U.
S. Securities
and Exchange Commission


Washington,
D. C. 20549





FORM
10-Q





[X]
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
quarterly period ended March 31, 2008





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


For the
transition period from _____ to _____





Commission
File No. 0-25707





SMOOTH
GLOBAL (CHINA)
HOLDINGS, INC.


(Name of
Small Business Issuer in its Charter)




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





Room 618, +17 Anyuan Road,
Chaoyang District, Beijing, P.R. China 100029


(Address
of Principal Executive Offices)




Issuer's
Telephone Number: 86-10-6498-7788





Indicate  by
check mark  whether the  Registrant  (1) has filed
all reports required to be filed by Sections 13 or 15(d) of
the  Securities Exchange Act of
1934  during  the  preceding  12
months  (or for such shorter  period  that the
Registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.





YesX                  No
__




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check One)




Large
      accelerated filer o
            
            Accelerated
      filero
            
            Non-accelerated
      filero
            
            Small
      reporting company x





Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange
Act).  Yes__                No   X





APPLICABLE
ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the Registrant's classes of common stock, as of the latest
practicable date:




May 19,
2008


Common
Stock: 38,381,375 shares








SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES


F/K/A
THE BRALORNE MINING COMPANY AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





March
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            96,754
            
            
            $
            521,016Accounts
      receivable, net (Note 5)
            
            
            215,323
            
            
            
            209,948Prepaid
      expense (Note 6)
            
            
            633,033
            
            
            
            370,632Purchased
      calling card
            
            
            -
            
            
            
            403Total
      current assets
            
            
            945,110
            
            
            
            1,101,999Property,
      Plant, and Equipment, net (Note 7)
            
            
            268,244
            
            
            
            281,482Long-term
      Investment
            
            
            61,212
            
            
            
            -Contract
      Security Deposit (Note 8)
            
            
            87,108
            
            
            
            83,400Total
      Assets
            
            $
            1,361,674
            
            
            $
            1,466,881LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accrued
      expenses (Note 9)
            
            
            30,220
            
            
            
            59,548Taxes
      payable
            
            
            106
            
            
            
            399Deferred
      revenue
            
            
            1,379
            
            
            
            1,079Due
      to officers (Note 10)
            
            
            5,998
            
            
            
            -Total
      Current Liabilities
            
            
            37,703
            
            
            
            61,026Commitments
      and Contingencies (Note 13)
            
            
            -
            
            
            
            -Stockholders'
      Equity:Common
      stock, $0.001 par value, 200,000,000 shares authorized;38,381,375
      shares issued and outstanding as ofMarch 31, 2008 and December 31, 2007
            
            
            38,381
            
            
            
            38,381Additional
      paid-in capital
            
            
            799,255
            
            
            
            799,255Unamortized
      contractual services costs
            
            
            (153,523
            )
            
            
            (261,213
            )Statutory
      reserves
            
            
            236,875
            
            
            
            236,875Retained
      earnings
            
            
            249,870
            
            
            
            501,476Accumulated
      other comprehensive income
            
            
            153,113
            
            
            
            91,081Stockholders'
      Equity
            
            
            1,323,971
            
            
            
            1,405,855Total Liabilities and Stockholders' Equity
            
            $
            1,361,674
            
            
            $
            1,466,881






See
Notes to Consolidated Financial Statements





2






SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES
 F/K/A
THE BRALORNE MINING COMPANY AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME


For
      the Three Months EndedDecember
      31,2008
            
            
            2007(unaudited)
            
            
            (unaudited)Revenues(a)
      QTC VoIP call time distribution
            
            $
            2,977
            
            
            $
            -(b)
      GRT public telephone service
            
            
            5,144
            
            
            
            19,855(c)
      GRT network solution
            
            
            -
            
            
            
            12,482(d)
      GRT VoIP call time distribution
            
            
            88,950
            
            
            
            -(e)
      GRT sales of call forwarding cards
            
            
            1,062
            
            
            
            97,501Total
      Revenue
            
            
            
            98,133
            
            
            
            129,838Costs
      of Revenue(a)
      QTC VoIP call time distribution
            
            
            8,257
            
            
            
            -(b)
      GRT public telephone service
            
            
            8,386
            
            
            
            43,436(c)
      GRT network solution
            
            
            -
            
            
            
            -(d)
      GRT VoIP call time distribution
            
            
            74,078
            
            
            
            -(e)
      GRT sales of call forwarding cards
            
            
            1,576
            
            
            
            44,930Total
      Costs of Revenue
            
            
            92,297
            
            
            
            88,366Gross
      Profit
            
            
            5,836
            
            
            
            41,472Operating
      ExpensesCompensation
      to CEO
            
            
            44,028
            
            
            
