----

----

| (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, 2010 |
|                  |   |
| (    ) | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|                  |   |
|                  |             For the transition period from _________ to __________ |

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

----

| ITEM 1. |  BUSINESS |
|---------|----------------|

----

----

| ITEM 1A |    RISK FACTORS |
|---------|--------------------------------|

----

----

----

----

----

| ITEM 1B         | UNRESOLVED STAFF COMMENTS |
|-----------------|---------------------------|
|            |                      |
| Not Applicable. |
|            |                      |
| ITEM 2.         | DESCRIPTION OF PROPERTY   |

|  ITEM 3. | LEGAL PROCEEDINGS |
|---------------|-------------------|
|          |              |
| None.         |              |
|          |              |
| ITEM 4.       | RESERVED          |

----

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

|               |   | Bid    |   |   |   |   |
|--------------------|--------|--------|--------|--------|--------|--------|
| Quarter Ending     |   | High   |   |   | Low    |   |
| March 31, 2009     |   | $      | 0.02   |   |   | $      | 0.02 |   |
| June 30, 2009      |   | $      | 0.03   |   |   | $      | 0.02 |   |
| September 30, 2009 |   | $      | 0.03   |   |   | $      | 0.03 |   |
| December 31, 2009  |   | $      | 0.03   |   |   | $      | 0.02 |   |
|               |   |   |   |   |   |   |   |   |
| March 31, 2010     |   | $      | 0.04   |   |   | $      | 0.02 |   |
| June 30, 2010      |   | $      | 0.07   |   |   | $      | 0.04 |   |
| September 30, 2010 |   | $      | 0.07   |   |   | $      | 0.01 |   |
| December 31, 2010  |   | $      | 0.01   |   |   | $      | 0.01 |   |

|                                                                                                                                                                                      | 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 plans |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
| Equity compensation plans approved by security holders                                                                                                                                    | 0                                                                                           | --                                                                          | 0                                                                                            |
| Equity compensation plans not approved by security holders                                                                                                                                | 0                                                                                           | --                                                                          | 0                                                                                            |
|                               Total | 0                                                                                           | --                                                                          | 0                                                                                            |

----

| ITEM 6.         | SELECTED FINANCIAL DATA                                                                      |
|-----------------|----------------------------------------------------------------------------------------------|
|            |                                                                                         |
| Not applicable. |
|            |                                                                                         |
| ITEM 7.         | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS |

----

----

| ITEM 7A         | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
|-----------------|-------------------------------------------------------------|
|            |                                                        |
| Not Applicable. |
|            |                                                        |
| ITEM 8.         | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                |

----

|                                                                       |   |
|----------------------------------------------------------------------------|--------|
| Report of Independent Registered Public Accounting Firm                    | 14     |
|                                                                       |   |
| Consolidated Balance Sheets as of December 31, 2010 and 2009               | 15     |
|                                                                       |   |
| Consolidated Statements of Operations and Other Comprehensive Income       |   |
|  for the Years Ended December 31, 2010 and 2009                       | 16     |
|                                                                       |   |
| Consolidated Statements of Changes in Stockholders’ Equity/(Deficit) |   |
| for the Years Ended December 31, 2010 and 2009                             | 17     |
|                                                                       |   |
| Consolidated Statements of Cash Flows for the Years Ended                  |   |
| December 31, 2010 and 2009                                                 | 18     |
|                                                                       |   |
| Notes to Consolidated Financial Statements                                 | 19     |

