                                       |   | On      June 28, 2007, Smooth Global established a wholly owned subsidiary, Smooth      Global (Beijing) Telecom Science Limited ("Beijing Telecom") in the      Beijing City, PRC.  Beijing Telecom was incorporated under the      Company Law of PRC as a limited liability company with registered capital      of $100,000.  Beijing Telecom was formed for the purpose of      seeking and consummating a merger or acquisition with a business entity      organized in PRC and engaged in the business of providing      telecommunication services. |
|                                                       |   |   |   |
|                                                       |   | On      September 20, 2007, Ms. Yianfang Jin and Ms. Yianxia Wang (collectively      the "Trustees"), both of whom are citizens of PRC and totally own a 100%      equity ownership interest in Beijing GRT Information Services Limited (      "GRT" ),  executed Trust and Indemnity Agreements ("Agreements")      with Beijing Telecom, pursuant to which the Trustees assigned to Beijing      Telecom all of the beneficial interest in the Trustee's equity ownership      interest in GRT.  The Agreements provided for effective control      of GRT to be transferred to Beijing Telecom at September 20,      2007. |
|                                                       |   |   |   |
|                                                       |   | Through      the Agreements described in the preceding paragraph Beijing Telecom is      deemed a 100% beneficiary of GRT resulting in GRT being deemed a      subsidiary of Beijing Telecom under the requirements of Financial      Interpretation 46 (Revised) "Consolidation of Variable Interest Entities"      issued by the Financial Accounting Standards Board      ("FASB").   Accordingly, the consolidated financial      statements of Smooth Global and its wholly owned      subsidiary,  Beijing Telecom, will be prepared by including the      financial statements of GRT through September 20, 2007 and      thereafter. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      2- | ORGANIZATION      AND OPERATIONS (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Organization      and Business Background (continued) |   |
|                                                       |   |   |   |
|                                                       |   | GRT      and QTC are the two of these affiliated companies that are engaged in      business operations.  Smooth Global (China), Gold Profit, Smooth      Global, and Beijing Telecom are all holding companies, whose business is      to hold an equity ownership interest in QTC and a beneficial interest in      GRT.   All these affiliated companies are hereafter      referred to as the "Company", whose structure is outlined as      following: |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       |   | Reverse      Merger Accounting |   |
|                                                       |   |   |   |
|                                                       |   | The      merger of Smooth Global (China) with Smooth Global results in a capital      transaction accounted for as a reverse merger.  The transaction      was treated for accounting purposes as a recapitalization of the      accounting acquirer (Smooth Global) and a reorganization of the accounting      acquiree (Smooth Global (China)). Accordingly, the historical consolidated      financial statements presented prior to the merger are the historical      consolidated financial statements of Smooth Global, which includes Smooth      Global's wholly-owned subsidiary, Beijing Telecom, and its variable      interest entity, GRT.  The consolidated financial statements      presented post to the merger are the consolidated financial statements of      Smooth Global (China) and its subsidiaries and variable interest entity,      which include GRT,  and QTC from the acquisition date, October      24,2007. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |
|                                                       |   |   |   |
|                                                       | Note      2- | ORGANIZATION      AND OPERATIONS (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Business      Operations |   |
|                                                       |   |   |   |
|                                                       |   | (a)  GRT      Public Telephone Service |   |
|                                                       |   |   |   |
|                                                       |   | GRT      provides public phone users with access to the network of  China      Unicom (Beijing) Limited (“CUBJ”) F/K/A China United Telecommunications      (Beijing) Corporation Limited, via paid phones installed in outlets      located in universities, convenience shops and street      corners.  These outlets are managed but not necessary owned by      GRT.  GRT signed non-exclusive distribution agreement with CUBJ      to distribute its traditional fixed line call time in Beijing City,      PRC. |
|                                                       |   |   |   |
|                                                       |   | CUBJ      is a subsidiary of China Unicom (Hong Kong) Limited ("CUHK") F/A/K China      United Telecommunications Corporation Limited.  On January 6,      2009, China United Telecommunications Corporation Limited merged with      China Netcom (Group) Corporation Limited and changed its name to China      Unicom (Hong Kong) Limited.  CUHK is one of the largest      telecommunications carriers in PRC. |
|                                                       |   |   |
|                                                       |   | (b)      GRT Network Solution |   |
|                                                       |   |   |   |
|                                                       |   | GRT      provides computer networking and telephone solutions to its customers,      mainly the commercial buildings located in PRC, including design and      implementation of network system, and purchasing and installation of      hardware and software. |
|                                                       |   |   |   |
|                                                       |   | (c)      GRT VoIP Call Time Distribution |   |
|                                                       |   |   |   |
|                                                       |   | Beginning      from January 2008, GRT provides enterprise phone users and public phone      users with access to the network of China Unicom (Shaoxing) Limited      (“CUSX”) F/K/A China Netcom (Shaoxing) Corporation Limited  and      China Unicom (Shanghai) Limited (“CUSH”) F/A/K China Netcom (Shanghai)      Corporation Limited,  via phones connected to GRT's      telecommunication server.  Both CUSX and CUGD are subsidiaries      of China Unicom (Hong Kong) Limited F/A/K China Netcom (Group) Company      Limited. GRT signed non-exclusive distribution agreement with CUSX and      CUGD to distribute their Voice Over Internet Protocol (“VoIP”) call time      in the PRC. |
|                                                       |   |   |   |
|                                                       |   | (d)      GRT International Call Forwarding Service |   |
|                                                       |   |   |   |
|                                                       |   | GRT      provides China mobile phone users with international call forwarding      service, which resembles the function of international roaming      services.  GRT provides subscribers with SIM cards of the      destination country or region with predefined call forwarding      time.  The subscribers forward their mobile phone calls to a      specified GRT number and instruct GRT to further forward the calls to a      telephone number in their destination country or region.  This      enables the mobile phone user to receive local calls for a competitive      tariff rate when they are traveling abroad. |
|                                                       |   |   |   |
|                                                       |   | Discontinued      Operation |   |
|                                                       |   |   |   |
|                                                       |   | QTC      provided enterprise phone users and public phone users with access to the      network of CUSX and China Unicom (Guangdong) Limited (“CUGD”) F/A/K China      Netcom (Guangdong) Corporation Limited  via phones connected to      QTC's telecommunication server.  On August 20, 2008, QTC's board      of directors decided to terminate this operation and disposed of the      relevant equipment.  QTC totally disposed of 65 pieces of      equipments with a carrying value of $61,929 (RMB 424,475), of which 59      pieces of equipment with a carrying value of $42,312 (RMB 290,017) were      sold to a third party for $7,295 (RMB 50,000. 00), resulting in a loss of      $34,474 (RMB 240,017), and 6 pieces of equipment with carrying value of      $19,617 (RMB 134,458) were transferred to GRT to satisfy a "due to GRT" of      $11,671 (RMB 80,000.00). No loss was recognized for this transfer due to      the elimination of intercompany transactions in    consolidation. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      2- | ORGANIZATION      AND OPERATIONS (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Discontinued      Operation (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Losses      from discontinued operation consist of the following: |   |

