UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-KSB




(Mark
One)


x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the fiscal year ended December 31, 2007




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




For
the transition period from ___________ to ___________





Commission
file number 333-130937




GUANGZHOU
GLOBAL TELECOM, INC.


(Exact
name of registrant as specified in its charter)





Room
1802, North Tower, Suntec Plaza,


No.
197 Guangzhou Avenue North


Guangzhou,
PRC 510075


(44)
1207-245-6131


(Address
and Telephone Number of Registrant’s Principal


Executive
Offices and Principal Place of Business)








Florida
            59-3565377(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)Room
      1802, North Tower, Suntec Plaza,
              No.
      197 Guangzhou Avenue North
              Guangzhou,
      PRC
            510075(Address
      of principal executive offices)
            (Zip
      Code)Registrant’s
      telephone number, including area code:
            (44)
      1207-245-6131Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class
            Name
      of each exchange on which registeredNone
            NoneSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, par value $.001(Title
      of class)




Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No o




Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. o




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).   Yes o No x





State
issuer’s revenues for its most recent fiscal year. $21,453,232




Aggregate
market value of the common stock held by non-affiliates of the Company as of
December 31, 2007: $10,952,975.52




Number
of shares of the registrant’s common stock outstanding as of December 31,
2007:  53,170,000shares of Common Stock.




















TABLE
OF CONTENTS








Part
      IItem
      1.
            Description
      of Business.
            1Item
      2.
            Description
      of Property.
            5Item
      3.
            Legal
      Proceedings.
            5Item
      4.
            Submission
      of Matters to a Vote of Security Holders.
            5Part
      IIItem
      5.
            Market
      for Common Equity and Related Stockholder Matters.
            5Item
      6.
            Management’s
      Discussion and Analysis or Plan of Operations.
            7Item
      7.
            Financial
      Statements.
            11Item
      8.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure.
            12Item
      8A.
            Controls
      and Procedures.
            12Item
      8B.
            Other
      Information.
            12Part
      IIIItem
      9.
            Directors,
      Executive Officers, Promoters and Control Persons; Compliance with Section
      16(a) of the Exchange Act.
            14Item
      10.
            Executive
      Compensation.
            15Item
      11.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.
            15Item
      12.
            Certain
      Relationships and Related Transactions.
            16Item
      13.
            Exhibits.
            17Item
      14.
            Principal
      Accountant Fees and Services.
            17Signatures
            
            18

















Except
as otherwise required by the context, all references in this prospectus to "we",
"us”, "our", “BMSTA”, or "Company" refer to the consolidated operations of
Camelot Entertainment Group Inc., a Delaware corporation, and its wholly owned
subsidiaries.




Forward-Looking
Statements and Associated Risks






The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
certain forward-looking statements. Some of the statements contained in this
annual report of Edulink discuss future expectations, contain projections
of our operations or financial condition or state other forward-looking
information. Some statements contained in this annual report on Form 10-K that
are not historical facts (including without limitation statements to the effect
that we "believe," "expect," "anticipate," "plan," "intend," "foresee," or other
similar expressions) and are forward-looking statements. These forward-looking
statements are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that
future developments affecting us will be those anticipated by us. All comments
concerning our expectations for future revenue and operating results are based
on our forecasts of our plan of operation and do not include the potential
impact of any future acquisitions or operations. These forward-looking
statements involve significant risks and uncertainties (some of which are beyond
our control) and assumptions. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in the forward-looking
statements.




PART I




Item
1. Description of
Business.




General





We were
incorporated as Avalon Development Enterprises, Inc. (“Avalon”) on March 29,
1999, under the laws of the State of Florida. From inception, we engaged in the
acquisition of commercial property and expanded into building cleaning,
maintenance services, and equipment leasing as supporting ancillary services and
sources of revenue.  On January 10, 2007, Avalon, Global Telecom Holdings,
Ltd., a British Virgin Islands Corporation (“GTHL”), and the shareholders of
GTHL, entered into a Share Exchange Agreement. Pursuant to that Agreement, the
Company issued 39,817,500 shares of its restricted common stock to the
Shareholders of GTHL in exchange for all of the issued and
outstanding common shares of GTHL common stock. Pursuant to this
transaction, on March 27, 2007, GTHL became a wholly-owned subsidiary of
Avalon, and the Company changed its name to Guangzhou Global Telecom Holdings,
Inc. and succeeded to the business of GTHL.   Now we are a
nationally integrated mobile phone handset and pre-paid calling card distributor
and provider of mobile handset value-added services. Future products and
services include the GTL Lineless Messaging Service and retail sales and
customer service operations. We are an independent qualified corporation that
serves as a principle distribution agent for China Telecom, China Unicom, and
China Mobile. We also maintain and operate the largest prepaid mobile phone card
sales and distribution center in Guangdong Province and maintain cooperative
distribution relationships with VK, Panasonic, Motorola, LG, GE and Bird
corporations, among others.




Overview





We are a nationally integrated mobile phone handset and
pre-paid calling card distributor and provider of mobile handset value-added
services. Future products and services include the GTL Lineless Messaging
Service and retail sales and customer service operations. We are an independent
qualified corporation that serves as a principle distribution agent for China
Telecom, China Unicom, and China Mobile. We also maintain and operate the
largest prepaid mobile phone card sales and distribution center in Guangdong
Province and maintain cooperative distribution relationships with VK, Panasonic,
Motorola, LG, GE and Bird corporations, among others.






1





Development





Development
activities are a fundamental building block to our future financial success. We
will devote significant resources to identifying and developing new software and
value-added services through an expanded network of regional and neighborhood
service centers, shops and via a virtual store. We plan to continue our
distribution operations and to introduce current products and new and innovative
software and services through an expanded network of regional and neighborhood
retail service centers and shops. This new sales channel will allow us to sell
direct to the consumer and to cross-sell additional value-added services and
add-on products. We anticipate building strong customer relationships in the
local communities that are served in order to take advantage of future sales
from existing loyal customers and through word of mouth advertisement. Selling
products and value-added services via a retail presence allows us to become part
of the community and to enter into exclusive contracts directly with the
individual consumer.




Financing





Based on
rapid current and anticipated future growth in the mobile phone and mobile phone
parts supply and distribution markets and ever increasing demand for mobile
consumer telecommunications devices, we are seeking a capital investment partner
to fund expansion of our sales, distribution, and post-sale customer support in
addition to the development of new business units and operations




Production





In
addition to existing hardware distribution and sales partnerships, we are
expanding our services, building a retail presence and developing e-commerce
business units in order to build and maintain a high-quality brand and service
reputation. We currently serve as a nationally integrated mobile phone handset
and pre-paid calling card distributor and provider of mobile handset value-added
services. Future products and services include Lineless Messaging Service
(“LMS”) and retail sales and customer service operations.




Revenue
Sources





We
currently earn approximately USD $13 million in annual sales. As a handset and
pre-paid calling card distributor, GTL faces significant competition from other
vertically integrated product and service providers. In order to compete, GTL
plans to continue its distribution operations and to introduce current products
and new and innovative software and services through an expanded network of
regional and neighborhood retail service centers and shops. This new sales
channel will allow us to sell direct to the consumer and to cross-sell
additional value-added services and add-on products. We anticipate building
strong customer relationships in the local communities that are served in order
to take advantage of future sales from existing loyal customers and through word
of mouth advertisement. Selling products and value-added services via a retail
presence allows the Company to become a part of the community and to enter into
exclusive contracts directly with the individual consumer.




Our
fundamental operating cycle will change over the next 20-30 months as a growing
percentage of revenue is derived from web delivered software and associated
service and product support. Revenue from current operations, as well as new
investment, will fund the expansion of software design and development functions
within the company responsible for the design, deployment, quality assurance,
and consumer support of LMSTM and
associated services.





During
the expansion / product introduction phase, retail outlets and product lines
will be kept at current size and production levels to focus on development and
deployment of LMS. As the margins for LMS exceed those of our traditional
distribution business, potential losses from lack of distribution expansion will
be offset by gains in market penetration of the instant messaging
markets.








2





Aside from existing in-house prototype development of future products, We have
not yet decided on any specific internal and/or outsourced contractor solutions
to produce, deploy, and support LMS and associated services.




The distribution channels associated with these revenue streams are discussed in
greater detail below:




Direct-support
distribution & service network


Using
current distribution agent relationships with network service providers and
handset manufacturers, we will open multi-functional distribution and post-sale
retailer support service centers in five Chinese provinces over a 12 month
period. These service centers will be strategically located in areas which will
improve relationships with existing distribution & retail partners while
increasing margins through increased cost-efficiency. The first service centers
will be located in Beijing and Guangzhou, PRC. These centers will serve as
management control centers for future retail and wholesale
activities.





Specialty
shop expansion


Using the
five regional multi-functional service centers as local management headquarters,
we will establish up to 20 regional specialty shops that will be responsible for
the direct interface with manufacturers and functionalization of OEM handsets
for retail partner distribution.




These
shops will add value through improved quality assurance, reduced product
development cycle times, and greater control over handset acquisition and
distribution systems. These shops will perform on-site troubleshooting and
engineering design to solve supply-side function and quality problems at a
minimal overall cost. It is estimated that it will take up to 18 months to
establish and staff these 20 regional specialty shops.




Integration
of service center & specialty shop network


Once
established, the 25 regional service centers and specialty shops will serve as
the foundation for our future wholesale and direct-to-consumer retail
operations. This newly expanded China-wide presence will place us in close
proximity not only with its entire potential domestic market and international
retail partners, but also in close geographic range of peers and other
emerging competitive threats.





Development
of GTL lineless messaging system


Once our
initial expansion is complete, it will be prepared to launch a proprietary
enhanced instant messaging service software application in concert with its
mobile phone distribution agreements. Our lineless messaging system (LMSTM) will
primarily serve as an intra-corporate communications system that will enable a
company to instantly disseminate routine or time-sensitive information to some
or all of its employees. Messages may also be sent to a particular subset of the
organization based on the employee’s role in the company or for as something as
personal as a “happy birthday” message. This system will replace a large portion
of an organization’s communication overhead traditionally fulfilled by email or
courier messages.





In
addition to dissemination of information, LMSTM will
facilitate critical company management functions such as meeting reminders,
location changes, field reports, etc. This more intuitive and rapid
communication protocol will occur through a device that virtually all people
already own and carry with them everywhere - their mobile phone. The ability for
an organization to communicate more efficiently without additional hardware
requirements will give any organization an instant competitive operational
advantage. With sufficient and prompt capital investment, initial deployment of
LMSTMshould
occur by mid to late 2007 throughout China with expansion worldwide soon
after.