----

| KEITH K. ZHEN, CPA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| CERTIFIED PUBLIC ACCOUNTANT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 2070 WEST 6TH STREET - BROOKLYN, NY 11223 - TEL (347) 408-0693 - FAX (347) 602-4868 - EMAIL :KEITHZHEN@GMAIL.COM                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Board of Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Smooth Global (China) Holdings, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| We have audited the accompanying consolidated balance sheets of Smooth Global (China) Holdings, Inc. and subsidiaries as of  December 31, 2010 and 2009, 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, 2010.  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 presentation. We believe that our audits provide a reasonable basis for our opinion. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Smooth Global (China) Holdings, Inc. and subsidiaries as of  December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| /s/Keith K. Zhen, CPA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Keith K. Zhen, CPA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Brooklyn, New York                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| April 15, 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                                                                                    |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                     |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |
| CONSOLIDATED BALANCE SHEETS                                                                                                              |   |
|                                                                                                                                     |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |
|                                                                                                                                     |   | December 31, |   |   | December 31, |   |
|                                                                                                                                     |   | 2010 |   |   | 2009 |   |
| ASSETS                                                                                                                                   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |
| Current Assets:                                                                                                                          |   |   |   |   |   |   |
|      Cash and cash equivalents                                                                                  |   | $ | 95,261 |   |   | $ | 35,447 |   |
|      Notes receivable                                                                                           |   |   | 75,621 |   |   |   | - |   |
|      Accounts receivable, net (Note 4)                                                                          |   |   | 1,176,039 |   |   |   | 112,408 |   |
|      Advance to suppliers                                                                                       |   |   | 21,943 |   |   |   | 549 |   |
|      Inventories (Note 5)                                                                                       |   |   | 312,996 |   |   |   | 32,410 |   |
|           Total current assets                                                         |   |   | 1,681,860 |   |   |   | 180,814 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
| Property, Plant, and Equipment, net (Note 6)                                                                                             |   |   | 102,770 |   |   |   | 13,997 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
| Lease Security Deposit                                                                                                                   |   |   | 15,835 |   |   |   | 687 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
|           Total Assets                                                                 |   | $ | 1,800,465 |   |   | $ | 195,498 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                     |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
| Current Liabilities:                                                                                                                     |   |   |   |   |   |   |   |   |
|      Accounts payable                                                                                           |   |   | 517,255 |   |   |   | 71,256 |   |
|      Accrued expenses                                                                                           |   |   | 88,640 |   |   |   | 1,540 |   |
|      Advance from customers                                                                                     |   |   | 39,035 |   |   |   | 66,660 |   |
|      VAT and other taxes payable                                                                                |   |   | 413,334 |   |   |   | (622 | ) |
|      Corporate taxes payable                                                                                    |   |   | 165,116 |   |   |   | - |   |
|      Due to a related party (Note 10)                                                                           |   |   | 106,807 |   |   |   | - |   |
|           Total Current Liabilities                                                    |   |   | 1,330,187 |   |   |   | 138,834 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
| Commitments and Contingencies (Note 11)                                                                                                  |   |   | - |   |   |   | - |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
| Stockholders' Equity:                                                                                                                    |   |   |   |   |   |   |   |   |
|      Common stock, $0.001 par value, 200,000,000 shares authorized;                                             |   |   |   |   |   |   |   |   |
|             38,381,375 shares issued and outstanding as of December 31, 2010 |   |   |   |   |   |   |   |   |
|             20,000,000 shares issued and outstanding as of December 31, 2009 |   |   | 38,381 |   |   |   | 20,000 |   |
|      Additional paid-in capital                                                                                 |   |   | (92,631 | ) |   |   | 52,948 |   |
|      Retained earnings                                                                                          |   |   | 471,545 |   |   |   | (16,434 | ) |
|      Accumulated other comprehensive income                                                                     |   |   | 52,983 |   |   |   | 150 |   |
|         Stockholders' Equity                                                                     |   |   | 470,278 |   |   |   | 56,664 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |
|           Total Liabilities and Stockholders' Equity                                   |   | $ | 1,800,465 |   |   | $ | 195,498 |   |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                                |   |
|--------------------------------------------------------------------------------------|--------|
|                                                                                 |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME                 |   |
|                                                                                 |   |   |   |   |   |   |
|                                                                                 |   |   |   |   |   |   |
|                                                                                 |   | For the Year Ended |   |
|                                                                                 |   | December 31, |   |
|                                                                                 |   | 2010 |   |   | 2009 |   |
|                                                                                 |   |   |   |   |   |   |
| Revenues                                                                             |   |   |   |   |   |   |
|     Sales                                                        |   |   | 4,164,057 |   |   |   | 529,632 |   |
|     Costs of Sales                                               |   |   | 3,261,160 |   |   |   | 475,010 |   |
|          Gross Profit                        |   |   | 902,897 |   |   |   | 54,622 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| QTC Consultancy Income                                                               |   |   | 18,747 |   |   |   | - |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Operating Expenses                                                                   |   |   |   |   |   |   |   |   |
|      Selling expenses                                       |   |   | 70,193 |   |   |   | 31,024 |   |
|      Payroll                                                |   |   | 44,969 |   |   |   | 15,700 |   |
|      Pension and employee benefit                           |   |   | 82,619 |   |   |   | 3,787 |   |
|      Depreciation expenses                                  |   |   | 7,702 |   |   |   | 2,295 |   |
|      Office rent                                            |   |   | 9,342 |   |   |   | 8,245 |   |
|      Office expenses                                        |   |   | 57,965 |   |   |   | 8,731 |   |
|           Total Operating Expenses |   |   | 272,790 |   |   |   | 69,782 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Income (Loss) from Operations                                                        |   |   | 648,854 |   |   |   | (15,160 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Other Income                                                                         |   |   |   |   |   |   |   |   |
|      Interest income                                        |   |   | 174 |   |   |   | 159 |   |
|           Total other income       |   |   | 174 |   |   |   | 159 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Income (Loss) before provision                                                       |   |   |   |   |   |   |   |   |
|     for Income Tax                                               |   |   | 649,028 |   |   |   | (15,001 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Provision for Income Tax                                                             |   |   | (161,049 | ) |   |   | - |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                                                    |   |   | 487,979 |   |   |   | (15,001 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Other Comprehensive Income (Loss)                                                    |   |   |   |   |   |   |   |   |
|     Effects of Foreign Currency Conversion                       |   |   | 52,683 |   |   |   | 172 |   |
|                                                                                 |   |   |   |   |   |   |   |   |
| Comprehensive Income (Loss)                                                          |   | $ | 540,662 |   |   | $ | (14,829 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Basic and fully diluted earnings (loss) per share                                    |   | $ | 0.01 |   |   | $ | (0.00 | ) |
|                                                                                 |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                  |   |   | 38,381,375 |   |   |   | 20,000,000 |   |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                |   |
|----------------------------------------------------------------------|--------|
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009                       |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                 |   | Common Stock |   |   | Additional |   |   |   |   |   | Other |   |   | Total |   |
|                                                                 |   | $0.001 Par Value |   |   | Paid-in |   |   | Retained |   |   | Comprehensive |   |   | Owners' |   |
|                                                                 |   | Shares |   |   | Amount |   |   | Capital |   |   | Earnings |   |   | Income |   |   | Equity |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       December 31, 2008                |   |   | 1,000 |   |   | $ | 1,000 |   |   | $ | 71,948 |   |   | $ | (1,433 | ) |   | $ | (22 | ) |   | $ | 71,493 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      acquisition of Smooth Global           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      (reverse merger)                       |   |   | 20,000,000 |   |   |   | 20,000 |   |   |   | (20,000 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Smooth Global share exchange                                         |   |   | (1,000 | ) |   |   | (1,000 | ) |   |   | 1,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (15,001 | ) |   |   | - |   |   |   | (15,001 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income-                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     effects of exchange rates                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 172 |   |   |   | 172 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       December 31, 2009                |   |   | 20,000,000 |   |   | $ | 20,000 |   |   | $ | 52,948 |   |   | $ | (16,434 | ) |   | $ | 150 |   |   | $ | 56,664 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reverse merger adjustment*                                           |   |   | 18,381,375 |   |   |   | 18,381 |   |   |   | (145,579 | ) |   |   | - |   |   |   | - |   |   |   | (127,198 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 487,979 |   |   |   | - |   |   |   | 487,979 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income-                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     effects of exchange rates                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 52,833 |   |   |   | 52,833 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances at                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       December 31, 2010                |   |   | 38,381,375 |   |   | $ | 38,381 |   |   | $ | (92,631 | ) |   | $ | 471,545 |   |   | $ | 52,983 |   |   | $ | 470,278 |   |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES                      |   |
|----------------------------------------------------------------------------|--------|
|                                                                       |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                      |   |
|                                                                       |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |
|                                                                       |   | For the Year Ended |   |
|                                                                       |   | December 31, |
|                                                                       |   | 2010 |   |   | 2009 |   |
| Operating Activities                                                       |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |
| Net income (loss)                                                          |   | $ | 487,979 |   |   | $ | (15,001 | ) |
| Adjustments to reconcile net income (loss) to                              |   |   |   |   |   |   |   |   |
|    net cash provided (used) by operating activities:        |   |   |   |   |   |   |   |   |
|         Depreciation               |   |   | 7,702 |   |   |   | 2,295 |   |
|         Reverse merger effect      |   |   | (127,198 | ) |   |   | - |   |
| Changes in operating assets and liabilities:                               |   |   |   |   |   |   |   |   |
|    (Increase)/Decrease in accounts receivable               |   |   | (1,051,966 | ) |   |   | (112,348 | ) |
|    (Increase)/notes receivable                              |   |   | (75,062 | ) |   |   | - |   |
|    (Increase)/Decrease in advance to suppliers              |   |   | (21,217 | ) |   |   | (549 | ) |
|    (Increase)/Decrease in inventories                       |   |   | (277,415 | ) |   |   | (32,393 | ) |
|    (Increase)/Decrease in contract security deposit         |   |   | (15,013 | ) |   |   | (687 | ) |
|     Increase/(Decrease) in accounts payable            |   |   | 440,291 |   |   |   | 71,219 |   |
|     Increase/(Decrease) in accrued expenses            |   |   | 87,166 |   |   |   | - |   |
|     Increase/(Decrease) in advance from customers      |   |   | (30,440 | ) |   |   | 66,705 |   |
|     Increase/(Decrease) in VAT and other taxes payable |   |   | 410,918 |   |   |   | (622 | ) |
|     Increase/(Decrease) in corporate taxes payable     |   |   | 163,896 |   |   |   | - |   |
| Net cash provided (used) by operating activities                           |   |   | (359 | ) |   |   | (21,381 | ) |
|                                                                       |   |   |   |   |   |   |   |   |
| Investing Activities                                                       |   |   |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Purchase of fixed assets                                                   |   |   | (87,925 | ) |   |   | (16,283 | ) |
| Net cash provided (used) by investing activities                           |   |   | (87,925 | ) |   |   | (16,283 | ) |
|                                                                       |   |   |   |   |   |   |   |   |
| Financing Activities                                                       |   |   |   |   |   |   |   |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Proceeds from related parties                                              |   |   | 106,018 |   |   |   | - |   |
| Net cash provided (used) by financing activities                           |   |   | 106,018 |   |   |   | - |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash                                                |   |   | 17,734 |   |   |   | (37,664 | ) |
| Effects of exchange rates on cash                                          |   |   | 42,080 |   |   |   | 163 |   |
| Cash at beginning of the period                                            |   |   | 35,447 |   |   |   | 72,948 |   |
| Cash at end of the period                                                  |   | $ | 95,261 |   |   | $ | 35,447 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| Supplemental Disclosures of Cash Flow Information:                         |   |   |   |   |   |   |   |   |
|    Cash paid (received) during year for:                    |   |   |   |   |   |   |   |   |
|        Interest                         |   | $ | - |   |   | $ | - |   |
|        Income taxes                     |   | $ | - |   |   | $ | - |   |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 1- | ORGANIZATION AND OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | Smooth Global (China) Holdings, Inc. ("Smooth Global (China)" or the "Company") was incorporated under the laws of the State of Nevada on December 2, 1998 with authorized common stock of 200,000,000 shares at $0.001 par value.  Currently, the Company principally engages in the business of design, manufacture and distribution of rechargeable polymer lithium-ion batteries in the People's Republic of China ("PRC'), through its wholly-owned subsidiaries, Smooth Global Services Limited ("Smooth Global"), a limited liability company incorporated on January 25, 2006 in the British Virgin Island ("BVI") .                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | 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. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | On September 20, 2007, Ms. Yianfang Jin and Ms. Yianxia Wang (collectively the "Trustees"), both of whom are citizens of PRC and own a 100% equity ownership interest in Beijing GRT Information Services Limited ( "GRT" ),  executed Trust and Indemnity Agreements ("Agreements") with Beijing Telecom, pursuant to which the Trustees assigned to Beijing Telecom all of the beneficial interest in the Trustee's equity ownership interest in GRT.  The Agreements provided for effective control of GRT to be transferred to Beijing Telecom at September 20, 2007.                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | On December 16, 2010, the Trustees terminated the Agreements with Beijing Telecom, and accordingly, Beijing Telecom lost its effective control over GRT.  Therefore, the consolidated financial statements of Smooth Global and its wholly owned subsidiary, Beijing Telecom, do not include the financial statements of GRT.  In connection with the termination of the Agreements, Ms. Zheng Shuying transferred and surrendered  20,000,000 shares of the Company's common stock to the Company as treasury stock.                                                                                                                                                                                                                                                                                                                                                     |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 1- | ORGANIZATION AND OPERATIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    | On December 16, 2010, Beijing Telecom finished the acquisition of 100% of the registered capital of Beijing Yupeng Hengli Technology Co., Ltd. ("Yupeng Hengli"). In connection with the acquisition, the Company issued 20,000,000 shares of its treasury stock to the two prior registered owners of Yupeng hengli, Mr. Wang, Xiaoping and Mr. Zhu, Chenyu, and their assignees, all of them are PRC citizen.  Upon completion of this transaction, Yupeng Hengli became a wholly-owned subsidiary of Beijing Telecom.           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    | The acquisition of Yupeng Hengli resulted in a capital transaction accounted for as a reverse merger.  The transaction was treated for accounting purposes as a recapitalization of the accounting acquirer (Yupeng Hengli) and a reorganization of the accounting acquiree (Beijing Telecom). Accordingly, the historical financial statements presented prior to the merger are the historical financial statements of Yupeng Hengli.                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    | Under the Company Law of PRC, Yupeng Hengli was incorporated on December 23, 2008 in Beijing City, PRC , as a limited liability company with a registered capital of RMB 500,000 (equivalent to US$72,948).   Yupeng Hengli started its operation with distribution of rechargeable polymer lithium-ion batteries  in PRC in 2009.  Beginning from January 2010, Beijing Yupeng is engaged in the business of design, manufacture, and distribution of rechargeable polymer lithium-ion batteries in PRC. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    | Smooth Global (China) also wholly own Gold Profit (Asia) Group Limited ("Gold Profit"), a limited liability company incorporated in the BVI on July 28, 2006, which in turn wholly own Beijing Quan Tong Chang Information Service Limited a/k/a Beijing Smooth Global Information Services Ltd. (”QTC”), a limited liability company incorporated in Beijing City, PRC on August 2, 2003. Currently, QTC is engaged to provide business information consultant services.                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    | Yupeng Hengli 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 Yupeng Hengli and QTC.   All these affiliated companies are hereafter referred to as the "Company", whose structure is outlined as following:                                                                                                 |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 1- | ORGANIZATION AND OPERATIONS (continued) |
|---------|-----------------------------------------|

