UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K





(Mark
One)





( X
      )
            ANNUAL
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2008





(   )
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





For the
transition period from _________ to __________





Commission
File Number 0-25707





SMOOTH GLOBAL (CHINA)
HOLDINGS, INC.


(Exact
Name of Registrant as Specified in Its Charter)





NEVADA
                          91-1948355(State
      or other jurisdiction of
                          (I.R.S.
      Employerincorporation
      or organization)
                          Identification
      No.)





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


(Address
of principal executive offices)





(011)-
86-10-6498-7788


(Issuer's
telephone number)





Securities
Registered Pursuant to Section 12(b) of the Exchange Act: NONE





Securities
Registered Pursuant to Section 12(g) of the Exchange Act:





COMMON STOCK, $.0001 PAR
VALUE


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 406 of the Securities Act.    Yes __ No √





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes __ No √





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes  √   No __














Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [ ]





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




Large
      accelerated filer
                  Accelerated
      filer
                  Non-accelerated
      filer
                  Small
      reporting company X





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





As of
April 10, 2009 the aggregate market value of the common stock held by
non-affiliates was approximately $333,627, based upon the closing sale price on
April 10, 2009 of $.02 per share.





As of
April 10, 2009, there were 38,381,375 shares of common stock
outstanding.





Documents
incorporated by reference: NONE










PART
I





FORWARD-LOOKING
STATEMENTS: NO ASSURANCES INTENDED





In
addition to historical information, this Annual Report contains forward-looking
statements, which are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or
similar expressions. These forward-looking statements represent Management’s
belief as to the future of Smooth Global (China) Holdings,
Inc.  Whether those beliefs become reality will depend on many factors
that are not under Management’s control.  Many risks and uncertainties
exist that could cause actual results to differ materially from those reflected
in these forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in the section entitled “Risk
Factors.” Readers are cautioned not to place undue reliance on these
forward-looking statements. We undertake no obligation to revise or publicly
release the results of any revision to these forward-looking
statements.







ITEM
1.        BUSINESS





Development
of our Organization




Smooth Global (China) Holdings, Inc. is
a holding company whose operating subsidiaries are located in the People’s
Republic of China.  Until October 2007 our only operating subsidiary
was Beijing Quan Tong Chang Information Service Limited (“Beijing QTC”), a
corporation organized under the laws of The People’s Republic of
China.  We own, through an offshore subsidiary, 100% of the registered
capital of Beijing QTC.




Beijing
QTC was founded in 2003 by Guoqing Xu and Shuying Zheng.  Its primary
revenue source was a network of public payphones located in
Beijing.  With outlets located in universities, shopping malls and
street corners, Beijing QTC distributed fixed line call times under distribution
agreements with China Netcom (Beijing) Corporation Limited and China Netcom
(Guangdong) Corporation Limited.  In 2004, Beijing QTC controlled 34%
of the public payphone market in Beijing.




In 2006
and 2007 the revenue from our payphone business fell
dramatically.  The primary reasons for the reduction in revenue
were:




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




Ø
            In
      January 2007 China Netcom (Beijing) Corporation Limited cancelled the
      contract under which we distributed its fixed line call
    times.




Management recognized that its efforts
to return the payphone business to profitability were futile.  For
that reason, on August 20, 2008, QTC's board of directors decided to terminate
this operation and disposed of the relevant equipment.  QTC disposed
of 65 pieces of equipment with a carrying value of $61,929 (RMB 424,475), of
which 59 pieces of equipment with a carrying value of $42,312 (RMB 290,017) were
sold to a third party for $7,295 (RMB 50,000), resulting in a loss of $34,474
(RMB 240,017); and 6 pieces of equipment with a carrying value of $19,617 (RMB
134,458) were transferred to another of the Company’s subsidiaries to satisfy a
debt of $11,671 (RMB 80,000). No loss was recognized for this transfer due to
the elimination of inter-company transactions in consolidation.





1





Beijing GRT




On October 24, 2007 we acquired
ownership of the registered capital stock of Smooth Global Services Limited, a
corporation organized in the British Virgin Islands, in exchange for 33,000,000
shares of our common stock.  Smooth Global Services Limited has one
wholly-owned subsidiary:  Smooth Global (Beijing) Telecom Science
Limited, which was organized under the laws of The People’s Republic of
China.  Smooth Global (Beijing) Telecom Science Limited is the
beneficiary under a Trust and Indemnity Agreement, in which Jin Yanfang and Wang
Yanxia, the registered equity owners of Beijing GRT Information Services Limited
(“Beijing GRT”), have transferred to Smooth Global (Beijing) Telecom Science
Limited all of the beneficial interest in the equity of Beijing
GRT.  Jin Yanfang and Wang Yanxia remain the registered owners of the
equity in Beijing GRT, but have agreed to act as trustees for Smooth Global
(Beijing) Telecom Science Limited and to follow directions given to them with
respect to the business of Beijing GRT.




Beijing GRT entered into the
international call forwarding business for the Shanghai and Shaoxing marketplace
in February 2007 by obtaining a license from China Netcom (Group) Company Ltd.
Shanghai Branch and a license from China Netcom (Group) Company Ltd. Shaoxing
Branch.




International call forwarding replaces
the function of the international roaming services provided by most mobile
carriers.  To utilize our international call forwarding service, a
subscriber will obtain use of a phone number in the country he or she is
visiting.  He will then purchase from us a SIM card that will permit
him to receive a fixed amount of call-time from our server while in the foreign
country.  When he uses the call forwarding service provided by his
mobile carrier to forward his inbound calls to a Beijing GRT phone number, we
rout the calls to the subscriber’s phone number in the destination
country.




The market for our call forwarding
service are those Chinese residents who travel abroad for business or personal
reasons.  Between 1999 and 2005 this market grew by 22% annually,
increasing from 9 million travelers in 1999 to over 31 million travelers in
2005.  As China’s entry into the World Trade Organization opens up
more countries to Chinese business travel, we expect the growth of foreign
travel by residents of China to continue.  Since China now has the
largest mobile phone subscriber base in the world – 463 million subscribers at
the end of 2006, most of those travelers will be potential subscribers to our
international call forwarding service.




Although international call forwarding
service is popular in Hong Kong, we are not aware of any service provider
offering the service in China.  Therefore, initially our competition
will come from the roaming services provided by mobile carriers.  Our
primary competitive advantage will be price:  we currently charge 2
RMB (approximately $.27) per minute for calls on our system and the subscriber
also pays the local phone tariff for outbound calls; mobile roaming charges by
the principal Chinese carriers generally exceed 8 RMB and are much higher in
certain countries.  One additional disadvantage of roaming services is
that they are not available in countries that use incompatible mobile
communication systems.  For example, the GSM system used by China
Mobile has not been deployed in Japan.  So China Mobile customers
cannot obtain roaming services in Japan.




2




Our other initial competition will come
from mobile phone services provided in the destination
countries.  These services will often be price competitive with us –
but the user has to notify his friends and associates of his new (temporary)
phone number.




In 2008, GRT decided to relocate its
call forwarding business from the Shanghai area to Beijing. The reasons for the
business relocation include:




§
            Management’s
      realization that it lacked the personnel and financial resources to
      operate in both Shanghai and Beijing at this
  time.




§
            As
      a result of the successful Olympics and as the capital of China with
      approximately 20 million residents, Beijing attracts 80-90% of foreign
      tourists traveling to China, and thus has a much larger potential customer
      base than Shanghai.




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




In
addition, our Management expects that this relocation will revitalize our
company for the following reasons:




§
            We
      expect to market our call forwarding service at a very competitive
      price.  Our international SIM card will be marketed at 0.80 RMB
      per minute or per message, compared to the prevailing market price of
      approximately 2.0 RMB per minute or per
message.




§
            We
      expect to have an exclusive distribution contract for
      Beijing with China Unicom Group Hong Kong International
      Ltd.  to distribute a wide variety of
  cards.




§
            We
      expect that two executive management members of the Beijing
      Tourism Group, one of China’s largest travel agencies, will become
      significant customers as soon as we open the
  office.




§
            We
      are making arrangements to have branded logos printed on our SIM
      cards.  These arrangements, such as one that we expect to have
      with Ctrip.com International Ltd., will provide us a new stream of
      advertising income.




As a
result of the above business relocation decision, our management decided to sell
the Shanghai operations of our call forwarding business. The proceeds of the
sale will be used to revitalize our international call forwarding business in
its new Beijing location. Those operations will be supplemented by the joint
venture that we entered in October 2008 with Beijing Zhongheng Technology Co.,
Inc.  Having invested 10% of the capital in this venture, we own 10%
of the equity, and will cooperate with our new partner in marketing
international call forwarding cards.  Our hope is that this supplement
to our business will help us return our company to profitability.




Because
our international call forwarding business became dormant in 2008 due to the
relocation, an equal portion of our revenue arose from another of our
telecommunications services:  VoIP call time
distribution.  GRT entered this business in January 2008 by
contracting with China Netcom (Shaoxing) Corporation Limited and with China
Netcom (Shanghai) Corporation Limited.  Those two carriers sell us
usage units on their VoIP systems, which we in turn sell to customers who link
to the systems through our servers. The sale of VoIP time yielded $212,305 in
revenue during the 2008. We expect this portion of our business to expand
considerably in the future.





3





Franchise
Operations




Beijing
GRT developed a low cost method of maximizing the opportunity that our call
forwarding licenses afford us.  During 2007 we established sixteen
franchised distributors of our call forwarding services throughout
China.  In exchange for a franchise fee of approximately $33,000, we
provide the franchisee all of the necessary training and materials necessary to
enter into the business.  The franchisee then purchases an inventory
of our SIMS cards for resale to phone customers.




The sale
of SIM cards through franchisees is not as profitable as direct sale by our own
branch office, since we must afford the franchisee a substantial discount on the
price of the SIM card.  On the other hand, we can establish a
franchise with virtually no cost – indeed, far less cost than the franchise
fee.  So the franchise business enables us to expand our market
rapidly without a significant capital investment.




Franchise
sales are currently suspended during this phase of the relocation from Shanghai
to Beijing.




Employees




Beijing QTC currently employs 6
individuals, all on a full-time basis.  None of our employees belongs
to a collective bargaining unit.  Our relationships with our employees
are good.







ITEM
1A      RISK FACTORS





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





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




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





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




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





4





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




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




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




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





A recession in China could
significantly hinder our growth.




The success of our international call
forwarding services will depend on continuation and expansion oftrends in travel
by the people of China developed in the past few years.  Those travel
habits depended, in turn, on the growth in business activity and disposable
income in China during the same period.  Currently, as a result of the
worldwide recession,  there is a downturn in business activity in
China.  This may  reduce the market for our
services.  In addition, if business in China continues to wane, China
itself could experience a recession.    The occurrence of a
recession would significantly hinder our efforts to implement our business
plan.





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




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





5





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




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





Government regulation may hinder our
ability to function efficiently.




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





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




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





Currency fluctuations may adversely
affect our operating results.




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





6





We have limited business insurance
coverage.




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





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




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





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




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





ITEM
1B      UNRESOLVED STAFF COMMENTS





Not
Applicable.





ITEM
2.        DESCRIPTION OF
PROPERTY





Our
offices are located in 195 square meters of office space that we lease from our
Chairman, Shuying Zheng.  The lease terminates in June
2010.  The annual rental is $17,236.




ITEM
3.       LEGAL PROCEEDINGS




None.





ITEM
4.        SUBMISSION OF MATTERS TO AVOTE
OF SECURITY HOLDERS


None.
 7




PART
II





ITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES.





(a)
Market Information




The Company’s common stock is quoted on
the OTC Bulletin Board under the symbol “SMGH.”   Set forth below
are the high and low bid prices for each of the quarters between since January
1, 2007 and December 31, 2008. The reported bid
quotations reflect inter-dealer prices without retail markup, markdown or
commissions, and may not necessarily represent actual transactions.




The prices set forth below have been
adjusted, as necessary, to reflect the effect of a 1-for-30 reverse stock split
on July 31, 2007.




BidQuarter Ending
                                                                                    High
                                                                                    LowMarch
      31, 2007
                                                                                    $
      200.00
                                                                                    $  45.00June
      30, 2007
                                                                                    $   70.00
                                                                                    $  21.00September
      30, 2007
                                                                                    $   22.00
                                                                                    $      .11December
      31, 2007
                                                                                    $       .51
                                                                                    $      .11March
      31, 2008
                                                                                    $     0.87
                                                                                    $   0.07June
      30, 2008
                                                                                    $     0.23
                                                                                    $   0.05September
      30, 2008
                                                                                    $     0.05
                                                                                    $   0.02December
      31, 2008
                                                                                    $     0.06
                                                                                    $   0.02





(b)
Shareholders




Our shareholders list contains the
names of 71 registered stockholders of record of the Company’s Common
Stock.




(c)  Dividends




The
Company has not paid or declared any cash dividends on its Common Stock within
the past three years and does not foresee doing so in the foreseeable
future.  The Company intends to retain any future earnings for the
operation and expansion of the business.  Any decision as to future
payment of dividends will depend on the available earnings, the capital
requirements of the Company, its general financial condition and other factors
deemed pertinent by the Board of Directors.





(d)  Securities
Authorized for Issuance Under Equity Compensation Plans.




The information set forth in the table
below regarding equity compensation plans (which include individual compensation
arrangements) was determined as of December 31, 2008.




8




Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
                                            Weighted
      average exercise price of outstanding options, warrants and
      rights
                                            Number
      of securities remaining available for future issuance under equity
      compensation plansEquity
      compensation plans approved by security holders......
                                            0
                                            --
                                            0Equity
      compensation plans not approved by security holders......
                                            0
                                            --
                                            0Total..............
                                            0
                                            --
                                            0








(e)  Sale of Unregistered
Securities




The
Company did not sell any unregistered securities during the 4th quarter
of 2008.