Overview
of LMSTM





For
most messaging service providers, message entry requires accessing the Internet
through the line entry of a special service number. GTL LMS does not require
discrete text messaging numbers as in the current and traditional ways of
transmitting a message through the Internet, but instead sends messages directly
by way of PHS/GSM/CDMA mobile web transmission protocols. Using the unique
hardware address of each mobile device, LMSTM doesn’t
need any special messaging service numbers or an operator to transfer the
message - thus the name: lineless messaging service.






3








LMS
is a complex software application which is deployed by itself on PCs, mobile
computers, and mobile telephony. It can be used to build unattached messages and
enter the LMS network at any point and reach any properly configured subscriber
device.




Marketing




Our
new strategy is a natural follow on to our existing telephone distribution
operation, which is becoming the largest distribution agreement inside and
outside China. We anticipate opening fixed and virtual retail outlets in order
to continue distributing current products, consumer electronic products and
mobile phone value added services.





In
line with the development of mobile communication standards and increasing
consumer demand for non-voice communications, network added service will be the
new development of mobile communication. GTL is currently seeking and offering
globally innovative techniques, products and services to include the following
mobile functions:




Ø
            Color-messageØ
            Drawing
      and ringØ
            Chord
      ringØ
            Staying
      color picture





Ø
            WAPØ
            Note
      gamesØ
            Treasure
      boxØ
            IVR
      chatting





We
use our relationships within the distribution network to develop and offer
value-added services and connected mobile handset services. After entry into a
region, we will consult strategies used by existing and successful operations
such as Virgin’s entry into England and America. GTL will penetrate the market
in key cities and regions such as Beijing, Shanghai and Wuhan first. GTL aims to
become the handset service distributor of China Mobile or China Unicom, by
segmenting the market (for example, developing special communicated brands for
young women) and through a demographically segmented, distributed cost model.
Using resources from partners higher in the value chain and close agreements
with other services, we will realize maximal profit via bundling communication,
handset and value-added services within the networks.




Competition




China has
become the world’s largest mobile telecommunications market. By the end of 2006,
nearly 500 million Chinese citizens used mobile phones. This represents 37
percent of the population. In 2006 alone, more than 48 million people purchased
their first mobile phones and projections indicate another 50 million more first
time users will purchase in 2007. By 2010, almost half of China’s 1.3 billion
people will be using mobile phones. As the Chinese population becomes saturated
with multiple mobile handsets per person, demand will still exist for upgraded
replacement platforms and value-added services. Customer’s value-added services
will operate on an exclusive basis with our company.





Our
new strategy is a natural follow on to its existing telephone distribution
operation, which is becoming the largest distribution agreement inside and
outside China. GTL anticipates opening fixed and virtual retail outlets in order
to continue distributing current products, consumer electronic products and
mobile phone value added services.





Subsequent
Event





On January
30, 2008, Huantong Telecom Singapor Company Pte. Ltd. (“Huantong”), a
wholly-owned subsidiary of Guangzhou Global Telecom, Inc. entered into a Letter
of Intent (the “LOI”) with TCAM Technology Pte.  Ltd. (“TCAM”),
whereby Huantong agreed to purchase 30% of the total authorized shares of TCAM
for the purchase amount of S$200,000 and 3 million shares of Guangzhou Global
Telecom, Inc. common stock.  Additionally, the LOI mandated that TCAM
allocate two director seats on its Board of Directors to representatives of
Huantong.








4





On February
14, 2008, Huantong and TCAM executed a final share transfer agreement (the
“Agreement”) whereby Huantong agreed to purchase 30% of the total authorized
shares of TCAM for the purchase amount of S$200,000 and 3.5 million shares of
Guangzhou Global Telecom, Inc. common stock.  The S$200,000 will serve
as an infusion of cash for TCAM’s business operations.  The 3.5
million shares will be delivered to shareholders of TCAM selected by
TCAM.  The TCAM shareholder that are provided shares shall be able to
sell 50% of such shares freely in the open market six months after the date of
the Agreement and the remaining 50% of the such shares freely in the open market
one year after the date of the Agreement.  In consideration for the
money and shares, TCAM will allocate two director seats on its Board of
Directors to representatives of Huantong.




Intellectual
Property





We do not
own any intellectual property.





Government Approval and
Regulation




We do not
need government approval for our principal products or services.





Employees




As
of January 24, 2008, the Company has 50 employees.





Item
2. Description of
Property.




As of
December 31, 2007, the Company’s corporate offices are located at Room 1802,
North Tower, Suntec Plaza, No. 197 Guangzhou Avenue North Guangzhou, PRC
510075.  We pay $3,050 in rent per month for a lease term of 2
years.





Item
3. Legal
Proceedings.





We are
not currently a party to any legal proceedings nor are any contemplated by us at
this time.





Item
4. Submission of
Matters to a Vote of Security Holders.




None.




PART II




Item
5. Market for Common
Equity and Related Stockholder Matters.




Market
Information





Our
common stock has traded on the OTC Bulletin Board system under the symbol “GZGT”
since May 15, 2007.   There is a limited trading market for our
Common Stock. The following table sets forth the range of high and low bid
quotations for each quarter within the last fiscal year. These quotations as
reported by the OTCBB reflect inter-dealer prices without retail mark-up,
mark-down, or commissions and may not necessarily represent actual
transactions.






5







High
            
            
            LowMay
      15, 2007 to June 30, 2007
            
            $
            2.95
            
            
            $
            0.70July
      1, 2007 to September 30, 2007
            
            $
            1.28
            
            
            $
            0.66September
      30, 2007 to December 31, 2007
            
            $
            1.08
            
            
            $
            0.25




The
source of these high and low prices was the OTC Bulletin Board. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions and
may not represent actual transactions. The high and low prices listed have been
rounded up to the next highest two decimal places.




The
market price of our common stock is subject to significant fluctuations in
response to variations in our quarterly operating results, general trends in the
market, and other factors, over many of which we have little or no control. In
addition, broad market fluctuations, as well as general economic, business and
political conditions, may adversely affect the market for our common stock,
regardless of our actual or projected performance.





Holders





As of
December 31, 2007, in accordance with our transfer agent records, we had 117
recordholders of our 53,170,000shares of Common Stock.





Dividends





Holders
of our common stock are entitled to receive dividends if, as and when declared
by the Board of Directors out of funds legally available therefore. We have
never declared or paid any dividends on our common stock. We intend to retain
any future earnings for use in the operation and expansion of our business.
Consequently, we do not anticipate paying any cash dividends on our common stock
to our stockholders for the foreseeable future.





Recent Sales of Unregistered
Securities





On July
31, 2007 (the “Issuance Date”), we entered into a Securities Purchase Agreement
with Enable Growth Partners LP, Pierce Diversified Strategy Master Fund LLC, and
Enable Opportunity Partners LP (individually, the “Investor” and collectively,
the “Investors”), whereby the Investors committed to purchase (i) $3,000,000 in
Callable Secured Convertible Notes (the “Notes”) with a principal amount
aggregating $3,428,571 based on an original issue discount of 12.5% and (ii)
warrants to purchase 2,090,582 shares of our common stock (the
“Warrants”).





In
conjunction with the Securities Purchase Agreement entered into with the
Investors, on February 21, 2008, we entered into an Amendment Agreement (the
“Amendment Agreement”) with the Investors whereby we amended the conversion
price of the Notes to $0.28 and the exercise price of the Warrants to
$0.28.  Secondly, pursuant to the terms of the Amendment Agreement,
each Investor, severally and not jointly with the other Investor, waived the
condition to the Second Closing as defined within the Securities Purchase
Agreement that the Registration Statement be declared effective by February 1,
2008, provided that a Registration Statement registering 130% of the Registrable
Securities (as defined in the Registration Rights Agreement) has been declared
effective prior to the date hereof and shall have thereafter remained effective
through and including the date of the Second Closing, as defined within the
Securities Purchase Agreement.





Additionally,
in conjunction with Amendment Agreement and the effectiveness of our
Registration Statement on Form SB-2 on February 4, 2008, the Investors funded
the Second Closing, as defined within the Securities Purchase Agreement with a
purchase of $1,000,000, which principally aggregates to the amount of $1,142,857
based on an original issue discount of 12.5%.






6





Based on
our recent financing, we have also issued warrants convertible into 9,198,604
shares of our common stock. Each Warrant entitles to holder to one share of our
common stock. The warrants were issued as follows: Enable Growth Partners LP-
7,108,012 warrant shares, Pierce Diversified Strategy Master Fund LLC- 418,120
warrant shares, Enable Opportunity Partners LP- 836,236 warrant shares and
Midtown Partners & Co., LLC – 836,236 warrant shares.  The
exercise price is $0.28.





Item
6. Management’s
Discussion and Analysis or Plan of Operations.





The
following discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to future events or our future performance. Actual
results may materially differ from those projected in the forward-looking
statements as a result of certain risks and uncertainties set forth in this
prospectus. Although management believes that the assumptions made and
expectations reflected in the forward-looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual results will not be different from expectations expressed
in this report.




Plan of
Operation





During
the next twelve months, we expect to take the following steps in connection with
the development of our business and the implementation of our plan of
operations:





In
addition to existing hardware distribution and retail sales, in the coming
months, we will focus on expanding our services, building a retail presence and
developing e-commerce business units in order to build and maintain a
high-quality brand and service reputation. We currently serve as a nationally
integrated mobile phone handset and pre-paid calling card distributor and
provider of mobile handset value-added services. Future products and services
include Mobile Messaging Service (“MMS”) and customer service
operations.





We plan
to focus our operations in the coming months on development activities, as they
are a fundamental building block to our future financial success. More
specifically, we will devote significant resources to identifying and developing
new software and value-added services through an expanded network of regional
and neighborhood service centers, shops and via a virtual store. We also plan to
continue our distribution operations and to introduce current products and new
and innovative software and services through an expanded network of regional and
neighborhood retail service centers and shops. This new sales channel will allow
us to sell direct to the consumer and to cross-sell additional value-added
services and add-on products.





We
anticipate building strong customer relationships in the local communities that
are served in order to take advantage of future sales from existing loyal
customers and through word of mouth advertisement.





We also
plan to use our relationships within the distribution network to develop and
offer value-added services and connected mobile handset services. After entry
into a region, we will consult strategies used by existing and successful
operations such as Virgin’s entry into England and America. GTL will penetrate
the market in key cities and regions such as Beijing, Zhenzhou and Wuhan first.
GTL aims to become the handset service distributor of China Mobile or China
Unicom, by segmenting the market (for example, developing special communicated
brands for young women) and through a demographically segmented, distributed
cost model. Using resources from partners higher in the value chain and close
agreements with other services, we will realize maximal profit via bundling
communication, handset and value-added services within the
networks.