|                                                                                                                              |   | For      The Three Months Ended |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                                                                              |   | March      31,                  |   |
|                                                                                                                              |   | 2009                            |   |   | 2008 |   |
|                                                                                                                              |   | (unaudited)                     |   |   | (unaudited) |   |
| Losses      from discontinued operation                                                                                           |   |                            |   |   |   |   |
|     Revenue      from discontinued operation-                                                                 |   |                            |   |   |   |   |
|          QTC      VoIP call time distribution                                        |   | $                               | -      |   |   | $ | 2,977 |   |
|     Costs      of revenue from discontinued operation-                                                        |   |                            |   |   |   |   |   |   |
|          QTC      VoIP call time distribution                                        |   |                            | -      |   |   |   | (8,257 | ) |
|                Losses      from discontinued operation |   |                            | -      |   |   |   | (5,280 | ) |
| Loss      of disposal of fixed assets                                                                                             |   |                            | -      |   |   |   | - |   |
| Income      taxes                                                                                                                 |   |                            | -      |   |   |   | - |   |
|        Losses      on discontinued operation                                                   |   | $                               | -      |   |   | $ | (10,560 | ) |
|                                                                                                                              |   |                            |   |   |   |   |   |   |
| Assets      to be disposed consist of the following:                                                                              |   |                            |   |   |   |   |   |   |
|                                                                                                                              |   | March      31,                  |   |   | December      31, |   |
|                                                                                                                              |   | 2009                            |   |   | 2008 |   |
|                                                                                                                              |   | (unaudited)                     |   |   |   |   |   |
| Cost      of fixed assets to be disposed of                                                                                       |   | $                               | -      |   |   | $ | 190,437 |   |
| Accumulated      depreciation of fixed assets to be disposed of                                                                   |   |                            | -      |   |   |   | (104,950 | ) |
|                                                                                                                              |   | $                               | -      |   |   | $ | 85,487 |   |

|   | Note      3- | GOING      CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|--------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |         | As      reflected in the accompanying consolidated financial statements, the      Company incurred a loss of $1,155,287 in the year ended December 31,      2008.  This amount is significant compared with the Company's      shareholders' equity.   Additionally, the Company continued      to incurred a loss of $49,289 for the three months ended March 31,      2009.  These factors raise substantial doubt about the Company's      ability to continue as a going concern.  In view of the matters      described above, recoverability of a major portion of the recorded asset      amounts shown in the accompanying consolidated balance sheets is dependent      upon continued operations of the Company, which in turn is dependent upon      the Company's ability to raise additional capital, obtain financing and      succeed in its future operations.  The financial statements do      not include any adjustments relating to the recoverability and      classification of recorded asset amounts or amounts and classification of      liabilities that might be necessary should the Company be unable to      continue as a going concern. |
|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |
|   |         | Management      has taken the steps to revise its operating and financial requirements,      which it believes are sufficient to provide the Company with the ability      to continue as a going concern.  The Company is actively      pursuing additional funding and a potential merger or acquisition      candidate and strategic partners, which would enhance stockholders'      investment.  The Company is also developing new business lines,      including new telecommunication equipment and telecommunication      services.  Management believes that these actions will allow the      Company to continue operations through the next fiscal    year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      4- | Control      by Principal Stockholders |   |
|                                                       |   |   |   |
|                                                       |   | The      chief executive officer owns beneficially and in the aggregate, the      majority of the voting power of the Company. Accordingly, the chief      executive officer has the ability to control the approval of most      corporate actions, including approving significant expenses, increasing      the authorized capital stock and the dissolution, merger or sale of the      Company's assets. |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES |   |
|                                                       |   |   |   |
|                                                       |   | Basis      of Consolidation |   |
|                                                       |   |   |   |
|                                                       |   | The      consolidated financial statements include the accounts of the Company and      all its majority-owned subsidiaries which require      consolidation.  Inter-company transactions have been eliminated      in consolidation. |
|                                                       |   |   |   |
|                                                       |   | The      consolidated financial statements are prepared in accordance with      generally accepted accounting principles in the United States of America      ("US GAAP").  This basis of accounting differs from that used in      the statutory accounts of the Company, which are prepared in accordance      with the "Accounting Principles of China " ("PRC      GAAP").  Certain accounting principles, which are stipulated by      US GAAP, are not applicable in the PRC GAAP.  The difference      between PRC GAAP accounts of the Company and its US GAAP financial      statements is immaterial. |
|                                                       |   |   |   |
|                                                       |   | Use      of Estimates |   |
|                                                       |   |   |   |
|                                                       |   | The      consolidated financial statements have been prepared in accordance with      accounting principles generally accepted in the United States of America.      In preparing these financial statements, management makes estimates and      assumptions that affect the reported amounts of assets and liabilities in      the balance sheets and revenues and expenses during the years reported.      Actual results may differ from these estimates. |
|                                                       |   |   |   |
|                                                       |   | Revenue      Recognition |   |
|                                                       |   |   |   |
|                                                       |   | The      Company recognizes its revenues net of sales taxes and sales-related      taxes. In accordance with the SEC’s Staff Accounting Bulletin No. 104,      Revenue Recognition , the Company recognizes revenue when persuasive      evidence of an arrangement exists, transfer of title and the risks and      rewards of ownership have occurred or services have been rendered and      accepted, the selling price is fixed or determinable and collectability is      reasonablyassured. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Revenue      Recognition (continued) |   |
|                                                       |   |   |   |
|                                                       |   | (a)  GRT      Public Telephone Service |   |
|                                                       |   |   |   |
|                                                       |   | GRT      sets up outlets through CUBJ's network to provide public telephone service      to end users.  GRT buys call time from CUBJ in advance and then      distribute to end users via these outlets.  GRT recognizes      revenue when the tariff is collected after an end user places a telephone      call.  GRT records revenue from outlets after netting outlets'      operating expenses since such expenses are instable. |
|                                                       |   |   |   |
|                                                       |   | Pursuant      to the distribution agreement with CUBJ, GRT is entitled to refund a      certain percentage of call time cost and the percentage varies based on      the volume of call time which GRT distributes monthly.  GRT      records these refunds as revenue because GRT has to issue sales invoices      to CUBJ for the refunds. |
|                                                       |   |   |   |
|                                                       |   | (      b ) GRT Network Solution |   |
|                                                       |   |   |   |
|                                                       |   | GRT      provides network solution to enterprise customers, including design and      implementation of internet and telephone network.  The contracts      are accounted for as one unit of accounting as the criteria for separation      are not met, and revenue for billed amounts is recognized when customer’s      acceptance is obtained provided that no significant obligations      remain. |
|                                                       |   |   |   |
|                                                       |   | (c)      GRT VoIP Call Time Distribution |   |
|                                                       |   |   |   |
|                                                       |   | Beginning      from January 2008, GRT contracted with CUSX and CUSH for the distribution      of their VoIP call time. VoIP call time distribution revenue is generally      recognized when the end user makes a call through the phone connected to      GRT's telecommunication server. |
|                                                       |   |   |   |
|                                                       |   | Pursuant      to the contracts with CUSX and CUSH, GRT pays tariff to the      telecommunication carriers in advance and connects its telecommunication      server to the carriers' network.  Then, GRT distributes the VoIP      call time to its customers who connect their phones to GRT’s      server.   The customers also pay tariff to GRT in      advance.  Monthly, the telecommunication carriers bill GRT for      the VoIP call time that it distributes.  In turn, GRT bills its      customers for the VoIP call time which the customers consume, based on the      records provided by its own server. |