(f) Repurchase of Equity
Securities




The Company did not repurchase any of
its equity securities that were registered under Section 12 of the Securities
Act during the 4th quarter
of 2008









ITEM
6.        SELECTED FINANCIAL
DATA





Not
applicable.





ITEM 7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
      OPERATIONS





Results
of Operations




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





Beijing
QTC had been primarily involved in the business of operating public
payphones.  We chose to replace Beijing QTC as the focus of our
operations in 2007 because we saw that business waning. The primary reasons for
the reduction were:




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


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


9




The other
business of Beijing QTC had been its distribution of internet VoIP phone
systems.  In August 2008 management of Beijing QTC decided to
terminate that business as well due to languishing revenue. As a result, the
revenue and expenses of Beijing QTC for 2008 are summarized as “Loss from
Discontinued Operations – VoIP Call Time Distribution of QTC” on our
Consolidated Statements of Operations and Other Comprehensive
Income.




The
acquisition of Beijing GRT provided the Company with a brief period of
profitability in 2007.  During 2007 we recorded $1,914,609 in revenue,
most of which was recorded in the 4th quarter
and most of which was attributable to the international call forwarding business
of Beijing GRT:  $1,196,996 from our sale of SIM cards and an
additional $527,753 in fees paid by our franchisees.  Beijing GRT
achieved the above success in operating the call forwarding business from one
office only:  its office in Shanghai.  The success of that
initiative indicated that the business could be successful if we developed it
from offices throughout China.





Despite
the success of our international call forwarding business in Shanghai area in
2007, a hiatus occurred in that business in 2008.  Compared to our
revenue of $1,196,996 from the sale of call forwarding cards and $527,753 from
the sale of franchises in 2007, we realized only $213,953 from the sale of call
forwarding cards in 2008, and no revenue from the sale of franchises during this
period.  The decreased revenue in 2008 was primarily the result of
Management’s decision to relocate our call forwarding business from the Shanghai
area to Beijing.  Because of that move, most of the revenue that we
realized from the call forwarding business in 2008 came from one
customer.




As a
result of the above business relocation decision, our management decided to sell
the Shanghai operations of our call forwarding business. On October 18, 2008,
GRT signed a “Business Transfer Agreement” with Shanghai Zhen Guang Travel Agent
and Shanghai North Travel Agent, pursuant to which, Shanghai Zhen Guang Travel
Agent and Shanghai North Travel Agent agreed to acquire GRT’s call-forwarding
operation in Shanghai area for $511,098 (RMB 3,500,000). On November 30, 2008
the parties agreed to increase the sales price to $729,480 (RMB
5,000,000).  On October 21, 2008, GRT received $291,792 (RMB
2,000,000) from Shanghai Zhen Guang Travel Agent, and $29,179 (RMB 200,000) from
Shanghai North Travel Agent as a security deposit for the agreement. The deal is
expected to close at the end of 2009.  The proceeds of the sale will
be used to revitalize our international call forwarding business in its new
Beijing location.




Because
of the strategic change in our call forwarding business, our operating expenses
were significantly greater than our revenue in 2008.  Primary among
the components of operating expenses were (1) $85,650 compensation to our CEO;
and (2) consulting fees of $706,384.  Included in the consulting fees
was $231,880 attributable to four contracts that we entered in August and
September 2007 with consultants who are assisting us in rebuilding our company’s
business.  To compensate these individuals we issued them shares of
our common stock, which had a market value of $404,800.  We are
expensing that amount over the lives of the four contracts, which range from
nine months to two years.  In addition, during 2008 we incurred a
research and development expense of $105,448.  This expense arose from
our participation in an arrangement with Xinjiang Jinzhonghua Telecommuncation
Services Co., Inc., whose purpose is to develop and manufacture wireless network
extension equipment, utilizing that company’s patented telecommunications
technology.




10




Because
of our lack of revenues, we incurred a net loss of $1,155,287 (($.03) per share)
in 2008, compared to the net income of $859,520 ($.03 per share) that we
realized in 2007.  Although the PRC Income Tax Law allows the
enterprise to offset its future net income with operating losses carried
forward, the enterprise must obtain approval from the local tax authority before
it can claim that benefit, and the outcome of the application is generally
uncertain.  Therefore, Management established a 100% valuation
allowance for the operating losses carried forward, and no deferred tax assets
have been recorded.




Our business operates primarily in
Chinese Renminbi, but we report our results in our SEC filings in U.S.
Dollars.  The conversion of our accounts from RMB to Dollars results
in translation adjustments, which are reported as a middle step between net
income and comprehensive income.  The net income is added to the
retained earnings on our balance sheet; while the translation adjustment is
added to a line item on our balance sheet labeled “accumulated other
comprehensive income,” since it is more reflective of changes in the relative
values of U.S. and Chinese currencies than of the success of our
business.  In 2008, the effect of converting our financial results to
Dollars was to add $87,276 to our comprehensive income.





Liquidity and Capital
Resources





We
reduced our cash position by $487,601 in 2008.  The primary reason for
the reduction was our operating loss.  In addition, however, we
invested $229,811 (RMB 1,600,000)in a joint venture to market calling
cards.




Establishing
our several telecommunications businesses in the public consciousness will cost
money.  At December 31, 2008 we had only $33,415 in cash on our
balance sheet. Our plan, however, is to eventually expand our operations by
opening additional sales offices throughout China, and hiring additional sales
personnel to staff the offices.  Fulfillment of this goal, however,
will depend on our ability to obtain financing.




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




Critical
Accounting Policies and Estimates




We made
no material changes to our critical accounting policies in connection with the
preparation of financial statements for 2008.





11





Impact of Accounting
Pronouncements





There were no recent accounting
pronouncements that have had a material effect on the Company’s financial
position or results of operations.





Off-Balance
Sheet Arrangements





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





ITEM 7A
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





Not
Applicable.





ITEM
8.        FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.




12




INDEX TO FINANCIAL
    STATEMENTSREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                                      F-2CONSOLIDATED
      BALANCE SHEETS
                                                      F-3CONSOLIDATED
      STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
                                                      F-4CONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
                                                      F-5CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                                                      F-6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      F-7
      -
F-35
   F-1


KEITH
      K. ZHEN, CPACERTIFIED
      PUBLIC ACCOUNTANT2070
      WEST 6TH STREET - BROOKLYN, NY 11223 - TEL (347) 408-0693 - FAX (347)
      602-4868 - EMAIL :KEITHZHEN@GMAIL.COMREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard
      of DirectorsSmooth
      Global (China) Holdings, Inc.We
      have audited the accompanying consolidated balance sheets of Smooth Global (China) Holdings, Inc. and
      subsidiaries as of  December 31, 2008 and 2007, and the related
      statements of income, stockholders' equity and comprehensive income, and
      cash flows for each of the years in the two-year period ended December 31,
      2008.  Smooth Global (China) Holdings, Inc.'s management is
      responsible for these financial statements.  Our responsibility
      is to express an opinion on these financial statements based on our
      audit.We
      conducted our audits in accordance with the standards of the Public
      Company Accounting Oversight Board (United States). Those standards
      require that we plan and perform the audit to obtain reasonable assurance
      about whether the financial statements are free of material misstatement.
      The company is not required to have, nor were we engaged to perform, an
      audit of its internal control over financial reporting. Our audit included
      consideration of internal control over financial reporting as a basis for
      designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of the
      company’s internal control over financial reporting. Accordingly, we
      express no such opinion. An audit also includes examining, on a test
      basis, evidence supporting the amounts and disclosures in the financial
      statements, assessing the accounting principles used and significant
      estimates made by management, as well as evaluating the overall financial
      statement presenIn
      our opinion, the financial statements referred to above present fairly, in
      all material respects, the financial position of Smooth Global (China)
      Holdings, Inc. and subsidiaries as of  December 31, 2008 and
      2007, and the results of its operations and its cash flows for each of the
      years in the two-year period ended December 31, 2008 in conformity with
      accounting principles generally accepted in the United States of
      America.The
      accompanying consolidated financial statements have been prepared assuming
      that the Company will continue as a going concern. As discussed in Note 2
      to the consolidated financial statements, the Company had a significant
      loss and the revenue dropped dramatically in the year ended December 31,
      2008.  These factors raises substantial doubt about its ability
      to continue as a going concern. Management’s plans concerning these
      matters are also described in Note 2. The accompanying consolidated
      financial statements do not include any adjustments that might result from
      the outcome of this uncertainty./s/Keith
      K. Zhen, CPAKeith
      K. Zhen, CPABrooklyn,
      New YorkApril
      6,
2009





F-2





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007December
      31,
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        December
      31,2008
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        33,415
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        521,016Accounts
      receivable, net (Note 5)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        209,948Prepaid
      expense (Note 6)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        374,597
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        370,632Purchased
      calling card
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        403Total
      current assets
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        408,012
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        1,101,999Property,
      Plant, and Equipment, net (Note 8)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        215,515
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        281,482Long-term
      Investment (Note 7)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        233,434
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -Contract
      Security Deposit (Note 9)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        89,114
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        83,400Total
      Assets
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        946,075
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        1,466,881LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accrued
      expenses (Note 10)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        53,667
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        59,548Taxes
      payable
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        34
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        399Deferred
      revenue (Note 11)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        1,679
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        1,079Agreement
      security deposit (Note 12)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        320,971
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -Total
      Current Liabilities
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        376,351
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        61,026Commitments
      and Contingencies (Note 21)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -Stockholders'
      Equity:Common
      stock, $0.001 par value, 200,000,000 shares authorized;38,381,375
      shares issued and outstanding as of December 31, 2008 and December 31,
      2007
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        38,381
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        38,381Additional
      paid-in capital
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        799,255
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        799,255Unamortized
      contractual services costs
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (29,333
                                                                                                                                        )
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (261,213
                                                                                                                                        )Statutory
      reserves
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        236,875
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        236,875Retained
      earnings
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (653,811
                                                                                                                                        )
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        501,476Accumulated
      other comprehensive income
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        178,357
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        91,081Stockholders'
      Equity
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        569,724
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        1,405,855Total
      Liabilities and Stockholders' Equity
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        946,075
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        1,466,881





F-3




SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOMEFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007For
      the Year EndedDecember
      31,2008
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  2007Revenues(a)
      GRT public telephone service
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  16,265
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  76,111(b)
      GRT network solution
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  113,749(c)
      GRT VoIP call time distribution
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  212,305
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -(d)
      GRT sales of call forwarding cards
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  213,953
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,196,996(e)  Franchise
      Fees-GRT
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  527,753Total
      Revenue
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  442,523
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,914,609Costs
      of Revenue(a)
      GRT public telephone service
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  22,981
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  108,301(b)
      GRT network solution
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  24,287(c)
      GRT VoIP call time distribution
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  163,309
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -(d)
      GRT sales of call forwarding cards
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  178,935
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  599,253(e)  Franchise
      Fees-GRT
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -Total
      Costs of Revenue
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  365,225
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  731,841Gross
      Profit
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  77,298
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,182,768QTC
      Supplemental Income (Note 14)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  37,344
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -Operating
      ExpensesCompensation
      to CEO
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  85,650
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  96,264Payroll
      and employee benefit
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  44,161
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  22,804Depreciation
      expenses
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  83,357
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  28,533Office
      expenses
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  37,268
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  16,067Repair
      and maintenance
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  912
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  11,647Research
      & development expenses
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  105,448
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -Professional
      fees
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  70,724
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  46,118Consultant
      fees (Note 13)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  706,384
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  71,793Travel
      and entertainment
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  87,049
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  24,011Other
      general and administrative expenses
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,733
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  5,916Total
      Operating Expenses
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,222,686
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  323,153Income
      (Loss) from Operations
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (1,108,044
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  859,615Other
      IncomeInterest
      income
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  364
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  450Total
      other income
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  364
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  450Income
      (Loss) before provision for Income Tax
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (1,107,680
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  860,065Provision
      for Income Tax
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -Income
      (Loss) from Continuing Operations
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (1,107,680
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  860,065Loss
      from Discontinued Operations--VoIP
      Call Time Distribution of QTC
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (47,607
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (545
                                                                                                                                                  )Net
      Income
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (1,155,287
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  859,520Other
      Comprehensive Income (Loss)Effects
      of Foreign Currency Conversion
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  87,276
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  80,442Comprehensive
      Income (Loss)
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  (1,068,011
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  939,962Basic
      and fully diluted earnings (loss) per share
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  (0.03
                                                                                                                                                  )
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  0.03Weighted
      average shares outstanding
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  38,381,375
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  33,896,896





F-4





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)FOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007Unamortized
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            AccumulatedCommon
      Stock
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Additional
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Registered
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Contractual
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Other
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Total$0.001 Par
      Value
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Paid-in
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Capital
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Service
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Statutory
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Retained
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Comprehensive
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Owners'Shares
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Amount
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Capital
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Receivable
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Costs
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Reserve
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Earnings
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            Income
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            EquityBalances
      atDecember
      31, 2006
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            1,000
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            1,000
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            241,640
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (121,169
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            10,639
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            132,110Common
      stock issued foracquisition
      of SmoothGlobal
                                                                                                                                                                                                                                                                                                              (reverse
      merger)
                                                                                                                                                                                                                                                                                                            33,000,000
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            33,000
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (33,000
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -Smooth
      Global share
                                                                                                                                                                                                                                                                                                              exchange
                                                                                                                                                                                                                                                                                                            (1,000
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (1,000
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            1,000
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -Reverse
      merger
                                                                                                                                                                                                                                                                                                              adjustment*
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            5,381,375
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            5,381
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            159,891
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            165,272Registered
      capital contributionfrom
      Beijing Telecom
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            96,717
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            96,717Shares
      issued forcontractual
      services
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            333,007
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (261,213
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            71,794Net
      Income (Loss)
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            859,520
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            859,520Appropriation
      to statutoryreverse
      funds (GRT)
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            138,636
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (138,636
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -Adjustment
      to statutoryreverse
      funds (QTC)
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            98,239
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (98,239
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -Other
      comprehensive income-effects
      of exchangerates
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            80,442
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            80,442Balances
      atDecember
      31, 2007
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            38,381,375
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            38,381
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            799,255
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            (261,213
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            236,875
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            501,476
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            91,081
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            1,405,855Amortization
      of costs of common stockissued
      for contractualservices
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            231,880
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            231,880Net
      Income (Loss)
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (1,155,287
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            (1,155,287
                                                                                                                                                                                                                                                                                                            )Other
      comprehensive income-effects
      of exchangerates
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            87,276
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            87,276Balances
      atDecember
      31, 2007
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            38,381,375
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            38,381
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            799,255
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            -
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            (29,333
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            236,875
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            (653,811
                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            178,357
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                            569,724* The
      reverse merger adjustment represents the paid-in capital associated with
      Smooth Global (China)'s shares issued and outstanding at the time of the
      reverse merger.