Results of
Operation




Fiscal
year ended December 31, 2007 compared with fiscal year ended December 31,
2006




During
fiscal year ended December 31, 2007, we earned $21,453,232 in revenues as
compared to $12,829,462 during the fiscal year ended in 2006, representing an
increase of $8,623,770 or approximately 67%.






7






The
increase of revenue is mainly contributed to our efforts on promotion and more
acceptance of our services.  With new branches opened in Zhengzhou,
Wuhan and Macau, we will see more sales growth in future.




The gross
profit decreased to $1,249,934 during the fiscal year ended December 31, 2007
from $1,440,960 in the same period of 2006.   The decrease of gross
profit is mainly due to the reason that China Mobile Guangzhou Branch changed
its sales model which left thinner margin for agencies but took certain
marketing function itself.  As a result, the decrease of gross margin
resulted in decrease of selling expenses in the mean time.




Meanwhile,
selling, general and administrative expenses (“SG&A expenses”) were
$1,548,351 during the fiscal year ended December 31, 2007 as compared to
$1,197,158 for the fiscal year ended in 2006, representing an increase of
$351,193 or approximately 29%.   The increase of SG&A expenses was
mainly due to the cost related to the convertible debt financing and reverse
merger.   Furthermore, lot of travelling costs and professional
costs were paid to search for target companies to be acquired or branches to be
set up.




Other
expenses were $544,618 during the year ended December 31, 2007, which mainly
included the non-recurring financing cost related to the convertible debt and
the continuing interest expenses.  The financing cost included
investment banker fee, lawyer fee, due diligence fee, etc.   The
interest expenses included interest of convertible debt, amortization of
discount on the convertible debt, amortization of the fair value of granting
financial instruments.





Net loss
recorded $984,489 during the fiscal year ended December 31, 2007, as compared to
a net profit of $220,980 during the fiscal year ended December 31,
2006.  The decrease of net profit is mainly due to the increase of
SG&A expenses and other expenses.




Liquidity and Capital
Resources




Cash used
in operating activities were $2,876,970 during the fiscal year ended December
31, 2007 as compared to cash provided in operating activities of $274,862 for
the same period ended in 2006.   Cash used from operating activities
during year 2007 was mainly resulted from net loss of $984,489, increase of
receivables of $1,889,945, and increase in inventory of $421,436, netting off
increase in VAT payable of $410,879.





Cash
flows provided by investing activities were $565,936 for the fiscal year ended
December 31, 2007 as compared to $198,452 used for the fiscal year ended
December 31, 2006.   Cash provided from investing activities during
year 2007 was resulted from proceeds from repayment of note receivable, related
parties and acquisition receivable of $311,392, $226,402 and $500,000
respectively, by netting of acquisition of property and equipment, intangible
assets and advances for business development of $105,571, $173,958 and $192,798
respectively.




Cash
flows provided by financing activities were $2,502,088 during the fiscal year
ended December 31, 2007 compared to $239,879 used in financing activities for
the fiscal year ended in 2006.   Cash provided by the financing
activities was mainly due to the proceeds from issuance of stock and issuance of
convertible debt.





Critical Accounting
Pronouncements





Guangzhou
Global Telecom Inc.’s financial statements and related public financial
information are based on the application of accounting principles generally
accepted in the United States (“GAAP”). GAAP requires the use of estimates;
assumptions, judgments and subjective interpretations of accounting principles
that have an impact on the assets, liabilities, revenue and expense amounts
reported. These estimates can also affect supplemental information contained in
our external disclosures including information regarding contingencies, risk and
financial condition. We believe our use if estimates and underlying accounting
assumptions adhere to GAAP and are consistently and conservatively applied. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. Actual results may
differ materially from these estimates under different assumptions or
conditions. We continue to monitor significant estimates made during the
preparation of our financial statements.






8






Our
significant accounting policies are summarized in Note 2 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, Equity Ventures views certain of these
policies as critical. Policies determined to be critical are those policies that
have the most significant impact on Equity Ventures’ consolidated financial
statements and require management to use a greater degree of judgment and
estimates.




Actual
results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other
reasonable judgments or estimate methodologies would cause effect on our
consolidated results of operations, financial position or liquidity for the
periods presented in this report




Recent Accounting
Pronouncements





In May
2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154,
"Accounting Changes and Error Corrections" (SFAS 154), which replaces Accounting
Principles Board (APB) Opinion No. 20, "Accounting Changes," and SFAS No. 3,
"Reporting Accounting Changes in Interim Financial Statements - An Amendment of
APB Opinion No. 28." SFAS 154 provides guidance on the accounting for and
reporting of accounting changes and error corrections, and it establishes
retrospective application, or the latest practicable date, as the required
method for reporting a change in accounting principle and the reporting of a
correction of an error. SFAS 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005.
The Company adopted SFAS 154 in the first quarter of fiscal year 2007 and does
not expect it to have a material impact on its consolidated results of
operations and financial condition.





In
February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140", to
simplify and make more consistent the accounting for certain financial
instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", to permit fair value re-measurement for any
hybrid financial instrument with an embedded derivative that otherwise would
require bifurcation, provided that the whole instrument is accounted for on a
fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the
Impairment or Disposal of Long-Lived Assets", to allow a qualifying
special-purpose entity to hold a derivative financial instrument that pertains
to a beneficial interest other than another derivative financial instrument.
SFAS No. 155 applies to all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. The adoption of this statement is not expected
to have a material effect on the Company's future reported financial position or
results of operations.





In March
2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities". This
statement requires all separately recognized servicing assets and servicing
liabilities be initially measured at fair value, if practicable, and permits for
subsequent measurement using either fair value measurement with changes in fair
value reflected in earnings or the amortization and impairment requirements of
Statement No. 140.




The
subsequent measurement of separately recognized servicing assets and servicing
liabilities at fair value eliminates the necessity for entities that manage the
risks inherent in servicing assets and servicing liabilities with derivatives to
qualify for hedge accounting treatment and eliminates the characterization of
declines in fair value as impairments or direct write-downs. SFAS No. 156 is
effective for an entity's first fiscal year beginning after September 15, 2006.
The adoption of this statement is not expected to have a material effect on the
Company's future reported financial position or results of
operations.





In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statements No. 109”. FIN 48 clarifies
the accounting for uncertainty in income taxes by prescribing a two-step method
of first evaluating whether a tax position has met a more likely than not
recognition threshold and second, measuring that tax position to determine the
amount of benefit to be recognized in the financial statements. FIN 48 provides
guidance on the presentation of such positions within a classified statement of
financial position as well as on derecognition, interest and penalties,
accounting in interim periods, disclosure, and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The adoption of this
statement is not expected to have a material effect on the Company's future
reported financial position or results of operations.






9





In June
2006, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 06−3 (EITF
06-3), “How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus
Net Presentation).” EITF 06−3 applies to any tax assessed by a governmental
authority that is directly imposed on a revenue producing transaction between a
seller and a customer. EITF 06−3 allows companies to present taxes either gross
within revenue and expense or net. If taxes subject to this issue are
significant, a company is required to disclose its accounting policy for
presenting taxes and the amount of such taxes that are recognized on a gross
basis. The Company currently presents such taxes net. EITF 06−3 is required to
be adopted during the first quarter of fiscal year 2008. These taxes are
currently not material to the Company’s financial statements.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS 157 is to increase consistency and comparability in fair value
measurements and to expand disclosures about fair value measurements. SFAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements and does not require any new fair
value measurements.





The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
is not expected to have a material effect on the Company's future reported
financial position or results of operations.




In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106, and 132(R)”. This statement requires employers to recognize the
over-funded or under-funded status of a defined benefit postretirement plan
(other than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
statement also requires an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. The provisions of SFAS No. 158 are effective for employers with
publicly traded equity securities as of the end of the fiscal year ending after
December 15, 2006. The adoption of this statement is not expected to have a
material effect on the Company's future reported financial position or results
of operations.




In
September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative an
qualitative factors. SAB No. 108 is effective for period ending after November
15, 2006. The Company is currently evaluating the impact of adopting SAB No. 108
but does not expect that it will have a material effect on its financial
statements.





In
September 2006, the FASB issued FASB Staff Position No. FAS 13-1 (As Amended),
“Accounting for Rental Costs Incurred during a Construction Period” (FAS 13-1).
This position requires a company to recognize as rental expense the rental costs
associated with a ground or building operating lease during a construction
period, except for costs associated with projects accounted for under SFAS No.
67, “Accounting for Costs and Initial Rental Operations of Real Estate
Projects.” FAS 13-1 is effective for reporting periods beginning after December
15, 2005 and was adopted by the Company in the first quarter of fiscal year
2007. The Company’s adoption of FAS 13-1 will not materially affect its results
of operations and financial position.






10





FSP FAS
123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that
were originally issued as employee compensation and then modified, and that
modification is made to the terms of the instrument solely to reflect an equity
restructuring that occurs when the holders are no longer employees, then no
change in the recognition or the measurement (due to a change in classification)
of those instruments will result if both of the following conditions are met:
(a). There is no increase in fair value of the award (or the ratio of intrinsic
value to the exercise price of the award is preserved, that is, the holder is
made whole), or the antidilution provision is not added to the terms of the
award in contemplation of an equity restructuring; and (b). All holders of the
same class of equity instruments (for example, stock options) are treated in the
same manner. The provisions in this FSP shall be applied in the first reporting
period beginning after the date the FSP is posted to the FASB website. The
Company does not expect the adoption of FSP FAS 123(R)-5 to have a material
impact on its consolidated results of operations and financial
condition.





In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities -
Including an Amendment of FASB Statement No. 115”. This statement permits
entities to choose to measure many financial instruments and certain other items
at fair value. Most of the provisions of SFAS No. 159 apply only to entities
that elect the fair value option. However, the amendment to SFAS No. 115
“Accounting for Certain Investments in Debt and Equity Securities” applies to
all entities with available-for-sale and trading securities. SFAS No. 159 is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption
of this statement is not expected to have a material effect on the Company's
financial statements.




Off-Balance Sheet
Arrangements





We do not
have any off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).




Revenue
Recognition




The
Company recognizes revenue when services have been provided and collection is
reasonably assured.