|                                                       |   |   |   |
|                                                       |   | (d)      International Call Forwarding Service |   |
|                                                       |   |   |   |
|                                                       |   | GRT      purchases a foreign SIM card and then attaches it with a specified phone      number, which GRT bought from CUSH.   When a mobile phone      call is forwarded to that particular phone number, GRT will further      forward the call to the related SIM card, via the network of either CUSH      or CUSX.  GRT signed non-exclusive agreements with CUSH and CUSX      to forward phone calls via theirnetwork. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Revenue      Recognition (continued) |   |
|                                                       |   |   |   |
|                                                       |   | (d)      International Call Forwarding Service (continued) |   |
|                                                       |   |   |   |
|                                                       |   | GRT      sells SIM cards either directly to end users or via its franchised      distributors, who signed non-exclusive Distribution Agreements with GRT to      distribute its SIM cards. |
|                                                       |   |   |   |
|                                                       |   | (1)   When      GRT sells SIM cards directly to end users, it recognizes revenue when the      SIM cards are expired as indicated in the description printed on the      envelop containing the SIM card. |
|                                                       |   |   |   |
|                                                       |   | (2)   When      GRT sells SIM cards to its franchised distributors, it recognizes revenue      when the SIM cards are delivered to the distributors and the payments have      been received, at which time Management believes the sales transactions      have been completed pursuant to the Distribution    Agreements. |
|                                                       |   |   |   |
|                                                       |   | (e)      Franchise Fees from Franchised Distributers |   |
|                                                       |   |   |   |
|                                                       |   | GRT      recognizes revenue from franchise fees and training fees when the      Management believes that all material services and conditions applicable      to the sale have been substantially performed pursuant to the Distribution      Agreements.  The Management believes that substantial      performance under FASB 45, Accounting for Franchise Fee      Revenue, is indicated by: (1) absence of intent to refund cash      received; (2) performance of substantially all initial services; and (3)      nonexistence of other material conditions related to      performance. |
|                                                       |   |   |   |
|                                                       |   | Revenue      that GRT recognized from franchise fees and training fees was $0 and $0      for the three months ended March 31, 2009 and 2008,      respectively. |
|                                                       |   |   |   |
|                                                       |   | Revenue      from discontinued operation-QTC VoIP call timedistribution |   |
|                                                       |   |   |   |
|                                                       |   | Before      QTC terminated its operation of VoIP call time distribution on August 20,      2008, QTC contracted with CUSX and CUGD for the distribution of their VoIP      call time. VoIP call time distribution revenue is generally recognized      when the end user makes a call through the phone connected to QTC's      telecommunication server. |
|                                                       |   |   |   |
|                                                       |   | Pursuant      to the contracts with CUSX and CUGD, QTC pays tariff to the      telecommunication carriers in advance and connects its telecommunication      server to the carriers' network.  Then, QTC distributes the VoIP      call time to its customers who connect their phones to QTC’s      server.   The customers also pay tariff to QTC in      advance.  Monthly, the telecommunication carriers bill QTC for      the VoIP call time that it distributes.  In turn, QTC bills its      customers for the VoIP call time which the customers consume, based on the      records provided by its ownserver. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Cost      of Revenue |   |
|                                                       |   |   |   |
|                                                       |   | (a)  GRT      Public Telephone Service |   |
|                                                       |   |   |   |
|                                                       |   | Costs      of public telephone service mainly include costs to buy call time from      CUBJ. |   |
|                                                       |   |   |   |
|                                                       |   | (      b ) GRT Network Solution |   |
|                                                       |   |   |   |
|                                                       |   | Costs      of network solution principally include materials and equipment      particularly purchased for the projects, and the labor that GRT assigns to      the projects.  Because these employees also work on the      maintenance function in the day-to-day operation and it is difficult to      distinguish their working hours between network projects and maintenance      function, and the amount is immaterial, these labor costs are included in      the general and administrative expenses. |
|                                                       |   |   |   |
|                                                       |   | (c)      GRT VoIP Call Time Distribution |   |
|                                                       |   |   |   |
|                                                       |   | Costs      of VoIP call time distribution principally include the costs of VoIP call      time purchased from CUSX and CUSH. |
|                                                       |   |   |   |
|                                                       |   | (d)      International Call Forwarding Service |   |
|                                                       |   |   |   |
|                                                       |   | Costs      of international call forwarding services principally include the costs to      purchase SIM cards, the costs of telephone number, and the call forwarding      fees charged by the telecommunication carriers. |
|                                                       |   |   |   |
|                                                       |   | (e)      Franchise Fees from Franchised Distributers |   |
|                                                       |   |   |   |
|                                                       |   | Costs      of franchise fees principally include the costs to prepare the      distribution agreements, which amount is immaterial and included in the      general and administrative expenses. |
|                                                       |   |   |   |
|                                                       |   | Cost      of revenue from discontinued operation-QTC VoIP call time      distribution |   |
|                                                       |   |   |   |
|                                                       |   | Costs      of QTC VoIP call time distribution principally include the costs of VoIP      call time purchased from CUSX andCUGD. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Cash      and Cash Equivalents |   |
|                                                       |   |   |   |
|                                                       |   | Cash      and cash equivalents are carried at cost and represent cash on hand,      demand deposits placed with banks or other financial institutions and all      highly liquid investments with an original maturity of three months or      less as of the purchase date of such investments. |
|                                                       |   |   |   |
|                                                       |   | Accounts      Receivable |   |
|                                                       |   |   |   |
|                                                       |   | Trade      accounts receivable are recorded at the invoiced amount and do not bear      interest. The allowance for doubtful accounts is the Management’s best      estimate of the amount of probable credit losses in the Company’s existing      accounts receivable. The Company determines the allowance based on      historical write-off experience. The Company reviews its allowance for      doubtful accounts on a regular basis. Past due balances over 90 days and      over a specified amount are reviewed individually for collectability. All      other balances are reviewed on a pooled basis by industry. Account      balances are charged off against the allowance after all means of      collection have been exhausted and the potential for recovery is      considered remote.  If actual collections experience changes,      revisions to the allowance may be required. |
|                                                       |   |   |   |
|                                                       |   | Concentrations      of Credit Risk |   |
|                                                       |   |   |   |
|                                                       |   | Financial      instruments that subject the Company to concentrations of credit risk      consist primarily of cash and cash equivalents. The Company maintains its      cash and cash equivalents with high-quality institutions. While deposits      held with banks are not insurance in PRC, these deposits generally may be      redeemed upon demand and therefore bear minimal risk. |
|                                                       |   |   |   |
|                                                       |   | Fair      Value of Financial Instruments |   |
|                                                       |   |   |   |
|                                                       |   | The      carrying value of the Company’s financial instruments, which include cash      and cash equivalents, accounts receivables and payables, and amounts due      from/to shareholders, approximate fair value due to the short maturities      of those instruments. |
|                                                       |   |   |   |
|                                                       |   | Impairment      of Long-life Assets |   |
|                                                       |   |   |   |
|                                                       |   | Long-lived      assets and certain identifiable intangibles are reviewed for impairment      whenever events or changes in circumstances indicate that the carrying      amount of an asset may not be recoverable. Recoverability of assets to be      held and used is measured by a comparison of the carrying amount of an      asset to future net cash flows expected to be generated by the asset. If      such assets are considered to be impaired, the impairment to be recognized      is measured by the amount by which the carrying amount of the assets      exceeds the fair value of the assets. Assets to be disposed of are      reported at the lower of the carrying amount or fair value less costs to      sell. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Property      and Equipment |   |
|                                                       |   |   |   |
|                                                       |   | Plant      and equipment are stated at cost less accumulated depreciation and      accumulated impairment losses, if any.  Depreciation is      calculated on the straight-line basis over the following expected useful      lives from the date on which they become fully operational and after      taking into account their estimated residual  values: |