            -Payroll
      and employee benefit
            
            
            12,995
            
            
            
            3,597Depreciation
      expenses
            
            
            19,326
            
            
            
            3,426Office
      expenses
            
            
            6,953
            
            
            
            2,269Repair
      and maintenance
            
            
            518
            
            
            
            1,707Professional
      fees
            
            
            4,000
            
            
            
            -Consultant
      fees
            
            
            148,882
            
            
            
            -Travel
      and entertainment
            
            
            20,654
            
            
            
            9,568Other
      general and administrative expenses
            
            
            283
            
            
            
            545Total
      Operating Expenses
            
            
            257,639
            
            
            
            21,112Income
      (Loss) from Operation
            
            
            (251,803
            )
            
            
            20,360Other
      IncomeInterest
      income
            
            
            197
            
            
            
            25Commission
      on sales of art
            
            
            -
            
            
            
            -Total
      other income
            
            
            197
            
            
            
            25Income
      (Loss) before provisionfor Income Tax
            
            
            (251,606
            )
            
            
            20,385Provision
      for Income Tax
            
            
            -
            
            
            
            -Net
      Income
            
            
            (251,606
            )
            
            
            20,385Other
      Comprehensive Income (Loss)Effects of Foreign Currency
      Conversion
            
            
            62,033
            
            
            
            1,081Comprehensive
      Income (Loss)
            
            $
            (189,573
            )
            
            $
            21,466Basic
      and fully diluted earnings (loss) per share
            
            $
            (0.00
            )
            
            $
            0.00Weighted
      average shares outstanding
            
            
            38,381,375
            
            
            
            33,000,000






See
Notes to Consolidated Financial Statements





3






SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES F/K/A
THE BRALORNE MINING COMPANY AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS


For
      the Three Months EndedMarch
      31,2008
            
            
            2007(unaudited)
            
            
            (unaudited)Operating
      ActivitiesNet
      income (loss)
            
            $
            (251,606
            )
            
            $
            20,385Adjustments
      to reconcile net income (loss) tonet
      cash provided (used) by operating activities:Depreciation
            
            
            19,326
            
            
            
            3,426Deferred
      consultant compensation
            
            
            107,690
            
            
            
            -Changes
      in operating assets and liabilities:(Increase)/Decrease
      in accounts receivable
            
            
            (4,659
            )
            
            
            47,413(Increase)/Decrease
      in purchased SIM cards
            
            
            403
            
            
            
            (66,853
            )(Increase)/Decrease
      in prepaid expenses
            
            
            (262,401
            )
            
            
            (1,306
            )Increase/(Decrease)
      in accounts payable and accrued expenses
            
            
            (24,047
            )
            
            
            (4,431
            )Increase/(Decrease)
      in deferred revenue
            
            
            300
            
            
            
            -Increase/(Decrease)
      in taxes payable
            
            
            (293
            )
            
            
            -Net
      cash provided (used) by operating activities
            
            
            (415,287
            )
            
            
            (1,366
            )Investing
      ActivitiesInvestment
      in subsidiary
            
            
            (61,212
            )
            
            
            -Purchase
      of fixed assets
            
            
            -
            
            
            
            (1,610
            )Net
      cash (used) by investing activities
            
            
            (61,212
            )
            
            
            (1,610
            )Financing
      ActivitiesLoans
      from shareholders
            
            
            -
            
            
            
            31,263Net
      cash provided (used) by financing activities
            
            
            -
            
            
            
            31,263Increase
      (decrease) in cash
            
            
            (476,499
            )
            
            
            28,287Effects
      of exchange rates on cash
            
            
            52,237
            
            
            
            1,201Cash
      at beginning of the period
            
            
            521,016
            
            
            
            42,985Cash
      at end of the period
            
            $
            96,754
            
            
            $
            72,473Supplemental
      Disclosures of Cash Flow Information:Cash
      paid (received) during year for:Interest
            
            $
            -
            
            
            $
            -Income
      taxes
            
            $
            -
            
            
            $
            -


See
Notes to Consolidated Financial Statements


4





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.  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-KSB for the year ended December 31, 2007.





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 of providing 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 a 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 in PRC.









5


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 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.







6


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:




Smooth
      Global (China)100%
      Equity Ownership Interest
            
            
            100%
      Equity Ownership InterestGold
      Profit
            
            Smooth
      Global(BVI
      Company)
            
            (BVI
      Company)100%
      Equity Ownership Interest
            
            
            100%
      Equity Ownership InterestQTC
            
            Beijing
      Telecom(PRC
      Company)
            
            (PRC
      Company)100%
      Beneficial InterestGRT(PRC
      Company)





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.