Stock-Based
Compensation




The
Company has traditionally accounted for stock-based compensation under the
recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. Accordingly, no compensation cost
is recognized in the financial statements, when options granted under those
plans have an exercise price equal to or greater than the market value of the
underlying common stock on the date of grant. The Company issued no compensatory
options to its employees during the years ended December 31, 2006 and
2005.




In December 2005, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123R, although this statement had no effect on the
Company’s 2006 financial statements.




Item
7. Financial Statements.






11






Guangzhou
Global Telecom, Inc.
 
 Consolidated
Financial Statements
 
 December
31, 2007 and 2006
 
 (Stated
in US Dollars)
 
 
 
 
 
 
 
 
 
 Guangzhou
Global Telecom, Inc.
 
 
 
 
 Contents
              PagesReport
      of Independent Registered Public Accounting Firm1 - 2
              1Consolidated
      Balance Sheets 3
              2 -
      3Consolidated
      Statements of Income
              4Consolidated
      Statements of Changes in Stockholders’ Equity 5
              5Consolidated
      Statements of Cash Flows
              6 –
      7Notes
      to Consolidated Financial Statements 7 - 10
              8 –
      22
 
 
 
 
 
 
 
 
 
 
 
 Board of
Directors and Stockholders
 Guangzhou
Global Telecom, Inc.
 
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 We have
audited the accompanying consolidated balance sheets of Guangzhou Global
Telecom, Inc. as of December 31, 2007 and 2006, and the related consolidated
statements of income, stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial positions of Guangzhou Global Telecom, Inc as
of December 31, 2007 and 2006, and the results of its operations, and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
 
 
 
 South San
Francisco,
California                                                                                Samuel
H. Wong & Co. LLP
 January
27,
2008                                                                                                           Certified
Public Accountants
    F-1
  Guangzhou
Global Telecom, Inc
 Consolidated
Balance Sheets
 As
of December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 NoteASSETS
              
              
              
              
              2007
              
              
              2006Current
      AssetsCash
              
              
              2
              (e)
              
              $
              228,202
              
              
              $
              37,148Other
      Receivable
              
              
              4
              
              
              
              515,862
              
              
              
              990,906Note
      Receivable
              
              
              5
              
              
              
              31,751
              
              
              
              343,143Due
      from Related Party
              
              
              11
              
              
              
              32,560
              
              
              
              258,962Due
      from Shareholder
              
              
              11
              
              
              
              118,047
              
              
              
              -Purchase
      Deposits
              
              
              4
              
              
              
              2,380,375
              
              
              
              29,999Acquisition
      Receivable
              
              
              
              
              
              
              -
              
              
              
              500,000Advance
      for Business Development
              
              
              
              
              
              
              192,329
              
              
              
              -Inventory
              
              
              2
              (g)
              
              
              430,398
              
              
              
              8,962Total
      Current Assets
              
              
              
              
              
              
              3,929,524
              
              
              
              2,169,119Non-Current
      AssetsProperty,
      Plant & Equipment, Net
              
              
              2
              (h),6
              
              
              168,679
              
              
              
              63,108Goodwill
              
              
              
              
              
              
              173,958
              
              
              
              -Total
      Assets
              
              
              
              
              
              $
              4,272,161
              
              
              $
              2,232,227LIABILITIES
      & STOCKHOLDERS' EQUITYLiabilitiesCurrent
      LiabilitiesTaxes
      Payable
              
              
              
              
              
              $
              60,535
              
              
              $
              15,893VAT
      Payable
              
              
              7
              
              
              
              1,310,395
              
              
              
              899,516Income
      Tax Payable
              
              
              2
              (n)
              
              
              200,961
              
              
              
              48,722Due
      to Shareholder
              
              
              11
              
              
              
              -
              
              
              
              36,948Acquisition
      Commitment
              
              
              
              
              
              
              -
              
              
              
              485,000Accrued
      Liabilities and Other Payable
              
              
              
              
              
              
              259,326
              
              
              
              9,646Convertible
      Debenture - Current Portion
              
              
              9
              
              
              
              1,373,560
              
              
              
              -Total
      Current Liabilities
              
              
              
              
              
              
              3,204,777
              
              
              
              1,495,725Non-Current
      LiabilitiesConvertible
      Debenture – Non-Current Portion
              
              
              9
              
              
              
              749,175
              
              
              
              -Total
      Liabilities
              
              
              
              
              
              $
              3,953,952
              
              
              $
              1,495,725
  See
notes to the financial statements
  F-2
      Guangzhou
Global Telecom, Inc
 Consolidated
Balance Sheets (Continued)
 As
of December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 NoteStockholders'
      Equity
              
              
              
              
              2007
              
              
              2006Common
      Stock US$0.01 par value;75,000,000
      authorized; 53,170,000 and
                52,890,000
      issued and outstanding as ofDecember
      31, 2007 and 2006 respectively
              
              
              10
              
              
              $
              531,700
              
              
              $
              528,900Additional-paid-in
      capital
              
              
              10
              
              
              
              408,216
              
              
              
              -Subscription
      Receivable
              
              
              
              
              
              
              -
              
              
              
              (86,384
              )Other
      Comprehensive Income
              
              
              2
              (p)
              
              
              20,101
              
              
              
              25,664Retained
      Earnings
              
              
              
              
              
              
              (641,808
              )
              
              
              268,322Total
      Stockholders' Equity
              
              
              
              
              
              
              318,209
              
              
              
              736,502Total
      Liabilities & Stockholders' Equity
              
              
              $
              4,272,161
              
              
              $
              2,232,227
 
  See
notes to the financial statements
   F-3
   
 Guangzhou
Global Telecom, Inc
 Consolidated
Statements of Income
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 
 2007
              
              
              2006NoteRevenuesSales
              
              
              2
              (j)
              
              $
              21,453,232
              
              
              $
              12,829,462Cost
      of Sales
              
              
              
              
              
              
              20,203,298
              
              
              
              11,388,502Gross
      profit
              
              
              
              
              
              $
              1,249,934
              
              
              $
              1,440,960Operating
      ExpensesSelling
      Expenses
              
              
              
              
              
              
              166,399
              
              
              
              575,332Administrative
      and general expenses
              
              
              
              
              
              
              1,381,952
              
              
              
              621,826Total
      Operating Expense
              
              
              
              
              
              
              1,548,351
              
              
              
              1,197,158Operating
      Income/(Loss)
              
              
              
              
              
              $
              (298,417
              )
              
              $
              243,802Other Income &
      ExpensesInterest
      income
              
              
              
              
              
              
              2,529
              
              
              
              25,037Other
      expenses
              
              
              
              
              
              
              544,618
              
              
              
              177Income/(Loss)
      before taxation
              
              
              
              
              
              
              (840,506
              )
              
              
              268,662Income
      tax benefit/(expense)
              
              
              2
              (n)
              
              
              143,983
              
              
              
              (47,682
              )Net
      income
              
              
              
              
              
              $
              (984,489
              )
              
              
              220,980Basic
      net income per common share
              
              
              
              
              
              $
              (0.0185
              )
              
              
              0.0042Basic
      weighted average common shares outstanding
              
              
              
              53,080,000
              
              
              
              52,890,000Diluted
      net income per common share
              
              
              
              
              
              $
              (0.0141
              )
              
              
              0.0042Diluted
      common shares outstanding
              
              
              
              
              
              
              58,048,048
              
              
              
              52,890,000
 
 See
notes to the financial statements
  F-4
  Guangzhou
Global Telecom, Inc
 Consolidated
Statements of Changes in Stockholders’ Equity
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 Total
      Number of Share
              
              
              Common
      Stock
              
              
              Additional-
      paid-in Capital
              
              
              Subscription
      Receivable
              
              
              Other
      Comprehensive Income
              
              
              Retained
      Earnings
              
              
              TotalBalance,
      January 1, 2006
              
              
              52,890,000
              
              
              
              528,900
              
              
              
              -
              
              
              
              (86,384
              )
              
              
              5,488
              
              
              
              294,904
              
              
              
              742,908Net
      income
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              220,980
              
              
              
              220,980Dividend
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (247,727
              )
              
              
              (247,727
              )Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              20,176
              
              
              
              165
              
              
              
              20,341Balance,
      December 31, 2006
              
              
              52,890,000
              
              
              
              528,900
              
              
              
              -
              
              
              
              (86,384
              )
              
              
              25,664
              
              
              
              268,322
              
              
              
              736,502Total
      Number of Share
              
              
              Common
      Stock
              
              
              Additional-
      paid-in Capital
              
              
              Subscription
      Receivable
              
              
              Other
      Comprehensive Income
              
              
              Retained
      Earnings / Accumulated Losses
              
              
              TotalBalance,
      January 1, 2007
              
              
              52,890,000
              
              
              
              528,900
              
              
              
              -
              
              
              
              (86,384
              )
              
              
              25,664
              
              
              
              268,322
              
              
              
              736,502Issue
      new share
              
              
              280,000
              
              
              
              2,800
              
              
              
              408,216
              
              
              
              86,384
              
              
              
              -
              
              
              
              -
              
              
              
              497,400Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (984,489
              )
              
              
              (984,489
              )Foreign
      currency translation adjustment
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              68,796
              
              
              
              
              
              
              
              68,796Balance,
      December 31, 2007
              
              
              53,170,000
              
              
              
              531,700
              
              
              
              408,216
              
              
              
              -
              
              
              
              20,101
              
              
              
              (716,167
              )
              
              
              318,209
 
 
 Accumulated
      Comprehensive IncomeFor
      the years ended December 31, 2007 and 2006
                (Stated
      in US Dollars)2006
              
              
              2007
              
              
              TotalComprehensive
      IncomeNet
      (Loss)/Income
              
              $
              220,980
              
              
              $
              (984,489
              )
              
              $
              (763,509
              )Other
      Comprehensive IncomeForeign
      Currency Translation Adjustment
              
              
              20,176
              
              
              
              68,796
              
              
              
              88,972Total
      Comprehensive Income
              
              $
              241,156
              
              
              $
              (915,693
              )
              
              $
              (674,537
              )
  See
notes to the financial statements
 F-5
 
 Guangzhou
Global Telecom, Inc
 Consolidated
Statements of Cash Flows
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 2007
              
              
              2006USD
              
              
              USDCash
      Flow from Operating ActivitiesCash
      Received from Customers
              
              $
              21,522,028
              
              
              
              12,021,100Cash
      Paid to Suppliers
              
              
              (24,401,527
              )
              
              
              (11,771,117
              )Interest
      Received
              
              
              2,529
              
              
              
              25,057Cash
      Paid for Other Expenses
              
              
              -
              
              
              
              (178
              )Cash
      Used in/ (Sourced from) Operating Activities
              
              $
              (2,876,970
              )
              