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 2- | CONTROL BY PRINCIPAL STOCKHOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | The chief executive officer owns beneficially and in the aggregate, the majority of the voting power of the Company. Accordingly, the chief executive officer has the ability to control the approval of most corporate actions, including approving significant expenses, increasing the authorized capital stock and the dissolution, merger or sale of the Company's assets.                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Note 3- | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | Basis of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | The consolidated financial statements include the accounts of the Company and all its majority-owned subsidiaries which require consolidation.  Inter-company transactions have been eliminated in consolidation.                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP").  This basis of accounting differs from that used in the statutory accounts of the Company, which are prepared in accordance with the "Accounting Principles of China " ("PRC GAAP").  Certain accounting principles, which are stipulated by US GAAP, are not applicable in the PRC GAAP.  The difference between PRC GAAP accounts of the Company and its US GAAP financial statements is immaterial. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | Certain amounts in the prior year's consolidated financial statements and notes have been revised to conform to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | The Company evaluated subsequent events through the date of issuance of these financial statements. We are not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our financial statements, or all such material events have been fully disclosed.                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    | The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. In preparing these financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.                                                                                                                                                                  |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    | Foreign Currencies Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    | The Company maintains its books and accounting records in PRC currency "Renminbi" ("RMB"), which is determined as the functional currency.  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 currencies other than RMB 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 owners' 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$”).  Assets and liabilities of the Company are translated at the prevailing exchange rate at each reporting period end. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income and expense accounts are translated at the average rate of exchange during the reporting period.  Translation adjustments resulting from translation of these financial statements are reflected as accumulated other comprehensive income (loss) in the owners’ equity.                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    | The exchange rates used for foreign currency translation were as follows (USD$1 = RMB):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| Period Covered               |   | Balance SheetDate Rates |    | Average Rates |
|------------------------------|--------|-------------------------|---------|---------------|
|                         |   |                    |    |          |   |
| Year ended December 31, 2010 |   |                    | 6.61180 |          | 6.661031434 |
| Year ended December 31, 2009 |   |                    | 6.83720 |          | 6.84088 |