F-5





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED DECEMBER 31, 2008 AND 2007For
      the Year EndedDecember
      31,2008
                                                                                                                    
                                                                                                                    
                                                                                                                    2007Operating ActivitiesNet
      income (loss)
                                                                                                                    
                                                                                                                    $
                                                                                                                    (1,155,287
                                                                                                                    )
                                                                                                                    
                                                                                                                    $
                                                                                                                    859,520Adjustments
      to reconcile net income (loss) to net cash provided (used) by operating
      activities:Depreciation
                                                                                                                    
                                                                                                                    
                                                                                                                    83,357
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    28,533Loss
      on disposal of fixed assets
                                                                                                                    
                                                                                                                    
                                                                                                                    34,474
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    -Deferred
      consultant compensation
                                                                                                                    
                                                                                                                    
                                                                                                                    231,880
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    71,794Changes
      in operating assets and liabilities:(Increase)/Decrease
      in accounts receivable
                                                                                                                    
                                                                                                                    
                                                                                                                    220,558
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    (160,945
                                                                                                                    )(Increase)/Decrease
      in purchased SIM cards
                                                                                                                    
                                                                                                                    
                                                                                                                    422
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    (402
                                                                                                                    )(Increase)/Decrease
      in prepaid expenses
                                                                                                                    
                                                                                                                    
                                                                                                                    20,579
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    (349,536
                                                                                                                    )(Increase)/Decrease
      in contract security deposit
                                                                                                                    
                                                                                                                    
                                                                                                                    -
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    (82,118
                                                                                                                    )Increase/(Decrease)
      in accounts payable and accrued expenses
                                                                                                                    
                                                                                                                    
                                                                                                                    (9,723
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    23,078Increase/(Decrease)
      in deferred revenue
                                                                                                                    
                                                                                                                    
                                                                                                                    519
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    1,079Increase/(Decrease)
      in taxes payable
                                                                                                                    
                                                                                                                    
                                                                                                                    (386
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    399Increase/(Decrease)
      in agreement security deposit
                                                                                                                    
                                                                                                                    
                                                                                                                    315,990
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    -Net
      cash provided (used) by operating activities
                                                                                                                    
                                                                                                                    
                                                                                                                    (257,616
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    391,402Investing ActivitiesInvestment
      in subsidiaries
                                                                                                                    
                                                                                                                    
                                                                                                                    (229,811
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    -Proceeds
      from disposal of fixed assets
                                                                                                                    
                                                                                                                    
                                                                                                                    7,182
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    -Purchase
      of fixed assets
                                                                                                                    
                                                                                                                    
                                                                                                                    (60,535
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    (8,707
                                                                                                                    )Net
      cash (used) by investing activities
                                                                                                                    
                                                                                                                    
                                                                                                                    (283,165
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    (8,707
                                                                                                                    )Financing ActivitiesPayback
      of loans from shareholders
                                                                                                                    
                                                                                                                    
                                                                                                                    -
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    (240
                                                                                                                    )Proceeds
      from capital contribution
                                                                                                                    
                                                                                                                    
                                                                                                                    -
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    96,717Net
      cash provided (used) by financing activities
                                                                                                                    
                                                                                                                    
                                                                                                                    -
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    96,477Increase
      (decrease) in cash
                                                                                                                    
                                                                                                                    
                                                                                                                    (540,781
                                                                                                                    )
                                                                                                                    
                                                                                                                    
                                                                                                                    479,172Effects
      of exchange rates on cash
                                                                                                                    
                                                                                                                    
                                                                                                                    53,180
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    (1,141
                                                                                                                    )Cash
      at beginning of the period
                                                                                                                    
                                                                                                                    
                                                                                                                    521,016
                                                                                                                    
                                                                                                                    
                                                                                                                    
                                                                                                                    42,985Cash
      at end of the period
                                                                                                                    
                                                                                                                    $
                                                                                                                    33,415
                                                                                                                    
                                                                                                                    
                                                                                                                    $
                                                                                                                    521,016Supplemental
      Disclosures of Cash Flow Information:Cash
      paid (received) during year for:Interest
                                                                                                                    
                                                                                                                    $
                                                                                                                    -
                                                                                                                    
                                                                                                                    
                                                                                                                    $
                                                                                                                    -Income
      taxes
                                                                                                                    
                                                                                                                    $
                                                                                                                    -
                                                                                                                    
                                                                                                                    
                                                                                                                    $
                                                                                                                    -





F-6





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      1-
                                                                                                            ORGANIZATION
      AND OPERATIONSOrganization
      and Business BackgroundThe
      Bralorne Mining Company ("Bralorne") was incorporated under the laws of
      the State of Nevada on December 2, 1998 with authorized common stock of
      200,000,000 shares at $0.001 par value.  Currently, the Company
      principally engages in the business to provide telecommunication services
      in the People's Republic of China ("PRC'), through its wholly-owned
      subsidiaries, Gold Profit (Asia) Group Limited ("Gold Profit") and Smooth
      Global Services Limited ("Smooth Global").  On July 31, 2007,
      Bralorne changed its name to Smooth Global (China) Holdings, Inc. ("Smooth
      Global (China)" or the "Company").On
      November 2, 2006, Bralorne entered into a Share Exchange Agreement (“the
      Agreement") with the sole shareholder of Gold Profit to exchange 1,333,334
      shares (40,000,000 shares prior to reverse stock split on July 31, 2007)
      of common stock of Bralorne for 100% of the outstanding stock of Gold
      Profit.  Upon the execution of the Agreement, Gold Profit became
      a wholly-owned subsidiary of Bralorne.Gold
      Profit was incorporated as a limited liability company in the British
      Virgin Islands (“BVI”) under the BVI Business Companies Act on July 28,
      2006, for the purpose of seeking and consummating a merger or acquisition
      with a business entity organized as a private corporation, partnership, or
      sole proprietorship as defined by Statement of Financial Accounting
      Standards (SFAS) No. 7 “Accounting and Reporting by Development Stage
      Enterprises”.On
      September 8, 2006, Gold Profit entered into a Share Purchase Agreement
      with all the shareholders of Beijing Quan Tong Chang Information Service
      Limited a/k/a Beijing Smooth Global Information Services Ltd. (”QTC') to
      acquire 100% of QTC's registered capital for RMB500,000 (equivalent to
      US$60,386).  Upon completion of this transaction, QTC became a
      wholly-owned subsidiary of Gold Profit.Under
      the Company Law of PRC, QTC was incorporated in Beijing City, PRC on
      August 2, 2003 with a registered capital of RMB500,000 (equivalent to
      US$60,386).  QTC is engaged in the business of providing
      telecommunication services in
PRC.





F-7





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      1-
                                                                                                            ORGANIZATION
      AND OPERATIONS (continued)Organization
      and Business Background (continued)On
      October 24, 2007 Smooth Global (China) completed the acquisition of all
      the registered capital stock of Smooth Global.  In exchange for
      the capital stock of Smooth Global, Smooth Global (China) issued
      33,000,000 shares of its common stock to the prior owners of Smooth
      Global.  The prior registered owners were Christina Nelson and
      Shannon Lee Alsop.  They held the shares, however, as nominees
      for nine residents of PRC.  Accordingly, upon closing of the
      acquisition, Ms. Nelson and Ms. Alsop assigned the 33,000,000 shares to
      those nine beneficiaries.  20,000,000 of the shares were
      assigned to Ms. Zheng Shuying.  Ms. Zheng is the Chief Executive
      Officer of Smooth Global (China).  Also, Smooth Global became a
      wholly-owned subsidiary of Smooth Global (China) upon completion of the
      acquisition.Smooth
      Global was incorporated on January 25, 2006 in the British Virgin Island
      ("BVI") under the BVI Business Companies Act, 2004, as a BVI Business
      Company.  The Company was formed for the purpose of seeking and
      consummating a merger or acquisition with a business entity organized as a
      private corporation, partnership, or sole proprietorship as defined by
      Statement of Financial Accounting Standards (SFAS) No.
  7.On
      June 28, 2007, Smooth Global established a wholly owned subsidiary, Smooth
      Global (Beijing) Telecom Science Limited ("Beijing Telecom") in the
      Beijing City, PRC.  Beijing Telecom was incorporated under the
      Company Law of PRC as a limited liability company with registered capital
      of $100,000.  Beijing Telecom was formed for the purpose of
      seeking and consummating a merger or acquisition with a business entity
      organized in PRC and engaged in the business of providing
      telecommunication services.On
      September 20, 2007, Ms. Yianfang Jin and Ms. Yianxia Wang (collectively
      the "Trustees"), both of whom are citizens of PRC and totally own a 100%
      equity ownership interest in Beijing GRT Information Services Limited (
      "GRT" ),  executed Trust and Indemnity Agreements ("Agreements")
      with Beijing Telecom, pursuant to which the Trustees assigned to Beijing
      Telecom all of the beneficial interest in the Trustee's equity ownership
      interest in GRT.  The Agreements provided for effective control
      of GRT to be transferred to Beijing Telecom at September 20,
      2007.Through
      the Agreements described in the preceding paragraph Beijing Telecom is
      deemed a 100% beneficiary of GRT resulting in GRT being deemed a
      subsidiary of Beijing Telecom under the requirements of Financial
      Interpretation 46 (Revised) "Consolidation of Variable Interest Entities"
      issued by the Financial Accounting Standards Board
      ("FASB").   Accordingly, the consolidated financial
      statements of Smooth Global and its wholly owned
      subsidiary,  Beijing Telecom, will be prepared by including the
      financial statements of GRT through September 20, 2007 and
      thereafter.





F-8




SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      1-
                                                                                                  ORGANIZATION
      AND OPERATIONS (continued)Organization
      and Business Background (continued)GRT
      and QTC are the two of these affiliated companies that are engaged in
      business operations.  Smooth Global (China), Gold Profit, Smooth
      Global, and Beijing Telecom are all holding companies, whose business is
      to hold an equity ownership interest in QTC and a beneficial interest in
      GRT.   All these affiliated companies are hereafter
      referred to as the "Company", whose structure is outlined as
      following:















Reverse
      Merger AccountingThe
      merger of Smooth Global (China) with Smooth Global results in a capital
      transaction accounted for as a reverse merger.  The transaction
      was treated for accounting purposes as a recapitalization of the
      accounting acquirer (Smooth Global) and a reorganization of the accounting
      acquiree (Smooth Global (China)). Accordingly, the historical consolidated
      financial statements presented prior to the merger are the historical
      consolidated financial statements of Smooth Global, which includes Smooth
      Global's wholly-owned subsidiary, Beijing Telecom, and its variable
      interest entity, GRT.  The consolidated financial statements
      presented post to the merger are the consolidated financial statements of
      Smooth Global (China) and its subsidiaries and variable interest entity,
      which include GRT,  and QTC from the acquisition date, October
      24,
2007.




F-9





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      1-
                                                                                                  ORGANIZATION
      AND OPERATIONS (continued)Business
      Operations(a)  GRT
      Public Telephone ServiceGRT
      provides public phone users with access to the network of  China
      Unicom (Beijing) Limited (“CUBJ”) F/K/A China United Telecommunications
      (Beijing) Corporation Limited, via paid phones installed in outlets
      located in universities, convenience shops and street
      corners.  These outlets are managed but not necessary owned by
      GRT.  GRT signed non-exclusive distribution agreement with CUBJ
      to distribute its traditional fixed line call time in Beijing City,
      PRC.CUBJ
      is a subsidiary of China Unicom (Hong Kong) Limited ("CUHK") F/A/K China
      United Telecommunications Corporation Limited.  On January 6,
      2009, China United Telecommunications Corporation Limited merged with
      China Netcom (Group) Corporation Limited and changed its name to China
      Unicom (Hong Kong) Limited.  CUHK is one of the largest
      telecommunications carriers in PRC.(b)
      GRT Network SolutionGRT
      provides computer networking and telephone solutions to its customers,
      mainly the commercial buildings located in PRC, including design and
      implementation of network system, and purchasing and installation of
      hardware and software.(c)
      GRT VoIP Call Time DistributionBeginning
      from January 2008, GRT provides enterprise phone users and public phone
      users with access to the network of China Unicom (Shaoxing) Limited
      (“CUSX”) F/K/A China Netcom (Shaoxing) Corporation Limited  and
      China Unicom (Shanghai) Limited (“CUSH”) F/A/K China Netcom (Shanghai)
      Corporation Limited,  via phones connected to GRT's
      telecommunication server.  Both CUSX and CUGD are subsidiaries
      of China Unicom (Hong Kong) Limited F/A/K China Netcom (Group) Company
      Limited. GRT signed non-exclusive distribution agreement with CUSX and
      CUGD to distribute their Voice Over Internet Protocol (“VoIP”) call time
      in the PRC.(d)
      GRT International Call Forwarding ServiceGRT
      provides China mobile phone users with international call forwarding
      service, which resembles the function of international roaming
      services.  GRT provides subscribers with SIM cards of the
      destination country or region with predefined call forwarding
      time.  The subscribers forward their mobile phone calls to a
      specified GRT number and instruct GRT to further forward the calls to a
      telephone number in their destination country or region.  This
      enables the mobile phone user to receive local calls for a competitive
      tariff rate when they are traveling abroad.Discontinued
      OperationQTC
      provided enterprise phone users and public phone users with access to the
      network of CUSX and China Unicom (Guangdong) Limited (“CUGD”) F/A/K China
      Netcom (Guangdong) Corporation Limited  via phones connected to
      QTC's telecommunication server.  On August 20, 2008, QTC's board
      of directors decided to terminate this operation and disposed of the
      relevant equipment.  QTC totally disposed of 65 pieces of
      equipments with a carrying value of $61,929 (RMB 424,475), of which 59
      pieces of equipment with a carrying value of $42,312 (RMB 290,017) were
      sold to a third party for $7,295 (RMB 50,000. 00), resulting in a loss of
      $34,474 (RMB 240,017), and 6 pieces of equipment with carrying value of
      $19,617 (RMB 134,458) were transferred to GRT to satisfy a "due to GRT" of
      $11,671 (RMB 80,000.00). No loss was recognized for this transfer due to
      the elimination of intercompany transactions in
    consolidation.