              
              274,862Cash
      Flows from Investing ActivitiesRepayment
      of Notes Receivable
              
              $
              311,392
              
              
              
              (188,364
              )Repayment
      of Related Party Advance
              
              
              226,402Advance
      for business development
              
              
              (192,798
              )
              
              
              -Deposit
      paid
              
              
              -
              
              
              
              (10,088
              )Purchase
      of Property, Plant, & Equipment
              
              
              (105,571
              )
              
              
              -Purchase
      of intangible assets
              
              
              (173,958
              )
              
              
              -Repayment
      of Acquisition receivable
              
              
              500,000
              
              
              
              -Cash
      Used in Investing Activities
              
              $
              565,936
              
              
              
              (198,452
              )Cash
      Flows from Financing ActivitiesIssuance
      of common stock
              
              $
              497,400
              
              
              
              -Dividend
      paid
              
              
              -
              
              
              
              (250,567
              )Loan
      to shareholder
              
              
              -
              
              
              
              10,688Loan
      from shareholder
              
              
              118,047
              
              
              
              -Cash
      received from issuance of Convertible debenture
              
              
              2,122,735
              
              
              
              -Cash
      Sourced from/ (Used in) Financing Activities
              
              $
              2,502,088
              
              
              
              (239,879
              )Net
      Increase/ (Decrease) in Cash & Cash Equivalents for the
      Year
              
              
              191,054
              
              
              
              (163,469
              )Effect
      of Currency Translation
              
              
              -
              
              
              
              3,025Cash
      & Cash Equivalents at Beginning of Year
              
              
              37,148
              
              
              
              197,592Cash
      & Cash Equivalents at End of Year
              
              $
              228,202
              
              
              
              37,148
  See
notes to the financial statements
    F-6
    Guangzhou
Global Telecom, Inc.
 Reconciliation
of Net Income to Cash Flow Used in Operating Activities
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 2,007
              
              
              
              2,006USD
              
              
              USDNet
      (Loss)/Income
              
              
              (984,489
              )
              
              
              220,980Adjustments
      to Reconcile Net (Loss)/Income toNet
      Cash (Used in)/Sourced from Operating Activities:Depreciation
              
              
              46,460
              
              
              
              28,984Finance
      cost
              
              
              -
              
              
              
              177Increase
      in Prepayment, Deposit and other receivable
              
              
              (1,889,945
              )
              
              
              (639,093
              )Increase
      in Due from Related Parties
              
              
              -
              
              
              
              (178,914
              )Increase
      in Due from Shareholder
              
              
              -
              
              
              
              -(Increase)
      / Decrease in Inventory
              
              
              (421,436
              )
              
              
              668,701Decrease
      in Accounts Payable
              
              
              -
              
              
              
              (292,722
              )Increase
      in Taxes Payable
              
              
              44,642
              
              
              
              1,015Increase
      /(Decrease) in Accrued Liabilities and Other Payable
              
              
              -
              
              
              
              (160,248
              )Increase
      in VAT Payable
              
              
              410,879
              
              
              
              578,263Increase
      in Income Tax Payable
              
              
              152,239
              
              
              
              47,719Decrease
      in Acquisition Payable
              
              
              (485,000
              )
              
              
              -Increase
      in Accrued Liability
              
              
              249,680
              
              
              
              -Total
      of all adjustments
              
              
              (1,892,481
              )
              
              
              53,882Net
      Cash (Used in)/ Sourced from Operating Activities
              
              
              (2,876,970
              )
              
              
              274,862
  See
notes to the financial statements
   F-7
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 1.
              ORGANIZATION
      AND PRINCIPAL ACTIVITIES
 
 Guangzhou
Global Telecom, Inc. (the Company) formerly Avalon Development Enterprise, Inc.
was incorporated in the State of Florida, United States (an OTCBB Company) on
March 29, 1999.
 
 On March
27, 2007, the Company underwent a reverse-merger with Global Telecom Holding
Limited (GTHL, a British Virgin Islands (BVI) Company incorporated on April 1,
2004 under the British Virgin Islands International Business Companies Act (CAP.
291)) and its wholly-owned subsidiary Guangzhou Global Telecommunication Company
Limited (GGT, established on December 4, 2004 in PRC with a registered and
paid-up capital of $375,307 (RMB 3,030,000)) involving an exchange of shares
whereby the Company issued an aggregate of 39,817,500 shares of common stock in
exchange for all of the issued and outstanding shares of GTHL. In connection
with the reverse merger, the Company issued 200,000 shares of common stock to
Zenith Capital Management LLC in April 2007 at a price of $2.50 per share. For
financial reporting purposes, these two transactions are classified as a
recapitalization of Guangzhou Global Telecom, Inc. and the historical financial
statements of GTHL. The accompanying consolidated financial statements were
adjusted to reflect the effects of the recapitalization, at December 31, 2007 as
well as retroactively at December 31, 2006 as if these two transactions occurred
at the beginning of the year ended December 31, 2006 in wake of the
reverse-merger presentation.
 
 During
the year, the Company newly established 4 subsidiaries; namely, Zhengzhou Global
Telecom Equipment Limited (“ZGTE”), Macau Global Telecom Company Limited
(“MGT”), Huantong Telecom Hongkong Holding Limited (“HTHKH”), and Huantong
Telecom Singapore Company PTE Limited (“HTS”) with capital of RMB 500,000, Macau
Dollar 300,000, Hong Kong Dollar 100 and Singapore Dollar 200,000,
respectively.
 
 The
Company, through its subsidiaries, is principally engaged in the distribution
and trading of rechargeable phone cards, cellular phones and accessories within
cities in PRC.  Customers of the Company embrace wholesalers,
retailers, and final users.
 
 The
Company now operates in a leased facility located at Room 29D, Block E, Zhu
Jiang Di Jing Hao Jing Qian, Haizhu Qu, City of Guangzhou, PRC.
 
 2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 (a)
              Method
      of Accounting
 
 The
Company maintains its general ledger and journals with the accrual method of
accounting for financial reporting purposes. The financial statements and notes
are representations of management. Accounting policies adopted by the Company
conform to generally accepted accounting principles in the United States of
America and have been consistently applied in the presentation of financial
statements, which are compiled on the accrual basis of accounting.
    F-8
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 (b)
              Consolidation
 
 The
consolidated financial statements include the accounts of Guangzhou Global
Telecom, Inc. and six wholly-owned subsidiaries.  The consolidated
financial statements were compiled in accordance with generally accepted
accounting principles of the United States of America.  All
significant inter-company accounts and transactions have been eliminated in
consolidation.
 
 As of
December 31, 2007, detailed identities of the consolidating subsidiaries are as
follows: -
 
 Name
      of Company
              
              Place
      of Incorporation
              
              Attributable
      Equity interest %Global
      Telecom Holding Ltd.
              
              BVI
              
              100Guangzhou
      Global Telecommunication Company Ltd.
              
              PRC
              
              100Zhengzhou
      Global Telecom Equipment Limited
              
              PRC
              
              100Huantong
      Telecom Hong Kong Holding Ltd.
              
              Hong
      Kong SAR
              
              100Macau
      Global Telecom Company Ltd.
              
              Macau
      SARHuantong
      Telecom Singapore Company PTE Ltd.
              
              Singapore
              
              100
 
 
 (c)
              Economic
      and Political Risks
 
 The
Company’s operations in the PRC are subject to special considerations and
significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the
political, economic, legal environment and foreign currency exchange. The
Company’s results may be adversely affected by changes in the political and
social conditions in the PRC, and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency
conversion, restriction on international remittances, and rates and methods of
taxation, among other things.
 
 (d)
              Use
      of Estimates
 
 Our
discussion and analysis is based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. In preparing financial statements in conformity
with accounting principles generally accepted in the United States of America,
management makes estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the dates of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting years. These accounts and estimates
include, but are not limited to, the estimation on useful lives of property,
plant and equipment. Actual results could differ from those
estimates.
 
 (e)
              Cash
      and Cash Equivalents
 
 The
Company considers all cash and other highly liquid investments with initial
maturities of three months or less to be cash equivalents. The Company does not
maintain any bank accounts in the United States of America.
 
  F-9
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
  2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 (f)
              Accounts
      Receivable-Trade
 
 Trade
receivables are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. An allowance for doubtful accounts is
made when recovery of the full amount is doubtful.
 
 (g)
              Inventories
 
 Inventories
are stated at the lower of cost or market value. Cost is computed using the
first-in, first-out method and includes all costs of purchase and other costs
incurred in bringing the inventories to their present location and condition.
Market value is determined by reference to the sales proceeds of items sold in
the ordinary course of business or estimates based on prevailing market
conditions. The inventories are telecommunication products such as mobile phone,
rechargeable phone cards, smart chip, and interactive voice response
cards.
 
 (h)
              Property,
      Plant, and Equipment
 
 Property,
plant and equipment are carried at cost net of accumulated depreciation.
Depreciation is provided over their estimated useful lives, using the
straight-line method with no salvage value. Estimated useful lives of the
property, plant and equipment are as follows:
   Equipment
                5
      yearsFurniture
      and Fixtures
                5
      yearsLeasehold
      Improvement
                5
      yearsMotor
      Vehicles
                3
      years
 
 (i)
              Accounting
      for Impairment of Long-Lived Assets
 
 The
Company adopted Statement of Financial Accounting Standards No. 144, “Accounting
for the Impairment or Disposal of Long-Live Assets” (“SFAS 144”), which
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. The Company periodically evaluates the carrying value of
long-lived assets to be held and used in accordance with SFAS 144.SFAS 144
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets’
carrying amounts. In that event, a loss is recognized based on the amount by
which the carrying amount exceeds the fair market value of the long-lived
assets.
 
 The
long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
assets may not be recoverable. It is reasonably possible that these assets could
become impaired as a result of technology or other industry changes.
Determination of recoverability of assets to be held and used is by comparing
the carrying amount of an asset to future net undiscounted cash flows to be
generated by the assets.
 
 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.  During the
reporting periods, there was no impairment loss.
   F-10
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
  2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 (j)
              Revenue
      Recognition
 
 Revenue
from the sale of the products is recognized on the transfer of risks and rewards
of ownership, which generally coincides with the time when the goods are
delivered to customers and the title has passed.
 
 (k)
              Advertising
 
 The Company expensed all advertising
costs as incurred.Advertising expenses included in selling
expenses were $308,598 and $77,062 for the years ended December 31, 2007 and
2006, respectively.
 
 
 (l)
              Research
      and Development
 
 All
research and development costs are expensed as incurred.
 