7


SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
2-ORGANIZATION AND OPERATIONS (continued)




Business
Operation




(a)
QTC VoIP Call Time Distribution




QTC
telecommunication services mainly focus on call time distribution.  It
provides enterprise phone users and public phone users with access to China
Netcom (Shaoxing) Corporation Limited (“CNSX”) and China Netcom (Guangdong)
Corporation Limited (“CNGD”) network via phones connected to QTC's
telecommunication server.  Both CNSX and CNGD are subsidiaries of
China Netcom (Group) Company Limited, one of the largest telecommunications
carriers in PRC. QTC signed non-exclusive distribution agreement with CNSX and
CNGD to distribute their Voice Over Internet Protocol (“VoIP”) call time in the
PRC.




(b)  GRT
Public Telephone Service




GRT
provides public phone users with access to China United Telecommunications
(Beijing) Corporation Limited (“CUBJ”) network via paid phones installed in
outlets located in universities, convenience shops and street
corners.  These outlets are managed but not necessary owned by GRT.
CUBJ is a subsidiary of China United Telecommunications Corporation Limited
("CUTC"), one of the largest telecommunications carriers in PRC. GRT signed
non-exclusive distribution agreement with CUBJ to distribute its traditional
fixed line call time in Beijing City, PRC.




(c)
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.




(d)
GRT VoIP Call Time Distribution




Beginning
from January 2008, GRT also provides VoIP service as QTC does.  GRT
signed non-exclusive distribution agreement with CNSX and China Netcom
(Shanghai) Corporation Limited (“CNSH”)  to distribute their VoIP call
time.




(e)
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.







8


SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
3-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
4-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 reasonably assured.









9


SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS










Note
4-SIGNIFICANT ACCOUNTING POLICIES (continued)




Revenue
Recognition (continued)




(a)
QTC VoIP Call Time Distribution




QTC
contracted with CNSX and CNGD 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 CNSX and CNGD, 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 own server.




(b)  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.  GRT generally received these refunds one month
behind.




(
c ) 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.




(d)
GRT VoIP Call Time Distribution




GRT
contracted with CNSX and CNSH for the distribution of their VoIP call time.
Similar to QTC, GRT VoIP call time distribution revenue is generally recognized
when the end user makes a call through the phone connected to GRT's
telecommunication server.









10


SMOOTH
GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-SIGNIFICANT ACCOUNTING POLICIES (continued)




(e)
International Call Forwarding Service




GRT
purchases a foreign SIM card and then attaches it with a specified phone number,
which GRT bought from China Netcom (Shanghai) Corporation Limited
(“CNSH”).   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 CNSH or China Netcom (Shaoxing) Corporation
Limited ("CNSX").  GRT signed non-exclusive agreements with CNSH and
CNSX to forward phone calls via their network.




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.




(f)
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, 2008 and 2007.














11


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-SIGNIFICANT ACCOUNTING POLICIES (continued)




Cost
of Revenue




(a)
QTC VoIP Call Time Distribution




Costs of
VoIP call time distribution principally include the costs of VoIP call time
purchased from CNSX and CNGD.




(b)  GRT
Public Telephone Service




Costs of
public telephone service mainly include costs to buy call time from
CUBJ.




(
c ) 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.




(d)
GRT VoIP Call Time Distribution




Costs of
VoIP call time distribution principally include the costs of VoIP call time
purchased from CNSX and CNSH.




(e)
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.




(f)
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.














12


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-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 insured 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.









13


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-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
            
            ResidualLife
            
            ValueNetwork
      and computer equipment
            5
      years
            
            4%Office
      equipment and furniture
            5
      years
            
            4%Leasehold
      Improvements
            
            5
      years (Lease duration)
            0%


Expenditure
for maintenance and repairs is expended as incurred.




Long-term
Investment




The
Company executed an agreement with Xinjiang Jinzhonghua Telecommunication
Services Co., Inc., pursuant to which each party agrees to invest $61,212,
totaling $122,424 (RMB 857,304) to establish a join-venture to sell and
manufacture wireless network extension equipment.  The establishment
of the joint venture is currently ongoing.




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, 2008 and
2007, 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, 2008 and 2007, respectively.














14


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-SIGNIFICANT ACCOUNTING POLICIES (continued)




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 in operations.




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 153,113 as of March 31, 2008, and $91,081
as of December 31, 2007.  The balance sheet amounts with the exception
of equity at March 31, 2008 were translated at 7.00 RMB to $1.00 USD as compared
to 7.31 RMB at December 31, 2007. 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, 2008 and 2007 were 7.15
RMB and 7.77 RMB, respectively.




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.









15


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-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, 2008 and 2007, 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 or
benefit.














16


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
4-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 month periods ended March 31, 2008 and
2007, respectively.