F-10





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      1-
                                          ORGANIZATION
      AND OPERATIONS (continued)Discontinued
      Operation (continued)Losses
      from discontinued operation consist of the
  following:




For
      The Year EndedDecember
      31,2008
                                                                              
                                                                              
                                                                              2007Losses
      from discontinued operationRevenue
      from discontinued operation-QTC
      VoIP call time distribution
                                                                              
                                                                              $
                                                                              8,155
                                                                              
                                                                              
                                                                              $
                                                                              -Costs
      of revenue from discontinued operation-QTC
      VoIP call time distribution
                                                                              
                                                                              
                                                                              21,288
                                                                              
                                                                              
                                                                              
                                                                              -Losses
      from discontinued operation
                                                                              
                                                                              
                                                                              13,133
                                                                              
                                                                              
                                                                              
                                                                              -Loss
      of disposal of fixed assets
                                                                              
                                                                              
                                                                              34,474
                                                                              
                                                                              
                                                                              
                                                                              -Income
      taxes
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -Losses
      on discontinued operation
                                                                              
                                                                              $
                                                                              47,607
                                                                              
                                                                              
                                                                              $
                                                                              -Assets
      to be disposed consist of the following:December
      31,
                                                                              
                                                                              
                                                                              December
      31,2008
                                                                              
                                                                              
                                                                              2007Cost
      of fixed assets to be disposed of
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              190,437Accumulated
      depreciation of fixed assets to be disposed of
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (104,950
                                                                              )$
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              85,487


Note
      2-
                                                                  GOING
      CONCERNAs
      reflected in the accompanying consolidated financial statements, the
      Company incurred a loss of $1,155,287 in the year ended December 31,
      2008.  This amount is significant compared with the Company's
      shareholders' equity.   Additionally, the revenue for the
      year ended December 31, 2008 dropped by $1,472,086, or 77%, as compared to
      the revenue for the year ended December 31, 2007.  These factors
      raise substantial doubt about the Company's ability to continue as a going
      concern.  In view of the matters described above, recoverability
      of a major portion of the recorded asset amounts shown in the accompanying
      consolidated balance sheets is dependent upon continued operations of the
      Company, which in turn is dependent upon the Company's ability to raise
      additional capital, obtain financing and succeed in its future
      operations.  The financial statements do not include any
      adjustments relating to the recoverability and classification of recorded
      asset amounts or amounts and classification of liabilities that might be
      necessary should the Company be unable to continue as a going
      concern.Management
      has taken the steps to revise its operating and financial requirements,
      which it believes are sufficient to provide the Company with the ability
      to continue as a going concern.  The Company is actively
      pursuing additional funding and a potential merger or acquisition
      candidate and strategic partners, which would enhance stockholders'
      investment.  The Company is also developing new business lines,
      including new telecommunication equipment and telecommunication
      services.  Management believes that these actions will allow the
      Company to continue operations through the next fiscal
    year.





F-11





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      3-
                                                                                        CONTROL
      BY PRINCIPAL STOCKHOLDERSThe
      chief executive officer owns beneficially and in the aggregate, the
      majority of the voting power of the Company. Accordingly, the chief
      executive officer has the ability to control the approval of most
      corporate actions, including approving significant expenses, increasing
      the authorized capital stock and the dissolution, merger or sale of the
      Company's assets.Note
      4-
                                                                                        SIGNIFICANT
      ACCOUNTING POLICIESBasis
      of ConsolidationThe
      consolidated financial statements include the accounts of the Company and
      all its majority-owned subsidiaries which require
      consolidation.  Inter-company transactions have been eliminated
      in consolidation.The
      consolidated financial statements are prepared in accordance with
      generally accepted accounting principles in the United States of America
      ("US GAAP").  This basis of accounting differs from that used in
      the statutory accounts of the Company, which are prepared in accordance
      with the "Accounting Principles of China " ("PRC
      GAAP").  Certain accounting principles, which are stipulated by
      US GAAP, are not applicable in the PRC GAAP.  The difference
      between PRC GAAP accounts of the Company and its US GAAP financial
      statements is immaterial.Use
      of EstimatesThe
      consolidated financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States of America.
      In preparing these financial statements, management makes estimates and
      assumptions that affect the reported amounts of assets and liabilities in
      the balance sheets and revenues and expenses during the years reported.
      Actual results may differ from these estimates.Revenue
      RecognitionThe
      Company recognizes its revenues net of sales taxes and sales-related
      taxes. In accordance with the SEC’s Staff Accounting Bulletin No. 104,
      Revenue Recognition , the Company recognizes revenue when persuasive
      evidence of an arrangement exists, transfer of title and the risks and
      rewards of ownership have occurred or services have been rendered and
      accepted, the selling price is fixed or determinable and collectability is
      reasonably
assured.





F-12





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                          SIGNIFICANT
      ACCOUNTING POLICIES (continued)Revenue
      Recognition (continued)(a)  GRT
      Public Telephone ServiceGRT
      sets up outlets through CUBJ's network to provide public telephone service
      to end users.  GRT buys call time from CUBJ in advance and then
      distribute to end users via these outlets.  GRT recognizes
      revenue when the tariff is collected after an end user places a telephone
      call.  GRT records revenue from outlets after netting outlets'
      operating expenses since such expenses are instable.Pursuant
      to the distribution agreement with CUBJ, GRT is entitled to refund a
      certain percentage of call time cost and the percentage varies based on
      the volume of call time which GRT distributes monthly.  GRT
      records these refunds as revenue because GRT has to issue sales invoices
      to CUBJ for the refunds.  GRT generally received these refunds
      one month behind.(
      b ) GRT Network SolutionGRT
      provides network solution to enterprise customers, including design and
      implementation of internet and telephone network.  The contracts
      are accounted for as one unit of accounting as the criteria for separation
      are not met, and revenue for billed amounts is recognized when customer’s
      acceptance is obtained provided that no significant obligations
      remain.(c)
      GRT VoIP Call Time DistributionBeginning
      from January 2008, GRT contracted with CUSX and CUSH for the distribution
      of their VoIP call time. VoIP call time distribution revenue is generally
      recognized when the end user makes a call through the phone connected to
      GRT's telecommunication server.Pursuant
      to the contracts with CUSX and CUSH, GRT pays tariff to the
      telecommunication carriers in advance and connects its telecommunication
      server to the carriers' network.  Then, GRT distributes the VoIP
      call time to its customers who connect their phones to GRT’s
      server.   The customers also pay tariff to GRT in
      advance.  Monthly, the telecommunication carriers bill GRT for
      the VoIP call time that it distributes.  In turn, GRT bills its
      customers for the VoIP call time which the customers consume, based on the
      records provided by its own server.(d)
      International Call Forwarding ServiceGRT
      purchases a foreign SIM card and then attaches it with a specified phone
      number, which GRT bought from CUSH.   When a mobile phone
      call is forwarded to that particular phone number, GRT will further
      forward the call to the related SIM card, via the network of either CUSH
      or CUSX.  GRT signed non-exclusive agreements with CUSH and CUSX
      to forward phone calls via their
network.





F-13





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                    SIGNIFICANT
      ACCOUNTING POLICIES (continued)Revenue
      Recognition (continued)(d)
      International Call Forwarding Service (continued)GRT
      sells SIM cards either directly to end users or via its franchised
      distributors, who signed non-exclusive Distribution Agreements with GRT to
      distribute its SIM cards.(1)   When
      GRT sells SIM cards directly to end users, it recognizes revenue when the
      SIM cards are expired as indicated in the description printed on the
      envelop containing the SIM card.(2)   When
      GRT sells SIM cards to its franchised distributors, it recognizes revenue
      when the SIM cards are delivered to the distributors and the payments have
      been received, at which time Management believes the sales transactions
      have been completed pursuant to the Distribution
    Agreements.(e)
      Franchise Fees from Franchised DistributersGRT
      recognizes revenue from franchise fees and training fees when the
      Management believes that all material services and conditions applicable
      to the sale have been substantially performed pursuant to the Distribution
      Agreements.  The Management believes that substantial
      performance under FASB 45, Accounting for Franchise Fee
      Revenue, is indicated by: (1) absence of intent to refund cash
      received; (2) performance of substantially all initial services; and (3)
      nonexistence of other material conditions related to
      performance.Revenue
      that GRT recognized from franchise fees and training fees was $0 and
      $527,753 for the year ended December 31, 2008 and 2007,
      respectively.Revenue
      from discontinued operation-QTC VoIP call time
  distributionBefore
      QTC terminated its operation of VoIP call time distribution on August 20,
      2008, QTC contracted with CUSX and CUGD for the distribution of their VoIP
      call time. VoIP call time distribution revenue is generally recognized
      when the end user makes a call through the phone connected to QTC's
      telecommunication server.Pursuant
      to the contracts with CUSX and CUGD, QTC pays tariff to the
      telecommunication carriers in advance and connects its telecommunication
      server to the carriers' network.  Then, QTC distributes the VoIP
      call time to its customers who connect their phones to QTC’s
      server.   The customers also pay tariff to QTC in
      advance.  Monthly, the telecommunication carriers bill QTC for
      the VoIP call time that it distributes.  In turn, QTC bills its
      customers for the VoIP call time which the customers consume, based on the
      records provided by its own
server.





F-14





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                    SIGNIFICANT
      ACCOUNTING POLICIES (continued)Cost
      of Revenue(a)  GRT
      Public Telephone ServiceCosts
      of public telephone service mainly include costs to buy call time from
      CUBJ.(
      b ) GRT Network SolutionCosts
      of network solution principally include materials and equipment
      particularly purchased for the projects, and the labor that GRT assigns to
      the projects.  Because these employees also work on the
      maintenance function in the day-to-day operation and it is difficult to
      distinguish their working hours between network projects and maintenance
      function, and the amount is immaterial, these labor costs are included in
      the general and administrative expenses.(c)
      GRT VoIP Call Time DistributionCosts
      of VoIP call time distribution principally include the costs of VoIP call
      time purchased from CUSX and CUSH.(d)
      International Call Forwarding ServiceCosts
      of international call forwarding services principally include the costs to
      purchase SIM cards, the costs of telephone number, and the call forwarding
      fees charged by the telecommunication carriers.(e)
      Franchise Fees from Franchised DistributersCosts
      of franchise fees principally include the costs to prepare the
      distribution agreements, which amount is immaterial and included in the
      general and administrative expenses.Cost
      of revenue from discontinued operation-QTC VoIP call time
      distributionCosts
      of QTC VoIP call time distribution principally include the costs of VoIP
      call time purchased from CUSX and
CUGD.





F-15





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                  SIGNIFICANT
      ACCOUNTING POLICIES (continued)Cash
      and Cash EquivalentsCash
      and cash equivalents are carried at cost and represent cash on hand,
      demand deposits placed with banks or other financial institutions and all
      highly liquid investments with an original maturity of three months or
      less as of the purchase date of such investments.Accounts
      ReceivableTrade
      accounts receivable are recorded at the invoiced amount and do not bear
      interest. The allowance for doubtful accounts is the Management’s best
      estimate of the amount of probable credit losses in the Company’s existing
      accounts receivable. The Company determines the allowance based on
      historical write-off experience. The Company reviews its allowance for
      doubtful accounts on a regular basis. Past due balances over 90 days and
      over a specified amount are reviewed individually for collectability. All
      other balances are reviewed on a pooled basis by industry. Account
      balances are charged off against the allowance after all means of
      collection have been exhausted and the potential for recovery is
      considered remote.  If actual collections experience changes,
      revisions to the allowance may be required.Concentrations
      of Credit RiskFinancial
      instruments that subject the Company to concentrations of credit risk
      consist primarily of cash and cash equivalents. The Company maintains its
      cash and cash equivalents with high-quality institutions. While deposits
      held with banks are not insurance in PRC, these deposits generally may be
      redeemed upon demand and therefore bear minimal risk.Fair
      Value of Financial InstrumentsThe
      carrying value of the Company’s financial instruments, which include cash
      and cash equivalents, accounts receivables and payables, and amounts due
      from/to shareholders, approximate fair value due to the short maturities
      of those instruments.Impairment
      of Long-life AssetsLong-lived
      assets and certain identifiable intangibles are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying
      amount of an asset may not be recoverable. Recoverability of assets to be
      held and used is measured by a comparison of the carrying amount of an
      asset to future net cash flows expected to be generated by the asset. If
      such assets are considered to be impaired, the impairment to be recognized
      is measured by the amount by which the carrying amount of the assets
      exceeds the fair value of the assets. Assets to be disposed of are
      reported at the lower of the carrying amount or fair value less costs to
      sell.