 (m)
              Foreign
      Currency Translation
 
 The
Company maintains its financial statements in the functional currency. The
functional currency of the Company is the Renminbi (RMB). However, the
accompanying financial statements are presented in United States dollars.
Monetary assets and liabilities are translated at year-end exchange rates
whereas revenues and expenses are translated at average exchange rates of the
period. Capital accounts and fixed Assets/Long Term Assets are translated at the
actual historical exchange rates when the capital transactions occurred. Any
translation adjustments resulting are not included in determining net income,
but are included in foreign exchange adjustment to other comprehensive income,
as a component of stockholders’ equity.
 
 Exchange
      Rates
              
              2007
              
              
              2006RMB
      : US$ exchange rate as at December 31,
              
              
              7.3046
              
              
              
              7.8157Average
      RMB : US$ exchange rate for the years ended December 31,
              
              
              7.6040
              
              
              
              7.9879
 
 RMB is
not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US$ at
the rates used in translation.
    F-11
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
   2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 (n)
              Income
      Taxes
 
 The
Company uses the accrual method of accounting to determine and report its
taxable reduction of income taxes for the year in which they are available. The
Company has implemented Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes. Income tax liabilities computed according to
the United States, Singapore, People’s Republic of China (PRC), Macau SAR, and
Hong Kong SAR tax laws are provided for the tax effects of transactions reported
in the financial statements and consists of taxes currently due plus deferred
taxes related primarily to differences between the basis of fixed assets and
intangible assets for financial and tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of those differences,
which will be either taxable or deductible when the assets and liabilities are
recovered or settled. Deferred taxes also are recognized for operating losses
that are available to offset future income taxes. A valuation allowance is
created to evaluate deferred tax assets if it is more likely than not that these
items will either expire before the Company is able to realize that tax benefit,
or that future realization is uncertain.
 
 In
respect of the Company’s subsidiaries domiciled and operated in China,
Singapore, Macau and Hong Kong, the taxation of these entities are summarized
below: -
 
 ·
              GGT
      and ZGTG are located in the PRC, and GTHL is located in the British Virgin
      Islands, HTHKN is in Hong Kong, MGT is in Macau SAR, and HTS is in
      Singapore; all of these entities are subject to the relevant tax laws and
      regulations of the PRC, Hong Kong SAR, Macau SAR, British Virgin Islands,
      and Singapore in which the related entity domiciled.   The
      maximum tax rates of the subsidiaries pursuant to the countries in which
      they domicile are: -
 
 Subsidiary
              Country
      of Domicile
              Income
      Tax RateGGT
      and ZGTG
              PRC
              25.0%HTHKN
              Hong
      Kong SAR
              17.5%MGT
              Macau
      SAR
              12.0%GTHL
              British
      Virgin Islands
              0.00%HTS
              Singapore
              18.0%
 
 
 ·
              Effective
      January 1, 2008, PRC government implements a new 15% tax rate across the
      board for all enterprises regardless of whether domestic or foreign
      enterprise without any tax holiday which is defined as "two-year exemption
      followed by three-year half exemption" hitherto enjoyed by tax payers. As
      a result of the new tax law of a standard 15% tax rate, tax holidays
      terminated as of December 31, 2007. However, PRC government has
      established a set of transition rules to allow enterprises already started
      tax holidays before January 1, 2008, to continue enjoying the tax holidays
      until being fully utilized.
    F-12
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
  2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 ·
              The
      Company is subject to United States Tax according to Internal Revenue Code
      Sections 951 and 957. Corporate income tax is imposed on progressive rates
      in the range of: -
 
 Taxable
Income
 
 Rate
              
              
              Over
              
              
              But
      not over
              
              
              Of
      Amount Over15
              %
              
              
              0
              
              
              
              50,000
              
              
              
              025
              %
              
              
              50,000
              
              
              
              75,000
              
              
              
              50,00034
              %
              
              
              75,000
              
              
              
              100,000
              
              
              
              75,00039
              %
              
              
              100,000
              
              
              
              335,000
              
              
              
              100,00034
              %
              
              
              335,000
              
              
              
              10,000,000
              
              
              
              335,00035
              %
              
              
              10,000,000
              
              
              
              15,000,000
              
              
              
              10,000,00038
              %
              
              
              15,000,000
              
              
              
              18,333,333
              
              
              
              15,000,00035
              %
              
              
              18,333,333
              
              
              
              -
              
              
              
              0
 
 Based on
the consolidated net income for the year ended December 31, 2007, the Company
shall not be subject to income tax.
   F-13
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
   2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 (o)
              Statutory
      Reserve
 
 Statutory
reserve refers to the amount appropriated from the net income in accordance with
PRC laws or regulations, which can be used to recover losses and increase
capital, as approved, and, are to be used to expand production or operations.
PRC laws prescribe that an enterprise operating at a profit, must appropriate,
on an annual basis, from its earnings, an amount to the statutory reserve to be
used for future company development. Such an appropriation is made until the
reserve reaches a maximum equalling 50% of the enterprise’s
capital.
 
 However,
since GGT being an operating company in PRC does not itself have any foreign
shareholders and that the Memorandum and Articles do not provide for such
appropriation, the Company is therefore not required to fund the Statutory
Reserve.
 
 (p)
              Other
      Comprehensive Income
 
 Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, all
items that are required to be recognized under current accounting standards, as
components of comprehensive income are required to be reported in a financial
statement that is presented with the same prominence as other financial
statements. The Company’s current component of other comprehensive income is the
foreign currency translation adjustment.
 
 (q)
              Related
      party transactions
 
 A related
party is generally defined as (i) any person that holds 10% or more of the
Company's securities including such person's immediate families, (ii) the
Company's management, (iii) someone that directly or indirectly controls, is
controlled by or is under common control with the Company, or (iv) anyone who
can significantly influence the financial and operating decisions of the
Company. A transaction is considered to be a related party transaction when
there is a transfer of resources or obligations between related parties. (See
Note 11)
 
   F-14
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
  2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 (r)
              Accounting
      for Derivative instruments
 
 The
Company designates its derivatives based upon the criteria established by SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. SFAS 133, as amended by SFAS 138 and SFAS 149, requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
accounting for the changes in the fair value of the derivative depends on the
intended use of the derivative and the resulting designation. For a derivative
designated as a fair value hedge, the gain or loss is recognized in earnings in
the period of change together with the offsetting loss or gain on the hedged
item due to the risk being hedged. For a derivative designated as a cash flow
hedge, the effective portion of the derivative's gain or loss is initially
reported as a component of accumulated other comprehensive income (loss) and is
subsequently reclassified to earnings when the hedge exposure affects earnings.
The ineffective portion of the hedge is reported in earnings immediately. For a
derivative that does not qualify as a fair value hedge or cash flow hedge, the
change in fair value is recognized in net income in the current period. It is
the Company's policy to classify all of its derivative instruments for cash flow
purposes as operating activities.
 
 (s)
              Goodwill
 
 Goodwill
represents the excess of the purchase price over the fair value of the net
tangible and identifiable intangible assets acquired in a business combination.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets", goodwill is no longer subject to
amortization. Rather, goodwill is subject to at least an annual assessment for
impairment, applying a fair-value based test. Fair value is generally determined
using a discounted cash flow analysis.
    F-15
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
    2.
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 (t)
              Recent
      accounting pronouncements
 
  In
February 2006, the FASB issued a SFAS 155, “Accounting for Certain Hybrid
Financial Instruments” to amend FASB Statements No. 133, Accounting for
Derivative Instruments and Hedging Activities, and No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
This statement permits fair value remeasurement for any hybrid financial
instrument that contains an embedded derivative that otherwise would require
bifurcation and eliminate the prohibition on a qualifying special-purpose entity
from holding a derivative financial instrument that pertains to a beneficial
interest other than another derivative financial instrument. This statement is
effective for all financial instruments acquired or issued after the beginning
of an entity’s first fiscal year that begins after September 15,
2006.
   In July
2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes—an
Interpretation of FASB Statement No. 109, which clarifies the accounting for
uncertainty in tax positions. This Interpretation requires that the Company
recognizes in its consolidated financial statements the impact of a tax position
if that position is more likely than not of being sustained on audit, based on
the technical merits of the position. The provisions of FIN 48 are effective for
the Company on January 1, 2007, with the cumulative effect of the change in
accounting principle, if any, recorded as an adjustment to opening retained
earnings.
   In
September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements, where fair value is the relevant
measurement attribute. The standard does not require any new fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
year beginning after November 15, 2007, and interim periods within those fiscal
years.
   In
September 2006, the SEC issued SAB No. 108, which provides guidance on the
process of quantifying financial statement misstatements. In SAB No. 108, the
SEC staff establishes an approach that requires quantification of financial
statement errors, under both the iron-curtain and the roll-over methods, based
on the effects of the error on each of the Company’s financial statements and
the related financial statement disclosures. SAB No.108 is generally effective
for annual financial statements in the first fiscal year ending after November
15, 2006. The transition provisions of SAB No. 108 permits existing public
companies to record the cumulative effect in the first year ending after
November 15, 2006 by recording correcting adjustments to the carrying values of
assets and liabilities as of the beginning of that year with the offsetting
adjustment recorded to the opening balance of retained earnings.
   In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including an Amendment of SFAS 115”
(SFAS No. 159), which allows for the option to measure financial instruments and
certain other items at fair value.  Unrealized gains and losses on
items for which the fair value option has been elected are reported in
earnings.
     F-16
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
   The
objective of SFAS 159 is to provide opportunities to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply hedge accounting provisions.  SFAS 159 also
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities.  This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007.  The Company is currently evaluating the impact of SFAS No. 159
on our consolidated financial statements.
  In
December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations,
(‘‘SFAS 141(R)’’). SFAS 141(R) retains the fundamental requirements of the
original pronouncement requiring that the purchase method be used for all
business combinations, but also provides revised guidance for recognizing and
measuring identifiable assets and goodwill acquired and liabilities assumed
arising from contingencies, the capitalization of in-process research and
development at fair value, and the expensing of acquisition-related costs as
incurred. SFAS 141(R) is effective for fiscal years beginning after December 15,
2008. In the event that the Company completes acquisitions subsequent to its
adoption of SFAS 141 (R), the application of its provisions will likely have a
material impact on the Company’s results of operations, although the Company is
not currently able to estimate that impact.
  The
Company does not anticipate that the adoption of the above standards will have a
material impact on these consolidated financial statements.
  3.
              CONCENTRATION
 
 (a)                 
Significant Relationships
 
 A
substantial portion of GGT’s business operations depend on mobile
telecommunications in PRC; any loss or deterioration of such relationship may
result in severe disruption to the business operations impacting the Company's
revenue. GGT relies entirely on the networks and gateways of these phone
operators to provide its services. The Company's agreements with these operators
are generally for a short period of one year and generally do not have automatic
renewal provision. If these providers are unwilling to continue with the
Company, the Company's ability to conduct its existing business would be
adversely affected.
 