|                              | Depreciable                   |   | Residual |
|-----------------------------------|-------------------------------|--------|----------|
|                              | Life                          |   | Value    |
|                              |                          |   |     |
| Network      and office equipment | 5      years                  |   | 4%       |
| Leasehold      Improvements       | 5      years (Lease duration) |   |

|   |   | Expenditure      for maintenance and repairs is expended as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Deferred      Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Payments      received prior to satisfying the Company’s revenue recognition criteria      are recorded as deferred revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Research      and Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Research      and development costs are expensed when incurred.  Research and      development costs were immaterial for the three months ended March 31,      2009 and 2008, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Advertising      Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | The      Company expenses advertising costs as incurred in accordance with the      American Institute of Certified Public Accountants (“AICPA”) Statement of      Position 93-7, “Reporting for Advertising Costs”. Advertising expenses      were immaterial for the three months ended March 31, 2009 and 2008,      respectively.                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | Foreign      Currencies Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|   |   | The      functional currency of the Company is Renminbi (“RMB”). Transactions      denominated in currencies other than RMB are translated into RMB at the      exchange rates quoted by the People’s Bank of China (“PBOC”) prevailing at      the date of the transactions. Monetary assets and liabilities denominated      in foreign currencies are translated into RMB using the applicable      exchange rates quoted by the PBOC at the balance sheet dates. Exchange      differences are included in the statements of changes in shareholders'      equity.  Gain and losses resulting from foreign currency      transactions are included inoperations. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Foreign      Currencies Translation (continued) |   |
|                                                       |   |   |   |
|                                                       |   | The      Company’s financial statements are translated into the reporting currency,      the United States Dollar (“US$”), using exchange rates in effect at each      year end for assets and liabilities and average exchange rates during each      reporting year for the consolidated statements of operations. Contributed      capital accounts are translated using the historical rate of exchange when      capital is injected.  Translation adjustments resulting from      translation of these consolidated financial statements are reflected as      accumulated other comprehensive income in the shareholders’      equity. |
|                                                       |   |   |   |
|                                                       |   | Translation      adjustments resulting from this process are included in accumulated other      comprehensive income (loss) in the consolidated statement of changes in      shareholders’ equity and amounted to 179,015  as of March 31,      2009, and $178,357 as of December 31, 2008.  The balance sheet      amounts with the exception of equity at March 31, 2009 were translated at      6.84 RMB to $1.00 USD as compared to 6.85 RMB at December 31, 2008. The      equity accounts were stated at their historical rate.  The      average translation rates applied to income statement accounts for the      three months ended March 31, 2009 and 2008 were 6.85 RMB and 7.15 RMB,      respectively. |
|                                                       |   |   |   |
|                                                       |   | Statement      of Cash Flows |   |
|                                                       |   |   |   |
|                                                       |   | In      accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from      the Company’s operations are calculated based upon the functional      currency.  As a result, amounts related to assets and      liabilities reported on the statement of cash flows may not necessarily      agree with changes in the corresponding balances on the balance      sheet. |
|                                                       |   |   |   |
|                                                       |   | Segment      Reporting |   |
|                                                       |   |   |   |
|                                                       |   | SFAS      No. 131 “Disclosures about Segments of an Enterprise and Related      Information” establishes standards for reporting information about      operating segments on a basis consistent with the Company’s internal      organization structure as well as information about geographical areas,      business segments and major customers in financial statements. The Company      operates in five principal business segments. |
|                                                       |   |   |   |
|                                                       |   | Related      Parties |   |
|                                                       |   |   |   |
|                                                       |   | For      the purposes of these financial statements, parties are considered to be      related to the Company if the Company has the ability, directly or      indirectly, to control the party or exercise significant influence over      the party in making financial and operating decisions, or vice versa, or      where the Company and the party are subject to common control or common      significant influence. Related parties may be individuals or other      entities. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Statutory      Reserves |   |
|                                                       |   |   |   |
|                                                       |   | Pursuant      to the applicable laws in PRC, PRC entities are required to make      appropriations to three non-distributable reserve funds, the statutory      surplus reserve, statutory public welfare fund, and discretionary surplus      reserve, based on after-tax net earnings as determined in accordance with      the PRC GAAP, after offsetting any prior years’ losses. Appropriation to      the statutory surplus reserve should be at least 10% of the after-tax net      earnings until the reserve is equal to 50% of the Company's registered      capital.  Appropriation to the statutory public welfare fund is      5% to 10% of the after-tax net earnings.  The statutory public      welfare fund is established for the purpose of providing employee      facilities and other collective benefits to the employees and is      non-distributable other than in liquidation.  No appropriations      to the discretionary surplus reserve are made at the discretion of the      Board of Directors. |
|                                                       |   |   |   |
|                                                       |   | The      Company makes appropriations to these three reserve funds at the fiscal      year end pursuit to  PRC GAAP.  Accordingly, the      Company made no appropriations for the three months ended March 31, 2009      and 2008, respectively. |
|                                                       |   |   |   |
|                                                       |   | Income      Taxes |   |
|                                                       |   |   |   |
|                                                       |   | The      Company accounts for income taxes in interim periods as required by      Accounting Principles Board Opinion No. 28 "Interim Financial Reporting"      and as interpreted by FASB Interpretation No. 18, "Accounting for Income      Taxes in Interim Periods".  The Company has determined an      estimated annual effect tax rate.  The rate will be revised, if      necessary, as of the end of each successive interim period during the      Company's fiscal year to its best current estimate. |
|                                                       |   |   |   |
|                                                       |   | The      estimated annual effective tax rate is applied to the year-to-date      ordinary income (or loss) at the end of the interim  period. |
|                                                       |   |   |   |
|                                                       |   | Comprehensive      Income |   |
|                                                       |   |   |   |
|                                                       |   | Statement      of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive      Income,” establishes standards for reporting and display of comprehensive      income, its components and accumulated balances.  Comprehensive      income as defined includes all changes in equity during a period from      non-owner sources. Accumulated comprehensive income, as presented in the      accompanying statement of changes in shareholders' equity consists of      changes in unrealized gains and losses on foreign currency      translation.  This comprehensive income is not included in the      computation of income tax expense orbenefit. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |   |   |
|                                                       |   |   |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |   |   |
|                                                       |   |   |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |   |   |
|                                                       |   | Earnings      (Loss) Per Share |   |
|                                                       |   |   |   |   |   |
|                                                       |   | The      Company reports earnings per share in accordance with the provisions of      SFAS No. 128, “Earnings Per Share.” SFAS No. 128 requires presentation of      basic and diluted earnings per share in conjunction with the disclosure of      the methodology used in computing such earnings per      share.  Basic earnings (loss) per share is computed by dividing      income (loss) available to common shareholders by the weighted-average      number of common shares outstanding during the period.  Diluted      earnings per share is computed similar to basic earnings per share except      that the denominator is increased to include the number of additional      common shares that would have been outstanding if the potential common      shares had been issued and if the additional common shares were      dilutive.  There are no potentially dilutive securities      outstanding (options and warrants) for the three months ended March 31,      2009 and 2008, respectively. |
|                                                       |   |   |   |   |   |
|                                                       |   | Fair      Value of Measurements |   |
|                                                       |   |   |   |   |   |
|                                                       |   | The      Company adopted Statement of Financial Accounting Standards No. 157, “Fair      Value Measurements” (“SFAS 157”), effective January 1,      2008.  The provisions of SFAS 157 are to be applied      prospectively. |
|                                                       |   |   |   |   |   |
|                                                       |   | SFAS      157 clarifies that fair value is an estimate of the exit price,      representing the amount that would be received to sell an asset or paid to      transfer a liability in an orderly transaction between market participants      (i.e., the exit price at the measurement date).  Under SFAS 157,      fair value measurements are not adjusted for transaction      cost.  SFAS 157 provides for use of a fair value hierarchy that      prioritizes inputs to valuation techniques used to measure fair value into      three levels: |
|                                                       |   |   |   |   |   |
|                                                       |   | Level      1: |   | Unadjusted      quoted prices in active markets for identical assets or      liabilities. |   |
|                                                       |   |   |   |   |   |
|                                                       |   | Level      2: |   | Input      other than quoted market prices that are observable, either directly or      indirectly, and reasonably available.  Observable inputs reflect      the assumptions market participants would use in pricing the asset or      liability and are developed based on market data obtained from sources      independent of the Company. |
|                                                       |   |   |   |   |   |
|                                                       |   | Level      3: |   | Unobservable      inputs.  Unobservable inputs reflect the assumptions that the      Company develops based on available information about what market      participants would use in valuing the asset or  liability. |
|                                                       |   |   |   |   |   |
|                                                       |   | An      asset or liability’s level within the fair value hierarchy is based on the      lowest level of any input that is significant to the fair value      measurement.  Availability of observable inputs can vary and is      affected by a variety of factors.  The Company uses judgment in      determining fair value of assets and liabilities and Level 3 assets and      liabilities involve greater judgment than Level 1 and Level 2 assets or      liabilities. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Adoption      of FIN 48 |   |
|                                                       |   |   |   |
|                                                       |   | Effective      January 1, 2007, the Company adopted FASB Interpretation No. 48,      “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  FIN 48      clarifies the accounting for uncertainty in income taxes recognized in an      enterprise’s financial statements in accordance with SFAS No. 109,      “Accounting for Income Taxes.”  FIN 48 prescribes a recognition      threshold and measurement attribute for the financial statement      recognition and measurement of a tax position taken or expected to be      taken in a tax return.  FIN 48 also provides guidance on      de-recognition of tax benefits, classification on the balance sheet,      interest and penalties, accounting in interim periods, disclosure, and      transition.  In accordance with FIN 48, the Company performed a      self-assessment and concluded that there were no significant uncertain tax      positions requiring recognition in its financial    statements. |
|                                                       |   |   |   |
|                                                       |   | Adoption      of SFAS No. 157 |   |
|                                                       |   |   |   |
|                                                       |   | In September 2006, the Financial Accounting      Standards Board (“FASB”) issued SFAS No. 157, "Fair Value      Measurements".  SFAS No. 157 defines fair value, establishes a      framework and gives guidance regarding the methods used for measuring fair      value, and expands disclosures about fair value      measurements.  In February 2008, the FASB issued FASB Staff      Position 157-1, "Application of FASB Statement No. 157 to FASB Statement      No. 13 and Other Accounting Pronouncements That Address Fair Value      Measurements for Purposes of Lease Classification or Measurement under      Statement 13" ("FSP 157-1") and FASB Staff Position 157-2, "Effective Date      of FASB Statement No. 157" ("FSP 157-2").  FSP 157-1 amends SFAS      No. 157 to remove certain leasing transactions from its      scope.  FSP 157-2 delays the effective date of SFAS No. 157 for      all non-financial assets and non-financial liabilities, except for items      that are recognized or disclosed at fair value in the financial statements      on a recurring basis (at least annually), until fiscal years beginning      after November 15, 2008.  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      Company adopted SFAS No. 157 effective January 1, 2008 for all financial      assets and liabilities as required, and effective January 1, 2009 for all      non-financial assets and non-financial liabilities as allowed by FSP FAS      157-2.  The adoption of SFAS No. 157 did not have a material      impact on the Company’s financial position and results of      operations. |