|   | Statement of Cash Flows                                                                                                                                                                                                                                                                                                                                                      |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                         |
|   | In accordance with ASC 830-230, “Statement of Cash Flows”, cash flows from the Company’s operations is 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. |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                         |
|   | Cash and cash equivalents include cash on hand, deposits in banks with maturities of three months or less, and all highly liquid investments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less at the time of purchase.                                                                                             |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | Fair Value of Measurements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | The Company applies the provisions of ASC Subtopic 820-10, Fair Value Measurements, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements.  ASC Subtopic 820-10 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | ASC Subtopic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | ASC Subtopic 820-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Subtopic 820-10 establishes three levels of inputs that may be used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | Level 1:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | Level 2:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | Level 3:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |
|    | The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, loan receivables, other receivables, advance to suppliers, short-term loan, accounts payable, advance from customers, other payables and accrued expenses, approximate their fair market value based on the short-term maturity of these instruments. The Company did not identify any assets or liabilities that are required to be measured at fair value on a recurring basis on the consolidated balance sheets in accordance with ASC 820.                                                                           |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company recognizes its revenues net of sales taxes and sales-related taxes. In accordance with FASB ASC 605, "Revenue Recognition", the Company recognizes revenue when the earnings process is complete. This generally occurs when services have been rendered and accepted or products are shipped to unaffiliated customers or picked up by unaffiliated customers in the Company's warehouse, title and risk of loss have been transferred, collectability is reasonably assured and pricing is fixed or determinable.  The corresponding shipping and handling costs are included in the selling expenses.                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company warrants the product only in the event of defects for one year from the date of shipment. Historically, the Company has not experienced significant defects, and replacements for defects have been minimal. For the years ended December 31, 2010 and 2009, no such returns and allowances have been recorded. Should returns increase in the future it would be necessary to adjust estimates, in which case recognition of revenues could be delayed. Payments received prior to satisfying the Company’s revenue recognition criteria are recorded as advance from customers.                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Product warranty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company provides product warranties to its customers that all equipment manufactured by it will be free from defects in materials and workmanship under normal use for a period of one year from the date of shipment. The Company's costs and expenses in connection with such warranties has been immaterial and during the two-year period ended December 31 2010, no product warranty reserve was considered necessary.                                                                                                                                                                                                                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Accounts Receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Accounts receivable are recorded at the invoiced amount and do not bear interest.  Any allowance for doubtful accounts is established based on the management’s assessment of the recoverability of accounts and other receivables. Management regularly reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the collectability of accounts receivable and the adequacy of the allowance.  In circumstances in which we receive payment for accounts receivable which have previously been written off, we reverse the allowance and bad debt expenses. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Inventories are stated at the lower of cost, as determined on a weighted average basis, or market. Costs of inventories include purchase and related costs incurred in bringing the products to their present location and condition. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Management writes down the inventories to market value if they are below cost. Management regularly evaluates the composition of the Company’s inventories to identify slow-moving and obsolete inventories to determine if a valuation allowance is required.                                                                       |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | Property, Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    | Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Maintenance, repairs and betterments, including replacement of minor items, are charged to expense; major additions to physical properties are capitalized. Depreciation and amortization are provided using the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the assets as follows: |