 4.
              OTHER
      RECEIVABLE
 
 Other
Receivable at December 31, 2007 and 2006 consisted of two types of accounts,
namely (a) over-stocked cellular phone merchandise returned to supplier because
of unsatisfactory market conditions and supplier graciously accepted the goods
return pending for their disposal of such merchandise before making refund to
the Company and (b) Company voluntarily extended financing to business
associates for purchase of merchandise in return for 60% of gross profit in
those transactions, in lieu of interest.
    F-17
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 
 Type
      of Account
              
              2007
              
              
              2006(a)
      Goods returned to two suppliers pending for refund
              
              $
              -
              
              
              $
              291,124(b)
      Trade financing to business associates
              
              
              515,862
              
              
              
              699,782$
              515,862
              
              
              $
              990,906
 
 5.
              NOTE
      RECEIVABLE
 
 Note
receivable at December 31, 2007 and 2006 pertained to the Company’s financing of
two unrelated business associates without collateral on the following terms:
-
 
 Borrower
              Terms
              
              Interest
              
              
              2007
              
              
              2006Wai
      Zhou Wong Choy Cable Factory
              On
      Demand
              
              
              12
              %
              
              $
              -
              
              
              $
              155,583Kit
      Yeung Twilight Telecommunication & Cable Factory
              On
      Demand
              
              
              12
              %
              
              
              31,751
              
              
              
              187,560$
              31,751
              
              
              $
              343,143
 
 Interest
receivable accrued were $16,097 and $25,583 at December 31, 2007 and 2006,
respectively.
 
 
 6.
              PURCHASE
      DEPOSITS
 
 Purchase
Deposits of $2,380,375 and $29,998 at December 31, 2007 and 2006, respectively,
consisted of advances to suppliers for the purchase of inventories, and
prepayments for general operating costs.
 
 
 7.
              PROPERTY,
      PLANT AND EQUIPMENT
 
 Property,
plant and equipment consist of the following as of December 31, 2007 and 2006:
-
 
 2007
              
              
              2006Category of
      AssetEquipment
              
              
              30,839
              
              
              
              10,936Furniture
      & Fixtures
              
              
              16,734
              
              
              
              11,594Leasehold
      Improvement
              
              
              125,991
              
              
              
              24,265Motor
      Vehicles
              
              
              91,708
              
              
              
              60,705265,272
              
              
              
              107,500Less: Accumulated
      Depreciation
              
              
              (96,593
              )
              
              
              (44,392
              )168,679
              
              
              
              63,108
 
 The
depreciation expenses were $47,790 and $10,729 for the years ended December 31,
2007 and 2006, respectively.
 
   F-18
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
 8.
                    VAT
      PAYABLE
 The
Company has been collecting from its customers Value Added Tax (VAT), on behalf
of the government. The Company has been granted to pay the balance dues under
installments up to March 31, 2008, by the government. The reason of this special
arrangement is that the government may waive past due VAT after decision has
been made in accordance with regulations for technology zone on tax-exemption
matter.
  9.
                  LEASE
      COMMITMENTS
 The
Company leases office space and retail stores under operating leases with
non-cancelable terms of less than a year at fixed monthly rent. None of the
leases included contingent rentals. Lease expense charged to operations for the
years ended December 31, 2007 and 2006 amounted to $143,772 and $44,729
respectively. Future minimum lease payments under non-cancelable operating
leases until termination of the leases amounted to $276,042 distributed as:
-
 
 Fiscal
      Year
              
              Minimum
      Lease
                Payments2008
              
              $
              171,0052009
              
              
              100,6092010
              
              
              4,428Total
              
              $
              276,042
 
 10.
                  CONVERTIBLE
      DEBENTURE AND BOND WARRANTS
 On July
31, 2007, the Company completed a financing transaction with several investors
(the “Subscriber”) issuing (i) $2,000,000 Fixed Rate Convertible Debenture due
in 2009 (the “Debenture”) and (ii) a stock purchase warrant to purchase an
aggregate of 2,090,592 shares of our common stock, subject to adjustments for
stock splits or reorganizations as set forth in the warrant, that will expire in
2012 (the “Warrants”).
 
 The
Debenture were subscribed at a price equal to 87.25% of their principal amount,
which is the issue price of $2,285,714 less a 12.5% discount. The Debenture were
issued pursuant to, and are subject to the terms and conditions of, a trust deed
dated July 31, 2007 (the “Trust Deed”).
 
 ·
              Interest Rate. The
      Debenture bears interest at the rate of 8% per annum of the principal
      amount of the Debenture.
 
 ·
              Conversion. Each
      Debenture is convertible at the option of the holder at any time after
      July 31, 2007 up to July 31, 2009, into shares of our common stock at a
      fixed conversion price of $0.82 per
share.
    F-19
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
   10.
                CONVERTIBLE
      DEBENTURE AND BOND WARRANTS
(Continued)
 On July
31, 2007, the Company also entered into a registration rights agreement with the
Subscriber pursuant to which the Company agreed to include the Debenture, the
Warrants, and the shares of common stock underlying the Debenture and Warrants
in a pre-effective amendment to a registration statement that the Company have
on file with the SEC. The Company intends to have the registration statement
cover the resale of the Debenture, the Warrants, and the shares of common stock
underlying the Debenture and Warrants.
 
 At July
31, 2007, the date of issuance, the Company determined the fair value of the
Debenture to be $2,000,000. The values of the warrants and the beneficial
conversion feature as at December 31, 2007 determined under the Black-Scholes
valuation method were immaterial. Accordingly, the interest discount on the
warrants and beneficial conversion feature were recorded, and are being
amortized by the straight-line method over 5 years and 2 years
respectively.
 
 Because
of the fact that the Fixed Rate Convertible Debenture contain three separate
securities and yet merged into one package, the Debenture security must identify
its constituents and establish the individual value as determined by the Issuer
as follows: -
 
 (1)
              Convertible
      Debenture
              $2,285,714(2)
              Discount
              $   285,714(3)
              Warrant
              $               -(4)
              Beneficial
      Conversion Feature
              $               -
 
 The above
item (2) is to be amortized to interest expense over the term of the Debenture
by the effective interest method as disclosed in the table below.
   F-20
  Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
  10.
                  CONVERTIBLE
      DEBENTURE AND BOND WARRANTS
(Continued)
 The
Convertible Debentures Payable, net consists of the following:
 
 2007
              
              
              2006USD
              
              
              USDConvertible Debenture
      - Principal and interestBalance
      as at beginning of year
              
              
              -
              
              
              
              -Addition
              
              
              2,000,000
              
              
              
              -Redemption
              
              
              -
              
              
              
              -Interest
      Charged for the current year
              
              
              168,448
              
              
              
              -Repayment
      of interest in current year
              
              
              (45,713
              )
              
              
              -Balance
      as at end of year
              
              
              2,122,735
              
              
              
              -Less: Interest
      discount – Beneficial conversion featureBalance
      as at beginning of year
              
              
              -
              
              
              
              -Addition
              
              
              -
              
              
              
              -Amortization
              
              
              -
              
              
              
              -Balance
      as at end of year
              
              
              -
              
              
              
              -Less: Interest
      Discount – WarrantBalance
      as at beginning of year
              
              
              -
              
              
              
              -Addition
              
              
              -
              
              
              
              -Amortization
              
              
              -
              
              
              
              -Balance
      as at end of year
              
              
              -
              
              
              
              -Convertible
      Debenture, net
              
              
              2,122,735
              
              
              
              -The
      Convertible Debenture was classified as current and non-current as
      follows2007
              
              
              2006USD
              
              
              USDNon-current
      portion
              
              
              1,373,560
              
              
              
              -Current
      Portion
              
              
              749,175
              
              
              
              -2,122,735
              
              
              
              -
   F-21
 Guangzhou
Global Telecom, Inc
 Notes
to the Financial Statements
 For
the years ended December 31, 2007 and 2006
 (Stated
in US Dollars)
  11.
                  COMMON
      STOCK CAPITAL
 The
Company is authorized by its Memorandum of Association (i.e. equivalent to
Articles of Incorporation) to issue a total of 75,000,000 shares at a par value
of US$0.01 of which 53,170,000 and 52,890,000 shares at a par value of US$0.01
per share have been issued and outstanding as of December 31, 2007 and 2006,
respectively.
  The
retroactive presentation of recapitalization upon reverse-merger on March 7,
2007 being depicted in the following table:
  Date
              Name
      of Shareholders
              Number
      of Shares
              
              Common
      Stock Capital
              
              Additional
      Paid-in Capital
              
              %
      of Equity Holdings3/7/2007
              Shell:
      Avalon Development of Enterprises Inc. prior to
    reverse-merger
              13,072,500
              
              $  130,725
              
              $              -
              
              24.59%3/7/2007
              Shareholders
      of Shell in exchange of all of GTHL shares upon
    reverse-merger
              39,817,500
              
              398,175
              
              -
              
              74.89%4/2/2007
              Zenith
      Capital Management LLC
              200,000
              
              2,000
              
              498,000
              
              0.37%7/1/2007
              Miss
      Li, Yan Kuan
              80,000
              
              800
              
              61,600
              
              0.15%Less: Cost of
      Issue
              
              
              
              
              (151,384)53,170,000
              
              $    53,170
              
              $   408,216
              
              100.00%
 
  12.
                    RELATED
      PARTY TRANSACTIONS
 
 The
following material transactions with related parties during the periods were in
the opinion of the directors, carried out in the ordinary course of business and
on normal commercial terms:
 
 The
      due from related party at December 31, 2007 and 2006 were $32,560 and
      $258,962 respectively.
 
 The
      due from shareholder at December 31, 2007 was $118,047 and the due to
      shareholders at December 31, 2006 was
$36,948.
 
 On
      July 1, 2007, the Group acquired the entire equity shares of MGT from a
      shareholder of the Company at a consideration of $150,000 cash plus new
      issuance of 80,000 common shares of the
Company.






F-22




Item
8. Changes In and
Disagreements With Accountants on Accounting and Financial
Disclosure.





None.




Item
8A. Controls and Procedures.




Evaluation
of disclosure controls and procedures




Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of December 31, 2007. Based
on this evaluation, our principal executive officer and principal financial
officers have concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms and that our disclosure and controls are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.