Recent
Accounting Pronouncements




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 Management does
not expect that the adoption of SFAS No. 161 would have a material effect on the
Company’s financial position and results of operations.




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.
Management does not expect that the adoption of SFAS No. 141 (revised 2007) and
SFAS No. 160 would have a material effect on the Company’s financial position
and results of operations.









17


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
5-ACCOUNTS RECEIVABLE




Accounts
receivable consists of the following:


March
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)Franchise
      fees receivable
            
            $
            213,486
            
            
            $
            204,399Other
      accounts receivable
            
            
            1,837
            
            
            
            5,549less:
      Allowance for bad debt
            
            
            -
            
            
            
            -Accounts  receivable,
      net
            
            $
            215,323
            
            
            $
            209,948


The
majority of the Company’s sales are on open account terms and in accordance with
terms specified in the contracts governing the relevant transactions. The
Company evaluates the need of an allowance for doubtful accounts based on
specifically identified amounts that management believes to be uncollectible. If
actual collections experience changes, revisions to the allowance may be
required. Based upon the aforementioned criteria, management has determined that
no provision for uncollectible accounts is required as of March 31, 2008 and
December 31, 2007.




Note
6-PREPAID EXPENSES




Prepaid
expenses consist of the following:




March
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)Prepaid
      travel expenses
            
            $
            -
            
            
            $
            19,141Advance
      to telecommunication carriers
            
            
            46,053
            
            
            
            9,685Advance
      to purchase SIM cards
            
            
            99,960
            
            
            
            95,706Advance
      to purchase equipment
            
            
            257,040
            
            
            
            246,100Advance
      to a consultant
            
            
            49,980
            
            
            
            -Advance
      to an investor relation firm
            
            
            180,000
            
            
            
            -$
            633,033
            
            
            $
            370,632





18


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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
      31,2008
            
            
            2007(unaudited)Network
      and computer equipment
            
            $
            125,157
            
            
            $
            119,828Office
      equipment and furniture
            
            
            94,717
            
            
            
            90,688Leasehold
      Improvements
            
            
            317,714
            
            
            
            304,192537,588
            
            
            
            514,708Less:
      Accumulated depreciation
            
            
            (269,344
            )
            
            
            (233,226
            )Total
            
            $
            268,244
            
            
            $
            281,482





Depreciation
expense charged to operations was $19,326 and $3,426 for the three months ended
March 31, 2008 and 2007, respectively.




Note
8-CONTRACT SECURITY DEPOSIT




Contract
security deposit consists of the following:




March
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)Security
      deposit for GRT's public phone distribution contract with
    CUBJ
            
            $
            1,428
            
            
            $
            1,367Security
      deposit for GRT and Beijing Telecom'Trust
      and Indemnity Agreement with Ms. Yianfang Jin  *
            
            
            85,680
            
            
            
            82,033$
            87,108
            
            
            $
            83,400





*On
September 20, 2007, Ms. Yianfang Jin, who owns a 98% equity ownership interest
in GRT, executed a Trust and Indemnity Agreement,  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 1.








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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
9-ACCRUED EXPENSES




Accrued
expenses consist of the following:


March
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)Employee
      benefit payable *
            
            $
            17,502
            
            
            $
            16,786Accrued
      professional fees
            
            
            12,718
            
            
            
            42,762$
            30,220
            
            
            $
            59,548


*
Employee benefit payable was mainly carried forward from QTC.




Note
10-RELATED PARTIES TRANSACTIONS




Compensation
to Ms. Zheng Shuying, CEO




The
Company paid $44,028 in cash to Ms. Zheng Shuying, CEO, as compensation for the
three months ended March 31, 2008.  The Company did not pay
compensation to Ms. Zheng for the three months ended March 31,
2007.




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 $1,677 and $772 for the three months
ended March 31, 2008 and 2007, respectively.  As of March 31, 2007,
there was an outstanding balance of $1,714 due to Mr. Xu.




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 $4,193 for the three months ended March 31, 2008.  As of
March 31, 2008, there was an outstanding balance of $4,284 due to Ms.
Zheng.







20


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS







Note
10-RELATED PARTIES TRANSACTIONS (Continued)




Due to
officers consists of the following:


March
      31,
            
            
            December
      31,2008
            
            
            2007(unaudited)GRT
      Office rent due to Mr. Guoqing Xu
            
            $
            1,714
            
            
            $
            -QTC
      Office rent due to Ms. Shuying Zhen
            
            
            4,284
            
            
            
            -$
            5,998
            
            
            $
            -





Note
11-SEGMENT REPORTING




QTC
Operation




QTC
operated in one reportable business segment for the three months ended March 31,
2008.  Summarized information follows:





For
      the three months ended March 31, 2008REVENUEQTC
      VoIP Call Time Distribution
            
            $
            2,977COST
      OF SALESQTC
      VoIP Call Time Distribution
            
            $
            8,257GROSS
      PROFITSQTC
      VoIP Call Time Distribution
            
            $
            (5,280
            )TOTAL
      ASSETSQTC
      VoIP Call Time Distribution
            
            $
            174,498


GRT
Operation




For the
three months ended March 31, 2008 and 2007, GRT operated 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.