| Building and warehouses        |   | 20 years      |
|--------------------------------|--------|---------------|
| Machinery and equipment        |   | 7 to 10 years |
| Office equipment and furniture |   | 5 years       |
| Motor vehicles                 |   | 5 years       |

|   | Valuation of Long-Lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | In accordance with Impairment or Disposal of Long-Lived Assets Subsections of ASC Subtopic 360-10, Property, Plant, and Equipment - Overall, long-lived assets, such as property, plant and equipment, and purchased intangible asset subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment of long-lived assets was recognized for the years ended December 31, 2010 and 2009, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Research and Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The Company charges research and development costs to expense when incurred in accordance with the FASB ASC 730, “Research and Development”. Research and development costs were immaterial for the years ended December 31, 2010 and 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Advertising Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The Company expenses advertising costs as incurred or the first time the advertising takes place, whichever is earlier, in accordance with the FASB ASC 720-35, “Advertising Costs”. Advertising expenses were included in selling expenses. Advertising expenses were immaterial for the years ended December 31, 2010 and 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | Value-added Tax ("VAT") and other taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | Sales revenue represents the invoiced value of goods, net of a value-added tax (VAT).  The VAT collected on sales is netted against the taxes paid for purchases of cost of goods sold to determine the amounts payable and refundable. The Company presents VAT on a net basis.                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | The Company is subject to various taxes such as  City Development Tax, and Education tax to the local government tax authorities. The City Development Tax and Education Tax are generally collected on a certain percentage of VAT.                                                                                                                                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | ASC 220, “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. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | Segment Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    | ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company operated in one business segment for the years ended December 31, 2010 and 2009, respectively.                                |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | Related parties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | For the purposes of these financial statements, parties are considered to be related if one party 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | China Contribution Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | Full time employees of the PRC entities participate in a government mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to pay to the local labor bureau a monthly contribution at a stated contribution rate based on the monthly basic compensation of qualified employees. The relevant local labor bureau is responsible for meeting all retirement benefit obligations; the Company has no further commitments beyond its monthly contribution.                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | The Company made the provisions based on the number of qualified employees and the rate and base regulated by the government. However, the Company did not make full monthly contribution to these funds.  In the event that any current or former employee files a complaint with the PRC government, the Company may be subject to administrative fines. The Company believes that these fines would  be minimal, and accrual for such fines has been made in this regard.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | Statutory Reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | Pursuant to the applicable laws in the 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.  Beginning from January 1, 2006, enterprise is no longer required to make appropriation to the statutory public welfare fund. No appropriations to the discretionary surplus reserve have been made. |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company accounts for income tax in accordance with FASB ASC 740,"Income Taxes", which requires the asset and liability approach for financial accounting and reporting for income taxes.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  A valuation allowance related to deferred tax assets is recorded when it is more likely than not that some portion 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, an enterprise need approval from the local tax authority before it can claim such tax benefit, and the outcome of the application is generally uncertain.  Therefore, the Management established a 100% valuation allowance for the operation losses carried forward and no deferred tax assets have been recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company adopted a new FASB guidance, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The new FASB guidance 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.  The new FASB guidance 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 the new FASB guidance, the Company performed a self-assessment and concluded that there were no significant uncertain tax positions requiring recognition in its consolidated financial statements.                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company accounts for income taxes in interim periods in accordance with FASB ASC 740-270, "Interim Reporting".  The Company has determined an estimated annual effective tax rate.  The rate will be revised, if necessary, as of the end of each successive interim period during the Company's fiscal year to its best current estimate. The estimated annual effective tax rate is applied to the year-to-date ordinary income (or loss) at the end of the interim period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Earnings (Loss) Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company reports earnings per share in accordance with FASB ASC 260, “Earnings Per Share” , which 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 years ended December 31, 2010 and 2009, respectively.                                                     |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    | In December 2010, FASB issued an amendment to the disclosure of supplementary pro forma information for business combinations. The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    | In December 2010, FASB issued an amendment to goodwill impairment test. The amendments modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    | In July 2010, the Financial Accounting Standards Board ("FASB") issued amendments to the disclosure requirements about the credit quality of financing receivables and the allowance for credit losses. The purpose of the additional disclosures is to enable users of financial statements to better understand the nature of credit risk inherent in an entity’s portfolio of financing receivables and how that risk is analyzed. For end of period balances, the new disclosures are required to be made in all interim and annual periods ending on or after December 15, 2010. For activity during a reporting period, the disclosures are required to be made in all interim and annual periods after January 1, 2011. The Management does not expect these changes will have a material impact on  the Company’s financial position and results of operations as this guidance only relates to additional disclosures.                                                                                                                                                                                                                                                    |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 3- | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Recent Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | In April 2010, FASB issued an amendment to Stock Compensation. The amendment clarifies that an employee stock-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The  adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | In January 2010, the FASB issued additional disclosure requirements for fair value measurements. The guidance requires previous fair value hierarchy disclosures to be further disaggregated by class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. In addition, significant transfers between Levels 1 and 2 of the fair value hierarchy are required to be disclosed. These additional requirements became effective January 1, 2010 for quarterly and annual reporting.  The  adoption of this new guidance did not have a material effect on the Company’s financial position and results of operations. In addition, the fair value disclosure amendments also require more detailed disclosures of the changes in Level 3 instruments. These changes will be effective January 1, 2011 and the Management does not expect the  adoption of this new guidance will have a material effect on the Company’s financial position and results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions.  The ASU is effective beginning January 1, 2011. The Management does not expect the  adoption of this new guidance will have a material effect on the Company’s financial position and results of operations. |