F-16





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                  SIGNIFICANT
      ACCOUNTING POLICIES (continued)Property
      and EquipmentPlant
      and equipment are stated at cost less accumulated depreciation and
      accumulated impairment losses, if any.  Depreciation is
      calculated on the straight-line basis over the following expected useful
      lives from the date on which they become fully operational and after
      taking into account their estimated residual
  values:




Depreciable
                            ResidualLife
                            ValueNetwork
      and office equipment
                            5
      years
                            4%Leasehold
      Improvements
                            5
      years (Lease duration)




Expenditure
      for maintenance and repairs is expended as incurred.Deferred
      RevenuePayments
      received prior to satisfying the Company’s revenue recognition criteria
      are recorded as deferred revenue.Research
      and Development CostsResearch
      and development costs are expensed when incurred.  Research and
      development costs were $105,448 and $0 for the year ended December 31,
      2008 and 2007, respectively.Advertising
      CostsThe
      Company expenses advertising costs as incurred in accordance with the
      American Institute of Certified Public Accountants (“AICPA”) Statement of
      Position 93-7, “Reporting for Advertising Costs”. Advertising expenses
      were immaterial for the year ended December 31, 2008 and 2007,
      respectively.





F-17





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                      SIGNIFICANT
      ACCOUNTING POLICIES (continued)Foreign
      Currencies TranslationThe
      functional currency of the Company is Renminbi (“RMB”). Transactions
      denominated in currencies other than RMB are translated into RMB at the
      exchange rates quoted by the People’s Bank of China (“PBOC”) prevailing at
      the date of the transactions. Monetary assets and liabilities denominated
      in foreign currencies are translated into RMB using the applicable
      exchange rates quoted by the PBOC at the balance sheet dates. Exchange
      differences are included in the statements of changes in shareholders'
      equity.  Gain and losses resulting from foreign currency
      transactions are included in operations.The
      Company’s financial statements are translated into the reporting currency,
      the United States Dollar (“US$”), using exchange rates in effect at each
      year end for assets and liabilities and average exchange rates during each
      reporting year for the consolidated statements of operations. Contributed
      capital accounts are translated using the historical rate of exchange when
      capital is injected.  Translation adjustments resulting from
      translation of these consolidated financial statements are reflected as
      accumulated other comprehensive income in the shareholders’
      equity.Translation
      adjustments resulting from this process are included in accumulated other
      comprehensive income (loss) in the consolidated statement of changes in
      shareholders’ equity and amounted to $178,357  as of December
      31, 2008, and $91,081 as of December 31, 2007.  The balance
      sheet amounts with the exception of equity at December 31, 2008 were
      translated at 6.85 RMB to $1.00 USD as compared to 7.31 RMB at December
      31, 2007. The equity accounts were stated at their historical
      rate.  The average translation rates applied to income statement
      accounts for the year ended December 31, 2008 and 2007 were 6.96 RMB and
      7.61 RMB, respectively.Statement
      of Cash FlowsIn
      accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from
      the Company’s operations are calculated based upon the functional
      currency.  As a result, amounts related to assets and
      liabilities reported on the statement of cash flows may not necessarily
      agree with changes in the corresponding balances on the balance
      sheet.Segment
      ReportingSFAS
      No. 131 “Disclosures about Segments of an Enterprise and Related
      Information” establishes standards for reporting information about
      operating segments on a basis consistent with the Company’s internal
      organization structure as well as information about geographical areas,
      business segments and major customers in financial statements. The Company
      operates in four principal business segments.Related
      PartiesFor
      the purposes of these financial statements, parties are considered to be
      related to the Company if the Company has the ability, directly or
      indirectly, to control the party or exercise significant influence over
      the party in making financial and operating decisions, or vice versa, or
      where the Company and the party are subject to common control or common
      significant influence. Related parties may be individuals or other
      entities.





F-18





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                          SIGNIFICANT
      ACCOUNTING POLICIES (continued)Statutory
      ReservesPursuant
      to the applicable laws in PRC, PRC entities are required to make
      appropriations to three non-distributable reserve funds, the statutory
      surplus reserve, statutory public welfare fund, and discretionary surplus
      reserve, based on after-tax net earnings as determined in accordance with
      the PRC GAAP, after offsetting any prior years’ losses. Appropriation to
      the statutory surplus reserve should be at least 10% of the after-tax net
      earnings until the reserve is equal to 50% of the Company's registered
      capital.  Appropriation to the statutory public welfare fund is
      5% to 10% of the after-tax net earnings.  The statutory public
      welfare fund is established for the purpose of providing employee
      facilities and other collective benefits to the employees and is
      non-distributable other than in liquidation.  No appropriations
      to the discretionary surplus reserve are made at the discretion of the
      Board of Directors.QTC
      did not make appropriation to the statutory surplus reserve fund and
      statutory public welfare fund in 2008 and 2007 due to
    losses.In
      2007, GRT made $92,424 appropriation to the statutory surplus reserve
      fund, and $46,212 to the statutory public welfare fund.  GRT did
      not make appropriation to the statutory surplus reserve fund and statutory
      public welfare fund in 2008 due to losses.The
      following is a summary of changes in statutory reserves
    fund:




ConsolidationQTC
                                                                                            
                                                                                            
                                                                                            GRT
                                                                                            
                                                                                            
                                                                                            Adjustment
                                                                                            
                                                                                            
                                                                                            TotalBalance
      at January 1, 2006
                                                                                            
                                                                                            $
                                                                                            98,239
                                                                                            
                                                                                            
                                                                                            $
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            (98,239
                                                                                            )
                                                                                            
                                                                                            $
                                                                                            -Appropriation
      to statutory surplus reserve fund
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            -Appropriation
      to statutory public welfare fund
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            -Balance
      at December 31, 2006
                                                                                            
                                                                                            $
                                                                                            98,239
                                                                                            
                                                                                            
                                                                                            $
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            $
                                                                                            -Appropriation
      to statutory surplus reserve fund
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            92,424
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            92,424Appropriation
      to statutory public welfare fund
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            46,212
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            46,212Consolidation
      QTC from Oct. 24, 2007 through December 31, 2007
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            98,239
                                                                                            
                                                                                            
                                                                                            
                                                                                            98,239Balance
      at December 31, 2007
                                                                                            
                                                                                            $
                                                                                            98,239
                                                                                            
                                                                                            
                                                                                            $
                                                                                            138,636
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            $
                                                                                            236,875Appropriation
      to statutory surplus reserve fund
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            -Appropriation
      to statutory public welfare fund
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            -
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            -Balance
      at December 31, 2008
                                                                                            
                                                                                            $
                                                                                            98,239
                                                                                            
                                                                                            
                                                                                            $
                                                                                            138,636
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            
                                                                                            $
                                                                                            236,875





F-19





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                            SIGNIFICANT
      ACCOUNTING POLICIES (continued)Income
      TaxesThe
      Company accounts for income tax using SFAS No. 109 “Accounting for Income
      Taxes”, which requires the asset and liability approach for financial
      accounting and reporting for income taxes. Under this approach, deferred
      income taxes are provided for the estimated future tax effects
      attributable to temporary differences between financial statement carrying
      amounts of assets and liabilities and their respective tax bases, and for
      the expected future tax benefits from loss carry-forwards and provisions,
      if any. Deferred tax assets and liabilities are measured using the enacted
      tax rates expected in the years of recovery or reversal and the effect
      from a change in tax rates is recognized in the statement of operations in
      the period of enactment. A valuation allowance is provided to reduce the
      amount of deferred tax assets if it is considered more likely than not
      that some portion of, or all of the deferred tax assets will not be
      realized.Although
      the PRC Income Tax Law allows the enterprises to offset their future net
      income with operating losses carried forward, enterprise need approval
      from local tax authority before they can claim such tax benefit, and the
      outcome of the application is generally uncertain.  Therefore,
      the Managements established a 100% valuation allowance for the operation
      losses carried forward and no deferred tax assets have been
      recorded.Comprehensive
      IncomeStatement
      of Financial Accounting Standards (SFAS) No. 130, “Reporting Comprehensive
      Income,” establishes standards for reporting and display of comprehensive
      income, its components and accumulated balances.  Comprehensive
      income as defined includes all changes in equity during a period from
      non-owner sources. Accumulated comprehensive income, as presented in the
      accompanying statement of changes in shareholders' equity consists of
      changes in unrealized gains and losses on foreign currency
      translation.  This comprehensive income is not included in the
      computation of income tax expense or benefit.Earnings
      (Loss) Per ShareThe
      Company reports earnings per share in accordance with the provisions of
      SFAS No. 128, “Earnings Per Share.” SFAS No. 128 requires presentation of
      basic and diluted earnings per share in conjunction with the disclosure of
      the methodology used in computing such earnings per
      share.  Basic earnings (loss) per share is computed by dividing
      income (loss) available to common shareholders by the weighted-average
      number of common shares outstanding during the period.  Diluted
      earnings per share is computed similar to basic earnings per share except
      that the denominator is increased to include the number of additional
      common shares that would have been outstanding if the potential common
      shares had been issued and if the additional common shares were
      dilutive.  There are no potentially dilutive securities
      outstanding (options and warrants) for the year ended December 31, 2008
      and 2007,
respectively.





F-20





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                      SIGNIFICANT
      ACCOUNTING POLICIES (continued)Fair
      Value of MeasurementsThe
      Company adopted Statement of Financial Accounting Standards No. 157, “Fair
      Value Measurements” (“SFAS 157”), effective January 1,
      2008.  The provisions of SFAS 157 are to be applied
      prospectively.SFAS
      157 clarifies that fair value is an estimate of the exit price,
      representing the amount that would be received to sell an asset or paid to
      transfer a liability in an orderly transaction between market participants
      (i.e., the exit price at the measurement date).  Under SFAS 157,
      fair value measurements are not adjusted for transaction
      cost.  SFAS 157 provides for use of a fair value hierarchy that
      prioritizes inputs to valuation techniques used to measure fair value into
      three levels:Level
      1:
                                                                                                      Unadjusted
      quoted prices in active markets for identical assets or
    liabilitiesLevel
      2:
                                                                                                      Input
      other quoted market prices that are observable, either directly or
      indirectly, and reasonably available.  Observable inputs reflect the
      assumptions market participants would use in pricing the asset or
      liability and are developed based on market data obtainedLevel
      3:
                                                                                                      Unobservable
      inputs.  Unobservable inputs reflect the assumptions that the Company
      develops based on available information about what market participants
      would use in valuing the asset or liability.An
      asset or liability’s level within the fair value hierarchy is based on the
      lowest level of any input that is significant to the fair value
      measurement.  Availability of observable inputs can vary and is
      affected by a variety of factors.  The Company uses judgment in
      determining fair value of assets and liabilities and Level 3 assets and
      liabilities involve greater judgment than Level 1 and Level 2 assets or
      liabilities.





F-21





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                        SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)Adoption
      of FIN 48Effective
      January 1, 2007, the Company adopted FASB Interpretation No. 48,
      “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise’s financial statements in accordance with SFAS No. 109,
      “Accounting for Income Taxes.”  FIN 48 prescribes a recognition
      threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be
      taken in a tax return.  FIN 48 also provides guidance on
      de-recognition of tax benefits, classification on the balance sheet,
      interest and penalties, accounting in interim periods, disclosure, and
      transition.  In accordance with FIN 48, the Company performed a
      self-assessment and concluded that there were no significant uncertain tax
      positions requiring recognition in its financial
    statements.Adoption
      of SFAS No. 157In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No. 157, "Fair Value Measurements".  SFAS No. 157 defines
      fair value, establishes a framework and gives guidance regarding the
      methods used for measuring fair value, and expands disclosures about fair
      value measurements.  In February 2008, the FASB issued FASB
      Staff Position 157-1, "Application of FASB Statement No. 157 to FASB
      Statement No. 13 and Other Accounting Pronouncements That Address Fair
      Value Measurements for Purposes of Lease Classification or Measurement
      under Statement 13" ("FSP 157-1") and FASB Staff Position 157-2,
      "Effective Date of FASB Statement No. 157" ("FSP 157-2").  FSP
      157-1 amends SFAS No. 157 to remove certain leasing transactions from its
      scope.  FSP 157-2 delays the effective date of SFAS No. 157 for
      all non-financial assets and non-financial liabilities, except for items
      that are recognized or disclosed at fair value in the financial statements
      on a recurring basis (at least annually), until fiscal years beginning
      after November 15, 2008. SFAS No. 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007, and
      interim periods within those fiscal years.  The Company adopted SFAS
      No. 157 effective January 1, 2008 for all financial assets and liabilities
      as required.  The partial adoption of FAS No. 157, as allowed by FSP
      FAS 157-2, did not have a material impact on the Company's financial
      position and results of operations.On
      October 10, 2008, the FASB issued FSP FAS 157-3, “Determining the Fair
      Value of a Financial Asset When the Market for That Asset Is Not
      Active.”  The FSP clarifies the application of FASB Statement
      No. 157, “Fair Value Measurements,” in a market that is not active and
      provides an example to illustrate key considerations in determining the
      fair value of a financial asset when the market for that financial asset
      is not active.  The FSP is effective immediately, and includes
      prior period financial statements that have not yet been
      issued.