|                                                       |   |   |   |
|                                                       |   | On      October 10, 2008, the FASB issued FSP FAS 157-3, “Determining the Fair      Value of a Financial Asset When the Market for That Asset Is Not      Active.”  The FSP clarifies the application of FASB Statement      No. 157, “Fair Value Measurements,” in a market that is not active and      provides an example to illustrate key considerations in determining the      fair value of a financial asset when the market for that financial asset      is not active.  The FSP is effective immediately, and includes      prior period financial statements that have not yet been      issued. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Adoption      of SFAS No. 159 |   |
|                                                       |   |   |   |
|                                                       |   | In      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for      Financial Assets and Financial Liabilities — Including an Amendment of      FASB Statement No. 115”, which is effective for fiscal years beginning      after November 15, 2007.  SFAS No. 159 is an elective standard      which permits an entity to choose to measure many financial instruments      and certain other items at fair value at specified election      dates.  Subsequent unrealized gains and losses on items for      which the fair value option has been elected will be reported in      earnings.  The Company did not elect the fair value option for      any assets or liabilities that were not previously carried at fair      value.  Accordingly, the adoption of SFAS 159 did not have a      material impact on the Company’s financial position and results of      operations. |
|                                                       |   |   |   |
|                                                       |   | Adoption      of SFAS No. 160 and SFAS 141R |   |
|                                                       |   |   |   |
|                                                       |   | In      December 2007, the FASB issued Statements of Financial Accounting      Standards No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”)      and No. 160, “Noncontrolling Interests in Consolidated Financial      Statements – an amendment to ARB No. 51” (“SFAS 160”).  Both      SFAS 141R and SFAS 160 are to be adopted effective January 1,      2009.  SFAS 141R requires the application of several new or      modified accounting concepts that, due to their complexity, could      introduce a degree of volatility in periods subsequent to a material      business combination.  SFAS 141R requires that all business      combinations result in assets and liabilities acquired being recorded at      their fair value, with limited exceptions.  Other areas related      to business combinations that will require changes from current GAAP      include:  contingent consideration, acquisition costs,      contingencies, restructuring costs, in process research and development      and income taxes, among others.  SFAS 160 will primarily impact      the presentation of minority or noncontrolling interests within the      Balance Sheet and Statement of Operations as well as the accounting for      transactions with noncontrolling interest holders.  The Company      adopted SFAS No. 141 (revised 2007) and SFAS No. 160 on January 1, 2009.      There was no material impact on the Company’s financial position and      results of operations upon adoption, and their effects on future periods      will depend on the nature and significance of business combinations      subject to these statements. |
|                                                       |   |   |   |
|                                                       |   | Adoption      of SFAS No. 161 |   |
|                                                       |   |   |   |
|                                                       |   | In      March 2008, the FASB issued Statement of Financial Accounting Standards      No. 161, “Disclosures about Derivative Hedging Instruments and Hedging      Activities – an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS      161, which is effective January 1, 2009, requires enhanced qualitative and      quantitative disclosures with respect to derivatives and hedging      activities.  The adoption of SFAS No. 161 did not have a      material effect on the Company’s financial position and results of      operations. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Adoption      of FSP FAS 142-3 |   |
|                                                       |   |   |   |
|                                                       |   | In      April 2008, the FASB issued Staff Position FAS 142-3, Determination of the      Useful Life of Intangible Assets (“FSP FAS 142-3”) which amends the      factors an entity should consider in developing renewal or extension      assumptions used to determine the useful life of a recognized intangible      asset under FAS No. 142, Goodwill and Other Intangible Assets (“FAS No.      142”). FSP FAS 142-3 applies to intangible assets that are acquired      individually or with a group of assets and intangible assets acquired in      both business combinations and asset acquisitions. It removes a provision      under FAS No. 142, requiring an entity to consider whether a contractual      renewal or extension clause can be accomplished without substantial cost      or material modifications of the existing terms and conditions associated      with the asset. Instead, FSP FAS 142-3 requires that an entity consider      its own experience in renewing similar arrangements. An entity would      consider market participant assumptions regarding renewal if no such      relevant experience exists. FSP FAS 142-3 is effective for year ends      beginning after December 15, 2008 with early adoption      prohibited.  The adoption of FSP FAS 142-3 did not have a      material effect on the Company’s financial position and results of      operations. |
|                                                       |   |   |   |
|                                                       |   | Adoption      of FSP No. EITF 03-6-1 |   |
|                                                       |   |   |   |
|                                                       |   | In      June 2008, the Financial Accounting Standards Board (“FASB”) issued FSP      No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based      Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP      EITF 03-6-1 concludes that unvested share-based payment awards that      contain rights to receive non-forfeitable dividends or dividend      equivalents are participating securities, and thus, should be included in      the two-class method of computing earnings per share (“EPS”). FSP EITF      03-6-1 is effective for fiscal years beginning after December 15, 2008,      and interim periods within those years. Early application of EITF 03-6-1      is prohibited. It also requires that all prior-period EPS data be adjusted      retrospectively.  The adoption of FSP No. EITF 03-6-1 did not      have a material effect on the Company’s financial position and results of      operations. |
|                                                       |   |   |   |
|                                                       |   | Recent      Accounting Pronouncements |   |
|                                                       |   |   |   |
|                                                       |   | In      May 2008, the FASB issued SFAS No. 162 “The Hierarchy of Generally      Accepted Accounting Principles”. SFAS 162 identifies the sources of      accounting principles and the framework for selecting the principles used      in the preparation of financial statements of nongovernmental entities      that are presented in conformity with generally accepted accounting      principles (GAAP) in the United States (the GAAP hierarchy). The guidance      will become effective 60 days following the SEC’s approval of the Public      Company Accounting Oversight Board amendments to AU Section 411, “The      Meaning of Present Fairly in Conformity With Generally Accepted Accounting      Principles”. The Company is currently evaluating the impact of adopting      SFAS 162 on its financialstatements. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Recent      Accounting Pronouncements (continued) |   |
|                                                       |   |   |   |
|                                                       |   | In      April 2009, the FASB issued FSP FAS 141(R)-1, “Accounting for Assets      Acquired and Liabilities Assumed in a Business Combination That Arise from      Contingencies.” This FSP requires that assets acquired and liabilities      assumed in a business combination that arise from contingencies be      recognized at fair value if fair value can be reasonably estimated. If      fair value cannot be reasonably estimated, the asset or liability would      generally be recognized in accordance with SFAS No. 5, “Accounting for      Contingencies” and FASB Interpretation No. 14, “Reasonable Estimation of      the Amount of a Loss”. Further, the FASB removed the subsequent accounting      guidance for assets and liabilities arising from contingencies from SFAS      No. 141(R). The requirements of this FSP carry forward without significant      revision the guidance on contingencies of SFAS No. 141, “Business      Combinations”, which was superseded by SFAS No. 141(R). The FSP also      eliminates the requirement to disclose an estimate of the range of      possible outcomes of recognized contingencies at the acquisition date. For      unrecognized contingencies, the FASB requires that entities include only      the disclosures required by SFAS No. 5. This FSP was adopted effective      January 1, 2009. There was no impact upon adoption, and its effects on      future periods will depend on the nature and significance of business      combinations subject to this statement. |
|                                                       |   |   |   |
|                                                       |   | In      April 2009, the Financial Accounting Standards Board (FASB) issued FASB      Staff Position (FSP) Financial Accounting Standard (FAS) 157-4      “Determining Fair Value When the Volume and Level of Activity for the      Asset or Liability Have Significantly Decreased and Identifying      Transactions That Are Not Orderly”. Based on the guidance, if an entity      determines that the level of activity for an asset or liability has      significantly decreased and that a transaction is not orderly, further      analysis of transactions or quoted prices is needed, and a significant      adjustment to the transaction or quoted prices may be necessary to      estimate fair value in accordance with Statement of Financial Accounting      Standards (SFAS) No. 157 “Fair Value Measurements”. This FSP is to be      applied prospectively and is effective for interim and annual periods      ending after June 15, 2009 with early adoption permitted for periods      ending after March 15, 2009. The Company will adopt this FSP for its      quarter ending June 30, 2009.  The Management does not expect      that the adoption of this FSP would have a material effect on the      Company’s financial position and results of    operations. |
|                                                       |   |   |   |
|                                                       |   | In      April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and      Presentation of Other-Than-Temporary Impairments”. The guidance applies to      investments in debt securities for which other-than-temporary impairments      may be recorded. If an entity’s management asserts that it does not have      the intent to sell a debt security and it is more likely than not that it      will not have to sell the security before recovery of its cost basis, then      an entity may separate other-than-temporary impairments into two      components: 1) the amount related to credit losses (recorded in earnings),      and 2) all other amounts (recorded in other comprehensive income). This      FSP is to be applied prospectively and is effective for interim and annual      periods ending after June 15, 2009 with early adoption permitted for      periods ending after March 15, 2009. The Company will adopt this FSP for      its quarter ending June 30, 2009.  The Management does not      expect that the adoption of this FSP would have a material effect on the      Company’s financial position and results of    operations. |
|                                                       |   |   |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      5- | SIGNIFICANT      ACCOUNTING POLICIES (continued) |   |
|                                                       |   |   |   |
|                                                       |   | Recent      Accounting Pronouncements (continued) |   |
|                                                       |   |   |   |
|                                                       |   | In      April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board      (APB) 28-1 “Interim Disclosures about Fair Value of Financial      Instruments”. The FSP amends SFAS No. 107 “Disclosures about Fair Value of      Financial Instruments” to require an entity to provide disclosures about      fair value of financial instruments in interim financial information. This      FSP is to be applied prospectively and is effective for interim and annual      periods ending after June 15, 2009 with early adoption permitted for      periods ending after March 15, 2009. The Company will adopt this FSP for      its quarter ending June 30, 2009.  The Management does not      expect that the adoption of this FSP would have a material effect on the      Company’s financial position and results of operations. |
|                                                       |   |   |   |
|                                                       | Note      6- | PREPAID      EXPENSES |   |
|                                                       |   |   |   |
|                                                       |   | Prepaid      expenses consists of the following: |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | March      31, |    |   | December      31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2009           |    |   | 2008              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | (unaudited)    |    |   |              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |           |    |   |              |   |
| Prepaid      telephone number usage fees                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $              | 27,643  |   |              | $      | 28,823 |   |
| Advance      to telecommunication carriers                                                                                                                                                                                                                                                                                                                                                                                                                   |   |           | 29,251  |   |              |   | 43,769 |   |
| Advance      to purchase equipment *                                                                                                                                                                                                                                                                                                                                                                                                                         |   |           | 302,383 |   |              |   | 302,005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $              | 359,277 |   |              | $      | 374,597 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |           |    |   |              |   |   |   |
| *      Advance to purchase equipment represents cash payments to three venders to      purchase telecommunication equipments which will be used in the Company's      new business lines. These equipments must go through testing before they      can be put into service. These payments represent partial of the purchase      price and Management believes that the amount paid approximates the fair      value based on the progress of the testing. |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      7- | PROPERTY      AND EQUIPMENT, NET |   |
|                                                       |   |   |   |
|                                                       |   | The      following is a summary of property, plant and equipment-at cost, less      accumulated depreciation: |   |