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 4- | ACCOUNTS RECEIVABLE                            |
|---------|------------------------------------------------|
|    |                                           |
|    | Accounts receivable consists of the following: |

|                                                        |   | December 31, |      |   | December 31, |   |
|-------------------------------------------------------------|--------|--------------|-----------|--------|--------------|--------|
|                                                        |   | 2010         |      |   | 2009         |   |
|                                                        |   |         |      |   |         |   |
| Accounts receivable                                         |   | $            | 1,177,895 |   |         | $      | 114,264 |   |
| Less: Allowance for doubtful accounts                       |   |         | (1,856    | )      |         |   | (1,856 | ) |
|     Accounts  receivable, net |   | $            | 1,176,039 |   |         | $      | 112,408 |   |

|    | Bad debt expense charged to operations was $0 and $745 for the year ended December 31, 2010 and 2009, respectively. |
|---------|---------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                |
|    |                                                                                                                |
| Note 5- | INVENTORIES                                                                                                         |
|    |                                                                                                                |
|    | Inventories consist of following:                                                                                   |

|                                |   | December 31, |    |   | December 31, |   |
|-------------------------------------|--------|--------------|---------|--------|--------------|--------|
|                                |   | 2010         |    |   | 2009         |   |
|                                |   |         |    |   |         |   |
| Finished goods                      |   | $            | 199,775 |   |         | $      | 24,095 |   |
| Work-in-progress                    |   |         | 54,059  |   |         |   | - |   |
| Raw materials                       |   |         | 59,162  |   |         |   | 8,315 |   |
|      Total |   | $            | 312,996 |   |         | $      | 32,410 |   |

| Note 6- | PROPERTY AND EQUIPMENT, NET                                                                         |
|---------|-----------------------------------------------------------------------------------------------------|
|    |                                                                                                |
|    | The following is a summary of property, plant and equipment-at cost, less accumulated depreciation: |
|    |                                                                                                |

|                                |   | December 31, |    |   | December 31, |   |
|-------------------------------------|--------|--------------|---------|--------|--------------|--------|
|                                |   | 2010         |    |   | 2009         |   |
|                                |   |         |    |   |         |   |
| Machinery and equipment             |   | $            | 16,562  |   |         | $      | - |   |
| Office equipment and furniture      |   |         | 16,089  |   |         |   | 2,494 |   |
| Motor vehicles                      |   |         | 87,360  |   |         |   | 13,798 |   |
|                                |   |         | 120,011 |   |         |   | 16,292 |   |
|                                |   |         |    |   |         |   |   |   |
| Less: Accumulated depreciation      |   |         | (17,241 | )      |         |   | (2,295 | ) |
|                                |   |         |    |   |         |   |   |   |
|      Total |   | $            | 102,770 |   |         | $      | 13,997 |   |

|     | Depreciation expense charged to operations was $56,540 and $2,296 for the year ended December 31, 2010 and 2009, respectively. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

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| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 7- | CORPORATE INCOME TAX                                                                                                                                                                                                                                                                                                                          |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                          |
|    | Gold Profit and Smooth Global are registered in the BVI. Under the current laws of the BVI, the Company is not subject to tax on income or capital gains. Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed. Gold Profit and Smooth Global had no income during the period. |
|    |                                                                                                                                                                                                                                                                                                                                          |
|    | PRC Income Tax                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                          |
|    | Under the Income Tax Laws of the PRC, the Company is generally subject to tax at a statutory rate of 25%.                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                          |
|    | QTC  and Beijing Telecom Income Tax                                                                                                                                                                                                                                                                                                 |
|    |                                                                                                                                                                                                                                                                                                                                          |
|    | QTC and Beijing Telecom are subject to effective income tax rate of 25% beginning from January 1, 2008.                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                          |
|    | The provision for income taxes on earnings consists of the following:                                                                                                                                                                                                                                                                         |

|                                               |   | For the Year Ended |   |
|----------------------------------------------------|--------|--------------------|--------|
|                                               |   | December 31,       |   |
|                                               |   | 2010               |   |   | 2009 |   |
| PRC Enterprise Income Taxes                        |   | $                  | -      |   |   | $ | - |   |
| United States Federal Income Taxes                 |   |               | -      |   |   |   | - |   |
|    Total Provision for Income Taxes |   | $                  | -      |   |   | $ | - |   |

|   | A reconciliation between the income tax computed at the U.S. statutory rate and the Company’s provision for income tax is as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | For the Year Ended |   |
|---------------------------------------------------------|--------|--------------------|--------|
|                                                    |   | December 31,       |   |
|                                                    |   | 2010               |   |   | 2009 |   |
| U.S. Statutory tax rate                                 |   |               | 34.00  | % |   |   | 34.00 | % |
| Foreign income not recognized in the United States      |   |               | -34.00 | % |   |   | -34.00 | % |
| PRC enterprise income tax rate                          |   |               | 25.00  | % |   |   | 25.00 | % |
| Effect of tax holiday                                   |   |               | -25.00 | % |   |   | -25.00 | % |
|      Effective income tax rate |   |               | -      |   |   |   | - |   |

|   | There are no significant permanent or temporary differences between book and taxable income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | QTC had net operating losses of approximately $188,118 and $129,702 carried from prior years as of December 31, 2010 and 2009, respectively.  Beijing Telecom had net operating losses of approximately $92,346 and $61,811 carried from prior years as of December 31, 2010 and 2009, respectively. Although the PRC Income Tax Law allows the enterprises to offset their future taxable income with operating losses carried forward in a 5-year period, enterprises need approval from local tax authority before they can claim such tax benefit, and the outcome of the application is generally uncertain. Therefore, the Management established a 100% valuation allowance for the operation losses carried forward and no deferred tax assets have been recorded as a result of these losses. |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 7- | CORPORATE INCOME TAX (continued)                                                 |
|---------|----------------------------------------------------------------------------------|
|    |                                                                             |
|    | YPHL Income Tax                                                                  |
|    |                                                                             |
|    | YPHL subject to effective income tax rate of 25% beginning from January 1, 2008. |
|    |                                                                             |
|    | The provision for income taxes on earnings consists of the following:            |

|                                               |   | For the Year Ended |    |
|----------------------------------------------------|--------|--------------------|---------|
|                                               |   | December 31,       |    |
|                                               |   | 2010               |    |   | 2009 |   |
| PRC Enterprise Income Taxes                        |   | $                  | 161,049 |   |   | $ | - |   |
| United States Federal Income Taxes                 |   |               | -       |   |   |   | - |   |
|    Total Provision for Income Taxes |   | $                  | 161,049 |   |   | $ | - |   |