F-22




SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)Adoption
      of SFAS No. 159In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities — Including an Amendment of
      FASB Statement No. 115”, which is effective for fiscal years beginning
      after November 15, 2007.  SFAS No. 159 is an elective standard
      which permits an entity to choose to measure many financial instruments
      and certain other items at fair value at specified election
      dates.  Subsequent unrealized gains and losses on items for
      which the fair value option has been elected will be reported in
      earnings.  The Company did not elect the fair value option for
      any assets or liabilities that were not previously carried at fair
      value.  Accordingly, the adoption of SFAS 159 did not have a
      material impact on the Company’s financial position and results of
      operations.Recent
      Accounting PronouncementsIn
      June 2008, the Financial Accounting Standards Board (“FASB”) issued FSP
      No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
      Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”). FSP
      EITF 03-6-1 concludes that unvested share-based payment awards that
      contain rights to receive non-forfeitable dividends or dividend
      equivalents are participating securities, and thus, should be included in
      the two-class method of computing earnings per share (“EPS”). FSP EITF
      03-6-1 is effective for fiscal years beginning after December 15, 2008,
      and interim periods within those years. Early application of EITF 03-6-1
      is prohibited. It also requires that all prior-period EPS data be adjusted
      retrospectively. We have not yet determined the effect, if any, of the
      adoption of this statement on our financial condition or results of
      operations.In
      May 2008, the FASB issued SFAS No. 162 “The Hierarchy of Generally
      Accepted Accounting Principles”. SFAS 162 identifies the sources of
      accounting principles and the framework for selecting the principles used
      in the preparation of financial statements of nongovernmental entities
      that are presented in conformity with generally accepted accounting
      principles (GAAP) in the United States (the GAAP hierarchy). The guidance
      will become effective 60 days following the SEC’s approval of the Public
      Company Accounting Oversight Board amendments to AU Section 411, “The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles”. The Company is currently evaluating the impact of adopting
      SFAS 162 on its financial
statements.





F-23





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      4-
                                                                                                                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES (continued)Recent
      Accounting Pronouncements (continued)In
      April 2008, the FASB issued Staff Position FAS 142-3, Determination of the
      Useful Life of Intangible Assets (“FSP FAS 142-3”) which amends the
      factors an entity should consider in developing renewal or extension
      assumptions used to determine the useful life of a recognized intangible
      asset under FAS No. 142, Goodwill and Other Intangible Assets (“FAS No.
      142”). FSP FAS 142-3 applies to intangible assets that are acquired
      individually or with a group of assets and intangible assets acquired in
      both business combinations and asset acquisitions. It removes a provision
      under FAS No. 142, requiring an entity to consider whether a contractual
      renewal or extension clause can be accomplished without substantial cost
      or material modifications of the existing terms and conditions associated
      with the asset. Instead, FSP FAS 142-3 requires that an entity consider
      its own experience in renewing similar arrangements. An entity would
      consider market participant assumptions regarding renewal if no such
      relevant experience exists.  FSP FAS 142-3 is effective for year ends
      beginning after December 15, 2008 with early adoption prohibited.  We
      have not yet determined the effect, if any, of the adoption of this
      statement on our financial condition or results of
    operations.In
      March 2008, the FASB issued Statement of Financial Accounting Standards
      No. 161, “Disclosures about Derivative Hedging Instruments and Hedging
      Activities – an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS
      161, which is effective January 1, 2009, requires enhanced qualitative and
      quantitative disclosures with respect to derivatives and hedging
      activities.  The Management does not expect that the adoption of
      SFAS No. 161 would have a material effect on the Company’s financial
      position and results of operations.In
      December 2007, the FASB issued Statements of Financial Accounting
      Standards No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”)
      and No. 160, “Noncontrolling Interests in Consolidated Financial
      Statements – an amendment to ARB No. 51” (“SFAS 160”).  Both
      SFAS 141R and SFAS 160 are to be adopted effective January 1,
      2009.  SFAS 141R requires the application of several new or
      modified accounting concepts that, due to their complexity, could
      introduce a degree of volatility in periods subsequent to a material
      business combination.  SFAS 141R requires that all business
      combinations result in assets and liabilities acquired being recorded at
      their fair value, with limited exceptions.  Other areas related
      to business combinations that will require changes from current GAAP
      include:  contingent consideration, acquisition costs,
      contingencies, restructuring costs, in process research and development
      and income taxes, among others.  SFAS 160 will primarily impact
      the presentation of minority or noncontrolling interest holders.  The
      Management does not expect that the adoption of SFAS No. 141 (revised
      2007) and SFAS No. 160 would have a material effect on the Company's
      financial position and results of
operations.




F-24





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      5-
                                            ACCOUNTS
      RECEIVABLEAccounts
      receivable consist of the
following:




December
      31,
                                
                                
                                December
      31,2008
                                
                                
                                2007GRT-Franchise
      fees receivable
                                
                                $
                                -
                                
                                
                                $
                                204,399Other
      accounts receivable
                                
                                
                                -
                                
                                
                                
                                5,549less:
      Allowance for bad debt
                                
                                
                                -
                                
                                
                                
                                -Accounts  receivable,
      net
                                
                                $
                                -
                                
                                
                                $
                                209,948




The
      majority of the Company’s sales are on open account terms and in
      accordance with terms specified in the contracts governing the relevant
      transactions. The Company evaluates the need of an allowance for doubtful
      accounts based on specifically identified amounts that management believes
      to be uncollectible. If actual collections experience changes, revisions
      to the allowance may be required. Based upon the aforementioned criteria,
      management has determined that no provision for uncollectible accounts is
      required as of December 31, 2008 and 2007,
respectively.Note
      6-
                                            PREPAID
      EXPENSESPrepaid
      expenses consist of the
following:




December
      31,
                                  
                                  
                                  December
      31,2008
                                  
                                  
                                  2007Prepaid
      travel expenses
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  19,141Prepaid
      telephone number usage fees
                                  
                                  
                                  28,823
                                  
                                  
                                  
                                  9,685Advance
      to telecommunication carriers
                                  
                                  
                                  43,769
                                  
                                  
                                  
                                  -Advance
      to purchase SIM cards
                                  
                                  
                                  -
                                  
                                  
                                  
                                  95,706Advance
      to purchase equipment
                                  
                                  
                                  302,005
                                  
                                  
                                  
                                  246,100$
                                  374,597
                                  
                                  
                                  $
                                  370,632





F-25





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      7-
                                                      LONG-TERM
      INVESTMENTLong-term
      investment consists of the
following:




December
      31,
                                                                  
                                                                  December
      31,2008
                                                                  
                                                                  2007Equity
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  EquityOwnership
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  OwnershipDescription
                                                                  
                                                                  Amount
                                                                  
                                                                  
                                                                  Percentage
                                                                  
                                                                  Amount
                                                                  
                                                                  
                                                                  PercentageJoint-venture
      withBeijing Zhongheng Technology Co., Inc.
                                                                  
                                                                  
                                                                  233,434
                                                                  
                                                                  
                                                                  
                                                                  10
                                                                  %
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -$
                                                                  233,434
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  
                                                                  $
                                                                  -




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





F-26





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      8-
                                        PROPERTY
      AND EQUIPMENT, NETThe
      following is a summary of property, plant and equipment-at cost, less
      accumulated
depreciation:




December
      31,
                                                
                                                
                                                December
      31,2008
                                                
                                                
                                                2007Network
      and office equipment
                                                
                                                $
                                                121,660
                                                
                                                
                                                $
                                                20,079Leasehold
      Improvements
                                                
                                                
                                                324,603
                                                
                                                
                                                
                                                304,192446,263
                                                
                                                
                                                
                                                324,271Less:
      Accumulated depreciation
                                                
                                                
                                                (230,748
                                                )
                                                
                                                
                                                (128,276
                                                )Subtotal
                                                
                                                
                                                215,515
                                                
                                                
                                                
                                                195,995Fixed
      Assets to be disposed
                                                
                                                
                                                -
                                                
                                                
                                                
                                                85,487Total
                                                
                                                $
                                                215,515
                                                
                                                
                                                $
                                                281,482





Depreciation
      expense charged to operations was $83,357 and $28,533 for the year ended
      December 31, 2008 and 2007, respectively.Note
      9-
                                    CONTRACT
      SECURITY DEPOSITContract
      security deposit consists of the
following:





December
      31,
                                                                    
                                                                    
                                                                    December
      31,2008
                                                                    
                                                                    
                                                                    2007Security
      deposit for GRT'spublic
      phone distribution contract with CUBJ
                                                                    
                                                                    $
                                                                    1,576
                                                                    
                                                                    
                                                                    $
                                                                    1,367Security
      deposit for GRT and Beijing Telecom'Trust
      and Indemnity Agreement with Ms. Yianfang Jin  *
                                                                    
                                                                    
                                                                    87,538
                                                                    
                                                                    
                                                                    
                                                                    82,033$
                                                                    89,114
                                                                    
                                                                    
                                                                    $
                                                                    83,400*On
      September 20, 2007, Ms. Yianfang Jin who owns a 98% equity ownership
      interest in GRT executed a Trust and Indemnity
      Agreements,  pursuant to which Ms. Jin assigned to Beijing
      Telecom all of the beneficial interest in her equity ownership interest in
      GRT, as more fully disclosed in Note 1.





Note
      10-
                                          ACCRUED
      EXPENSESAccrued expenses consist
      of the
following:





December
      31,
                                                                
                                                                
                                                                December
      31,2008
                                                                
                                                                
                                                                2007Employee
      benefit payable *
                                                                
                                                                $
                                                                17,546
                                                                
                                                                
                                                                $
                                                                16,786Accrued
      professional fees
                                                                
                                                                
                                                                36,121
                                                                
                                                                
                                                                
                                                                42,762$
                                                                53,667
                                                                
                                                                
                                                                $
                                                                59,548*
      Employee benefit payable was mainly carried forward from QTC.





F-27




SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      11-
                                          DEFERRED
      REVENUEDeferred
      revenue consists of the
following:




December
      31,
                              
                              
                              December
      31,2008
                              
                              
                              2007Advance
      from VoIP customers
                              
                              $
                              1,679
                              
                              
                              $
                              1,079$
                              1,679
                              
                              
                              $
                              1,079




Note
      12-
                              AGREEMENT
      SECURITY DEPOSITAgreement
      security deposit consists of the
following:
  December
      31,
                    
                    
                    December
      31,2008
                    
                    
                    2007Security
      deposit for the Business Transfer Agreement
                    
                    $
                    320,971
                    
                    
                    $
                    1,079$
                    320,971
                    
                    
                    $
                    1,079




On
      October 18, 2008, GRT signed a “"Business Transfer Agreement" with
      Shanghai Zhen Guang Travel Agent and Shanghai North Travel Agent, pursuant
      to which, Shanghai Zhen Guang Travel Agent and Shanghai North Travel Agent
      agreed to acquire GRT’s call-forwarding operation in Shanghai area for
      $511,098 (RMB 3,500,000). On November 30, 2008, the parties agreed to
      increase the sales price to $729,480  (RMB 5,000,000) and the
      deal will be closed in December 2009.  On October 21, 2008, GRT
      received $291,792 (RMB 2,000,000) from Shanghai Zhen Guang Travel Agent,
      and $29,179 (RMB 200,000) from Shanghai North Travel Agent as security
      deposit for the agreement.Note
      13-
                                                CONSULTANT
      FEESConsultant
      fees consist of the
following:




For
      the Year EndedDecember
      31,2008
                                        
                                        
                                        2007Investor
      relationship fees
                                        
                                        $
                                        50,271
                                        
                                        
                                        $
                                        -Acquisition
      consultancy fees
                                        
                                        
                                        312,000
                                        
                                        
                                        
                                        -PRC
      Legal consultant for acquisition
                                        
                                        
                                        100,000
                                        
                                        
                                        
                                        -Amortization
      of costs of common stock issued forcompensation
      of consultant services (Note 18)
                                        
                                        
                                        231,880
                                        
                                        
                                        
                                        71,793Other
      consultancy fees
                                        
                                        
                                        12,233
                                        
                                        
                                        
                                        -$
                                        706,384
                                        
                                        
                                        $
                                        71,793





F-28





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      14-
                                                                    QTC
      SUPPLEMENTAL INCOMEDuring
      2006 and 2005, QTC entered a non-exclusive distribution contract with
      China Unicom (Beijing) Limited (“CUBJ”) F/K/A China Netcom (Beijing)
      Corporation Limited to distribute its traditional fixed line call
      times.  The tariff was initially collected from end users by
      CUBJ, which in turn would pay QTC according to the percentage sharing as
      mentioned in the distribution agreement.  In January 2007, CUBJ
      notified the Company to terminate the distribution
      contract.  Based on the review of the implementation of the
      distribution contract, CUBJ agreed to pay a supplemental payment of
      $37,344 (RMB 260,000) to QTC.  QTC received this payment in June
      2008.Note
      15-
                                                                    RELATED
      PARTIES TRANSACTIONSCompensation
      to Ms. Zheng Shuying, CEOThe
      Company paid $85,650 and $96,264 in cash to Ms. Zheng Shuying, CEO, as
      compensation for the year ended December 31, 2008 and 2007,
      respectively.GRT
      LeaseGRT
      rents office premise at the market rate from Mr. Guoqing Xu, President of
      QTC.  The lease is non-cancelable and will expire in June
      2010.  Rent expense amounted to $6,894 and $4,726 for the year
      ended December 31, 2008 and 2007, respectively.  As of December
      31, 2008, there was no outstanding balance due to Mr. Xu.  The
      future minimum lease payments for the leases are as follows at December
      31,
2008:




The
      YearDecember 31,2009
                              
                              $
                              17,9452010
                              
                              
                              9,629$
                              27,574




QTC
      LeaseQTC
      rents office premise at the market rate from Ms. Shuying Zheng,
      CEO.  The lease is non-cancelable and will expire in June
      2010.  Rent expense amounted to $17,236 and $2,626 for the year
      ended December 31, 2008 and 2007, respectively.  As of December
      31, 2008, there was no outstanding balance due to Ms.
      Zheng.  The future minimum lease payments for the leases are as
      follows at December 31,
2008:




The
      YearDecember31,2009
                            
                            $
                            17,5082010
                            
                            
                            8,754$
                            26,262





F-29





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      16-
                                                        SEGMENT
      REPORTINGGRT
      OperationGRT
      operated in four reportable business segments that are determined based
      upon differences in products and services. GRT does not allocate any
      operating expenses or assets to its four business segments as management
      does not use this information to measure the performance of the operating
      segments. Certain costs of revenues are shared between business
      segments.  Also, no measures of assets by segment are reported
      and used by the chief operating decision maker. Hence, GRT has not made
      disclosure of total assets by reportable segments.Summarized
      information by business segment for the year ended December 31, 2008 and
      2007 is as
follows:




For
      the Year EndedDecember
      31,2008
                                    
                                    
                                    2007REVENUEGRT
      public telephone service
                                    
                                    $
                                    16,265
                                    
                                    
                                    $
                                    76,111GRT
      network solution
                                    
                                    
                                    -
                                    
                                    
                                    
                                    113,749GRT
      VoIP call time distribution
                                    
                                    
                                    212,305
                                    
                                    
                                    
                                    -GRT
      sales of call forwarding cards
                                    
                                    
                                    213,953
                                    
                                    
                                    
                                    1,196,996GRT
      franchise fees
                                    
                                    
                                    -
                                    
                                    
                                    
                                    527,753COST
      OF SALESGRT
      public telephone service
                                    
                                    $
                                    22,981
                                    
                                    
                                    $
                                    108,301GRT
      network solution
                                    
                                    
                                    -
                                    
                                    
                                    
                                    24,287GRT
      VoIP call time distribution
                                    
                                    
                                    163,309
                                    
                                    
                                    
                                    -GRT
      sales of call forwarding cards
                                    
                                    
                                    178,935
                                    
                                    
                                    
                                    599,253GRT
      franchise fees
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -GROSS
      PROFITSGRT
      public telephone service
                                    
                                    $
                                    (6,716
                                    )
                                    
                                    $
                                    (32,190
                                    )GRT
      network solution
                                    
                                    
                                    -
                                    
                                    
                                    
                                    89,462GRT
      VoIP call time distribution
                                    
                                    
                                    48,996
                                    
                                    
                                    
                                    -GRT
      sales of call forwarding cards
                                    
                                    
                                    35,018
                                    
                                    
                                    
                                    597,743GRT
      franchise fees
                                    
                                    
                                    -
                                    
                                    
                                    
                                    527,753TOTAL
      ASSETS OF GRT
                                    
                                    $
                                    725,765
                                    
                                    
                                    $
                                    926,886




Note17-
                                            REVERSE
      STOCK SPLITEffective
      on July 31, 2007, The Company filed with the Nevada Secretary of State a
      Certificate of Amendment to its Articles of Incorporation.  The
      amendment effected a reverse stock split of the Company's common stock in
      the ratio of 1:30.  The number of common stocks issued and
      outstanding immediately after the reverse stock split was 1,701,375,
      including an addition of 40 shares for rounding up fractional
      shares.  All share and per share information included in these
      consolidated financial statements have been adjusted to reflect this
      reverse stock
split.





F-30





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      18-
                                                                                                                COMMON
      STOCKOn
      August 20, 2007, the Company engaged a consultant, Jun Chen, for a period
      September 2007 through April 2008.  The consultant provides
      technical service to the Company.  The terms of the agreement
      are for the consultant to receive 1,080,000 shares of common stock valued
      at $0.11 per share, totaling $118,800, which should be amortized over the
      beneficial period.  Due to the reverse merger, we only recorded
      the consultant cost from the acquisition date, October 24, 2007, through
      December 31, 2007, which was $29,700. The consultant cost for the year
      ended December 31, 2008 was $59,400.On
      August 20, 2007, the Company engaged a consultant, Bayaer, for a period
      August 28, 2007 through August 27, 2009.   The consultant
      provides the Company with legal service.  The terms of the
      agreement are for the consultant to receive 800,000 shares of common stock
      valued at $0.11 per share, totaling $88,000, which should be amortized
      over the beneficial period.  Due to the reverse merger, we only
      recorded the consultant cost from the acquisition date, October 24, 2007,
      through December 31, 2007, which was $7,333.  The consultant
      cost for the year ended December 31, 2008 was $44,000.On
      August 21, 2007, the Company engaged a consultant, Jingli
      Yao,  for a period September 10, 2007 through September 9,
      2008.   The consultant provides the Company with promotion
      service.  The terms of the agreement are for the consultant to
      receive 1,320,000 shares of common stock valued at $0.11 per share,
      totaling $145,200, which should be amortized over the beneficial
      period.  Due to the reverse merger, we only recorded the
      consultant cost from the acquisition date, October 24, 2007, through
      December 31, 2007, which was $24,200.  The consultant cost for
      the year ended December 31, 2008 was $96,800.On
      August 22, 2007, the Company engaged a consultant, Minxian
      Zeng,  for a period August 22, 2007 through June 21,
      2008.  The Company retained the consultant as a general
      coordinator.  The terms of the agreement are for the consultant
      to receive 480,000 shares of common stock valued at $0.11 per share,
      totaling $52,800, which should be amortized over the beneficial
      period.  Due to the reverse merger, we only recorded the
      consultant cost from the acquisition date, October 24, 2007, through
      December 31, 2007, which was $10,560.  The consultant cost for
      the year ended December 31, 2008 was $31,680.On
      October 24, 2007 Smooth Global (China) completed the acquisition of all
      the registered capital stock of Smooth Global.  In exchange for
      the capital stock of Smooth Global, Smooth Global (China) issued
      33,000,000 shares of its common stock to the prior owners of Smooth
      Global.  Since the stockholders of Smooth Global owned a
      majority of the outstanding shares of the Company's common stock
      immediately following the share exchange, this transaction was treated for
      accounting purposes as  a recapitalization and reverse
      merger.Beijing
      Telecom Registered Capital ContributionUpon
      formation of Beijing Telecom on June 28, 2007,  $96,717 was
      contributed toward the registered
capital.





F-31





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      19-
                                                                    INCOME
      TAXESThe
      Company’s operating subsidiaries, QTC and GRT are governed by the PRC
      Income Tax Law and various local income tax laws, pursuant to which a
      company generally is subject to an income tax at an effective rate of 33%
      (30% national income tax and 3% local income tax) on income as reported in
      its statutory financial statements after appropriate tax
      adjustments.Beginning
      January 1, 2008, the new Enterprise Income Tax (“EIT”) law has replaced
      the old laws for Domestic Enterprises (“DES”) and Foreign Invested
      Enterprises (“FIEs”).The
      key changes are:a.
      The new standard EIT rate of 25% replaces the 33% rate applicable to both
      DES and FIEs, except for High Tech companies that pay a reduced rate of
      15%;b.
      Companies established before March 16, 2007 continue to enjoy tax holiday
      treatment approved by local government for a grace period of either for
      the next 5 years or until the tax holiday term is completed, whichever is
      sooner.In
      addition, the new EIT also grants tax holidays to entities operating in
      certain beneficial industries, such as the agriculture, fishing, and
      environmental protection. Entities in beneficial industries enjoy a
      three-year period tax exempt and a three-year period with 50% reduction in
      the income tax rates.QTC
      Income TaxQTC
      is subject to effective income tax rate of 25% beginning from January 1,
      2008.The
      provision for income taxes consists of the
  following:




For
      the Year EndedDecember
      31,2008
                                                                    
                                                                    
                                                                    2007Provision
      for US Income Tax
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -Provision
      for PRC income tax
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Total
      provision for income taxes
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -The
      following table reconciles the US and PRC statutory rates to effective tax
      rate:For
      the Year EndedDecember
      31,2008
                                                                    
                                                                    
                                                                    2007U.S.
      Statutory rate
                                                                    
                                                                    
                                                                    34.00
                                                                    %
                                                                    
                                                                    
                                                                    34.00
                                                                    %Foreign
      income not recognized in USA
                                                                    
                                                                    
                                                                    -34.00
                                                                    %
                                                                    
                                                                    
                                                                    -34.00
                                                                    %China
      income taxes
                                                                    
                                                                    
                                                                    25.00
                                                                    %
                                                                    
                                                                    
                                                                    33.00
                                                                    %Effect
      of tax holiday
                                                                    
                                                                    
                                                                    -25.00
                                                                    %
                                                                    
                                                                    
                                                                    -33.00
                                                                    %Effective
      income tax rate
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -





F-32





SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      19-
                                                          INCOME
      TAXES (continued)GRT
      Income TaxAccording
      to “Inland Revenue Law No. [2002] 208 from Finance Department”, if an
      entity employed a required number of unemployed labor force for a term of
      three years, it will be eligible to claim a full exemption from EIT ,
      business taxes, city construction levy and education surcharge for a
      three-year period. GRT fulfilled the criteria and its tax exemption claim
      was approved by the Beijing Local Taxation Bureau (Shunyi Branch). As a
      result, GRT exempted from EIT from January 1, 2005 through December 31,
      2007, and exempted from business taxes, city construction levy and
      education surcharge from January 1, 2006 to December 31,
    2008.The
      provision for income taxes consists of the
  following:




For
      the Year EndedDecember
      31,2008
                                                                    
                                                                    
                                                                    2007Provision
      for US Income Tax
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -Provision
      for PRC income tax
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Total
      provision for income taxes
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    - The
      following table reconciles the US and PRC statutory rates to GRT’s
      effective tax rate:
 For
      the Year EndedDecember
      31,2008
                                                                        
                                                                        
                                                                        2007U.S.
      Statutory rate
                                                                        
                                                                        
                                                                        34.00
                                                                        %
                                                                        
                                                                        
                                                                        34.00
                                                                        %Foreign
      income not recognized in USA
                                                                        
                                                                        
                                                                        -34.00
                                                                        %
                                                                        
                                                                        
                                                                        -34.00
                                                                        %China
      income taxes
                                                                        
                                                                        
                                                                        25.00
                                                                        %
                                                                        
                                                                        
                                                                        33.00
                                                                        %Effect
      of tax holiday
                                                                        
                                                                        
                                                                        -25.00
                                                                        %
                                                                        
                                                                        
                                                                        -33.00
                                                                        %Effective
      income tax rate
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
  F-33
  SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      20-
                                                                                                      CONCENTRATIONS
      AND RISKS(a)
      Major SuppliersGRT
      signed non-exclusive agreements with CUSH and CUSX to facilitate the
      international call forwarding business and to distribute VoIP call time
      purchased from the carriers.  If the strategic relationship with
      either CUSH and CUSX is terminated or scaled-back, or if CUSH and CUSX
      alter the co-operative arrangements, GRT’s revenue from international call
      forwarding service and VoIP call time distribution might be adversely
      affected.(b)
      Major CustomerGRT
      had a diversified customer basis for VoIP call time distribution. None of
      the customers counted for 5% or more of the total revenue from VoIP call
      time distribution in the year ended December 31, 2008 and 2007,
      respectively;In
      the year ended December 31, 2008, one customer counted for 94% of the
      total revenue from sales of call forwarding card.  In the year
      ended December 31, 2007, GRT has a diversified customer basis for call
      forwarding card, and none of the customers counted for 5% or more of the
      sales of call forwarding card.(c)
      Fluctuation in Revenue from Call Forwarding ServiceGRT
      derives revenue from sales of call forwarding cards and relevant franchise
      fees from franchised distributors.  The market for our call
      forwarding service are those Chinese residents who travel abroad for
      business or personal reasons.   The demand for call
      forwarding cards is not stable, as it is high in busy travel seasons, and
      low in less busy travel seasons.  Accordingly, GRT's revenue
      from call forwarding service fluctuates time by time.Note
      21-
                                                                                                      COMMITMENTS
      AND CONTINGENCIESPRC's
      political and economic systemThe
      Company faces a number of risks and challenges not typically associated
      with companies in North America and Western Europe, since its assets exist
      solely in the PRC, and its revenues are derived from its operations
      therein.  The PRC is a developing country with an early stage
      market economic system, overshadowed by the state.  Its
      political and economic systems are very different from the more developed
      countries and are in a state of change.  The PRC also faces many
      social, economic and political challenges that may produce major shocks
      and instabilities and even crises, in both its domestic arena and in its
      relationships with other countries, including the United
      States.  Such shocks, instabilities and crises may in turn
      significantly and negatively affect the Company's
    performance.
  F-34
  SMOOTH
      GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIESNOTES
      TO CONSOLIDATED FINANCIAL STATEMENTSNote
      21-
                                                                              COMMITMENTS
      AND CONTINGENCIES (continued)Governmental
      control of currency conversionThe
      PRC government imposes controls on the convertibility of Renminbi into
      foreign currencies and, in certain cases, the remittance of currency out
      of the PRC. The Company receives all of its revenues in Renminbi, which is
      currently not a freely convertible currency. Shortages in the availability
      of foreign currency may restrict the Company’s ability to remit sufficient
      foreign currency to satisfy foreign currency denominated
      obligations.  Under existing PRC foreign exchange regulations,
      payments of current account items, including profit distributions,
      interest payments and expenditures from the transaction, can be made in
      foreign currencies without prior approval from the PRC State
      Administration of Foreign Exchange by complying with certain procedural
      requirements. However, approval from appropriate governmental authorities
      is required where Renminbi is to be converted into foreign currency and
      remitted out of China to pay capital expenses such as the repayment of
      bank loans denominated in foreign currencies.The
      PRC government may also at its discretion restrict access in the future to
      foreign currencies for current account transactions. If the foreign
      exchange control system prevents the Company from obtaining sufficient
      foreign currency to satisfy its currency demands, the Company may not be
      able to pay certain of its expenses as they come
  due.
  F-35





ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





Not applicable.





ITEM
      9A.
            CONTROLS
      AND PROCEDURES





(a)            Evaluation of disclosure controls and
procedures.


The term
“disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to
the controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files
under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,
processed, summarized and reported within required time periods. “Disclosure
controls and procedures” include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the company’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.