21


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
11-SEGMENT REPORTING (continued)




GRT
Operation (continued)




Summarized
information by business segment for the three months ended March 31, 2008 and
2007 is as follows:


For
      the Three Months EndedMarch
      31,2008
            
            
            2007REVENUEGRT
      public telephone service
            
            $
            5,144
            
            
            $
            19,855GRT
      network solution
            
            
            -
            
            
            
            12,482GRT
      VoIP call time distribution
            
            
            88,950
            
            
            
            -GRT
      sales of call forwarding cards
            
            
            1,062
            
            
            
            97,501COST
      OF SALESGRT
      public telephone service
            
            $
            8,386
            
            
            $
            43,436GRT
      network solution
            
            
            -
            
            
            
            -GRT
      VoIP call time distribution
            
            
            74,078
            
            
            
            -GRT
      sales of call forwarding cards
            
            
            1,576
            
            
            
            44,930GROSS
      PROFITSGRT
      public telephone service
            
            $
            (3,242
            )
            
            $
            (23,581
            )GRT
      network solution
            
            
            -
            
            
            
            12,482GRT
      VoIP call time distribution
            
            
            14,872
            
            
            
            -GRT
      sales of call forwarding cards
            
            
            (514
            )
            
            
            52,571TOTAL
      ASSETS OF GRT
            
            $
            848,795
            
            
            $
            215,102





Note
12-CONCENTRATIONS AND RISKS




(a)
Major Suppliers




All of
QTC's VoIP call time distribution revenue for the three months ended March 31,
2008 is derived from distribution of VoIP call time purchased from CNSX and
CNGD.  If the strategic relationship with either CNSX or CNGD is
terminated or scaled-back, or if CNSX and CNGD alter the co-operative
arrangements, QTC’s VoIP call time distribution revenue might be adversely
affected.









22


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
12-CONCENTRATIONS AND RISKS (Continued)




GRT
signed non-exclusive agreements with CNSH and CNSX to facilitate the
international call forwarding business and to distribute VoIP call time
purchased from such carriers.  If the strategic relationship with
either CNSH and CNSX is terminated or scaled-back, or if CNSH and CNSX alter the
co-operative arrangements, GRT’s revenue from international call forwarding
service and VoIP call time distribution might be adversely
affected.




(b)
Fluctuation in Revenue from Call Forwarding Service




GRT
derives revenue from sales of call forwarding cards and relevant franchise fees
from franchised distributors.  The market for our call forwarding
service is those Chinese residents who travel abroad for business or personal
reasons.   The demand for call forwarding cards is not stable, as
it is high in busy travel seasons, and low in less busy travel
seasons.  Accordingly, GRT's revenue from call forwarding service
fluctuates time by time.




Note
13-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.




23


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NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS









Note
13-COMMITMENTS AND CONTINGENCIES (continued)




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.



















24


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




Results
of Operations




On October 24, 2007 we acquired
beneficial ownership of Beijing GRT Information Services Limited (Beijing
GRT”).  Because we issued approximately 86% of our equity in exchange
for ownership of Beijing GRT and because the assets of Beijing GRT substantially
exceeded our assets before the acquisition, we have classified the acquisition
as a reverse merger for accounting purposes.  For that reason, our
Consolidated Statements of Operations and Other Comprehensive Income for the
three month periods ending March 31, 2008 and 2007 include the financial results
of Beijing GRT during those two periods, but include the financial results of
our other subsidiary, Beijing Quan Tong Chang Information Service Limited
(“Beijing QTC”) only for the first quarter of 2008.





Beijing
QTC had been primarily involved in the business of operating public payphones,
but also generated revenue by marketing internet phone systems.  We
chose to replace Beijing QTC as the focus of our operations because we saw that
business waning.  As expected, in the first three months of 2008 we
realized only $2,977 in revenue from Beijing QTC and only $5,144 from public
telephone services.  The primary reasons for the reduction
were:




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.


The
acquisition of Beijing GRT returned the Company to profitability in
2007.  During 2007 we recorded $1,922,748 in revenue, most of which
was attributable to the international call forwarding business of Beijing
GRT:  $1,196,996 from our sale of SIM cards and an additional $527,753
in fees paid by our franchisees.