Changes in internal
controls




We have
not made any changes to our internal controls subsequent to the Evaluation Date.
We have not identified any deficiencies or material weaknesses or other factors
that could significantly affect these controls, and therefore, no corrective
action was taken.





Item
8B. Other Information.




None.





PART III




Item
9. Directors, Executive
Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act.




The
following table sets forth information regarding the members of the Company’s
Board of Directors and its executive officers as of December 31,
2007:





Name
            Age
            PositionYankuan
      Li
            50
            Chief
      Executive Officer and Chairman of the BoardYiwen
      Wu
            43
            Chief
      Operating Officer and DirectorZhihan
      Hu
            43
            Chief
      Financial Officer




The
principal occupation for the past five years (and, in some instances, for prior
years) of each of our directors and officers are as follows:





Yankuan
Li


Chief
Executive Officer and Chairman of the Board


Yankuan
Li has been Chairman of the Board of GTL since 2005. From 2004-2005 he was
General Manager of Guangzhou YueShen TaiYang Technology Ltd., a subsidiary of
Pacificnet Inc. (Nasdaq: PACT). From 2003-2004 he was Managing Director of the
phone card division of Guangzhou Trading Center of Renwoxing, responsible for
phone cards. From 2000-2003 he was Department Manager of the Industrial and
Commercial Bank of China Guangzhou Branch. Mr. Yankuan holds a bachelor degree
in Business Management of Beijing United University in 1998.






12







Yiwen Wu


Chief
Operating Officer


Yiwen Wu
has been General Manger of GTL from 2005 to present. Gerneral From 2003-2005 he
was Vice General Manager of Guangzhou Trading Center of Renwoxing, responsible
for phone cards. From 2001-2003 he was Vice General Manager of Guangzhou YueShen
Technology Limited.





Zhihan
Hu


Chief
Financial Officer


Zhihan Hu
has been CFO of GTL from 2005 to present. In 2005 he was Financial Manager of
Guangzhou Tianjian Real Estate Development Co., Ltd. From 2002-2004 he was
Financial Manager of Guangdong Materials & Equipment Import & Export
Co., Ltd. From 2000-2002 he was CFO of Huiyijia Household Appliance Co., Ltd. in
Zhongshan and Zhuhai, representing Grandbuy Co.,Ltd. Mr. Zhihan is a CPA and
holds a Bachelor’s degree in International Finance from Zhongshan
University.





Board of
Directors





All
directors hold office until the annual meeting of stockholders of the Company
following their election or until their successors are duly elected and
qualified. Officers are appointed by the Board of Directors and serve at its
discretion. We have had a standing audit committee since our
inception.





Significant
Employees





None.





Family
Relationships





No family
relationships exist among our directors, executive officers, or persons
nominated or chosen by us to become directors or executive
officers.





Involvement in Certain Legal
Proceedings





To our knowledge, during the past
five (5) years, none of our directors, executive officers, promoters, control
persons, or nominees has been:




§
            the
      subject of any bankruptcy petition filed by or against any business of
      which such person was a general partner or executive officer either at the
      time of the bankruptcy or within two years prior to that
    time;




§
            convicted
      in a criminal proceeding or is subject to a pending criminal proceeding
      (excluding traffic violations and other minor
  offenses);




§
            subject
      to any order, judgment, or decree, not subsequently reversed, suspended or
      vacated, of any court of competent jurisdiction, permanently or
      temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities or banking activities;
      or




§
            found
      by a court of competent jurisdiction (in a civil action), the Commission
      or the Commodity Futures Trading Commission to have violated a federal or
      state securities or commodities
law.






13






Code of
Ethics





On April
16, 2007, the Board of Directors of the Company adopted a written Code of Ethics
designed to deter wrongdoing and promote honest and ethical conduct, full, fair
and accurate disclosure, compliance with laws, prompt internal reporting and
accountability to adherence to the Code of Ethics. This Code of Ethics has been
filed with the Securities and Exchange Commission as an Exhibit to our Form
10-KSB filed on April 16, 2007.





Compliance with Section
16(a) of the Exchange Act





Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers and
directors, and persons who own more than 10 percent of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (SEC). Officers,
directors, and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.





To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company, all reports under Section 16(a) required to be filed
by its officers and directors and greater than ten percent beneficial owners
were timely filed as of the date of this filing.





ITEM
9A. CONTROLS AND PROCEDURES





Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Accounting Officer (“CAO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CAO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CAO, as appropriate, to allow timely decisions regarding required
disclosure.




Management’s Report on
Internal Controls over Financial Reporting





Internal
control over financial reporting is a process to provide reasonable assurance
regarding the reliability of consolidated financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.  There has been no change in
the Company’s internal control over financial reporting during the year ended
December 31, 2007 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.






The
Company’s management, including the Company’s CEO and CAO, does not expect that
the Company’s disclosure controls and procedures or the Company’s internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of the
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected.





Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that the
company’s internal control over financial reporting was effective as of December
31, 2007.






14





Item
10. Executive
Compensation.




Compensation of Executive
Officers





The
following executives of the Company received compensation in the amounts set
forth in the chart below for the fiscal years ended December 31, 2007 and 2006.
All compensation listed is in US dollars. No other item of compensation was paid
to any officer or director of the Company other than reimbursement of
expenses.








SUMMARY
COMPENSATION TABLE





Name
      and Principal
      Position
            
            
            Year
            
            
            Salary
              ($)
            
            
            Bonus
              ($)
            
            
            Stock
      Awards
              ($)
            
            
            Option
      Awards
              ($)
            
            
            Non-Equity
      Incentive Plan Compensation ($)
            
            
            Non-Qualified
      Deferred Compensation Earnings
              ($)
            
            
            All
      Other Compensation
              ($)
            
            Totals
              ($)Yankuan
      Li, Chief Executive Officer and Chairman of the Board
            
            
            2007
            
            
            12,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            0
            
            0
            
            
            0
            
            12,0002006
            
            
            12,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            0
            
            0
            
            
            0
            
            12,000Yiwen
      Wu, Chief Operating Officer and Director
            
            
            2007
            
            $
            10,800
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            $
            10,8002006
            
            $
            10,800
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            $
            10,000Zhihan
      Hu, Chief Financial Officer and Director
            
            
            2007
            
            $
            9,600
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            $
            9,6002006
            
            $
            9,600
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            $
            9,600




Employment
Agreements




None.




Item
11. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.




The
following table sets forth certain information regarding the ownership of our
capital stock, as of April 16, 2007, for: (i) each director; (ii) each person
who is known to us to be the beneficial owner of more than 5%of our outstanding
common stock; (iii) each of our executive officers named in the Summary
Compensation Table; and (iv) all of our current executive officers and directors
of as a group. Except as otherwise indicated in the footnotes, all information
with respect to share ownership and voting and investment power has been
furnished to us by the persons listed. Except as otherwise indicated in the
footnotes, each person listed has sole voting power with respect to the shares
shown as beneficially owned.






15




Name
      and Address
            
            Number
      of Common Shares Beneficially Owned(2)
            
            Percent
      of ClassYankuan
      Li (1)
            
            
            12,343,424
            
            
            22.09
            %Yiwen
      Wu (1)
            
            
            250,000
            
            
            0.004
            %Zhihan
      Hu (1)
            
            
            10,000
            
            
            0.02
            %All
      directors and executive officers as a group (3 in number)
            
            
            12,603,424
            
            
            22.094
            %




(1) The
person listed is an officer and/or director of the Company.


(2) Based
on 53,170,000shares of common stock issued and outstanding as of December 31,
2007.




Item
12. Certain
Relationships and Related Transactions.




Transactions with Management
and Others





There
were no material transactions, or series of similar transactions, since the
beginning of the Company’s last fiscal year, or any currently proposed
transactions, or series of similar transactions, to which we were or are a
party, in which the amount involved exceeds $60,000, and in which any director
or executive officer, or any security holder who is known by us to own of record
or beneficially more than 5% of any class of our common stock, or any member of
the immediate family of any of the foregoing persons, has an
interest.




Indebtedness of
Management




There
were no material transactions, or series of similar transactions, since the
beginning of our last fiscal year, or any currently proposed transactions, or
series of similar transactions, to which we were or are a party, in which the
amount involved exceeds $60,000 and in which any director or executive officer,
or any security holder who is known to us to own of record or beneficially more
than 5% of any class of our common stock, or any member of the immediate family
of any of the foregoing persons, has an interest.




Transactions with
Promoters




There
were no material transactions between us and our promoters or
founders.








16





Item
13. Exhibits.




Exhibit No.
            
            Title
      of Document
            
            Location3.1.1
            
            Articles
      of Incorporation
            
            Incorporated
      by reference to Form SB-2 filed on January 6, 2006.3.2
            
            Bylaws
            
            Incorporated
      by reference to Form SB-2 filed on January 6, 2006.10.1
            
            Stock
      Purchase Agreement and Share Exchange dated January 10, 2007 by and among
      Avalon Development Enterprises, Inc., Global Telecom Holdings Limited, and
      the shareholders of Global Telecom Holdings Limited.
            
            Incorporated
      by reference to Form 8K filed March 29, 200710.2
            
            Amendment
      Agreement by and between Guangzhou Global Telecom, Inc and the
      Purchasers
            
            Incorporated
      by reference to Form 8K filed February 28, 200831.1
            
            Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to
      Rule 13a-14(a) of the Securities Exchange Act of 1934
            
            Filed
      herewith32.1
            
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
            
            Filed
      herewith




Item
14.   Principal
Accounting Fees and Services.




Audit
Fees




For our
fiscal year ended December 31, 2007, we were billed approximately $10,000 for
professional services rendered for the audit and reviews of our financial
statements.




Tax Fees




For our
fiscal years ended December 31, 2007 and 2006, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.




All Other
Fees




The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended December 31, 2006 and
2005.





Audit and Non-Audit Service
Pre-Approval Policy





We
currently do not have an audit committee. However, our board of directors has
approved the services described above.








17





SIGNATURES




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




GUANGZHOU
      GLOBAL TELECOM, INC.By:
            /s/ Li YankuanLi
      YankuanPresident
      and Chief Executive OfficerDate:
            March
      31, 2008





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Name
            
            Title
            
            Date/s/
      Li Yankuan
            
            President,
      Chief Executive Officer and Director
            
            March
      31, 2008Li
      Yankuan/s/Zhihan
      Hu
            
            Chief
      Financial Officer and Principal Accounting Officer
            
            March
      31, 2008Zhihan
      Hu






18