|                                                                                                                                           |   | March      31, |     |   | December      31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|----------|--------|-------------------|--------|
|                                                                                                                                           |   | 2009           |     |   | 2008              |   |
|                                                                                                                                           |   | (unaudited)    |     |   |              |   |
|                                                                                                                                           |   |           |     |   |              |   |
| Network      and office equipment                                                                                                              |   | $              | 123,139  |   |              | $      | 121,660 |   |
| Leasehold      Improvements                                                                                                                    |   |           | 325,010  |   |              |   | 324,603 |   |
|                                                                                                                                           |   |           | 448,149  |   |              |   | 446,263 |   |
|                                                                                                                                           |   |           |     |   |              |   |   |   |
| Less:      Accumulated depreciation                                                                                                            |   |           | (252,698 | )      |              |   | (230,748 | ) |
|                                                                                                                                           |   |           |     |   |              |   |   |   |
|                                                                                                                                           |   |           |     |   |              |   |   |   |
|      Total                                                                                                            |   | $              | 195,451  |   |              | $      | 215,515 |   |
|                                                                                                                                           |   |           |     |   |              |   |   |   |
| Depreciation      expense charged to operations was $21,656 and $19,326 for the three months      ended March 31, 2009 and 2008, respectively. |   |

|   | Note      8- | CONTRACT      SECURITY DEPOSIT                            |   |
|--------|--------------|-----------------------------------------------------------|--------|
|   |         |                                                      |   |
|   |         | Contract      security deposit consists of the following: |   |

|                                                                                                                                                                                                                                                                                                                               |   | March      31, |   |   | December      31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                               |   | 2009           |   |   | 2008              |   |
|                                                                                                                                                                                                                                                                                                                               |   | (unaudited)    |   |   |              |   |
| Security      deposit for GRT's                                                                                                                                                                                                                                                                                                    |   |           |   |   |              |   |
|      public      phone distribution contract with CUBJ                                                                                                                                                                                                                                                    |   | $              | 1,578  |   |              | $      | 1,576 |   |
| Security      deposit for GRT and Beijing Telecom'                                                                                                                                                                                                                                                                                 |   |           |   |   |              |   |   |   |
|      Trust      and Indemnity Agreement with Ms. Yianfang Jin *                                                                                                                                                                                                                                           |   |           | 87,648 |   |              |   | 87,538 |   |
|                                                                                                                                                                                                                                                                                                                               |   | $              | 89,226 |   |              | $      | 89,114 |   |
|                                                                                                                                                                                                                                                                                                                               |   |           |   |   |              |   |   |   |
| *On      September 20, 2007, Ms. Yianfang Jin who owns a 98% equity ownership      interest in GRT executed a Trust and Indemnity Agreements, pursuant      to which Ms. Jin assigned to Beijing Telecom all of the beneficial      interest in her equity ownership interest in GRT, as more fully disclosed      in Note 2. |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      9- | LONG-TERM      INVESTMENT |
|                                                       |   |   |   |
|                                                       |   | Long-term      investment consists of thefollowing: |