Despite
the success of our international call forwarding business in 2007, during the
first three months of 2007 a hiatus occurred in that business.  We
realized only $1,062 in revenue from the sale of call forwarding cards, and no
revenue from the sale of franchises.  The reasons for the
near-elimination of call forwarding revenue in the recent quarter were
two:




Ø
            In
      this initial stage of our call forwarding business, we are focusing our
      efforts on the vacation travel market.  The residents of China
      are most likely to vacation during one of the long
      holidays.  During the first three months of the year, however,
      the only long holiday is Chinese New Year.  While this is an
      especially long holiday, it is one during which Chinese people customarily
      return to their family homes.  So there is little foreign
      vacation travel during these three months.  For this reason, we
      curtailed our marketing efforts during the
  quarter.




25


Ø
            In
      an effort to rapidly develop a market presence, we provided our sales
      agents particularly large discounts on sales of SIM cards at the end of
      2007.  This resulted in large stocks remaining in the
      inventories of our agents going into 2008.  For that reason,
      almost none of our sales agents placed orders during the first three
      months of 2008.




We expect
our international call forwarding business to revitalize in the near term, and
expect that by year-end it will represent the largest portion of our
business.




Because
our international call forwarding business became dormant during the three
months ended March 31, 2008, most of our revenue arose from another of our
telecommunications services:  VoIP call time
distribution.  GRT entered this business in January 2008 by
contracting with China Netcom (Shaoxing) Corporation Limited and with China
Netcom (Shanghai) Corporation Limited.  Those two carries sell us
usage units on their VoIP systems, which we in turn sell to customers who link
to the systems through our servers.  The sale of VoIP time yielded
$91,927 in revenue during the first three months of 2008, when we first entered
the market.  We expect this portion of our business to expand
considerably in the future.





Because
of the hiatus in our call forwarding business, our operating expenses were
significantly greater than our revenue in the three months ended March 31,
2008:  $257,639 vs. $98,133.  The primary components of
operating expenses were (1) employee compensation, $57,023, most of which was
paid to our Chief Executive Officer, and (2) consulting fees of
$148,882.  The consulting fees resulted from four contracts that we
entered in August and September 2007 with consultants who are assisting us in
rebuilding our company’s business.  To compensate these individuals we
issued them shares of our common stock, which had a market value of
$404,800.  We are expensing that amount over the lives of the four
contracts, which range from nine months to two years.  Because the
largest contract will be fully amortized over a nine month term, these contracts
will add approximately $36,000 per month to our expenses through the second
quarter of this year, then will amortize at a lower rate for the remainder of
the two year terms.




We
incurred a net loss of $251,606 for the three months ended March 31, 2008,
compared to net income of $20,385 in the three months ended March 31,
2007.  The loss will provide us a future tax
benefit.  However, because there is no certainty that we will realize
taxable income in the future, we did no record any deferred tax benefit as a
result of the loss.





Our business operates primarily in
Chinese Renminbi, but we report our results in our SEC filings in U.S.
Dollars.  The conversion of our accounts from RMB to Dollars results
in translation adjustments, which are reported as a middle step between net
income and comprehensive income.  The net income is added to the
retained earnings on our balance sheet; while the translation adjustment is
added to a line item on our balance sheet labeled “accumulated other
comprehensive income,” since it is more reflective of changes in the relative
values of U.S. and Chinese currencies than of the success of our
business.  In the first three months of 2008, the effect of converting
our financial results to Dollars was to add $62,033 to our comprehensive
income.





26


Liquidity and Capital
Resources





We
reduced our cash position by $476,499 during the first quarter of
2008.  The primary reason for the reduction was our operating
loss.  In addition, however, we increased our prepaid expenses by
$262,401 – this expense primarily representing prepayments for investor
relations and other consulting services.





Establishing
our several telecommunications businesses in the public consciousness will cost
money.  At March 31, 2008 we had only $96,754 in cash on our balance
sheet.  Our plan, however, is to expand our operations by opening an
additional 18 sales offices throughout China, and hiring 100 additional sales
personnel to staff the offices.  We estimate that the start-up expense
associated with each new office will be $30,000 to
$50,000.  Therefore, fulfillment of our goal of 20 sales offices will
depend on our ability to obtain financing.





We have
little on our balance sheet that could be pledged as collateral for
debt.  For that reason, our ability to finance growth will necessarily
involve the sale of our equity.  Our ability to sell equity at an
acceptable price is not assured, and to date we have no commitments for
funding.  So we will continue to explore opportunities for
financing.  The cash flow from our business is sufficient to
indefinitely sustain our operations as they are currently
configured.  But in order to take full advantage of our market
opportunity, we will require additional funds.




Off-Balance
Sheet Arrangements




We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition or results of
operations.