The
Company’s management, with the participation of the Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by this
annual report (the “Evaluation Date”). Based on that evaluation, the Company’s
Chief Executive Officer and Chief Financial Officer has concluded that, as of
the Evaluation Date, such controls and procedures were effective.





(b)            Changes in internal
controls.


The term
“internal control over financial reporting” (defined in SEC Rule 13a-15(f))
refers to the process of a company that is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. The Company’s management, with the participation
of the Chief Executive Officer and Chief Financial Officer, has evaluated any
changes in the Company’s internal control over financial reporting that occurred
during the fourth quarter of the year covered by this annual report, and they
have concluded that there was no change to the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.





(c)
            Management’s Report on Internal
      Control over Financial
Reporting.




Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934.  We have assessed the effectiveness
of those internal controls as of December 31, 2008, using the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control –
Integrated Framework as a basis for our assessment.




Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.  All internal
control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.




13




A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects the Company’s
ability to initiate, authorize, record, process, or report external financial
data reliably in accordance with accounting principles generally accepted in the
United States of America such that there is more than a remote likelihood that a
material misstatement of the Company’s annual or interim financial statements
that is more than inconsequential will not be prevented or detected. In the
course of making our assessment of the effectiveness of internal controls over
financial reporting, we identified two material weaknesses in our internal
control over financial reporting.  These material weaknesses consisted
of:




a.           Inadequate staffing and supervision
within the accounting operations of our company.  The
relatively small number of employees who are responsible for accounting
functions prevents us from segregating duties within our internal control
system.  The inadequate segregation of duties is a weakness because it
could lead to the untimely identification and resolution of accounting and
disclosure matters or could lead to a failure to perform timely and effective
reviews.




b.           Lack of expertise in U.S accounting
principles among the personnel in our Chinese
headquarters.  Our books are maintained and our financial
statements are prepared by the personnel employed at our executive offices in
the City of Beijing.  Few of our employees have experience or
familiarity with U.S accounting principles.  The lack of personnel in
our Beijing office who are trained in U.S. accounting principles is a weakness
because it could lead to improper classification of items and other failures to
make the entries and adjustments necessary to comply with U.S.
GAAP.




Management
is currently reviewing its staffing and their training in order to remedy the
weaknesses identified in this assessment.  To date, we are not aware
of significant accounting problems resulting from these weaknesses; so we have
to weigh the cost of improvement against the benefit of strengthened
controls.  However, because of the above conditions, management’s
assessment is that the Company’s internal controls over financial reporting were
not effective as of December 31, 2008.




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




ITEM
      9B.
            OTHER
      INFORMATION


None.





14





PART
III





ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





The
officers and directors of the Company are:




Name
              Age
              Position with the Company
              Director SinceZheng
      Shuying
              42
              Chief
      Executive Officer, ChiefFinancial
      Officer, Director
              2007Liu
      Meifeng
              47
              Director
              2007Jin
      Guodong
              59
              Director
              2007





Directors
hold office until the annual meeting of the Company’s stockholders and the
election and qualification of their successors.  Officers hold office,
subject to removal at any time by the Board, until the meeting of directors
immediately following the annual meeting of stockholders and until their
successors are appointed and qualified.







Zheng
Shuying.  Since 2003 Ms. Zheng has been employed as Chief
Executive Officer of Beijing QTC Information & Services Co.,
Ltd.  Since 2005 Ms. Zheng has also been employed as Chief Executive
Officer of Beijing GRT Information Services Limited.  Both of these
companies are now subsidiaries of Smooth Global (China) Holdings, Inc. From 1992
to 2003, Ms. Zheng was Chief Executive Officer of Beijing Haodu Science &
Technology Co. Ltd., which was engaged in the business of acquiring and
marketing patents and other technology.  From 1988 to 1992 Ms. Zheng
was a Team Leader in the Finance Bureau of the City of Harbin in China, with
responsibilities for auditing.  In 1988 Ms. Zheng was awarded a
graduate degree in the Management Science College of the Zhengzhou University in
China.





Liu Meifeng.  Since 2003 Ms.
Liu has been employed as a Manager of the Accounting Department of Beijing QTC
Information & Services Co., Ltd., the subsidiary of The Bralorne Mining
Company.  From 1999 to 2003 Ms. Liu was employed as a Team Leader in
the accounting department of Beijing Zhonglian Architecture & Decoration
Engineering Co. Ltd.  In 1999 Ms. Liu was awarded an undergraduate
degree with a concentration by accounting by Renmin University of
China.





Jin
Guodong.  Since 2005 Jin Guodong has been employed as Vice
President of Beijing GRT Information Services Limited.  From 1978
until 2005 Jin Guodong was employed by the Heilongjiang Branch Company of the
People’s Insurance Company (Group) of China Property and Casualty Company
Limited.  His final position in that employ was as Manager of the
Qiqihar Branch.  In 1978 Jin Guodong earned a degree from Tianjin
University in China, with a specialty in architecture.





All of
our directors hold offices until the next annual meeting of the shareholders of
the Company, and until their successors have been qualified after being elected
or appointed.   Officers serve at the discretion of the board of
directors.





15


A udit
Committee; Compensation Committee; Nominating
Committee.


Due to
the small size of our Board of Directors, we have not constituted an audit
committee, a compensation committee or a nominating
committee.  Decisions regarding nominations to the Board will be made
by all currently-serving members of the Board.  For the same reason,
we do not have an audit committee financial expert among the members of our
Board of Directors.


C ode of
Ethics





The
Company does not have a written code of ethics applicable to its executive
officers.  The Board of Directors has not adopted a written code of
ethics because there are so few executive officers of the Company.





Section 16(a) Beneficial
Ownership Reporting Compliance





None of
the officers, directors or beneficial owners of more than 10% of the Company’s
common stock failed to file on a timely basis the reports required by Section
16(a) of the Exchange Act during the year ended December 31, 2007, except that
neither Zheng Shuying nor Liu Meifeng has filed a Form 3.





ITEM
11.           EXECUTIVE
COMPENSATION





The
following table sets forth all compensation awarded to, earned by, or paid
Smooth Global and its subsidiaries to Zheng Shuying, its Chief Executive
Officer, for services rendered in all capacities to the Company during the years
ended December 31, 2008, 2007 and 2006.  There were no other executive
officers whose total salary and bonus for the fiscal year ended December 31,
2008 exceeded $100,000.





Year
                      Salary
                      Bonus
                      Stock
                        Awards
                      Option
                        Awards
                      Other
                        CompensationZheng
      Shuying
                      2008
                      $85,650
                      --
                      --
                      --
                      --2007
                      $96,264
                      --
                      --
                      --
                      --2006
                      $ 
      3,798
                      --
                      --
                      --
                      --




Employment
Agreements




All of our executive officers are employed on an at-will basis.




Compensation of
Directors




Employees who are also members of the Board of Directors are not additionally
compensated for their services as a director.  We currently have no
directors who are not also employees.





16





Equity
Grants





The
following tables set forth certain information regarding the stock options
acquired by the Company’s Chief Executive Officer during the year ended December
31, 2008 and those options held by her on December 31, 2008.





Option Grants in the Last Fiscal
Year


Percent
                                                                                                      of
      total
                                                                                                    
                                                                                                    
                                                                                                    Potential
      realizableNumber
      of
                                                                                                        securities
                                                                                                        underlying
                                                                                                        option
                                                                                                    options
                                                                                                      granted to
                                                                                                      employees
                                                                                                      in
      fiscal
                                                                                                    Exercise
                                                                                                      Price
                                                                                                    Expiration
                                                                                                    value
      at assumed

                                                                                                      annual
      rates ofappreciation
                                                                                                      for
      option termgranted
                                                                                                    year
                                                                                                    ($/Share)
                                                                                                    Date
                                                                                                    5%
                                                                                                    10%Zheng
      Shuying
                                                                                                    --
                                                                                                    --
                                                                                                    --
                                                                                                    --
                                                                                                    --
                                                                                                    --






The
following tables set forth certain information regarding the stock grants
received by the executive officers named in the table above during the year
ended December 31, 2008 and held by them unvested at December 31,
2008.




Unvested Stock Awards in the
Last Fiscal Year




Number
      of
                  Shares
      That
                  Have
      Not
                  Vested
                Market
      Value
                  of
      Shares That
                  Have
      Not
                  VestedZheng
      Shuying
                --
                --







ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





There are
38,381,335 shares of Smooth Global common stock issued and
outstanding.  The following table sets forth information known to us
with respect to the beneficial ownership of our common stock as of the date of
this Report by the following:





·
            each
      shareholder known by us to own beneficially more than 5% of our common
      stock;




·
            Zheng
      Shuying, our Chief Executive
Officer;




·
            each
      of our directors; and




·
            all
      directors and executive officers as a
group.





Except as
otherwise indicated, we believe that the beneficial owners of the common stock
listed below have sole voting power and investment power with respect to their
shares,  subject to community property laws where
applicable.  Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission.





17





Name
      and Address
                                          of
      Beneficial Owner(1)
                                        Amount
      and Nature
                                          of
      Beneficial
                                          Ownership(2)
                                        Percentage
                                          of
      ClassZheng
      Shuying
                                        20,000,000
                                        2.1%Liu
      Meifeng
                                        0
                                        --Jin
      Guodong
                                        1,700,000
                                        4.4%All
      officers and directors (3 persons)
                                        21,700,000
                                        56.5%


________________________________


(1)   The
      address of each shareholder is Room 618, Building Hui An Xuan, +17 Anyuan
      Road,  Chaoyang District, Beijing, P.R. China
      100101.


(2)   All
      shares are owned of record and
beneficially.





ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE




Certain Relationships and
Related Transactions




On October 24, 2007 Smooth Global
(China) Holdings, Inc. acquired the registered capital stock of Smooth Global
Services Limited.  In exchange for the capital stock of Smooth Global
Services Limited, Smooth Global (China) Holdings, Inc. issued 33,000,000 shares
of its common stock to the prior owners of Smooth Global Services
Limited.  The prior registered owners were Christina Nelson and
Shannon Lee Alsop.  They held the shares, however, as nominees for
nine residents of The People’s Republic of China.  Accordingly, upon
closing of the acquisition, Ms. Nelson and Ms. Alsop assigned the 33,000,000
shares to those nine beneficiaries.  20,000,000 of the shares were
assigned to Zheng Shuying.  Ms. Zheng is the Chief Executive Officer
of Smooth Global (China) Holdings, Inc.





Director
Independence




None of the members of the Company’s
Board of Directors is an independent director, pursuant to the definition of
“independent director” under the Rules of The NASDAQ Stock Market.





ITEM
14.          PRINCIPAL ACCOUNTANT
FEES AND SERVICES





Audit Fees





Keith K. Zhen, CPA billed $47,000 to
the Company for professional services rendered for the audit of fiscal 2008
financial statements and review of the financial statements included in fiscal
2008 10-QSB filings.  Keith K. Zhen, CPA billed $50,000 to the Company
for professional services rendered for the audit of fiscal 2007 financial
statements.





Audit-Related Fees





Keith K. Zhen, CPA billed $0 to the
Company during 2008 for assurance and related services that are reasonably
related to the performance of the 2008 audit or review of the quarterly
financial statements.  Keith K. Zhen, CPA billed $0 to the Company
during 2007 for assurance and related services that are reasonably related to
the performance of the 2007 audit or review of the quarterly financial
statements.





18





Tax Fees





Keith K. Zhen, CPA billed $0 to the
Company during 2008 for professional services rendered for tax compliance, tax
advice and tax planning.  Keith K. Zhen, CPA billed $0 to the Company
during 2007 for professional services rendered for tax compliance, tax advice
and tax planning.





All Other Fees





Keith K. Zhen, CPA billed $0 to the
Company in 2008 and $0 in  2007 for services not described
above.




It is the policy of the Company
that all services other than audit, review or attest services must be
pre-approved by the Board of Directors.  No such services have been
performed by Keith K. Zhen, CPA.







ITEM
15.          EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES







(a) Exhibit
    List3-a
              Articles
      of Incorporation – filed as an exhibit to the Registration Statement on
      Form 10-SB (SEC File #0-25707) filed on April 2, 1999, and incorporated
      herein by reference.




3-a(1)
              Certificate
      of Amendment of Articles of Incorporation - filed as an exhibit to the
      Current Report on Form 8-K filed on August 2, 2007, and incorporated
      herein by reference.




3-b
              Restated
      By-laws – filed as an exhibit to the Registration Statement on Form 10-SB
      (SEC File #0-25707) filed on April 2, 1999, and incorporated herein by
      reference.




10-a
            Trust
      and Indemnity Agreement dated September 20, 2007 among Smooth Global
      (Beijing) Telecom Science Limited and Jin Yanfang and Wang Yinxia – filed
      as an exhibit to the Current Report on Form 8-K filed on October 29, 2007,
      and incorporated herein by
reference.





21
            Subsidiaries
      – Gold Profit (Asia) Group Limited, a BVI
  corporation


Beijing
      Quan Tong Chang Information Service Limited, a
      PRC corporation
              Smooth Global Services Limited, a BVI
      corporation
              Smooth Global (Beijing) Telecom Science
      Limited, a PRC corporation




31
            Rule
      13a-14(a) Certification




32
              Rule
      13a-14(b) Certification




19




SIGNATURES




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





Smooth
      Global (China) Holdings, Inc.By:
                                /s/ Zheng ShuyingZheng
      Shuying, Chief Executive
Officer





In
accordance with the Exchange Act, this Report has been signed below on April 14,
2009 by the following persons, on behalf of the Registrant and in the capacities
and on the dates indicated.





/s/ Zheng
Shuying


Zheng
Shuying, Director,


Chief
Executive Officer,


Chief
Financial Officer





/s/ Liu
Meifeng


Liu
Meifeng, Director





/s/ Jin
Guodong


Jin
Guodong, Director






20