|                                        |   | March      31, |    |   |       |   |   | December      31, |   |       |    |   |
|---------------------------------------------|--------|----------------|---------|--------|------------|--------|--------|-------------------|--------|------------|---------|--------|
|                                        |   | 2009           |    |   |       |   |   | 2008              |   |       |    |   |
|                                        |   | (unaudited)    |    |   |       |   |   |              |   |       |    |   |
|                                        |   |           |    |   |       |   |   |              |   |       |    |   |
|                                        |   |           |    |   | Equity     |   |   |              |   |       | Equity  |   |
|                                        |   |                |    |   | Ownership  |   |        |              |   | Ownership  |    |
| Description                                 |   | Amount         |    |   | Percentage |   | Amount |              |   | Percentage |    |
|                                        |   |           |    |   |       |   |   |              |   |       |    |   |
| Joint-venture      with                     |   |           |    |   |       |   |   |              |   |       |    |   |
| Beijing      Zhongheng Technology Co., Inc. |   |           | 233,727 |   |       |   | 10     | %                 |   |       | 233,434 |   |   |   | 10 | % |
|                                        |   | $              | 233,727 |   |       |   |   |              |   | $          | 233,434 |   |   |   |   |   |

|   | Joint-venture      with Beijing Zhongheng Technology Co., Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | On      October 9, 2008, GRT executed an agreement with Beijing Zhongheng      Technology Co., Inc., pursuant to which, GRT agreed to invest $233,434      (RMB 1,600,000), and Beijing Zhongheng Technology agreed to invest      $350,151 (RMB 2,400,000), totaling $584,855 (RMB 4,000,000) to establish a      join-venture to sell international call-forwarding cards.  On      October 21, 2008, GRT wired $233,434 (RMB 1,600,000) to Beijing Zhongheng      Technology Co., Inc.                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | On      November 25, 2008, the parties amended the agreement, pursuant to which      both parties agreed that Beijing Zhongheng Technology Co., Inc. will      increase its investment to $2,100,960 (RMB      14,400,000).  Accordingly, Beijing Zhongheng Technology Co.,      Inc. owns 90% equity ownership interest of the joint-venture and GRT owns      the rest 10% equity ownership interest.  As the project is      currently ongoing, the Management believes the amount invested      approximates the fair value and uses the cost method to record this      transaction. |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      10- | ACCRUED      EXPENSES |   |
|                                                       |   |   |   |
|                                                       |   | Accrued      expenses consists of the following: |   |

|                                                                    |   | March      31, |   |   | December      31, |   |
|-------------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                                    |   | 2009           |   |   | 2008              |   |
|                                                                    |   | (unaudited)    |   |   |              |   |
|                                                                    |   |           |   |   |              |   |
| Employee      benefit payable *                                         |   | $              | 17,577 |   |              | $      | 17,546 |   |
| Accrued      professional fees                                          |   |           | 24,394 |   |              |   | 36,121 |   |
|                                                                    |   | $              | 41,971 |   |              | $      | 53,667 |   |
|                                                                    |   |           |   |   |              |   |   |   |
| *      Employee benefit payable was mainly carried forward from    QTC. |   |           |   |   |              |

|   | Note      11- | DEFERRED      REVENUE                            |   |
|--------|---------------|--------------------------------------------------|--------|
|   |          |                                             |   |
|   |          | Deferred      revenue consists of the following: |   |

|                             |   | March      31, |   |   | December      31, |   |
|----------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                             |   | 2009           |   |   | 2008              |   |
|                             |   | (unaudited)    |   |   |              |   |
|                             |   |           |   |   |              |   |
| Advance      from VoIP customers |   | $              | 1,242  |   |              | $      | 1,679 |   |
|                             |   | $              | 1,242  |   |              | $      | 1,679 |   |

|   |          |                                                       |   |
|--------|---------------|------------------------------------------------------------|--------|
|   | Note      12- | AGREEMENT      SECURITY DEPOSIT                            |   |
|   |          |                                                       |   |
|   |          | Agreement      security deposit consists of the following: |   |

|                                                      |   | March      31, |    |   | December      31, |   |
|-----------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                      |   | 2009           |    |   | 2008              |   |
|                                                      |   | (unaudited)    |    |   |              |   |
|                                                      |   |           |    |   |              |   |
| Security      deposit for the Business Transfer Agreement |   | $              | 321,374 |   |              | $      | 320,971 |   |
|                                                      |   | $              | 321,374 |   |              | $      | 320,971 |   |

|   |   | On      October 18, 2008, GRT signed a “"Business Transfer Agreement" with      Shanghai Zhen Guang Travel Agent and Shanghai North Travel Agent, pursuant      to which, Shanghai Zhen Guang Travel Agent and Shanghai North Travel Agent      agreed to acquire GRT’s call-forwarding operation in Shanghai area for      $511,098 (RMB 3,500,000). On November 30, 2008, the parties agreed to      increase the sales price to $729,480  (RMB 5,000,000) and the      deal will be closed in December 2009.  On October 21, 2008, GRT      received $291,792 (RMB 2,000,000) from Shanghai Zhen Guang Travel Agent,      and $29,179 (RMB 200,000) from Shanghai North Travel Agent as security      deposit for theagreement. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      13- | DUE      TO OFFICERS |   |
|                                                       |   |   |   |
|                                                       |   | Due      to officers consists of the following: |   |

|      |                                          |   | March      31, |   |   | December      31, |   |
|-----------|-----------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|      |                                          |   | 2009           |   |   | 2008              |   |
|      |                                          |   | (unaudited)    |   |   |              |   |
|      |                                          |   |           |   |   |              |   |
| (1)  | Due      to Ms. Shuying Zheng                 |   | $              | 17,592 |   |              | $      | - |   |
| (2)  | GRT      Office rent due to Mr. Guoqing Xu    |   |           | 4,163  |   |              |   | - |   |
| (3)  | QTC      Office rent due to Ms. Shuying Zheng |   |           | 4,382  |   |              |   | - |   |
|      |                                          |   | $              | 26,137 |   |              | $      | - |   |

|   | (1)  | Due      to Ms. Shuying Zheng                                                                                                                                                                                                                                                                                                                                                                                 |   |
|--------|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |      | Due      to Ms. Shuying Zheng, CEO of the Company, represents loans from Ms. Zheng      to finance the Company's operations due to lack of cash resources. These      loans are unsecured, non-interest bearing and have no fixed terms of      repayment, therefore, deemed payable on demand.  Cash flows from      these activities are classified as cash flows from financing      activities. |
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | (2)  | GRT      Lease                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |      | GRT      rents office premise at the market rate from Mr. Guoqing Xu, President of      QTC.  The lease is non-cancelable and will expire in June      2010.  Rent expense amounted to $4,163 and $1,677 for the three      months ended March 31, 2009 and 2008, respectively.  As of March      31, 2009, there was an outstanding balance of $4,163 due to Mr.      Xu.      |
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   | (3)  | QTC      Lease                                                                                                                                                                                                                                                                                                                                                                                                |   |
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|   |      | QTC      rents office premise at the market rate from Ms. Shuying Zheng,      CEO.  The lease is non-cancelable and will expire in June      2010.  Rent expense amounted to $4,382 and $4,193 for the three      months ended March 31, 2009 and 2008, respectively.  As of March      31, 2009, there was an outstanding balance of $4,382 due to Ms.      Zheng.             |