Risk Factors that May Affect Future
Results





You should carefully consider the risks
described below before buying our common stock.  If any of the risks
described below actually occurs, that event could cause the trading price of our
common stock to decline, and you could lose all or part of your
investment.





Implementation of our international
call forwarding business will require substantial additional capital, which may
result in dilution of our existing shareholders.




In order to fully implement its
business plan, Beijing GRT will require a substantial amount of additional
capital.  It is likely that, in order to obtain that capital, Beijing
GRT will be forced to issue a large portion of its equity.  That
financing, if it occurs, will reduce the portion of our equity held by our
existing shareholders, and may reduce the value of their shares, if the sale of
equity occurs at prices lower than the current market price.  On the
other hand, if we are unable to obtain the necessary capital, the business will
fail.





Our international call forwarding
business is new and untested, so it may fail.




Our business plan relies on the success
of the international call forwarding business operated by Beijing
GRT.  This is a relatively new business for Beijing GRT – it commenced
operations in February 2007 - and international call forwarding is, in fact, a
new business in China.  Because we have limited historical results to
consider, there may be factors we have not considered or do not foresee that may
cause the business to fail.





27


If a major carrier undertook to compete
against us in the international call forwarding business, our resources might
not be sufficient to compete effectively.




There are low barriers to entry into
the international call forwarding business.  We have no patents on the
technology, nor are there significant trade secrets to give us a privileged
position in the market.  Our success in this new business will depend
on our marketing acumen, our good relations with the major telephone carriers,
and the quality of the service we provide.  If a major
telecommunications carrier or other highly capitalized business entered the
market, our resources might not permit us to compete effectively against the
competitor’s ability to devote vast capital and human resources to the project
of accumulating the relationships that will be key to success in this
business.





If
the major carriers reduce their roaming charges, we will lose the key
competitive advantage of our international call forwarding service.




For most subscribers to a mobile phone
service, the default position when they travel is to use their carrier’s roaming
services – primarily because it requires no planning or effort.  Our
business will succeed only if we persuade mobile phone users that the
substantial cost advantage of our service over the carriers’ roaming services
warrants the users’ investment of time and attention to subscribing and
establishing the necessary call connections.  If the mobile phone
carriers reduce their roaming charges in the future, our competitive advantage
will be proportionately reduced.  Our business will fail if the major
carriers reduce their roaming charges to a point where our price advantage
becomes insignificant to the average traveler.





A recession in China could
significantly hinder our growth.




The success of our international call
forwarding services will depend on continuation and expansion of recent trends
in travel by the people of China.  Those travel habits depend, in
turn, on recent growth in business activity and disposable income in
China.  If there is a downturn in business activity in China, it will
reduce the market for our services.  Many financial commentators
expect a recession to occur in China in the near future.  The
occurrence of a recession could significantly hinder our efforts to implement
our business plan.





Our business and growth will suffer if
we are unable to hire and retain key personnel that are in high
demand.




Our future success depends on our
ability to attract and retain highly skilled marketing personnel and
technicians.  Qualified individuals are in high demand in China, and
there are insufficient experienced personnel to fill the
demand.  Therefore we may not be able to successfully attract or
retain the personnel we need to succeed.





We may have difficulty establishing
adequate management and financial controls in China.




The People’s Republic of China has only
recently begun to adopt the management and financial reporting concepts and
practices that investors in the United States are familiar with.  We
may have difficulty in hiring and retaining employees in China who have the
experience necessary to implement the kind of management and financial controls
that are expected of a United States public company.  If we cannot
establish such controls, we may experience difficulty in collecting financial
data and preparing financial statements, books of account and corporate records
and instituting business practices that meet U.S. standards.





28


Government regulation may hinder our
ability to function efficiently.




The national, provincial and local
governments in the People’s Republic of China are highly
bureaucratized.  The day-to-day operations of our business require
frequent interaction with representatives of the Chinese government
institutions.  The effort to obtain the registrations, licenses and
permits necessary to carry out our business activities can be
daunting.  Significant delays can result from the need to obtain
governmental approval of our activities.  These delays can have an
adverse effect on the profitability of our operations.  In addition,
compliance with regulatory requirements applicable to telecommunications
services may increase the cost of our operations, which would adversely affect
our profitability.





Capital outflow policies in China may
hamper our ability to pay dividends to shareholders in the United
States.




The People’s Republic of China has
adopted currency and capital transfer regulations. These regulations require
that we comply with complex regulations for the movement of capital. Although
Chinese governmental policies were introduced in 1996 to allow the
convertibility of RMB into foreign currency for current account items,
conversion of RMB into foreign exchange for capital items, such as foreign
direct investment, loans or securities, requires the approval of the State
Administration of Foreign Exchange. We may be unable to obtain all of the
required conversion approvals for our operations, and Chinese regulatory
authorities may impose greater restrictions on the convertibility of the RMB in
the future. Because most of our future revenues will be in RMB, any inability to
obtain the requisite approvals or any future restrictions on currency exchanges
will limit our ability to pay dividends to our shareholders.