|   | A reconciliation between the income tax computed at the U.S. statutory rate and the Company’s provision for income tax is as follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | For the Year Ended |   |
|---------------------------------------------------------|--------|--------------------|--------|
|                                                    |   | December 31,       |   |
|                                                    |   | 2010               |   |   | 2009 |   |
| U.S. Statutory tax rate                                 |   |               | 34.00  | % |   |   | 34.00 | % |
| Foreign income not recognized in the United States      |   |               | -34.00 | % |   |   | -34.00 | % |
| PRC enterprise income tax rate                          |   |               | 25.00  | % |   |   | 25.00 | % |
|      Effective income tax rate |   |               | 25.00  | % |   |   | 25.00 | % |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | There are no material permanent or temporary differences between book and taxable income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Accounting for Uncertainty in Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The tax authority of the PRC Government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company’s tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s tax filings, which may lead to additional tax liabilities.                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The Company adopted the provisions of Accounting for Uncertainty in Income Taxes on January 1, 2007. The provisions clarify the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with the standard “Accounting for Income Taxes,” and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of Accounting for Uncertainty in Income Taxes also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 7- | CORPORATE INCOME TAX (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Accounting for Uncertainty in Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Based on the Company’s evaluation, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements.                                                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The Company may from time to time be assessed interest or penalties by major tax jurisdictions. In the event it receives an assessment for interest and/or penalties, it will be classified in the financial statements as tax expense.                                                                                                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Note 8- | ACQUISITION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | On September 30, 2010, the prior owners of Yupeng Hengli entered into a Share Exchange Agreement (the “Agreement”) with Smooth Global (China). Pursuant to the Agreement, the prior owners of Yupeng Hengli agreed to transfer their 100% equity ownerships interest of Yupeng Hengli to Beijing Telecom for 20,000,000 shares of common stock of Smooth Global (China). Upon the completion of the transfer on December 16, 2010, Yupeng Hengli became a wholly-owned subsidiary of Beijing Telecom. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Note 9- | DUE TO A RELATED PARTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Due to a related party represents loans from Ms. Zheng to finance the operations of QTC and Beijing Telecom due to lack of cash resources. These loans are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand.  Cash flows from these activities are classified as cash flows from financing activities.                                                                                                                                         |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 10- | CONCENTRATIONS AND CREDIT RISKS                                                                                                                                                                                                                                                                                           |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                      |
|     | The Company maintains its cash and cash equivalents with various financial institutions in the PRC which do not provide insurance for amounts on deposit.  The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk in this area.                  |
|     |                                                                                                                                                                                                                                                                                                                      |
|     | The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.                                                     |
|     |                                                                                                                                                                                                                                                                                                                      |
|     | Major Customer                                                                                                                                                                                                                                                                                                            |
|     |                                                                                                                                                                                                                                                                                                                      |
|     | For the years ended December 31, 2010 and 2009, no customer had net sales exceeding 10% of the Company’s total net sales for the respective period.                                                                                                                                                                 |
|     |                                                                                                                                                                                                                                                                                                                      |
|     | Major Suppliers                                                                                                                                                                                                                                                                                                           |
|     |                                                                                                                                                                                                                                                                                                                      |
|     | For the years ended December 31, 2010 and 2009, the Company’s one largest supplier accounted for 76.6% and 99%, respectively, of the Company’s total purchases. The account payable balances for the Company’s largest supplier was $79,048 and $26,268 as of December 31, 2010 and 2009, respectively. |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 11- | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                   |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                            |
|     | Minimum Lease Payments on Operating Lease                                                                                                                                                                                                                                                                                                                                                       |
|     |                                                                                                                                                                                                                                                                                                                                                                                            |
|     | The Company rents a production facility and significant production equipment from a third party for a three-year period ended December 31, 2012.  Rent expense amounted to $233,671 and $nil  for the year ended December  31, 2010 and 2009, respectively.  As of December 31, 2010, the future minimum lease payments for the lease are as following: |

| Year ending  |   | Lease   |    |
|--------------|--------|---------|---------|
| December 31, |   | Payment |    |
|         |   |    |    |
| 2011         |   |    | 231,674 |   |
| 2012         |   |    | 231,674 |   |
|         |   | $       | 463,348 |   |

|   | Lack of Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The Company does not carry any business interruption insurance, products liability insurance or any other insurance policy.  As a result, the Company may incur uninsured losses, increasing the possibility that the investors would lose their entire investment in the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The Company could be exposed to liabilities or other claims for which the Company has no insurance protection. The Company does not currently maintain any business interruption insurance, products liability insurance, or any other comprehensive insurance policy.  As a result, the Company may incur uninsured liabilities and losses as a result of the conduct of its business. There can be no guarantee that the Company will be able to obtain insurance coverage in the future, and even if it can obtain coverage, the Company may not carry sufficient insurance coverage to satisfy potential claims. Should uninsured losses occur, any purchasers of the Company’s common stock could lose their entire investment.                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Because the Company does not carry products liability insurance, a failure of any of the products marketed by the Company may subject the Company to the risk of product liability claims and litigation arising from injuries allegedly caused by the unqualified composition or quality of its products. The Company cannot assure that it will have enough funds to defend or pay for liabilities arising out of a products liability claim. To the extent the Company incurs any product liability or other litigation losses, its expenses could materially increase. There can be no assurance that the Company will have sufficient funds to pay for such expenses, which could end its operations and the investors would lose their entire investment.                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Environmental                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In the ordinary course of its business, the Company is subject to numerous environmental laws and regulations covering compliance matters or imposing liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances.  Currently, our environmental compliance costs are immaterial to our operating costs.  However, changes in these laws and regulations may significantly increase our environmental compliance costs and therefore have a material adverse effect on the Company’s financial position and results of operations.  Also, any failure by the Company to adequately comply with such laws and regulations could subject the Company to significant future liabilities. |