|                                                             |   | For      the Three Months Ended |   |
|------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                             |   | March      31,                  |   |
|                                                             |   | 2009                            |   |   | 2008 |   |
|                                                             |   | (unaudited)                     |   |   | (unaudited) |   |
|                                                             |   |                            |   |   |   |   |
| Acquisition      consultancy fees                                |   | $                               | -      |   |   | $ | 33,000 |   |
| Amortization      of costs of common stock issued for            |   |                            |   |   |   |   |   |   |
|     compensation      of consultant services |   |                            | 11,000 |   |   |   | 107,690 |   |
| Other      consultancy fees                                      |   |                            | -      |   |   |   | 8,192 |   |
|                                                             |   | $                               | 11,000 |   |   | $ | 148,882 |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      15- | SEGMENT      REPORTING |   |
|                                                       |   |   |   |
|                                                       |   | GRT      Operation |   |
|                                                       |   |   |   |
|                                                       |   | For      the three months ended March 31, 2009 and 2008, GRT operates in four      reportable business segments that are determined based upon differences in      products and services. GRT does not allocate any operating expenses or      assets to its four business segments as management does not use this      information to measure the performance of the operating segments. Certain      costs of revenues are shared between business segments.  Also,      no measures of assets by segment are reported and used by the chief      operating decision maker. Hence, GRT has not made disclosure of total      assets by reportable segments. |
|                                                       |   |   |   |
|                                                       |   | Summarized      information by business segment for the three months ended March 31, 2009      and 2008 is asfollows: |

|                                                                  |   | For      the Three Months Ended |    |
|-----------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                  |   | March      31,                  |    |
|                                                                  |   | 2009                            |    |   | 2008 |   |
| REVENUE                                                               |   |                            |    |   |   |   |
|      GRT      public telephone service       |   | $                               | 1,127   |   |   | $ | 5,144 |   |
|      GRT      network solution               |   |                            | -       |   |   |   | - |   |
|      GRT      VoIP call time distribution    |   |                            | 22,131  |   |   |   | 88,950 |   |
|      GRT      sales of call forwarding cards |   |                            | -       |   |   |   | 1,062 |   |
|                                                                  |   |                            |    |   |   |   |   |   |
| COST      OF SALES                                                    |   |                            |    |   |   |   |   |   |
|      GRT      public telephone service       |   | $                               | 1,217   |   |   | $ | 8,386 |   |
|      GRT      network solution               |   |                            | -       |   |   |   | - |   |
|      GRT      VoIP call time distribution    |   |                            | 14,571  |   |   |   | 74,078 |   |
|      GRT      sales of call forwarding cards |   |                            | -       |   |   |   | 1,576 |   |
|                                                                  |   |                            |    |   |   |   |   |   |
| GROSS      PROFITS                                                    |   |                            |    |   |   |   |   |   |
|      GRT      public telephone service       |   | $                               | (90     | ) |   | $ | (3,242 | ) |
|      GRT      network solution               |   |                            | -       |   |   |   | - |   |
|      GRT      VoIP call time distribution    |   |                            | 7,560   |   |   |   | 14,872 |   |
|      GRT      sales of call forwarding cards |   |                            | -       |   |   |   | (514 | ) |
|                                                                  |   |                            |    |   |   |   |   |   |
| TOTAL      ASSETS OF GRT                                              |   | $                               | 710,821 |   |   | $ | 848,795 |   |

----

| SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|------------------------------------------------------------|
|                                                       |   |   |   |
|                                                       |   |   |   |
| NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS            |
|                                                       |   |   |   |
|                                                       |   |   |   |
|                                                       | Note      16- | CONCENTRATIONS      AND RISKS |   |
|                                                       |   |   |   |
|                                                       |   | Major      Suppliers |   |
|                                                       |   |   |   |
|                                                       |   | GRT      signed non-exclusive agreements with CUSH and CUSX to facilitate the      international call forwarding business and to distribute VoIP call time      purchased from the carriers.  If the strategic relationship with      either CUSH and CUSX is terminated or scaled-back, or if CUSH and CUSX      alter the co-operative arrangements, GRT’s revenue from international call      forwarding service and VoIP call time distribution might be adversely      affected. |
|                                                       |   |   |   |
|                                                       | Note      17- | COMMITMENTS      AND CONTINGENCIES |   |
|                                                       |   |   |   |
|                                                       |   | PRC's      political and economic system |   |
|                                                       |   |   |   |
|                                                       |   | The      Company faces a number of risks and challenges not typically associated      with companies in North America and Western Europe, since its assets exist      solely in the PRC, and its revenues are derived from its operations      therein.  The PRC is a developing country with an early stage      market economic system, overshadowed by the state.  Its      political and economic systems are very different from the more developed      countries and are in a state of change.  The PRC also faces many      social, economic and political challenges that may produce major shocks      and instabilities and even crises, in both its domestic arena and in its      relationships with other countries, including the United      States.  Such shocks, instabilities and crises may in turn      significantly and negatively affect the Company's    performance. |
|                                                       |   |   |   |
|                                                       |   | Governmental      control of currency conversion |   |
|                                                       |   |   |   |
|                                                       |   | The      PRC government imposes controls on the convertibility of Renminbi into      foreign currencies and, in certain cases, the remittance of currency out      of the PRC. The Company receives all of its revenues in Renminbi, which is      currently not a freely convertible currency. Shortages in the availability      of foreign currency may restrict the Company’s ability to remit sufficient      foreign currency to satisfy foreign currency denominated      obligations.  Under existing PRC foreign exchange regulations,      payments of current account items, including profit distributions,      interest payments and expenditures from the transaction, can be made in      foreign currencies without prior approval from the PRC State      Administration of Foreign Exchange by complying with certain procedural      requirements. However, approval from appropriate governmental authorities      is required where Renminbi is to be converted into foreign currency and      remitted out of China to pay capital expenses such as the repayment of      bank loans denominated in foreign currencies. |
|                                                       |   |   |   |
|                                                       |   | The      PRC government may also at its discretion restrict access in the future to      foreign currencies for current account transactions. If the foreign      exchange control system prevents the Company from obtaining sufficient      foreign currency to satisfy its currency demands, the Company may not be      able to pay certain of its expenses as they come  due. |

----

| ITEM      2. | MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS |
|--------------|-------------------------------------------------------------------------------------------------------|

| Ø | The      tariffs on mobile phone calls in China have fallen by approximately 80% in      the past two years.  As a result, the use of cell phones has      increased dramatically, with a concomitant slackening of demand for our      payphone services.  When we initiated our business, the average      cell phone tariff was five times the tariff on a call from our      payphones.  Now the difference is  insignificant. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Ø | In      January 2007 China Netcom (Beijing) Corporation Limited cancelled the      contract under which we distributed its fixed line call      times.  This contract had generated $57,329 in revenue for us in      the first nine months of 2006. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | § | as      the capital of China, Beijing attracts 80-90% of foreign tourists      traveling to China, and thus has a much larger potential customer bases      than Shanghai; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | § | our      executive offices and connections are based in Beijing, which would      substantially reduce our operational cost and improve our      profitability. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

| ITEM      3. | QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK |
|--------------|----------------------------------------------------------------|

| ITEM      4. | CONTROLS      AND PROCEDURES |
|--------------|------------------------------|

| Item 6. | Exhibits                           |
|---------|-----------------------------------------|
|    |                                    |
| 31      | Rule      13a-14(a) Certification       |
| 32      | Rule      13a-14(b) Certification  |

----

|                   | SMOOTH      GLOBAL (CHINA) HOLDINGS, INC. |
|------------------------|-------------------------------------------|
|                   |                                      |   |
| Date:      May 4, 2009 | By:                                       | /s/ Zheng      Shuying |
|                   |                                      | Zheng      Shuying, Chief Executive Officer |
|                   |                                      | and      Chief Financial Officer |

----