Currency fluctuations may adversely
affect our operating results.




Beijing GRT generates revenues and
incurs expenses and liabilities in Renminbi, the currency of the People’s
Republic of China.  However, as a subsidiary of Smooth Global (China)
Holdings, it will report its financial results in the United States in U.S.
Dollars.  As a result, our financial results will be subject to the
effects of exchange rate fluctuations between these currencies.  From
time to time, the government of China may take action to stimulate the Chinese
economy that will have the effect of reducing the value of
Renminbi.  In addition, international currency markets may cause
significant adjustments to occur in the value of the Renminbi.  Any
such events that result in a devaluation of the Renminbi versus the U.S. Dollar
will have an adverse effect on our reported results.  We have not
entered into agreements or purchased instruments to hedge our exchange rate
risks.





We have limited business insurance
coverage.




The insurance industry in China is
still at an early stage of development. Insurance companies in China offer
limited business insurance products, and do not, to our knowledge, offer
business liability insurance. As a result, we do not have any business liability
insurance coverage for our operations. Moreover, while business disruption
insurance is available, we have determined that the risks of disruption and cost
of the insurance are such that we do not require it at this time. Any business
disruption, litigation or natural disaster might result in substantial costs and
diversion of resources.





29


Smooth Global (China) Holdings is not
likely to hold annual shareholder meetings in the next few years.




Management does not expect to hold
annual meetings of shareholders in the next few years, due to the expense
involved.  The current members of the Board of Directors were
appointed to that position by the previous directors.  If other
directors are added to the Board in the future, it is likely that the current
directors will appoint them.  As a result, the shareholders of Smooth
Global (China) Holdings will have no effective means of exercising control over
the operations of Smooth Global (China) Holdings.





Your ability to bring an action against
us or against our directors, or to enforce a judgment against us or them, will
be limited because we conduct all of our operations in China and because
all  of our management resides outside of the United
States.




We conduct all of our operations in
China through our wholly-owned subsidiary. All of our directors and officers
reside in China and all of the assets of those Chinese residents are located
outside of the United States. As a result, it may be difficult or impossible for
you to bring an action against us or against these individuals in the United
States in the event that you believe that your rights have been infringed under
the securities laws or otherwise. Even if you are successful in bringing an
action of this kind, the laws of the United States and of China may render you
unable to enforce a judgment against our assets or the assets of our
directors.





ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM
      4.
            CONTROLS
      AND PROCEDURES





Evaluation of Disclosure Controls
and Procedures.  Our Chief Executive Officer and Chief
Financial Officer carried out an evaluation of the effectiveness of our
disclosure controls and procedures as of March 31, 2008.  Pursuant to
Rule13a-15(e) promulgated by the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, “disclosure controls and procedures” means
controls and other procedures that are designed to insure that information
required to be disclosed by Smooth Global (China) Holdings in the reports that
it files with the Securities and Exchange Commission is recorded, processed,
summarized and reported within the time limits specified in the Commission’s
rules.  “Disclosure controls and procedures” include, without
limitation, controls and procedures designed to insure that information Smooth
Global (China) Holdings is required to disclose in the reports it files with the
Commission is accumulated and communicated to our Chief Executive Officer and
Chief Financial Officer as appropriate to allow timely decisions regarding
required disclosure.  Based on her evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that Smooth Global (China)
Holdings’ system of disclosure controls and procedures was effective as of March
31, 2008 for the purposes described in this paragraph.





30


Changes in Internal
Controls.  There was no change in internal controls over
financial reporting (as defined in Rule 13a-15(f) promulgated under the
Securities Exchange Act or 1934) identified in connection with the evaluation
described in the preceding paragraph that occurred during Smooth Global (China)
Holdings’ first fiscal quarter that has materially affected or is reasonably
likely to materially affect Smooth Global (China) Holdings’ internal control
over financial reporting.





PART
II   -   OTHER INFORMATION




Item
      6.
            Exhibits





31
            Rule
      13a-14(a) Certification


32
            Rule
      13a-14(b) Certification





SIGNATURES





Pursuant
to the  requirements  of the Securities  Exchange
Act of 1934, the Registrant  has
duly  caused  this  Report  to
be  signed  on its  behalf by the undersigned
thereunto duly authorized.





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC.Date:
      May 19, 2008
            By:  /s/ Zheng
      ShuyingZheng
      Shuying, Chief Executive Officerand
      Chief Financial Officer













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