----

| SMOOTH GLOBAL (CHINA) HOLDINGS, INC. AND SUBSIDIARIES |
|-------------------------------------------------------|
|                                                  |
|                                                  |
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            |

| Note 11- | COMMITMENTS AND CONTINGENCIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | Risks of losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | The Company is potentially exposed to risks of losses that may result from business interruptions, injury to others (including employees) and damage to property.  These losses may be uninsured, especially due to the fact that the Company’s operations are in China, where business insurance is not readily available.  If: (i) information is available before the Company’s financial statements are issued or are available to be issued indicates that such loss is probable and (ii) the amount of the loss can be reasonably estimated, an estimated loss will be accrued by a charge to income.  If such loss is probable but the amount of loss cannot be reasonably estimated, the loss shall be charged to the income of the period in which the loss can be reasonably estimated and shall not be charged retroactively to an earlier period.  As of September 30, 2010 and December 31, 2009, the Company has not experienced any uninsured losses from injury to others or other losses.                      |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | PRC's political and economic system                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | The Company faces a number of risks and challenges not typically associated with companies in North America and Western Europe, since its assets exist solely in the PRC, and its revenues are derived from its operations therein.  The PRC is a developing country with an early stage market economic system, overshadowed by the state.  Its political and economic systems are very different from the more developed countries and are in a state of change.  The PRC also faces many social, economic and political challenges that may produce major shocks and instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States.  Such shocks, instabilities and crises may in turn significantly and negatively affect the Company's performance.                                                                                                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | Governmental control of currency conversion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. The Company receives all of its revenues in Renminbi, which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict the Company’s ability to remit sufficient foreign currency to satisfy foreign currency denominated obligations.  Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies. |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     | The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents the Company from obtaining sufficient foreign currency to satisfy its currency demands, the Company may not be able to pay certain of its expenses as they come due.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

----

| ITEM 9.         | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
|-----------------|--------------------------------------------------------------------------------------|
|            |                                                                                 |
| Not applicable. |
|            |                                                                                 |
| ITEM 9A.        | CONTROLS AND PROCEDURES                                                              |
|            |                                                                                 |

----

| ITEM 9B. | OTHER INFORMATION |
|----------|-------------------|
|     |              |
| None.    |

----

| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
|----------|--------------------------------------------------------|

| Name        | Age | Position with the Company         | DirectorSince |
|-------------|-----|-----------------------------------|---------------|
| Xiaojing Xu | 26  | Chief Executive Officer, Director | 2010          |
| Hui Liang   | 27  | Chief Financial Officer, Director | 2010          |
| Chenyu Zhu  | 28  | Chief Operating Officer, Director | 2010          |

----

| ITEM 11. | EXECUTIVE COMPENSATION |
|----------|------------------------|

|          |  Year |   | Salary |   |   | Bonus  |   |   | StockAwards |   |   | OptionAwards |   |   | OtherCompensation |   |
|---------------|------------|--------|--------|--------|--------|--------|--------|--------|-------------|--------|--------|--------------|--------|--------|-------------------|--------|
| Zheng Shuying | 2010       |   | $      | 0      |   |   |   | --     |        |   |   | --           |   |   |              | --     |   |   |   | -- |   |
|          | 2008       |   | $      | 0      |   |   |   | --     |        |   |   | --           |   |   |              | --     |   |   |   | -- |   |
|          | 2008       |   | $      | 85,650 |   |   |   | --     |        |   |   | --           |   |   |              | --     |   |   |   | -- |   |

----

|        |   Number ofsecuritiesunderlyingoption |   Percentof totaloptionsgranted toemployeesin fiscal |   ExercisePrice |    Expiration |    Potential realizablevalue at assumedannual rates ofappreciationfor option term |
|-------------|--------------------------------------------|-----------------------------------------------------------|----------------------|-------------------------|---------------------------------------------------------------------------------------------|
|        | granted                                    | year                                                      |  ($/share)      |  Date              |  5%                                                                                    |  10% |
| Xiaojing Xu | --                                         | --                                                        | --                   | --                      | --                                                                                          | -- |

|        | Number ofShares ThatHave NotVested | Market Valueof Shares ThatHave NotVested |
|-------------|------------------------------------|------------------------------------------|
| Xiaojing Xu | --                                 | --                                       |

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

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

|   | · | Xiaojing Xu, our Chief Executive Officer; |
|--------|--------|-------------------------------------------|

|   | · | each of our directors; and |
|--------|--------|----------------------------|

|   | · | all directors and executive officers as a group. |
|--------|--------|--------------------------------------------------|

----

|                                   |   | Amount and Nature |      |   |       |   |
|----------------------------------------|--------|-------------------|-----------|--------|------------|--------|
| Name and Address                       |   | of Beneficial     |      |   | Percentage |   |
| of Beneficial Owner(1)                 |   | Ownership(2)      |      |   | of Class   |   |
| Xiaojing Xu                            |   |              | 3,665,000 |   |       |   | 9.5 | % |
| Hui Liang                              |   |              | 2,475,000 |   |       |   | 6.4 | % |
| Chenu Zhu                              |   |              | 0 --      |   |       |   |   |   |
|                                   |   |              |      |   |       |   |   |   |
| All officers and directors (3 persons) |   |              | 6,140,039 |   |       |   | 16.0 | % |

|   | (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 |
|---------|---------------------------------------------------------------------------|

| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
|----------|----------------------------------------|

----

| 3-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.                                                        |
| 21     | Subsidiaries – Gold Profit (Asia) Group Limited, a BVI corporation                                                                                                                                                          |
|   |                           Beijing Quan Tong Chang Information Service Limited, a PRCcorporation |
|   |                           Smooth Global Services Limited, a BVI corporation                          |
|   |                           Smooth Global (Beijing) Telecom Science Limited, a PRC corporation              |
|   |                           Beijing Yupeng Hengli Technology Ltd., a PRC corporation                   |
| 31.1   | Rule 13a-14(a) Certification - CEO                                                                                                                                                                                                |
| 31.2   | Rule 13a-14(a) Certification - CFO                                                                                                                                                                                                |
| 32     | Rule 13a-14(b) Certification                                                                                                                                                                                                      |

----

|   | Smooth Global (China) Holdings, Inc.                                     |
|--------|--------------------------------------------------------------------------|
|   |                                                                     |
|   | By:/s/ Xiaojing Xu                                                       |
|   |       Xiaojing Xu, Chief Executive Officer |

----